Willie Penrose (Longford-Westmeath, Labour)

I am pleased to have an opportunity to contribute to the Bill introduced by Deputy Varadkar on behalf of Fine Gael. My colleague, Deputy Higgins, outlined the Labour Party analysis of the proposal last night. While the Labour Party will not support the Bill for various reasons, some of which our party president addressed last night, I nevertheless acknowledge Deputy Varadkar's attempt to engage with the real economy and the necessity of regaining our competitiveness to enable us to engage in the marketplace.

The reality is that there has been a decrease in wages of up to 3.5% in the past year or so which has made us attractive once again from a real wage perspective and has contributed to a significant improvement in competitiveness. When allied with our 12.5% corporation tax rate, which is sacrosanct because it is so important in the context of attracting business, the high level of educational attainment, flexibility and adaptability of our workforce, and our quality of life, all these factors have propelled us to the forefront as an attractive environment for foreign direct investment. When one considers too the recent roadmap outlined by the IDA whereby it intends to create 105,000 new jobs by the end of 2014 or early 2015 and to attract significant investment in research and development - which is absolutely critical - we have some cause to be confident that we will be in a position to advance and sustain these important investments.

Having said that, it is essential that we do not lose sight of the indigenous sector. It is in this area that the Government has fallen down and can be constructively criticised. The small and medium-sized enterprise sector has been left on the back burner, with significant job losses throughout the State. Employers who provide three, five, eight or ten jobs are going bust, but that is falling below the radar. Such job losses do not receive the same attention and headlines as the closure of businesses with 200 or 300 employees, but they have an enormous impact on individuals and families in small urban areas, towns and villages throughout the country.

We have only to consider the calamitous way in which the proposed PRSI holiday has been handled to see how remiss the Government has been in this area. That proposal was announced in the December budget and welcomed by all of us, but six months later, we are still awaiting its introduction. We all saw it as an important way to boost employment to offer employers a tax break where they employ a person who has been unemployed for six months or more. Such a scheme would, under certain qualifying conditions, offer people the chance of a real job, not a substitution or replacement job, and save the employer €3,000. We were told the scheme would generate 12,000 jobs, yet all we have had is a statement last week by the Minister for Social Protection to the effect that its implementation is forthcoming.

That failure is a severe indictment of the Government and points to its apathy and lack of urgency in dealing with unemployment. Although many of us might have disagreed fundamentally with how it handled the banking system, the Government did at least have a strategy and a sense of urgency in that instance. Likewise, the broad parameters of its fiscal strategy have been clearly identifiable, regardless of whether one agrees or disagrees with specific cutbacks. I have referred to the banking, fiscal and unemployment issues as the tripod of challenges facing us. In the case of the third leg, unemployment, there has been no attempt to deal with it in the context of the real economy.

It has been outlined that the provisions of this Bill will mean an average saving of €400 per household per year, which amounts to €400 million to €500 million annually across the economy. However, taking that money out will leave a hole in the bucket. We are all in favour of accident and emergency charges, the cost of medicines and so on being reduced, and the Government has always used such charges as leverage. It is difficult to see how people will meet the increased costs. However, one cannot cut the income to hospitals, local authorities and other service providers without a significant and generally detrimental impact upon services and employment. A loss of income of up to €500 million is bound to have an impact on services. One either cuts services or raises money elsewhere; that is the reality and we must be honest with the people in this regard. We have already had significant reductions in public service pay. People do not want a situation where they save a few bob in one area only for that to have a knock-on effect in terms of taxation increases to fill the gap. If there is a gap it must be filled from general taxation or something else.

Local authorities are already pared to the bone. They do not have enough outdoor staff because of the moratorium and because they were given a directive by the Minister for the Environment, Heritage and Local Government that they cannot hire permanent or even contract staff. Most local authorities have during the past 12 to 18 months lost hundreds of contract staff. The local authority outdoor staff in my area are excellent and superbly efficient and productive in terms of the roadworks they carried out and should be allowed to do more direct labour work. There is too much rush here towards privatisation and contractual arrangements. Local authorities provide important employment in local areas. Those employed therein are the eyes and ears of local authorities. They have done tremendous work down through the years and have been often denigrated. I recall there was a programme which made a skit of local authority workers. As a son of a former local authority worker, I rejected that with the contempt it deserved. Local authority workers have an important role to play and there is now not enough of them to carry out essential and important work. If we continue to deny them more income, there will be fewer of them. What we will have then is the privatisation of local authority services. One has only to look across the water to see the serious consequences privatisation has left in its wake. Some economies are now engaged in reversing this process. We do not want to reach a point where we know the value of everything and the price of nothing. The Labour Party has unashamedly and unambiguously always stood on that platform.

There will be a net loss to the Exchequer. The question that arises is how is this gap to be filled? There is no such thing as a free lunch. Politicians appear continuously to perpetuate the myth that there is such a thing as a free lunch. However, nothing is free. The Government is examining the possibility of increasing many charges. As a child I travelled free by bus to school, a scheme introduced in 1968 or 1969 by former Minister Donogh O'Malley, without which, because I lived 12 miles from the school, I would not have been able to get there. Given that I was the eldest of ten children and my family had a medical card, I would probably still have been eligible to travel free on the bus. The cost of school transport increased to €175, then to €300 and it is now projected to increase to €500 from this September. I do not know if that is true but that is what people believe. This would be detrimental for the people involved. This is an example of where the Government is going.

The National Economic and Social Council, NESC, has analysed the fiscal crisis in the banks, the crisis in the real economy, the social crisis and reputational and ethical crisis. The big crisis for me is in the area of small and medium-sized enterprises. The figures released today indicate there has been an increase of 44,000 people on the live register during the past 12 months, with a 5,000 plus increase in April. I wonder, given those figures, if we have turned the corner. I read a report on this matter but I do not pay much attention to reports because the real economy is often different. The Ernst & Young summer forecast has predicted that unemployment will stubbornly remain at 10% for the next couple of years and that it will be some period before we recover.

The Government has run out of ideas and steam in terms of dealing with this issue. While it is important that we address the issue of job creation through foreign direct investment, we must do something to ensure the survival and contribution to employment of our 250,000 small and medium-sized enterprises.

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