Willie Penrose (Longford-Westmeath, Labour)

The current unemployment crisis is the worst in the history of the State and there is no prospect that the haemorrhage of jobs will stop in the near future, unless the Government gets its act together. It must do so now in an unequivocal fashion. We need innovative ideas and new initiatives. The old solutions are packaged in a way which will not suffice in the current economic climate.

Some commentators have suggested that the current crisis is not as bad as that with which we had to cope in the 1980s. However, that is incorrect, because in the 1980s there was a halt to the modest economic growth of the 1970s and most people had not experienced prosperity. It was also possible for the unemployed to emigrate, and many of our families did so, as the UK and the USA were growing rapidly. I remember it was said at the time that there was not room enough for everyone to live on this small island. However, we may soon find out that we can all live on this island if unemployment continues to rise and the unemployed see no prospect of finding work at home or abroad.

In its current state of panic, the Government is trying to blame the global recession for all our problems. However, most people understand that the policies pursued by Fianna Fáil-led Governments in the past decade have left us ill prepared for the current crisis. I do not wish to bore the House with economic theory, but every first year student of economics learns that in managing the economy, Government policy should be counter-cyclical. This means in a boom period the Government dampens the boom by controlling spending and, if necessary, increases taxation to pay for essential services. Since the days of the former Minister for Finance, Mr. Charlie McCreevy, the policy of "If I have it, I spend it" resulted in the Government fuelling the boom and now that it is over, the cupboard is almost bare and the few bones in it must be used to prop up the banks which were responsible for criminally irresponsible lending that has contributed such a great deal to the current crisis. At a time when banks should be lending to support existing and new businesses, they are unwilling to do so, because they are hoarding capital in order to deal with the crisis caused by irresponsible lending.

Let us consider the situation of the Small Firms Association. Many of its members have had various experiences dealing with the banks and many are now on the brink of failure because of the lack of credit, which is the lifeblood of business. Small and medium sized enterprises are the engine room of the economy. Credit is not being made available to these firms. Worse still, some of the banks are refusing to pass on the reductions in interest rates. We now have the worst of all options. Overdrafts are being reviewed very critically and some are, perhaps, subject to reductions. It is difficult for new loan facilities to be approved which would pump in money and get new ideas off the ground.

The question small businesses are putting to me and my colleagues is: Whither the benefits of the €7 billion recapitalisation plan? Who is benefiting from it? It is not filtering down to the small businesses which are crucial to the economic well-being of the country and to many places especially throughout rural Ireland. The three, four and five jobs that such firms provide are of paramount importance to ensuring the sustainability and viability of a great many families in the country. Entrepreneurs with innovative ideas do not get a chance to launch their ideas. Deputy Shortall is correct to say we must change the ideas. Let us consider start-up grants and cut out the nonsense. Some of the grant schemes are as old as Methusela and have not been amended to reflect the new challenging economic environment in which we find ourselves. They were fine when the boom was under way and when everything was floating but they are no good now. We must change the situation in order that the small businesses which create five or six jobs mean something. Whether it is the manufacturing, technology, science, food or retail sectors, such businesses are soundly based. Many are family owned and operated. They will fight to the very end to survive. No red carpets are rolled out for such people. Such businesses started from nothing and very often their success was the result of hard work generated by husbands and wives or partners. We must help such people, because these are the people who will get us out of this recession. They will save this country.

Given the crisis in the public finances we cannot engage in the stimulation measures that other small, open economies could use to help weather the current crisis. The measures to be introduced in the mini-budget may worsen unemployment by reducing disposable income and the demand for labour. We must contrast this with the UK and Northern Ireland where the Government is in a position to reduce taxes and stimulate the economy. We are all aware of the substantial rise in cross-Border shopping which is causing a further loss to tax revenue and jobs here. I am aware that the Government must give priority to the fiscal crisis. However, it seems that apart from warning of the increase in unemployment there is no strategy to deal with it. Hundreds of jobs are being lost every week in the construction industry. However, the school building programme for which money is already allocated is incredibly slow and some 45,000 pupils languish in prefabs. It takes the Department of Education and Science years to approve a new school, never mind build it. This is the problem.

