Willie Penrose (Longford-Westmeath, Labour)

This is why the whole structure is collapsing. The Government is paying out the same amount of money on social welfare. Why not transfer that money from the social welfare budget to the enterprise budget so it can be devoted to CE schemes, where people have an opportunity to participate, make a contribution and feel they have something to give? They can participate in the enhancement of their communities and feel they have been recognised for the effort, they can learn skills, including interpersonal skills, and use their talents, whether it be in painting, maintenance, carpentry or plumbing.

Reference was made to the SME credit review system. What do we want a review system for? This is a Government made of reports - it knows nothing but reports and putting an issue to another body for consideration. The Government is elected to make decisions and come forward with solutions. It is not elected to send reports to every quango, like the circular bird, and get back the answer it knows will come back in any case. The Government is procrastinating, obfuscating and delaying while those 440,000 people who need our attention and look to this House to come forward with solutions must wait, although they themselves are prepared to bring forward solutions.

We in the Labour Party are listening and we will react. People are saying there are no policies and no solutions. The Labour Party document, Jobs and Recovery, was published on 4 December and we advocated that the Government should consider it. Fine Gael and Sinn Féin have their policy solutions, which are also worth consideration. This is not the sole preserve of the Government, which should listen. That is part of its problem. The Government is blind to any idea emanating from any source and it is deaf because it does not want to give any credit to anybody else that comes forward with an idea that would provide the pathway to a solution.

The banking crisis dominated discussion of economic policy in the past year, both in this House and in the media. Not nearly enough attention has been paid to the equally serious unemployment crisis. The two crises are, of course, interlinked. The crazed construction bubble which was fuelled by the irresponsible policy of the Government and its predecessor led to a totally unsustainable expansion of the construction industry which, at the height of the boom, constituted 13% of GDP compared to an average of 5% for the EU. It is significant that the highest unemployment rates in the EU are in Ireland, Spain, Latvia and Lithuania, all of which experienced property bubbles. By contrast, countries such as Germany, France, the Netherlands and Belgium, though they have experienced significant falls in output, have had less of an increase in unemployment. Those countries are also better placed to engage in stimulus policies as they were not relying on ephemeral tax revenues from the property bubble to fund public spending.

How in the name of God do we think we are so powerful in this country of 4.5 million people that we do not need a stimulus package, when every European country and countries across the globe are depending on stimulus packages? Why do we feel we are so special? We are an insular country which needs aeroplanes to bring people to and from here. While some suggest we do not have the money for a stimulus, we managed to bankroll the banks by taking money from the National Pensions Reserve Fund.

I remember Fianna Fáil's great myth that it was sacrilege for any Government or party to propose raiding the National Pensions Reserve Fund. They lost their conscience and had no scruples about raiding it when it suited them. I remember what they said back in 1997 and 2002 - I am not so deaf or stupid not to remember what they were saying. They made that point clear and they had a willing and compliant media to make it for them. While I acknowledge we need a working banking system, if that money can be taken for the banks, why not do the same to create jobs? The Labour Party proposed that €1.15 billion be put into a job generation fund. The 440,000 people who are on the dole queues are not there of their own free will, do not want to be there and would like to be working. People are prepared to adapt and to take less, so long as they are working, because it gives them peace of mind.

Unemployment has negative effects that go beyond the loss of income for people of any age. It is associated with illness, mental stress, depression and a reduction in life expectancy. There is a well-established link between crime rates and unemployment, particularly property-related crimes. Sustained unemployment when young has very negative long-term consequences for those who experience it. Young people who are unemployed at the beginning of their working life tend to have lower productivity, lower incomes and poorer labour market experience in later life. This information comes from the UK economist, Professor David Blanchflower, an authority on youth unemployment, who has written that unemployment in youth creates "permanent scars" rather than "temporary blemishes". That is a significant statement. It is why we are very much focused on the third of young men between 18 and 25 years who are unemployed. It is a disturbing statistic and one we must try to address. It is not an issue of point-scoring; it is an issue of trying to address an extremely important question. I accept it is not easy to tackle - let us be clear and honest with one another about that. However, we must try.

While the Minister of State will probably not agree, an issue arises as follows. Since the 1980s, the triumph of monetarist economic policy has led western governments of all hues to give priority to low inflation over all other economic goals. The charter of the European Central Bank requires that we have to keep inflation below 3%. While I am certainly not advocating inflationary policies, EU policy makers should bear in mind that there is evidence that a 1% increase in unemployment reduces overall economic well-being twice as much as an equivalent 1% increase in inflation. Economists call this the misery index.

As always happens when unemployment rises, the political right, unwilling to accept the failure of the policies, seeks to explain unemployment as being the result of unemployment benefits or the minimum wage being too high. There is little evidence to support either of these assertions. In the USA, unemployment is higher in states that have a minimum wage than in those that do not. The Scandinavian countries have the highest unemployment benefits in the world but have lower unemployment. There is ample evidence from many countries that what Marx called the reserve army of the unemployed is a conscript army, not a volunteer army.

There are still some anomalies in the social welfare system which make it difficult for young people to enter the labour force and these need to be addressed. Unemployment benefits have been significantly reduced for people under 25 on the basis that most of them do not have to make significant payments such as mortgage repayments. The consequence of this reduction is that some young people are now compelled from economic necessity to live with their parents, making them less mobile in seeking whatever jobs may be available. Youth unemployment is now at an alarming level, and we should be particularly concerned about those young people who left the education system without skills and qualifications. Even at the height of the boom young people were enticed out of education by the high wages available in the construction industry. Those people are deserving of particular support if they become unemployed.

I have much more to say but the Leas-Cheann Comhairle has indicated that my time is up. We must all put our shoulders to the wheel to seek solutions to this problem. We in the Labour Party will play a positive and proactive role in that regard. I appeal to the Government to come to the table with an open mind.

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