Leo Varadkar (Dublin West, Fine Gael)

I compliment Deputy Coveney on the work he has done, not only in drafting the motion but, more important, on proposing some of the radical measures included in the NewERA document.

This morning the Ryan Tubridy show featured a discussion on the role of spin in Irish politics. The Government spin on the current recession is that it is part of an international phenomenon and we are innocent victims of a whirlwind sweeping the world. Every time one hears the Taoiseach or another Government representative speak, he or she uses the term "international recession". While an international recession is under way, largely as a result of a crisis in the financial institutions, Ireland is experiencing a much more severe domestic recession than other countries, as will be borne out by projections due to be released by the ESRI tomorrow. The Irish recession is not due to international factors alone. Other factors include runaway public expenditure. The Taoiseach, for example, in his previous role as Minister for Finance, increased public expenditure at four times the rate of economic growth every year. That policy was unsustainable and inevitably led to a massive deficit which has forced the Government to cut services and increase taxes on hard-pressed families.

Another factor was the Government's pursuit of tax policies which fuelled a property bubble it should have sought to contain. In addition, we had an over-reliance on the construction industry for growth, jobs and revenues. Let us also remember that the Celtic tiger was based on Ireland being a competitive economy. This was undermined consistently in the past 12 years by a series of Government policies which have left the economy uncompetitive and shedding jobs, not only low cost jobs to economies in the Far East but also knowledge economy jobs to countries such as Wales, England, Scotland, Singapore and the Netherlands where wages are high.

The most serious human consequence of recession and economic mismanagement is unemployment, which has major social consequences in terms of increasing levels of crime, deprivation, family breakdown, ill health and poverty and causing the destruction of communities. We need to ask what is the position regarding unemployment. While we may not learn tomorrow that 400,000 people are signing on, we will discover that we are fast approaching this figure, which represents 11% of the working population. How does the unemployment rate here compare with that of other countries? That is the key point. Will the Minister explain the reason unemployment here is much worse than in other countries?

Unemployment in Ireland is now 11%, higher than it was when Deputy Bertie Ahern and Fianna Fáil came to power in 1997. Let us look at other countries. The United States has a rate of 8.5%, Japan 4.5% - these are countries affected by the international recession - Britain 6.7%, Canada 8%, the eurozone 8.5%, France 8.6%, Germany 8.1%, Italy 6.9%, the Netherlands 4.1%, Denmark 2.5%, Norway 3.1%, Sweden 8.3%, Australia 5.7%, Singapore 2.6%, South Korea 3.7%, Israel 6.3% and Ireland 11%.

Of the 55 countries in the report, I can only find six with higher unemployment rates than Ireland. These are Belgium, whom we will probably overtake tomorrow, Spain, Turkey, Columbia, South America and Latvia. That is the seriousness of the situation we are in. I would love to hear an answer from Ministers as to why we have entered a situation where we have gone, in the space of one year, from being one of the countries with the lowest unemployment rates in the world to one of the highest, how that is due to international factors and how the Government can continue to claim it has no responsibility for it.

Even if one looks at the change - I am using OECD statistics - in Ireland, unemployment is 5.2% higher than it was this time last year. It has doubled from 5.2% to 11%. I cannot find another country in the OECD where it has increased that much nor one where it has increased by 4%. The next closest I can come is the United States, where the increase is 3.2% and after that the next closest is Denmark, where it is up 1.7%. The change in Ireland is dramatic relative to other countries.

I can find a number of countries where unemployment has fallen compared to this time last year, such as Germany, the Netherlands, Poland and Slovakia. If one strips away international factors, one is left with the clear conclusion that in Ireland we have a serious domestic recession and serious domestic problems, with unemployment numbers that are largely the creation of the Government, which continues to be in denial. As long as it is in denial there is no possibility for us to develop solutions. I am very interested in the Minister of State's remarks on that particular point.

Much can be done, which is what this motion is really about. The proposals put forward in the NewERA document have two key parts. The first is taking the national pension fund, as well as other moneys, such as borrowed capital and funds and, instead of investing them overseas, they would be invested in the Irish economy through new State enterprises which will develop new infrastructure for a new era, such as broadband, alternative energy and other projects. In many ways, this is reiterating the principles of the founders of this State, most of whom were members of the predecessor of my party. They established the ESB and a number of State agencies and entities at a time when, in many cases, it was not possible for the private sector to provide such infrastructure. The time has come to do that again.

We also acknowledge that existing State companies can be reformed and re-founded into ones which are more appropriate for this time. The merger of Coillte and Bord na Móna makes significant sense in that regard. There is a recognition and a willingness by this party to accept some State-owned assets should now be sold off. We want to exchange the old assets of the 20th century for the new assets of the 21st century.

Beyond what we proposed regarding State enterprises, much more can be done. The issue of the banks will go on and on. There is no perfect solution. The Government's proposal might work and I certainly hope it does, because if it does not the consequences for this country are catastrophic. However, none of those proposals will do what is necessary in the short term, such as extending credit to small and medium enterprises so they can sustain jobs and survive this storm. The way to do that is to do what is being done across the water in the UK and introduce a State guaranteed loan system for SMEs. One can choose to set up NAMA, have nationalisation of the banks, as the Labour Party proposes, or set up clean banks, as we propose. One can do any of those things but one still has to have a State guaranteed loan system for small businesses, otherwise tens of thousands of them will go to the wall and, with them, hundreds of thousands of jobs.

On the fiscal front, the Government needs to turn its strategy upside down. Deputy Enda Kenny is absolutely correct. We cannot tax our way out of a recession. No country ever has. We will have to have tax increases and spending cuts. No matter who is in Government that will be required, but the adjustments should be heavily on the spending side, in terms of reducing waste, getting rid of unnecessary functions, reviewing programmes and changing the entire budgetary system so we can minimise the requirement to increase taxes.

We also need to have more active ways to support business. We need to address and have a clear answer on the Government's plans regarding the minimum wage. There can be no case for increasing the minimum wage for the foreseeable future and the Government should make it clear that will not happen, for at least two years. We need to abolish the requirement that rent can only be reviewed upwards. We need to reduce utility costs, as Deputy Coveney has said. We need to freeze rates, in particular local authority rates, and I am glad a large number of Fine Gael-controlled councils have done that. We need specific measures for the Border counties, which are being hit extremely badly by cross-Border trade.

We need to use some of those spending reductions to reduce VAT, as proposed by Fine Gael in our costed pre-budget document. We also need to address issues such as employment. The Labour Party has come up with some very good suggestions on providing graduate internships and that should be taken on board. There should be an overhaul of how the €1 billion FÁS budget is used, of which €650 million is not used on payments to participants in training schemes, and we should look at how that money could be used in smarter way to assist those who have lost jobs.

That is essentially what Fine Gael is doing. We are putting forward a clear analysis that unemployment is much worse in Ireland than elsewhere. If it is still the Government's claim that this is due to international factors, we want to know why it is still making this claim, based on the statistics I put forward today. We also want to know what is its view on the positive proposals we put forward today.

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