Oireachtas Joint and Select Committees
Tuesday, 26 February 2013
Joint Oireachtas Committee on Jobs, Enterprise and Innovation
Action Plan for Jobs 2012 and 2013: Discussion with Minister for Jobs, Enterprise and Innovation
I welcome the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, and his officials and I thank them for attending. Given the launch of the new plan, our timing is quite good.
For the purposes of time, most members would agree that, if it is okay with the Minister, the committee will focus on the 2013 plan. More than likely, the Minister knew that was going to happen anyway. If that is okay with the Minister-----
-----we will probably do that. No doubt there will be some questions looking back as well but the majority would be on the new plan. I now ask the Minister to make his presentation to the committee on the review of the action plan, and on the new plan.
I thank the Chairman. I do not know whether the committee is familiar with Mr. William Parnell and Ms Gráinne O'Carroll from the Department who have done a significant amount of work in putting this together.
I need not tell the committee that the economy is undertaking a difficult transition from one that became far too dependent on construction, property and debt, and that we must rebuild one that is focused on innovation, exports and enterprise. That is a considerable journey. If one looks back, before we entered Government the average number of jobs lost per year in the private sector was nearly 90,000 and the economy was really devastated by the crisis. We have made jobs a priority so that not only are we about correcting the bank and fiscal problems, but we have put jobs at centre stage.
What we devised, in the Action Plan for Jobs, is a fairly unique instrument in my experience in politics, namely, a policy paper which is an annual process that embraces the whole of Government to work together on the central objective of creating employment. That has been really positive. To say a short word about the process, the plan is being monitored by a joint committee of both the Secretary General to the Government and the Secretary General of my Department, with other representatives of other Departments. They monitor the delivery, quarter by quarter, as to whether what was committed to is being delivered. Last year there was 92% delivery.
It has changed the collaborative way the public service works across the silos in a way that is really positive for our endeavours to deliver in the employment area. It has also speeded up what, certainly in my experience, would be inertia in the system in getting initiatives across the line. It has been a worthwhile tool. As I stated, we delivered 92% last year. Some of the measures were not possible, mainly for legislative reasons.
This year we are becoming more ambitious in what we are seeking to do. We have picked out areas where we believe there is a really strong strategic case to identify flagship projects that can make a difference. We have described them as "disruptive reforms". They are designed not only to address an area of strategic importance but to do it in a new way, namely, to bring in, as we have been doing already in the action plan for 2012, the various players in the public service but also for the first time to bring in industry partners to help us drive forward these particular areas. There are seven such areas identified across a range of sectors and they are listed.
The first of them - in no particular order - is big data. This is an area that is exploding in growth because of the explosion of information, both from social media and from the availability of various data sources. There is a sector growing around analytics of those data designing new business models to exploit the opportunities. Ireland is well placed for a number of reasons to position itself to be the centre of excellence in a European context.
Another area is ICT skills. I note Senator Clune brought a report to the joint committee previously. We have identified that as an area where we need to act, not only in the short term where we are committing to 2,000 additional graduates in 2013 but also in the long term to become the country that produces the most graduates in Europe in this area. The reason this is really important is that it is not only strategic to the ICT sector which is growing rapidly with 4,500 jobs in the past 18 months or so, but also one is seeing increasingly that ICT is transforming other sectors as well.
Securing a strong lead in the area will be central to growth in the ICT sector, where we have a competitive edge, and it will transform many sectors. Allied to that is our belief that we need to get more businesses to go online and we need to considerably up our game. Data suggests that companies who go online grow at double the rate of growth of companies who are not online. Obviously in a depressed domestic market any business that goes online will have an opportunity to broaden its capacity to sell. As members can see, we propose to target the measure and we will introduce vouchers that will assist people to make the transition. The sector operates on a competitive basis so we will try to generate a lot of interest in using the low cost tool because it offers a good opportunity for market entry.
Another area that we have identified is the long-term unemployed. I hope that stabilisation has led to a turnaround in our economy and that there is an opportunity to target the long-term unemployed who are the most difficult to place. Statistics suggest that the chance of a long-term unemployed person getting placed in the next 12 months is, in bookies terminology, about eight to one against or one-ninth of a chance. That is a very low chance when compared with a two thirds probability for someone under 12 months unemployed. Members can work out the difference between two-thirds and one-ninth.
There is a risk that many of the people who are long-term unemployed could remain on the live register for years. The JobsPlus initiative will offer a usable instrument to help employers give consideration to such people. Efforts have been made in this area because in the past we had PRSI relief and the Revenue Job Assist scheme. Such initiatives have never fulfilled expectations partly because they were difficult to comply with. One had to guarantee that a job would last 12 months. In some cases an employer had to stand out of money until a year after an employee was taken on. In other cases a business had to be profitable in order to benefit from a subsidy. I have stripped away the bureaucracy to make it a simple cash payment of roughly €75 per week paid on a month in arrears basis so that people can get that money into their hand fast. I hope that the new scheme can make a difference where the other schemes have failed. Obviously we must promote and drive the new scheme but it is worth making a simple change.
Licensing is another large area that we have worked on and one that we have significantly reformed this year. Senator Quinn is legendary in the retail sector. I can reassure him that we have examined 159 licences across all of the sectors and analysed how they were managed and administered. We identified the capacity to simplify them considerably and reduced the compliance costs by one-third. We will pilot the scheme this year which will identify and move 25 licences in the retail sector into a single portal. We reckon that simply by implementing this measure alone we will save the retail business €20 million. We will build on its success this year and will rationalise licensing. Many people felt that we needed to get a grip on licensing.
The final area of so-called disruptive reform is the energy efficiency sector. We have sought to leverage public money by getting private money to match public money in a fund and there will be a number of pilot projects in the public sector. There will be also an obligation on the public sector that when it spends over a certain threshold that it will commit to energy efficiency measures this year. We are also moving to a pay-as-you-save model. Our aim is to lift an area that represents a real opportunity, if we get it right, and then to commence systematically delivering it.
