Deirdre Clune (Cork South Central, Fine Gael)

This important motion focuses on job creation and protection and the importance of positioning this State for the recovery that will undoubtedly happen. We must ensure we have a workforce that is fit and able to match that recovery. As Deputy Varadkar argued, our economy must be returned to the high level of competitiveness we previously enjoyed.

The most important concern for people at this time is retaining their jobs. For those who have lost their jobs, the concern is where they will find new employment. The public is looking to this House for leadership in this area but is finding little evidence of it. The reaction of the Government to the deficit in the public finances has been to increase taxes, particularly those applying to low and middle-income earners. There was no mention in the April budget of prioritising job protection and creation. Nor was there support for small business, the lifeblood of our economy. This increased taxation has resulted in reduced consumer spending, which puts further pressure on small and medium enterprises throughout the State.

Every day we hear of further job losses. Many of those affected have been in their jobs for a considerable time. Many of the businesses obliged to reduce staff numbers have a strong record of trading and providing services. Now, however, they are unable to access funding from the banks to allow them to continue in business. This is a theme that arises consistently. We have all had representations from local businesses which have been refused requests for credit, whether for small or relatively large amounts. I have received representations from Cork Chamber of Commerce, for example, and from the owners of small and medium enterprises in my constituency outlining the difficulties they face in accessing credit. The Tánaiste has outlined this evening and previously how she intends to ensure capital is made available to small businesses. The reality, however, is that there has been no progress in this regard and many such businesses are obliged to let employers go. This in turn adds to the Government's woes in terms of the public finances.

Unfortunately, we seem on target to reach an unemployment level of 17% by the end of the year. This is a frightening statistic, equivalent to one in five out of work. A significant aspect of this is youth unemployment, with the rate of unemployment of under 25s doubling in 12 months, from 43,000 at the end of May 2008 to some 85,000 at the end of May 2009. This week students in third level institutions throughout the State are receiving their examination results. Those who have qualified with degrees and diplomas are wondering what the future will hold for them. The 55,000 leaving certificate students who are completing their examinations are similarly concerned, as are their parents, as to the best way to target their energy and resources in the coming years.

Many of those who have lost their jobs in recent months have finished school or college in the last ten or 15 years. Many have substantial financial commitments, including large mortgages and the cost of caring for young children. For those who lose their jobs, their world is falling apart. Many commentators have compared the current downturn to the situation in the 1980s. In reality, however, an aggravating factor now is that the level of personal debt is much higher than it was the past. This is an important issue to bear in mind.

I agree with Deputy Varadkar that proposals for retraining and up-skilling those who are unemployed are vital. I met recently with representatives of the FÁS regional office in Cork. That office is working closely with young people who have completed their apprenticeship training programme in order to ensure they secure a position, some in the United Kingdom and some in Germany. Impressive work is being done in this regard. However, FÁS officials say it is a major concern that there are no employment prospects for many of those who have completed their training.

Small and medium-sized enterprises employ some 800,000 people in the State. Aside from ensuring access to credit, there are many ways in which they can be assisted and supported. My party has completely different proposals from the Government on how we should move forward in this regard. The notion of a national recovery bank which can be established immediately to ensure the flow of funding to small businesses is something I entirely support. I hope that proposal will be implemented sooner rather than later. It is a positive initiative which has support from Members on this side of the House and from outside the House.

The Minister for Finance has admitted that the decision to increase the VAT rate in the last budget from 21% to 21.5% was a mistake. Yet he has not taken the opportunity to correct it. Fine Gael has put forward proposals to reduce VAT in order to provide a stimulus to economic activity and to encourage spending. The statistics show there is a significant lack of confidence on the part of consumers, with spending substantially reduced. We must increase consumer confidence and thus assist businesses in the services sector by reducing the VAT rate without delay.

The travel tax introduced in the October budget has been shown to have reduced confidence among the travelling public. Last week we learned that Aer Lingus is to reduce the frequency of its transatlantic flights from Shannon and Dublin. The chief executive officer, Mr. Dermot Mannion, revealed he had written to the Government on three occasions requesting the abolition of this tax. As a small island nation, we depend on a comprehensive air transport service. This is equally important in attracting tourists and in facilitating those in this State who depend on air travel to conduct their business. In The Netherlands, a similar tax was abolished as quickly as it was introduced because it immediately improved to be a disincentive to travel.

The Tánaiste referred earlier today at the meeting of the Select Committee on Enterprise, Trade and Employment to the importance of the reports from the National Competitiveness Council, and explained how she channels those reports through her Department and through the Government. The press release from the council last January focused on the issues that must be addressed. The importance of improving our cost competitiveness cannot be overestimated. High energy costs will continue to be a major concern for businesses, as referred to by previous speakers.

The report of the National Competitiveness Council also referred to education, which is of vital importance if we are to position the State for economic recovery. This is of relevance to the remit of the Minister of State, Deputy Conor Lenihan. The council's report called for a strong focus on improving performance in mathematics, science and information technology skills, with a recommendation that action be taken to encourage the take-up of higher level mathematics at leaving certificate level. However, having questioned the Minister for Education and Science, Deputy Batt O'Keeffe, on this issue, it is clear he has no intention of taking action in this regard. It will be important to encourage students to take up the subjects of mathematics, science and information technology skills, particularly if the Government's smart economy strategy is to be implemented. I hope the Minister of State will take that point on board and ensure that action is taken in respect of this matter across a range of Departments.

See this speech in context