We have proposed several ideas. It is a significant and traumatic experience for anyone to be told his or her services are no longer required, in other words, that one is being made redundant. Behind all the statistics, especially the 353,000 unemployed, there are human beings, their families and dependants. Losing one's job is most sickening. I recall when my father became unemployed in the 1960s. We were young children, aged between 12 and 14 years at the time and we had some understanding of the situation. However, the younger ones did not realise. It is an awful trauma to be visited on anyone. Jobs are disappearing at the rate of greater than 1,000 per week. At present, 353,000 people find themselves standing in dole queues, queueing up in inclement weather outside doles office which cannot accommodate them. Some 200,000 people have lost jobs since the last general election representing a cost of €4 billion. The Government is seeking €4.5 billion. We have the statistics. Some 200,000 people cost the State €4 billion, which is a very significant sum of money in terms of social welfare benefits and income tax foregone. That calculation is made without consideration of the cost of secondary benefits and the loss of spending power in the economy. The loss of spending power is being experienced in every retail outlet and is forcing many small, family run businesses to shed employment. As many as 250,000 such businesses provide up to 750,000 jobs. We must help this sector.

The Labour Party has made a number of proposals. As noted in the 2007 Forfás report, Towards Developing an Entrepreneurship Policy for Ireland, there is a major problem in the area of entrepreneurship policy. While I cannot deny that the Government is investing in programmes which aim to develop and encourage small businesses and entrepreneurship, too many agencies, bodies and Departments are involved in this area. The Department of Enterprise, Trade and Employment supports entrepreneurs and start-up businesses through a range of bodies, including city and county enterprise boards. The Department of Education and Science is responsible for the delivery of entrepreneurship education and training in the education system. The Department of Community, Rural and Gaeltacht Affairs is responsible for Udarás na Gaeltachta, the Leader programme and area partnerships. The Department of Arts, Sport and Tourism is responsible, through Fáilte Ireland, for the development of tourism enterprises. The Department of Justice, Equality and Law Reform is responsible for regulating residence and work visas for third country citizens and issuing business permissions to such individuals. The Department of Finance is responsible for overseeing the fiscal incentives for enterprise establishment and equity investment such as the seed capital and business expansion schemes.

Let us get our act together. Ireland lacks an explicit and articulated entrepreneurship policy directed at ministerial level. All the responsibilities I have cited should come within the remit of the Minister. One Department must run the show and perform all the activities currently carried out by a variety of Departments. There is no overarching forum and policy is all over the shop. One should not have to run from Billy to Jack, Joan or Mary to secure information. Policy and initiatives must be driven in a coherent manner, as recommended in the Forfás report in 2007. Nothing has been delivered in the meantime.

A number of Departments are responsible for delivering various initiatives which impact on entrepreneurs and the environment in which they operate. The policy is fragmented across Departments and agencies and should be pulled together. We must meet the challenge in these difficult times. My proposal is not an airy-fairy suggestion but a positive proposal.

I have further proposals. The Minister should remove the eligibility conditions attached to the back-to-education and back-to-work allowances and the vocational training opportunities scheme. Education is the way forward. We need to get people into the institutes of technology, as has been proposed in the case of apprentices in SR Technics. The theory element of the apprenticeship should be brought forward and the apprentices allowed to attend the institutes of technology for nine months, by which time we will, I hope, have turned the corner and work will be available in the aviation sector. Deputies Broughan, Costello and others from the northside of Dublin have articulated this argument very well. Let us give these young people an opportunity to complete their apprenticeship. We need aeronautics technicians and engineers. We might as well pay the €300,000 it would cost to allow them to transfer to the Dublin Institute of Technology which is ready and willing to facilitate them. I know the Minister is on top of this issue.

On social welfare payments, why not allow employers to top the unemployment benefit or jobseeker's allowance of individuals to bring their income above the minimum wage? Such persons could then be engaged in meaningful activities. Let us be innovative and flexible in the new circumstances we face.

It is not possible to supply a service for less than €37,500, which is the threshold at which companies must pay VAT. The figure must be increased to €60,000 or €65,000, while the VAT threshold for those supplying goods should be increased from €70,000 to €120,000. The Government will strangle companies with regulation. The complexities of VAT would require a small company to employ a bookkeeper for half a day each week, costing another €80. I know from personal experience that the steps I advocate will work.

The Minister should also expand community employment and job initiative schemes. The role of the county enterprise boards, which are involved in job creation measures affecting fewer than ten people, an area not covered by Enterprise Ireland and IDA Ireland, should also be expanded. A wider range of start-up grants is also required and greater discretion should be allowed in this area which is excessively restrictive and governed by too many eligibility criteria. These grants must be changed to reflect the current circumstances.

We spend too much time examining issues when we must translate ideas into action. It is often argued that the Labour Party does not have ideas. We have many positive ideas and are making them now. Let us act on them to get people back to work.

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