Apart from those areas which represent our fresh ambitions, we will continue to address many of the reforms that were the meat and drink of last year's project. We have made it easier to launch start-ups, rationalised the agencies which act as a first-stop-shop for entrepreneurs, rolled out instruments such as micro-finance and so on. This year we will try to get much more up close to what is happening in the financial markets. In the past number of months the State has put nearly €2.5 billion worth of funds, of one sort or another, out into the field to supplement bank sources of lending. We need to drive forward and sweat the assets that we have created and to try to change the environment for investing, particularly in small and medium sized enterprises.
I hope that I have given members an introduction to the action plan. This is a new approach. It is a planned approach. We had the Action Plan for Jobs 2012, we have a plan for 2013 and we will have one for 2014. The plan has been shown to work and we are making change happen. In the past year private sector employment has grown by 12,000 which is in sharp contrast to the 90,000 lost jobs per year during earlier years. Of course the figure is nowhere near where we need it to be and we need to go much further. We have a policy instrument and approach that is working and has some traction. We need to be more ambitious, as we seek to be, in 2013.
I welcome the Minister and his officials, Mr. William Parnell and Ms Gráinne O'Carroll. Over the weekend the Minister and I discussed the action plan for jobs. There is nothing wrong with it and I welcome the plan's approach.
With regard to the Action Plan on Jobs 2012, at the end of the year we had 429,000 people on the live register of which 329,000 people were full-time unemployed. That will be the measure we use to analyse the action plan. I know that job creation takes time and that governments do not create jobs. The live register must be the measure we use to see progress. The measure of any action plan is where the action is.
I shall ask a couple of specific questions on initiatives rather than make general remarks. The Government is committed, in the programme for Government, to creating 100,000 new jobs by 2016. The medium-term fiscal outlook was published in November. It stated that there was only a 1% growth in employment level anticipated by 2015 which means that around 18,000 jobs are anticipated. Can the Minister explain the difference in numbers?
I wish to comment on specific parts of the plan. The term "disruptive reforms" sounds like a good title. Can the Minister explain how disruptive reforms will work? He said that he will identify private sector champions to drive them. What kind of people has he in mind? Will there be open competition? Will back-up be provided? It is all very well getting somebody with private sector experience. It will be a challenge to get somebody from the private sector to work through the layers of the public sector, particularly for some of the reforms that he has in mind. What support will be available to them that will allow them to navigate his or her way through the bureaucracy that he spoke about previously?
I welcome the plan to reform the work permit system. Will it include the so-called technology visa that was championed by Open Ireland? Has he more thoughts on the matter?
I welcome the licensing enforcement regime and its reform. A difficulty for many people in business, particularly in retail, is the number of inspections that are carried out. An inspector from the HSE, NERA or three or four other inspectors could call by a business. The Minister has said that he intends to tidy up all of the licences. Will he tidy up the inspection process? Will he have a united inspection process?
Can the Minister confirm that the JobsPlus scheme will be operated only by the Department of Social Protection? In terms of the selection process for the employer, what will be involved for any business that is interested in the scheme? What do they have to do? Will it be similar to the employers' incentive scheme that was previously operated by Enterprise Ireland? Can people on the live register join the scheme? Will people be chosen from the live register? Will they be corralled off the register?
The Minister said that his Department's typical value will be of the gross national minimum wage cost. What specific costs of employment will be covered by the grant?
During Question Time on Thursday we had a discussion on the reasons the previous schemes did not work and reached the conclusion it was due to a lack of awareness. What initiatives has the Minister in mind to increase awareness among employers and those on the liver register about the scheme?
Will the Minister confirm the provisions for SME financing? The Minister was very diplomatic in stating his position on Thursday evening and he skirted around it today that he is not overly happy with the state of lending to SMEs at present. Since 2012 there has been established a monitoring group headed up by the Department of Jobs, Enterprise and Innovation to drive SME financing. Will the Minister elaborate on the genesis and establishment of the group?
There is less than a page devoted to the retail sector, one of our major industries. I accept the single licensing applications regime. The Minister proposes to establish an inter-departmental group which I presume will be some sort of retail strategy group. Are the terms of reference in place. What is the timeline for the establishment of the group? Will there be representatives of the retail industry on the group?
Similarly, a quarter of those on the live register previously worked in construction. There are few targeted measures for this sector. I know it is proposed to publish a Forfás report on construction in the coming days or weeks. Will the Minister elaborate on that?
"Formidable", as they say in French. I will try to respond to each of the questions.
Clearly our ambition to create 100,000 jobs will require a shift change from the status quo that is being projected on the existing performance of the economy. That is the reason for this initiative of "disruptive change" to break the patterns and trends, to open up new opportunities. This is about being ambitious. Each year we need to be more ambitious and this year we have taken the approach outlined in my opening statement, picking areas in which we believe we can position ourselves strategically to do something that will be decisive in its impact. I think we are about to change the performance of the economy. We cannot just accepting the existing performance.
We will first bring the industry players into the monitoring group so that they will play an active role in the group but they will be looking very specifically at these areas of expertise, in which we are seeking to deliver significant change, ICT, big data, energy and so on. The people will be selected to match the opportunities. We will select people who we think can contribute to the areas that have an input. They will also have a role of looking to how we deepen the connections and not only monitoring what we are doing in 2013, such as in the new technology centre in big data. Yesterday we launched the largest ever research centre specialising in big data, data analytics and so on. We are also driving the pilot schemes in the public service, doing the skill analysis of where we need to be. Those people will be in a position to not only monitor what we have already committed to but to identify the areas in which challenges will present. We need to get closer to industry to help develop the appropriate responses. The ICT initiative in Skillsnet is a good model, in which industry, education and enterprise sectors sat down together and bought into the system. Industry committed to take people on work experience, to take people to interviews so that the training they got during their conversion courses was embedded within the sector. That model of partnership was a success in the ICT area and we want to deepen it.
