Leo Varadkar (Dublin West, Fine Gael)

I compliment Deputies Penrose, the Labour Party and Sinn Féin on allowing us to discuss this most important issue to the public at present. The live register stands at 400,000 and includes people who are unemployed and underemployed, which is just more than 12% of the workforce. It puts us in a different position from what we were in even two years ago. Ireland is now a high unemployment country. Within the eurozone only Spain and perhaps Belgium, although that is questionable, have a higher level of unemployment. That is a turnaround for a country that had low unemployment not that long ago. Other states, including the United States, Canada, Australia, New Zealand, Israel and Singapore, have a lower rate of unemployment than us. While all countries in the western world at least are facing the impact of the global downturn, it is clear few countries are suffering as badly as Ireland.

The worse aspect of unemployment is its social consequences. They must last longer and well beyond the end of a statistical recession. They particularly relate to exclusion from society and from the labour market. That is why it is important during this period that we do everything we can to keep as many people in employment as possible. Once people enter the cycle of unemployment and welfare dependency, it is almost impossible to get them out of it and it can take generations to break that cycle.

To get the economy moving again and to restore employment, there are a few things we need to do. Essentially, there are five key pillars to the policies Fine Gael puts forward. The first is the repair of the financial system. We have different views from those of the other parties on how that should be done. The second is fixing the budget, which we believe should be primarily done through reducing spending, although some tax increases will also be necessary. We do not believe that relying predominantly on taxes will get us out of recession; in fact, it may even make it worse. Neither do we agree that we can borrow our way out of recession. Borrowing is just the deferral of tax increases and spending cuts, probably much worse ones. Essentially, it sends the bill for this economic crisis to our children, which is something we cannot support.

We also need to reduce costs and support businesses. This means targeting the key costs: labour, energy, regulation and taxation, the latter mostly in the form of VAT and travel taxes. We must also continue to invest in the future, which is what the Government has not done. Capital spending has been cut back hard. We understand why this had to be done, but there were alternatives, including the use of the National Pensions Reserve Fund to create new State enterprises and using that money to invest in infrastructure. We will not become competitive again if we do not continue to invest in the infrastructure we need for the future.

We need Government action to protect people - not to protect jobs but to protect people from unemployment. Some of the ideas that have been put forward in this Chamber include the establishment of a graduate internship programme and a change in the training system so that FÁS, instead of being a provider of training, becomes a buyer of training, giving people training vouchers which they can use to buy training from whomever they want, whether it is FÁS, the VEC sector, the institutes of technology or universities.

Another suggestion was something we should have done a long time ago but did not, which is to reform the social welfare system. We spend €20 billion per year on social welfare in Ireland, much more than other European countries, even though we have far fewer pensioners. We now have more people unemployed but we cannot deliver social justice or social protection with that money. We need to consider remodelling our welfare system by merging it with the tax system to end all disincentives to engage in work, and by moving towards a system of flexicurity, similar to those in the Netherlands and Denmark, in which people who lose their jobs retain a portion of their income in unemployment benefit provided they participate in either training or community service. This would mean enhancing protection for people but ending the system in which the State pays people more than €5 per hour to do nothing at all. This is something we cannot continue to do.

I am broadly supportive of the motion, although with one or two caveats, which I will come to in a minute. There is a strong case for a national investment bank - which we call a national recovery bank - capitalised by the State and funded by the ECB. It is largely the same concept. That is needed because it will take NAMA a long time to sort out the balance sheets and credit will not flow to business until that happens. Nationalisation will not sort out the balance sheets; nationalisation plus NAMA will be required to do that. In the interim we need some mechanism to extend credit to business and this can best be done through a national recovery bank of this type.

I support the ideas put forward by the Labour Party and Sinn Féin about one-stop enterprise business points. That is the kind of thing our local authorities should be doing. We should merge all the different local structures - county enterprise boards, city enterprise boards and development boards - into enterprise units within local authorities. It is a great shame we have left enterprise out of local authorities. We need to have a new focus on enterprise at local authority level.

