Leo Varadkar (Dublin West, Fine Gael)

In a debate on competitiveness last December, the Minister for Enterprise, Trade and Employment, Deputy Micheál Martin, told us the best test of a Government's policies was the ability of the economy to retain and create new jobs. I agree with that assessment and if the current Minister and Government are to be judged by their own criteria, their economic enterprise and employment policies have been an abysmal failure. The Ministers for Finance and Enterprise, Trade and Employment, were given the job of managing our economy following the Cabinet reshuffle of 2004. Since then, however, 20,065 people have been added to the live register and the standardised unemployment rate, the best measure of unemployment, has risen to 5.2%. The contrast with the Minister's forebears, Deputy Mary Harney and Deputy Richard Bruton, is stark. Those two people managed to move 100,000 people from the dole queues into work. On Friday the Central Statistics Office will publish figures which are likely to show that the standardised unemployment rate will exceed that of the United Kingdom for the first time in almost a decade. However, it appears clear that the figures are going to get much worse. The Department of Finance has projected that the live register will break the psychological figure of 200,000 by the middle of the year. The standardised unemployment rate will exceed 5.6% by Christmas and if the ESRI is to be believed, will reach as much as 6% by the end of the year. In terms of new jobs the Government's own estimates suggest that employment growth will fall to 1% this year and other economists and the ESRI has suggested that we may have no job growth at all. In recent months jobs have been lost in Allergan in Arklow; Merriot and Bulmers in Clonmel; Xerox and Lucent in my constituency of Blanchardstown; the Burlington Hotel and Arnotts in Dublin, to name a few; Portwest in Westport; Jacob's in Tallaght; Kingspan in Dungarvan; Abbott Laboratories in Galway; American Power in Castlebar; Grove Turkeys in County Monaghan; Dawn Meats in County Roscommon; Oatfields in Letterkenny; SFL Engineering and Slaney Meats in Kilkenny and Nexans in Athlone. These job losses will have a profoundly negative effect on the local economy and on the individuals and families affected. Some of my colleagues will speak on this aspect later in the debate.

The Minister, no doubt, will use his speech to give us a history lesson. He will tell us about the economic progress that has been made since his party came to office in 1997. He will seek to convince us that the Celtic tiger and the economic benefits that came with it were achievements of Fianna Fáil but this is not true. I do not think the House needs a history lesson or a debate on history. The economic success which this country has enjoyed in recent years came about for a multitude of reasons. The establishment of the Industrial Development Authority was opposed by Seán Lemass, who promised its abolition if returned to Government. Following Ireland's accession to the European Union under Jack Lynch and the succeeding years when Charles Haughey plundered the public finances and plunged Ireland into recession, the task of restoring the public finances to relative health fell to Alan Dukes as Minister for Finance. These tough and unpopular decisions brought public spending, Exchequer borrowing and the balance of payments deficit under control. The Tallaght strategy enabled Ray MacSharry to continue these policies and during these years we began to see the green shoots of recovery appear. The Single European Act opened European markets to Irish business and the Rainbow coalition's successful navigation of Ireland's entry into economic and monetary union allowed us break free from sterling and the constant fear of currency instability and devaluation.

The social partnership system has allowed unions, farmers and business to buy into the economic reform process, exchanging confrontation for engagement and nominal pay hikes for real improvements in take-home pay through tax cuts and pay increases. Under the rainbow Government, Ruairí Quinn balanced the budget for the first time in decades and as any independent analysis will show, that Fine Gael-led Government remains unsurpassed by any of the three Fianna Fáil Governments that have followed, in terms of economic growth, the control of inflation and our export and productivity performance. Over the past ten years, the three Ahern Governments, or perhaps the Cowen-Ahern Government, have benefited hugely from the decision made by all parties and none in the years gone by. The Celtic tiger is an achievement that belongs to all of us and was certainly not the creation of one party nor of one man.

This debate is not about the past but it is about the present and more important, it is about the future. Ireland is currently facing into its sharpest downturn in 25 years. Unemployment is rising at a faster rate than at any time in a quarter of a century. The public finances have gone from surplus to deficit at an alarming rate for which there is no historic precedent. Our economy is in serious trouble but the Cabinet will not take its head out of the sand. The Taoiseach would have us believe, to use his words, that we are facing into "a hard year" as a result of the global credit crunch brought on by the sub-prime crisis in the United States. The Tánaiste would have us believe that the dramatic downturn in construction activity is a "healthy correction" in the housing market and that the "fundamentals of our economy are at the strongest for ten years". None of this stands up to scrutiny.

Countless countries have been affected by the credit crunch but few are slipping as badly as Ireland. The rate of economic growth in Ireland is projected to be as little as 1% in 2008 yet other economies in the world continue to prosper. I refer to anticipated growth figures for other countries including China at 9.8%; India, 7.8%; Russia, 7%; Poland, 5.1%; Australia, 3.3%; Czech Republic, 4.7%; Norway, 2.9%; Turkey, 3.7%; and Argentina, 5.5%. Crucially, the growth rate in our knowledge economy competitors include Singapore, 4.4%; South Korea, 4.4%; Hong Kong, 4%; Hungary, 3.6%; and Israel, 3.7%.