Reform of the work permit system will not include a tech visa as envisaged by some people who suggested that anybody with a technical qualification could just come into the country and be granted an open ended visa. It will be related to companies with vacancies but there will be significant changes in the system. People who are seeking to recruit in areas of shortage and will be trusted partners can rely on the system to support their recruitment. We propose to reduce the time one waits for a visa by about one third. At present one can only recruit an ICT person for the ICT sector, without having to undergo a labour market test. In future ICT personnel in any sector will not have to go through a labour market test. A range of simplifications have been spelled out and we will implement them. This will mean bringing fresh legislation to the Oireachtas.
The Deputy is correct to state that inspections will follow on from licensing. They are a more complex challenge. The concept of a single portal is having a single interface with the business - the people in the back office do what must be done - but it should make things simple for business.
The system of inspection gets to the point of whether one can integrate the different inspectorates, so that one has general inspectors who have a range of skill across food, environmental and labour market conditions. That is a good question. We have not done the research yet to identify our capacity to do that. We are looking at shared inspections but the process will take time. It is a harder ask.
JobsPlus will be run by the Department of Social Protection. All costs will be covered and the employer will get €75 a week off the pay costs. It will be a cash refund for the employer who takes on an employee for more than 30 hours per week. The scheme will be made as simple as possible, the full administrative work must be done but there are no conditions such as applied to the PRSI scheme, in which case the employer had to guarantee the job would last for a certain duration. Under the Revenue Job Assist scheme, an employer would get no relief if the business did not make a profit, and in cases where businesses made a profit, they could not get it until the financial year was over and the employer had made returns to Revenue. There were many obstacles to these schemes, apart from whether people knew about the schemes. We have removed those obstacles. The ambition was that 10,000 people would avail of the PRSI scheme, however even after increasing its attractiveness by 50%, only 1,000 people availed of it. I think more factors in addition to advertising will have to be changed, for example the terms of reference.
I will now deal with lending to SME companies. The surveys conducted by Red C on lending to SMEs shows an improvement. Both the demand for credit from SMEs, in particular from the Microfinance Fund is improving. The refusal rate is falling. There is some improvement in the area. Our refusal rates are still high by international standards. Very few people are triggering the appeal mechanism, either by making an internal appeal to the banks or appealing their case to the Credit Review Office. If one believes the report of the Credit Review Office, although they are only seeing a very small portion of the loans, many of Mr. Trethowan's decisions are turning over the bank decisions. There is still concern that bankable projects are not getting through. We require a better analysis of exactly what is happening with the loans that are turned down; why the SMEs do not appeal the decision, and ways to make the option to appeal the bank's decision an easier option to take. We are going to look at ways to do that. It will be the role of the State Bodies group. It is already in place in the Department of Jobs, Enterprise and Innovation, Department of Finance and key players across the sector such as the National Pensions Reserve Fund, NPRF and others such as Enterprise Ireland.
Let us sweat the new instruments we have put into the field and look into greater detail as to what is happening in the banks. That is the reason we have put our money in the bank and we need to get the money to work better.
The terms of reference have not yet been agreed. We expect to meet the departmental committee before the end of the second quarter. I have good contact with the retail sector and they have welcomed the licensing reform. They welcome the online initiative. We are doing things that seek to support that.
It will probably be a committee consulting with the stakeholders rather than having de facto stakeholders on it.
If so, it will be a group to analyse what we can do across Government, much like what we have done in other areas. The licensing review, for example, was done internally.
The construction sector is a very important one, but it got too large during the boom. It went up to unsustainable levels and, as has been said, we have lost 160,000 jobs in that sector. At this stage, however, it is below its natural position. The hope would be that the sort of initiatives the Minister for Finance is taking, including the latest real estate investment trust and stamp duty reforms, will restore confidence. The job creation that comes through exporting IDA activities involves significant construction projects that are now coming through. We clearly need to develop a strategy for this sector but it is not as simple as spending more money and the job is oxo. As the Minister of State, Deputy Perry, said the other day, it is about examining the capacity to internationalise. Irish expertise is really effective and is doing well abroad. I have seen it working in India, for example.
I think I have answered all the questions that were raised.
We will look at that as it evolves. We will seek to have people with expertise in particular areas that are matched to areas where we are trying to drive change.
It is not. To be honest, what we have created by going cross-government is a new dynamic within the public service. We want to take that to another level by bringing people from outside the sector with particular knowledge in the areas we have identified to drive change. Hopefully, their role will evolve. They will certainly have a significant role in saying where Ireland's competitiveness needs to improve and in what areas we need to reposition ourselves. That dynamic within the process will be really positive. We have to open that up. Employment is a shared challenge and what we have done to date has been looking within the public sector at what changes we can make. This is moving it to another level.
It is across the whole action plan, but we hope their contribution would be most significant in the area where we have identified a significant change that we need to deliver.
Go raibh maith agat, a Chathaoirligh, agus go raibh maith agaibh as an gcur láthair. I notice that the Minister has not got his football team in with him today, so it looks like the Croke Park agreement is perhaps being implemented.
I wish to acknowledge a few of the positive points of progress. Obviously, Enterprise Ireland and the IDA have been doing good work on creating jobs. Irish exports have also been increasing, even though the level of unemployment has not been falling in proportion to those export increases. Good work has been done on enterprise loans, micro-finances and licences.
In many ways, however, there is a lot in this plan that is not new. Point 59, for example, deals with monitoring lending targets of the two pillar banks. Point 63 concerns promoting awareness of the understanding of Government-supported funding. Point 126 refers to establishing an interdepartmental group to consider further possible measures to assist the retail sector.
