Joan Burton (Dublin West, Labour)

I congratulate my colleague, Deputy William Penrose, on putting forward this motion. It is obvious from the events of the last week, month and year that the tectonic plates of the Irish economy are moving. Today's quarterly economic commentary from the ESRI forecasts a deeper downturn, which really indicates that a job strategy for the short and medium term is needed urgently from the Government. The ESRI expects that next year the rate of unemployment will grow to 8%. As has been said before, we have been losing jobs at the rate of 300 a week since the Taoiseach, Deputy Brian Cowen, took office.

The Celtic tiger period is over and we are entering a new phase where the scourge of unemployment is once more stalking the land, showing no respect to the city, town, village or, as Deputy Penrose has said, the rural countryside. We have seen large numbers of young men become unemployed. Some may well emigrate or go for a year or two to the United States, New Zealand or Australia. In other cases, immigrants who came here to work in the construction industry may well return home.

Nonetheless, we are facing into a position we have not seen since the late 1980s and early 1990s, where sustained unemployment is becoming the norm for significant groups of people. It would be a tragedy if the Government, which has worked so hard to rescue distressed bankers, did not feel some concern about the distress of families and individuals who are facing unemployment.

Whether this is a long recession or a relatively short period through which we can transit to a more mature and solid — if modest — rate of economic growth and prosperity depends on how the Government deals with the current position. Handled badly, particularly in next week's budget, and if too much activity is sucked from the economy, the Government will turn a recession into a depression. The modest and careful proposals by the Labour Party aim to put people back to work through retraining and reskilling, and they are critical for tens of thousands of families in every village and town across the country.

The Government has rightly sought to address the banking crisis, but dealing with that crisis must not become the Government's excuse for avoiding the unemployment crisis. The Government has threatened a dire budget next week and all indications are that the brunt of a difficult budget will be borne by middle class families and working people. It is their husbands, wives, children, sisters and brothers who are becoming redundant or unemployed.

Labour's proposals are important in directing people back to employment. They are achievable within the reduced resources now available. It is really important that the Government takes this in — if it takes too much advice from the bankers it will concentrate on the high finance sector of the economy rather than jobs in all the different manifestations, as highlighted by Deputy Penrose. In particular, there are high-tech jobs in pharmaceuticals and IT, but there are also the small, medium and large indigenous local enterprises on which we must focus again.

We must be particularly aware of the number of young men leaving the construction industry, with many from rural areas now going back to farming even though they are unlikely to earn a proper income. A strategy by the Government for dealing with that is absolutely essential.

We heard last night of the threat of 1,500 redundancies in Aer Lingus, with many of them in Dublin, the mid-west and possibly some in Cork. This is devastating. When Aer Lingus and other large companies restructured before, people were given notice. Dublin West is in many ways the home of restructuring. Other jobs and avenues were available before, but in a recession there will not be other jobs. That will make life, as we approach Christmas, so hard for so many families.

I will mention some particular issues. One thing we asked of the Government in the debate on banking last week was to consider the issue of distress. In the context of the banking crisis, the lack of liquidity has a direct and congruent impact on the capacity of firms to continue to get overdrafts or actually pay and employ people. On its own, the banking crisis is clearly of enormous significance but its significance to the real economy, consisting of firms employing people and others who are self-employed, is perhaps even more important. This is what caused the significant level of difficulty in the United States. If the Government does not connect the cause of the banking crisis and its impact that could lead to massive unemployment in this country, its analysis and capacity to create a strategy to get us out of this will be limited.

On Committee Stage in last week's debate, we tabled amendment No. 19a, which indicated the six banks in the system — as well as the eight others now mentioned as queuing for the guarantee scheme — should produce a scheme for people in distress as a result of unemployment and who are in danger of losing their houses through an incapacity to pay a mortgage for a certain time. The courts opened yesterday and Start Mortgages, ACC and various other banks lined up to take people in, charging them not just the arrears of mortgages, but horrendous penalties and legals fees. This is exploitation of distress at an extreme level. The Minister of State should know that in Islamic countries, banks are not allowed, under Islamic law known as riba, to inflict distress on innocent people who are the victims of an economic downturn without seeking to give them a mechanism by which they can salvage their position over a period.

I will mention another issue regarding this week's budget. Many people becoming unemployed were self-employed in the construction sector and were working on certs. These people and possibly their partners have been working. If these people lose their jobs and the partner is working either full-time or part-time, they will go down to being a single income family. In this case, they will lose their income and have to wait a long period to qualify for a social welfare payment or mortgage interest relief support from the community welfare officer. They will also suffer a penalty of between approximately €2,000 and €6,000 because in tax terms they will move from being a double income family with double income allowances to being a single income family and subject to the hammer of individualisation introduced by Charlie McCreevy to force both parents out to work.

Given these changing circumstances and the loss of the breadwinner's job in families where the man works in the construction sector and the woman probably works in paid employment, I ask the Minister to have regard to what individualisation will do to such families. The impact may not be felt this year because these families will, I hope, have some taxable income for both spouses but it will be felt next year when they will receive limited social welfare payments because they have been self-employed and a whammy of a tax penalty by means of extra taxes of between €2,000 and €6,000.

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