Fine Gael does not agree with taking Eircom into public ownership, largely because this would mean nationalisation of Eircom's massive debt of €3.8 billion. We have had enough nationalisation of debt in this country. We have seen how much Anglo Irish Bank has cost us since its nationalisation, and we would be entering into the same territory by nationalising Eircom. There is an alternative which has been proposed many times, including by Eircom itself: that it be split into retail and wholesale arms, with the wholesale arm carrying Eircom's infrastructure. That could be combined with the Government MANs and the existing networks that are in Government control, such as those of Iarnród Éireann, ESB and Bord na Móna. The State could then take a significant equity share in that company and thus provide the new wholesale company with funds to invest in broadband. This is the idea of Broadband 21 from our NewERA document, and it is achievable. I do not think any of us honestly believe that Eircom will be re-nationalised, but the proposal we are putting forward could be carried out.

I agree with the measures proposed to retain workers in employment and to support Irish manufacturers and producers in exporting to markets outside the USA and the UK through language support. Such measures could be useful. In addition, the "Bridge the Gap" work experience idea could work very well. We need to make a commitment to apprentices that they will be able to finish their apprenticeships no matter what. What is missing from the motion - this lessens it somewhat, although I do not think it is deliberate - is competitiveness. The key to restoring employment growth in Ireland is to make it competitive again. The recession of the 1980s ended in 1983 - from 1983 onwards we had growth, although we did not have jobs. We did not start creating jobs again until 1994, for a number of different reasons. I fear we are heading that way again. I believe the recession will end next year and that by the second or third quarter we will be back in growth, but we will not have jobs. Until we have jobs the public finances will not be improved and we will continue to pay higher taxes, take pay cuts and see people lose their jobs, even though the recession will be over. People will not understand this, but the reason is obvious, we need to become competitive before we can have employment growth, and that means reducing the cost of doing business, improving Government bureaucracy and continuing to invest in infrastructure.

The Government amendment deserves comment. It commends the Government on its management of the economy. That is a difficult one to swallow for almost anyone with a thinking brain. It also commends the Government on its management of the public finances. This is a Government that has borrowed €10 billion this year already, three times as much as it borrowed in the first half of last year. We may, after the UK, have the biggest Exchequer borrowing requirement in the western world - it may even be larger than that of the UK. There is not much to be proud of there in terms of the public finances. The Minister of State opposite me is Deputy Conor Lenihan, whose brother doubled the national debt in one year alone. It took a previous Government led by this party five years to do that. By the time Deputy Brian Lenihan is finished in office I expect he will have tripled the national debt. For the Government to commend itself on such management of the public finances is hard for us to take. The Government also commends itself on stabilising and revitalising the banking system, which is a little premature.

Our significant international competitive advantage is mentioned in the amendment and was also mentioned by the Tánaiste in her speech. She also mentioned that Ireland is ranked first in terms of real corporation tax, investment incentives and foreign investor freedom. This comes from the IMD World Competitiveness Yearbook 2009, which was published some weeks ago. The Tánaiste was being very selective in what she quoted from the report and I wonder whether she actually read it, because the yearbook actually reduced our competitiveness ranking from 12th in the world to 19th. It is one thing to pick out the good bits, but it is more than a little disingenuous to ignore the overall figure. It is a little like failing one's leaving certificate but saying one got a C in art and a D in pass Irish.

Our competitiveness is continuing to decline, although the fall in wages means that this will turn quite soon. However, much more needs to happen before we can become competitive again. Another disappointing aspect of the Government amendment is the mention of the enterprise stabilisation fund. It is not yet clear how much money is even being disbursed and it will be interesting to see how much is disbursed and when.

I thank the Labour Party and Sinn Féin for tabling this motion. There is no question that unemployment is the most important economic and social problem facing the State in the coming years. Our priority as politicians must be to find solutions by agreeing on a strategy to bring the country out of recession and back to employment growth. In the meantime, we need to introduce a mechanism to protect people who lose their jobs, which will continue to be the case for the next year or two. The likelihood is that there will be a prolonged period of high unemployment, for which I do not think we are prepared.

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