Some of the points in the action plan are airy-fairy, to say the least. It is important to say, however, that governments do create jobs. This committee needs to get away from the idea that governments do not create jobs. The Government is the biggest employer in the country. The retrofitting incentives, announced by the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, involve money that has a direct effect on creating jobs.
The key performance indicator that we cannot get away from is the number of jobs that the Minister's action plans create. There were 3,400 fewer jobs in the economy in the past year, so it is a net decrease. We often hear about these 12,000 new jobs but there has been a net reduction. By any means, therefore, it is not a positive outcome in that key performance indicator.
The Government makes a big point of saying that it has at least created stabilisation with regard to the unemployment figures. However, in July 2010, unemployment reached 14.1% and it has plateaued. That was eight months before the current Government took power, so unemployment has been in a plateau situation well in advance of these action plans and policies.
How many of the 12,000 new jobs in the private sector are temporary, part time or full time? When we focus on the likes of ICT, we must not get befuddled by that sector. It is an important growth area but it accounts for 4.2% of the working population, which is a very small segment of the economy.
I often get frustrated when buzzwords creep into the lexicon of job creation, such as "cloud computing" and "big data". They are seen as a panacea for problems, whereas in fact they are tiny opportunities in the whole scheme of things. All opportunities must be chased vigorously but those are very small ones.
Regional disparities are important to this committee. We have created a jobs plan to focus revenues into areas of greatest need. Some 2% of the jobs created in the past year covered 49% of the population. Therefore, half the population of the State saw 2% of actual job increases, which is a phenomenal figure.
The original action plan had a commitment that 50% of jobs created would be outside the Dublin and Cork regions, but that is not happening. I do not think that commitment is being repeated, but the Minister can correct me if I am wrong. Will the Government try to retain that 50% commitment of FDI outside Dublin and Cork? How will the Minister tackle those regional disparities?
Broadband is a critical issue in this economy, which is behind most of our competitors with regard to the geographical spread involved. That, in turn, affects the ability of regions to compete for jobs.
A number of points were made about procurement. In launching this committee's jobs plan, the Chairman focused on social clauses in Government procurement, which Sinn Féin has already mentioned. I do not see that in the Minister's action plan, however.
One of Sinn Féin's initiatives is to actively introduce indigenous small business and FDI, but this is not being done in the State's area of operation. Perhaps the Minister can tell us why that is not the case.
Upward-only rents, no commitments on rates and no addressing of utility costs can all negatively affect competitiveness. Last Friday, the Chairman, Deputy English, and I met with the management of Tara Mines who told us that their annual electricity bill of approximately €20 million had increased by €3.2 million this year. Those utility costs are nailing companies that will then start to focus on wage costs, which obviously has a negative effect.
Not enough work is being done to tackle cartels in this State, although I know there is a lot involved in that issue. In addition, this committee has focused on the youth guarantee, but youth unemployment remains a matter of concern. Meanwhile, efforts to ameliorate youth unemployment have gained great traction across Europe.
First of all, I would like to thank Deputy Tóibín for acknowledging that there is real progress going here.
I refer to the success of Enterprise Ireland, the IDA and export-led recovery in the context of the creation of 10,000 net jobs - 25,000 gross - between the IDA and Enterprise Ireland this year. Consequently, we are really making good progress and have record exports. The Deputy complains that the stabilisation of our employment figures suggests we are getting nowhere. While his inference is this merely constitutes stability, the truth is otherwise. As I noted, our export sectors are adding 25,000 gross jobs in those two sectors alone and tourism is adding more jobs. Unfortunately, we still have the consolidation that must happen in the public service and is happening in domestic banking, as well as continuing job losses in the construction sector. Consequently, sectors in our economy still are in decline. My point is we have successfully taken in hand the Enterprise Ireland and the IDA sectors, which lost 45,000 jobs in the years from 2008 to 2013 but which now are expanding. This constitutes a major change within the export-oriented sector, and the long-term recovery of the economy obviously depends on those sectors outstripping the declines in the other sectors as they gradually stabilise. What is happening is more dramatic than the Deputy suggests. While it may look like stability on the surface, there are sectors that are doing extremely well. They are the sectors we have targeted and are long-term sustainable growth sources in the economy. While we need to find stability in construction, which is another set of problems, the steps we set out to do, namely, to build enterprise, innovation and exports, are delivering an impact.
As for the reason the overall figure is minus 4,000, obviously it is due to 16,000 jobs being lost in the public service. There has been an increase of 12,000 in the private sector and a reduction of 16,000 in the public sector. I do not have to hand the mix of part-time and full-time jobs. Some break-out of the figures probably is included in the quarterly national household survey, but I do not have it to hand. In itself, the information, communications and technology, ICT, sector in itself employs approximately 100,000 people and is growing very rapidly. It also is an area of skills shortage in which, had we more people, more jobs could be added. However, ICT is also of strategic importance outside its own sector. The successful business models of the future will be those that bring ICT skills into their own domains. For instance, successful tourism businesses will be smart e-enabled businesses, and that will be true throughout the economy. Consequently, it is somewhat simplistic simply to state the sector is a little pigeonhole. ICT is having a much wider impact than that.
The issue of regional targets is really challenging. There are two parts to this issue. Enterprise Ireland companies have a very good regional spread, and the outside of Dublin figure is approximately 75%. However, the IDA has not been able to reach the 50% target. While it obviously continues to pursue that target, it is becoming more difficult because of an increasing emphasis on sectors in which there is a competitive edge for the deeper urban labour pools and so on. We are trying to ascertain how this can be diversified. Last year, in a process that will deepen this year, the Department started to examine the supply chain of multinational companies to establish whether opportunities exist to take Enterprise Ireland companies, which have a good regional spread, and get better revenue in this regard. The Department reckons there is approximately €500 million of additional global sourcing that could be considered. This year, it will undertake a systematic programme to go through companies that have the potential to increase their global sourcing within Ireland and seeks to work with them by having what might be called a trade mission at home, in which our good companies will be brought into supply chains that are already here. That is one initiative like the other initiatives such as ConnectIreland or targeting the emerging companies through which the Department hopes to achieve a better regional spread.