This new reality is also evident when it comes to unemployment. The figures show that Ireland is rapidly moving from the premier division when it comes to high employment and low unemployment and back into the league of middle to high unemployment. We have already overtaken the United States on 4.8%, Austria on 4.2%, Denmark on 2.2% and the Netherlands on 4.1%. I expect the figures on Friday will show that we will overtake the United Kingdom, Canada, Italy, the Czech Republic and Sweden by the end of the year.

The Government might accuse us of talking the economy down but there is nothing more worrying than a Government that will not take its head out of the sand or its head out of the clouds. Unemployment is the human cost of economic mismanagement and notwithstanding the problems created by the downturn in the American economy, our economic slump is largely of the Government's own making. Like an old-fashioned tax and spend socialist, Deputy Brian Cowen has allowed public spending to spiral out of control. Billions of euro have been thrown at health, education and justice and 178 new quangos, without any real reform, any improvement in public services, any performance targets, any efficiencies or any requirement that taxpayers' money should be used for their benefit. Spending has increased by 11 .5% on average, 40% more than the rate of growth. This reversion to the economics of the 1970s has resulted in current spending rising from 25% of GNP to 31% and taxation from 32.5% to 36% in the past six years. There have been higher taxes and higher inflation but no improvement in services.

The Government has run away from the challenge of public sector reform, most obviously by its decision to accept the recommendations of the review body on higher remuneration. By the end of the year, Deputies Brian Cowen and Micheál Martin will earn over twice the salary of US Secretary Paulson, their counterpart in the USA who manages the largest economy in the world.

Inflation has also been of the Government's creation and is the reason for a loss of competitiveness. In the past six years, inflation in Government-regulated services was 31%, three times the EU average, whereas in the competitive sectors it was 12.5%, which is less than the EU average. Since 2001, services regulated or directly provided by Government have accounted for half of all non-mortgage inflation yet nothing has been done to address this. No progress has been made towards deregulation of bus services. There has been no separation of EirGrid from ESB, no overhaul of the telecoms sector, no independent regulator for waste management, no moves to tear down barriers to entry or uncompetitive practices in the professions and a carte blanche to NRA to increase tolling on the nationalised West Link. Where a private company, NTR, was running the West Link toll bridge, it will now be nationalised and cost the country even more under a State monopoly. As the economy falters,the Government's response seems to be to postpone, not accelerate, reforms. There are no decisions, no Ministers, no Government.

The cost of doing business and living in Ireland has soared. According to the Central Bank, our cost competitiveness against our trading partners has deteriorated by 30% since 2000, driving a range of manufacturing industries to the wall. For key business costs like waste, electricity, local charges, mobile phones, office rental, Ireland is now way out of line with the UK and other competitor countries. The common theme behind these cost burdens is a Government that has been unwilling to drive service sector competition and efficiency improvements. According to Forfás and the National Competitiveness Council, Dublin is ranked as the third and most expensive of 14 cities in which to invest when it comes to telecommunications, fund administration and biotechnology and the fourth most expensive for medical technologies, engineering and pharmaceuticals.

We in Fine Gael believe that the time for wake-up calls has long since passed. We need a Government that is prepared to govern and Ministers who will make decisions and drive change.

We must continue to invest in infrastructure and education so our economy will have the capacity to grow and develop in the future. We must bring inflation under control through productivity-related pay increases, greater competition in sheltered sectors of the economy and real public sector reform to boost efficiency and productivity. We should support small and medium enterprises, the engines of job growth, by reducing red tape and setting an ambitious target for reduction of the cost of regulatory compliance to business, a target that still has not been set by the Minister, despite commitments to do so almost five months ago.

We must overhaul FÁS and initiate a national upskilling programme with the aim of upskilling 500,000 people in the next 12 years with annual progress targets to assess whether this policy is being delivered. Instead of paying lip service to the knowledge economy we need to start implementing tangible policies that will transform Ireland into a knowledge economy by investing in next generation networks, accelerating e-government, raising education standards rather than ignoring that issue, increasing investment in IT and extending the research and development tax credit.

We need to promote greater involvement of immigrants in the economy, who face huge barriers when they wish to set up businesses, and grant knowledge visas to highly skilled workers from overseas to enable us to benefit from a brain gain in contrast to the brain drain we suffered in previous decades.

While Fianna Fáil can take its fair share of credit for Ireland's economic transformation, the Celtic tiger was certainly not the creation of one party or one man. However, the Tánaiste and the Minister, Deputy Martin, have nothing to be proud of when it comes to their time as economic helmsmen. As stated in the motion, we have witnessed a period where the largest surplus has been turned into the largest deficit, 20,000 more people have been added to the dole queues and ours is among the highest inflation rate in Europe.

The time has come for the Government to take its head out of the sand and embark on the long and difficult process of implementing sound policies that will restore our competitiveness and reverse the rising tide of unemployment. If it does not, Fine Gael is ready to take over the reins of Government and will do so.

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