As for the social clauses, action No. 208 makes reference to it and the Department is examining them. As the Deputy rightly stated, under European Union procurement rules, one can have certain social clauses. I know the Minister of State at the Department of Finance, Deputy Brian Hayes, is carrying out work in that area and it is hoped it will yield something of value. On the issue of cartels, the Competition Authority has been beefed up this year as ten additional people are going into the authority to do exactly what the Deputy asks, namely, to have a stronger enforcement capability within the Competition Authority to take on anti-competitive behaviour wherever it is found, and that will be in place.
The Deputy raised the issue of utility costs and, obviously, the cost of something like electricity is a really significant issue. While it is not my area of responsibility, I understand the ESB has a significant cost reduction programme which it has negotiated with its unions and which is being implemented. Obviously, the cost of energy in Ireland reflects its dependence on fossil fuels, and while Ireland has a long-term exposure to or reliance on fossil fuels, it also is driving to diversify its energy sources. There has been a review carried out of the regulatory regime across all those utilities to ascertain whether the mandates given to the regulators in several of these sectors can be reframed and whether this can be better managed. I believe these were the main issues that were raised.
I apologise, as I had meant to comment on this issue and thank the joint committee for the report, which contains many really good things. While some of them are outside my remit, the report refers to the need for a national youth strategy in entrepreneurship, and Deputy Lawlor also raised that issue. It is something the Department is considering. It will produce a policy paper on entrepreneurship this year and will consider youth entrepreneurship in particular. Last year, the Department examined female entrepreneurship and initiated a competitive fund for female entrepreneurs, which initially comprised €250,000. However, it had such success that it has been trebled within the past year. There are untapped areas in entrepreneurship and youth may well be one of them. The Department certainly will give consideration to that.
As for the youth guarantee, it probably goes well beyond my role in that initiatives such as Momentum, JobBridge and Springboard are all new schemes introduced by the Minister for Education and Skills, Deputy Quinn, and the Minister for Social Protection, Deputy Burton. They are targeting young people in an effort to get schemes that will be tailored to their needs. They comprise a mixture of skill and employment experience and it is hoped they will be successful. I consider Momentum to be a particularly well-designed scheme. The mix of on-the-job and off-the-job experience on 20 to 40 week programmes is really interesting. Moreover, some of the sponsors, of which I believe there are 72 in Dublin, are quite interesting. It is to be hoped it is a scheme that will really work well.
I welcome the Minister and thank him for what he is doing. He obviously is grabbing hold of many challenges. I wish to raise the issue of licensing reform, particularly, but not exclusively, in retail. It appears to me that all big businesses started as small businesses and to have in place the same legislation for licences for someone who employs 500 people as for someone who employs four people simply does not seem capable of being handled. Moreover, I also wish the raise the number of licences that people need, particularly in the retail sector, . While I acknowledge the Minister has touched on the subject, he should provide members with some idea of what he is considering. In France, for instance, a large number of licences do not apply to any entity with fewer than 50 employees. Is European Union legislation forcing Ireland to have so many of these legislative items or is Ireland to an extent free to do some of it itself? While I acknowledge we have some difficulty in handling matters in some areas, it seems to me as though the fewer regulations we have, the more likely it is that someone will set up a business as a one, two or three person business. This is where the big businesses start and is from where the employment comes.
One final point was also touched on by Deputy Calleary, namely, the upward-only rents. I am unsure whether this issue is under the Minister's remit but is there anything that can be done about such rents, particularly in the retail sector? It just seems to be an impossible task. I am told that was the Government's intention when it came into office but that it has been unable to go ahead with it.
Surely even if it does mean changing the Constitution to do that, it must be possible to do something about it because it is a huge problem and it is causing a loss of jobs?
In the context of the new JobsPlus initiative, will existing incentive schemes such as the PRSI exemption and the Revenue tax assist scheme come to an end? How successful were such schemes and what were their failings and deficiencies? How many people were employed through those initiatives?
Another question relates to the proposed health innovation hub. When the Minister for Health, Deputy Reilly, announced the new children’s hospital, he referred to the establishment of a medical quarter in Dublin’s south-west inner city. I note that St. James’s Hospital is keen on the idea of a health innovation hub. Could the schemes outlined be geographically defined and what is the prospect of the south-west inner city taking on such a challenge, in particular St. James’s Hospital?
I am concerned that the plans outlined suggest unemployment is geographically evenly spread, whereas urban areas have mass unemployment where enormous personal, family and community damage is being done by the sheer level of unemployment. There does not appear to be a consciousness of the need to intervene in a radical way to give such communities more basis for hope and the individuals who are affected some basis for thinking that their turn will come again. I would like to see the Government do more in that regard.
First, I will deal with the point raised by Senator Quinn. We introduced an audit exemption, for example, which was about removing smaller companies, and we enhanced that last year. We look for that wherever we can. When it comes to environmental standards or wage rates there are certain criteria one expects to apply whether one is a large or small company. However, there is scope in the area. The EU is anxious to examine de minimis exemptions. I do not know how far the talks have got in that regard. What we have been doing is simplifying the entire licensing regime, but it is a reasonable point and we could do work on it to see whether there are areas we have missed where one could have a lesser requirement for smaller businesses. I am not familiar with the French example. Is it outside of the audit requirements in that it would not impact on public health or welfare? I would be interested to examine the situation and perhaps to have a look at the French case.
The high level group on regulation has business representation. The purpose of that is to churn up areas where we can identify changes. Last year we reformed the wage-setting mechanisms, which were very much a problem in the retail sector where one had different parts of it having to observe different rules. We have tried to simplify that and to have more uniform rules.
One could only implement a change on upward-only rent reviews if the State intended to compensate the landlord that was obliged to reduce the rent. We did examine the situation. The Minister for Justice and Equality, Deputy Shatter, examined the position, as did the Attorney General and others in order to see whether a system could be devised but that was the bottom line and the taxpayer simply could not afford to pay compensation to landlords.
On the positive side, NAMA agreed to go ahead with the approach considered, namely, where companies could demonstrate they were in difficulties that it would agree to renegotiate terms. NAMA has renegotiated more than 270 leases on the basis of the commitment. Other work is ongoing in terms of having greater transparency in the registering of rents. Some progress is being made. Rents are being renegotiated but, as we have seen, sometimes they are only renegotiated by the larger groups by going into examinership. It is a continuing problem but it is not one that the taxpayer can deal with. The taxpayer is trying to deal with a lot of issues and this was one that could not be changed without the taxpayer paying compensation, which was not on.
In response to the points made by Deputy Conaghan on the statistics on participation, the PRSI scheme had approximately 1,000 people on it but the ambition was to have 10,000. The Revenue job assist scheme had approximately 700 to 800 on it. It is a much older scheme and, typically, had very little take-up over its long life. The scheme had been going for years and dates back to the previous recession. The reason the schemes were not successful is that there were too many boxes to be ticked. One had to show the job would endure, wait until one returned one's income tax and got the tax relief on the Revenue job assist, which could be a year later, and if one was not in profit one would get nothing.
There were a lot of “hand trips” that made it difficult to use those schemes. This one will be simpler. From the point of view of people who are unemployed, as Deputy Tóibín or another member indicated, the advantage is that a person who is 12 months out of work, in effect, can go to an employer confident in the knowledge that there is a €75 a week coupon if they recruit the person coming back to the employer. It changes the conversation a bit, whereas with many employers if one had been out of work for so many months one would not be considered. They would only look to someone who had a CV with a relatively small gap in it.
On unemployment black spots, the Minister for Finance, Deputy Noonan, has included measures in the Finance Bill to address such areas in Limerick and Waterford. The Minister for Social Protection, Deputy Burton, through Intreo, the new employment service, is focused on unemployment black spots. In my area it is focused in Coolock where there is a higher level of unemployment. The work is only in its infancy but the concept is to have much earlier engagement with people and to give them options. The intention is to make the welfare system support the development of the person who has lost his or her job instead of the traditional approach where one only accessed the welfare system if one could show one was idle. The aim is to change the dynamic that was in the system. I hope that will have an impact.
The Commission for the Economic Development of Rural Areas has been set up but Deputy Conaghan was not referring to black spots in rural areas. The development of the new interventions through the Intreo service will promote the likes of Momentum, Springboard and JobBridge. There is now a much better menu of interventions that will be more relevant than community employment, CE, schemes were in the past. The key feature of the new interventions is to try to get people closer to the labour market. The new schemes are closer to employment opportunities. There has been an increase in participation in schemes, for example, 6,500 in Momentum, an additional 2,000 on JobBridge and a further 7,500 on other programmes, including local authority employment programmes. I hope the additional range of activity will be relevant to areas of high levels of unemployment.
On the health hub, a pilot scheme of a virtual hub has been established in Cork. Essentially the idea was to bring businesses with new technologies and test them in a real-life situation in hospitals where a new service or technology could be test-bedded and then it would become a reference point for international sales. That is the model that has been used. It has been very successful in Cork and we are now looking at taking it to a national scale.
That could be on the cards but we must do more work to decide how to embed this. Bringing some of the best medical devices companies, pharmaceutical companies, hospitals and consultants together is win-win situation. That is what the hub is trying to do.
Of the 2012 actions, 10% were not achieved and these are obviously part and parcel of the plans for 2013. Could we have a progress report on the achievement of these targets? There has been a reduction in the number of licences for small businesses. What is the timeframe for the introduction of this measures?
There was a proposal that there should be 20 major energy efficiency projects. The funding for Sustainable Energy Ireland is only coming in but there is already talk of changing the scheme. Would it not be better to put this into numerous smaller projects instead of 20 large projects? That might create more employment.
I raised the issue of ICT and science in schools with the Minister for Education and Skills. Science is not a core subject up to junior certificate. I am looking at schools in Kildare to find out how many children are doing science up to junior certificate. It would be nice to see that in the ICT sector, with the Minister advocating that science be taken on board. We are planning for something in 2018 but it will be in place for much longer.
There was no mention of procurement. It is not directly the Minister's responsibility but €9 billion is available in the procurement sector for small companies. There is a problem with the asset procurement services that want to amalgamate everything into bigger companies instead of smaller local enterprises.
The young entrepreneur action was mentioned. I urge the Minister to follow up on the significant success of the female entrepreneur fund last year. It would be nice if there could be a youth entrepreneur fund, even if it was to start at €250,000, to show we are serious about youth unemployment.
The Minister mentioned the upward only rents and property rights. In both the Dáil and the Seanad, during the debate on the IBRC legislation, we set aside property rights without compensation so it can be done if the political will exists. This features in discussions any of us have with employers, particularly in the retail sector, where we lost 50,000 jobs in the past four years. I have no doubt the cost of doing business, including the cost of rents, is part of that.
The Minister said we need to be more ambitious. If we look at the figures since this Government entered office, there has not been the increase in jobs we were promised. The Minister mentioned 16,000 jobs gone in the public sector last year and 12,000 net jobs created in the private sector, a total loss of 4,000 jobs. While we might be doing well in some areas, overall the jobs strategy is failing. We are simply not creating jobs in any significant numbers.
I am concerned that in response to a direction question on the 50% target for FDI outside Dublin and Cork, the Minister failed to say categorically that it will be retained. The south east is suffering disproportionately. We have 25% unemployment in Waterford city, with youth unemployment of over 35%, and a general figure of 19% across the south east. We need a suite of interventions to make sure we can create the necessary jobs even to reach the unacceptable levels we have in the State overall and I am concerned that we are not reaching those targets. The only way we will arrive at a situation where we can deal with those regional disparities is that the issue be driven at Cabinet level by the Minister and that it then seeps down into the enterprise agencies and stakeholders so we can join up the different efforts. That simply is not happening in the south east and other regions that are suffering disproportionately. I appeal to the Minister to look at that and ensure that where there are strong regional disparities and high levels of unemployment, more of a focus is placed on those areas. I also want him to support the call for more effort to be made on youth unemployment and entrepreneurship. In those areas that are suffering disproportionately, encouraging enterprise, entrepreneurship, creativity and innovation through second and third level should be part of a long-term strategy for the Government across different Departments. If we focus on youth unemployment it would be a positive move. There are very real regional disparities that are at crisis levels and that must be dealt with.
I welcome the Minister and his officials and congratulate them on the 92% success rate of the Action Plan for Jobs 2012 and the suite of measures and progress reports planned under the action plan for 2013. This cross-departmental approach is very important because too often action in one Departments hinders job creation in another. The approach is welcome.
There have been more than 250,000 job losses since 2008 in the private sector, many of them in the construction sector. While some retraining is possible many people would be best suited for construction work. We must consider infrastructure investment in terms of stimulus projects. These might be done through the European Investment Bank, as has been done in some water infrastructure projects under the Department of the Environment, Community and Local Government. For smaller schemes such as schools and health centres, some work has taken place and we need to see more of it in the coming year. It should also be targeted towards Irish companies rather than the larger projects that must be tendered in the European journal, where non-Irish companies can be chosen to do the work, importing their own workers instead of employing Irish people. I would also like a progress update on the common visa waiver scheme.
Commercial rates feature constantly in any discussions with the business sector. We must have progress on the valuation legislation in the Department of the Environment, Community and Local Government. Similarly, delays with foreshore and aquaculture licences are hindering significant potential for investment because of environmental requirements.
I welcome the sections in the plan on SMEs and the additional resources for the Credit Review Office and the monitoring of investment in stimulus from pillar banks.
I thank the Minister for his time here today. Last week, Open Ireland appeared before the committee and it would have been useful for all of us if we had the progress list the Minister has given us today on ICT action and the graduate training and retraining programmes.
I am interested in online trading. We all think of retail as the biggest online trading business, with €7 billion spent online in this country, 70% of which goes abroad.
Retail is always changing and anyone involved in the sector must be reactive and always look ahead. I hope the Minister will not have to prod people to take the vouchers. They should be allocated to those who have a plan and will appreciate their value. They must not be wasted. Many businesses would not necessarily use such a voucher online. Ireland has much going for it, including a large number of young graduates who could provide the types of services businesses require to have an online presence. The individuals receiving the voucher should have a business plan in place and be ready to use it. How will the scheme be implemented?
Deputy Lawlor referred primarily to legislative matters, specifically the workplace relations Bill, legislation to merge the Competition Authority with the National Consumer Agency, and the Legal Services Regulation Bill. He also noted the failure to reach the IDA's regional target for the establishment of new companies. In securing 13 new start-ups, we fell a little short of the 15 fresh starts we had hoped to achieve but that was still a substantial improvement on the previous position. All the targets have been designed to stretch us. We have identified the tendency of legislative ambitions to run ahead of the capacity of the system to deliver. This has been the case with the majority of the targets that were missed.
Deputy Lawlor also asked whether it would be better to have 100 small energy efficiency start-up projects rather than 20 flagship projects. There are different components to our plans in this area. The Sustainable Energy Authority of Ireland will focus on smaller types of project, the pay-as-one-saves scheme will be aimed at domestic households and the exemplar projects are in the public and commercial sectors. A fund is being established with some State money and matching money from the private sector. This model of joint funding will be used to finance energy saving companies which will secure a return on their investment from the savings generated from an upfront investment in energy saving works. If this approach is effective, it will create a recycling pool of money, as it were, that can generate more activity. The savings made will fund further activity.
Mathematics has been targeted as the most significant element of the curriculum from the perspective of the information and communications technology, ICT, sector. For this reason, the plan targets an increase in the uptake of mathematics to 30% by 2020. That science is not targeted does not denigrate the subject. Figures from college courses indicate that high placement rates are not so much in science but in engineering and mathematics, both of which are in strong demand. There is a correct emphasis on trying to build these skills in basic higher level mathematics.
Procurement is addressed in section 8.3 of the action plan, which deals with maximising procurement. The objective is to try to deepen the innovative procurement we started last year by getting more people involved in it and to police the reduction of barriers for small and medium-sized companies. Deputy Lawlor is correct that there is a move towards more centralised purchasing. However, efforts are also being made to ensure obstacles are not placed in the path of such companies. One problem that has frequently cropped up is where an unrealistically high threshold is set in the contract for insurance or previous business. We are trying to weed out such unnecessary requirements and the National Procurement Service is committed to opening up opportunities for small and medium-sized companies. While there will be an emphasis on consolidating purchases to secure best value, efforts will also be made to enable smaller companies to apply for contracts through the use of smaller bundles and collaborative tendering in which groups come together to make bids. Both Enterprise Ireland and InterTradeIreland have good programmes in place for supporting companies which are trying to get into the area of procurement.
Last year, we made use of the competitive start fund and chapter 10 sets out a number of initiatives in this area. We did not establish a dedicated fund with a new administration for female entrepreneurs but used an existing scheme administered by Enterprise Ireland. The system was in place and we created a dedicated competition for women. This type of approach has worked well and could be used for youth entrepreneurs. This would mean using an existing instrument and holding a dedicated competition aimed at a certain segment, rather than establishing a fund similar to the National Youth Council's fund with a separate administrator.
The position is that women are grossly under-represented among those who start up businesses. I believe the ratio between men and women is approximately 4:1. There is an opportunity here and we are on to something that is worth pursuing.
I hear what the Deputy is saying. When the Irish Bank Resolution Corporation, IBRC, went into liquidation, it left creditors exposed. That is different from the Government deciding that companies which are trading as landlords and offering leases would have to reduce their rents. The two scenarios are different. If a company goes into liquidation, the creditors are left and their security is what the liquidator can generate from the assets. Obviously, individual companies can enter examinership and try to renegotiate their property leases. While I do not wish to lecture Senator Cullinane, one cannot pretend that we will be able to move from an economy in collapse, one which has been traumatised and is prostrate on the ground, delivering this or that number of jobs annually for the next number of years. The truth is we are in a recovery in which we are rebuilding and fixing many of the things that were broken in the recent traumatic crisis. We have to fix the banks.
No, our commitment referred to 2016, and that remains our ambition and target. However, we did not pretend, and it would be naive to pretend, that this can be divided up into bundles of 5,000 jobs or 20,000 jobs. The economy does not work like that. We must repair the banking system and many of the sectors of the economy that have been damaged. We must put many things in place, which is what is being done. We have examined all sectors of government to identify what changes we can make in different areas to rebuild the economy on a sustainable basis. This will involve building capacity to win exports, developing sustainable enterprises and creating innovative companies as opposed to relying on Government expenditure or debt spending. This is the challenge we face and it is not one we will achieve by flicking a switch and suddenly creating a set number of jobs every year. Members must recognise that our task is akin to turning around an oil tanker and steering it in a different direction.
The IDA target remains and is a 2020 target in its strategy. However, we will clearly have to revisit our capacity to deliver in this area. As Deputies are aware, we have selected the south east and recognise the problems in the region. I have invested considerable effort in this issue. The various partners in the south east are working together and all the agencies have a spotlight on the region. We are trying to make a difference and build up the assets of the region as it requires a stronger asset base. The IDA has applied for planning permission for a facility. The challenge we are trying to meet is to rebuild the competitive edge of the region.
On Deputy Kyne's contribution, given that we do not have much money to spend, we must spend what we have in a smarter way. The Minister for Public Expenditure and Reform, Deputy Brendan Howlin, for example, is having bundles of schools built through public private partnership projects, funding water investment through charges and financing the hospital building programme through the national lottery. These are ways of creating a stimulus in the economy that will have an impact. I understand further bundles of schools are planned and primary health centres are being developed. A number of projects are still in play.
That is a very active part of all this. Another part is using some of the money in the National Pensions Reserve Fund to leverage funds for SMEs. That €800 million of new funds for SMEs and turnaround companies, in equity and credit, is using the money we have in a smart way. If we can get €850 million taken up, with the State putting in some €300 million from the NPRF, it would leverage a much bigger spend in the economy. Trying to be innovative with the money we have is a big part of what we are doing.
The visa waiver scheme relates to the Department of Justice and Equality. A scheme is in operation but the issue is to use it more effectively. I will not explain it in full but there is an arrangement with the United Kingdom whereby people who have visas for the UK can come to this country. This is very good for promoting business visits, with other elements applying to the tourism sector. The Deputy is right. The foreshore and agriculture Bills are being given priority because they provide opportunities. The Minister for the Environment, Community and Local Government, Deputy Phil Hogan, is working to advance the foreshore Bill in particular because there is recognition that this is an area of opportunity.
I acknowledge the committee's recognition of the Credit Review Office. I ask Deputies to promote the office as often as they can. Thousands of people are being turned down but very few are making appeals. If we do not see them and they are not examined by the CRO it is harder to get the refusals turned aside.
I thank Senator Clune who has done a great deal in the area of ICT. We have put together a package that will meet the various needs. We will keep the proposal under review but it would be a radical change to what we are doing. I agree entirely with the Senator about the vouchers, which will be competitive. People must demonstrate they have a business plan and will match the voucher with their own effort. Plans will be judged on their success. This is a toe in the water, an area where we want to promote activity, and we will use it as the Senator suggested.
I have two small points to raise. I refer to upward-only rents on which there are different views. However, could there not be a constitutional amendment to address the problem? The Minister stated we cannot turn around the juggernaut without taking time. The countercyclical argument we make, namely, that significant investment can be made, is not pie in the sky but is used internationally. The troika - the Minister's boss, so to speak - stated that significant money was available through the National Pensions Reserve Fund, the European Investment Bank and the private pensions industry. President Hollande of France and others in Australia, New Zealand, Canada and the United States have used significant-----
To be honest, there is much creative use of funds going on. The Minister for Public Expenditure and Reform, Deputy Brendan Howlin, has announced a €2.5 billion stimulus fund made up of public private partnerships, which is an innovative way of using resources, and he is capitalising the flow of our national lottery. He has established an infrastructure fund within the pension reserve fund, between the NPRF and Enterprise Ireland. We have created €2.5 billion worth of funds for SMEs and NAMA has committed to €2 billion of investment in new activity. We are using the resources we have to leverage investment in ways that are innovative. That must be recognised. If these are topped up there would be €7 billion worth of innovative use of funds. That is what the Government is doing.
However, it cannot be ignored that we came into a situation where spending on health, education and all the good things was nearly 50% higher than revenue being received. That is not a sustainable base for having a traditional Keynesian expansionist policy. If we have to supplement the tax base with 50% extra in borrowing it is not sustainable. Given the crash that occurred the Government did not have that option, even if the troika had been willing to lend to us. We cannot continue to borrow so we must develop smarter ways of using the revenues and assets we have, including asset sales. We must be willing to sell the assets we built up in the past in order to make investments in assets we need for the future. That is part of it, along with being willing to admit the need for a revenue stream from water services in order to invest in a world class water system. Those are the sorts of smart ways of using-----