Willie Penrose (Longford-Westmeath, Labour)

I am glad to have an opportunity to contribute on behalf of the Labour Party to this important motion which we in the Labour Party broadly support and which has as its core objective the placing of job creation as the main priority of Government policy. We would have some concerns about the reference to the widespread utilisation of the National Pensions Reserve Fund in an unlimited way and the inclusion in an undefined way of the sale of non-strategic assets where it is suggested that they should be sold to generate funds for job creation. Having privatised some of our State industries, we should be wary of further widespread privatisation which may result in short-term gains at the expense of long-term losses.

A group under the chairmanship of the ubiquitous Colm McCarthy is carrying out a review of what State assets should be sold. The review is clearly a prelude to selling off what remains of the semi-State sector in order to improve the public finances. Having mortgaged our futures and those of our grandchildren in order to pay the debts of the casino gamblers, the Government is now like a desperate gambler willing to sell the family silver to fund a last throw of the dice.

The announcement of that review peculiarly came on the day that Eircom announced it was seeking 1,200 job cuts. Eircom stands as a monument to the failure of the Government's privatisation policy. After overvaluing the company and overselling shares in it, the Government could only look on helplessly as Eircom became a plaything for profit making at a number of stages by various individuals and a private equity company. As Eircom was eviscerated and loaded with debt, it had no funds to invest in upgrading its broadband provision which has left Ireland with one of the poorest levels of broadband penetration in Europe. The Government's talk of creating a smart economy rings somewhat hollow to those who are trying to run small businesses in rural areas with inadequate broadband as a result of the Government's policy and actions at that time.

When President Sarkozy came to power in France, he had intended to sell several of France's very successful state companies. When the banking crisis and its associated recession hit France, he quietly abandoned his plans as he realised that a large and vibrant state sector was a valuable asset to a nation when significant numbers of jobs were lost in the private sector.

We in the Labour Party have proposed over the past year, as has been set out in our amendment to the Fine Gael motion, the establishment of a strategic investment bank to fund viable businesses around the country and invest in strategic infrastructure projects, enabling the bringing forward of coherent sectional strategies in areas such as tourism, food, clean tech and the creative industries. This should have a focus on the reinvigoration of the State agencies, including the county and city enterprise boards, which are extremely important in the context of micro-enterprises. We should ensure the provision of high-speed broadband throughout the country and give greater priority to support for applied research to support the commercialisation of new knowledge.

Our proposal involves the establishment of the strategic investment bank, using €2 billion of funds from the National Pensions Reserve Fund before it is all lost by Fianna Fáil in casino gambling. This would leverage €20 billion and that money would then be directed towards job creation proposals in the manner I have outlined. I would also support a proposal from the Construction Industry Federation and ICTU that an infrastructure fund be established. I heard the Taoiseach say today that the National Pensions Reserve Fund is for commercial investment. Notwithstanding my dislike for tolled roads, why was it not allowed to invest in tolled roads which have been constructed under public private partnership, where private companies from other countries get all the revenues and the State bears all the risks? Here was a sure way of ensuring the pension provision for our citizens who contribute to it would increase. However, when we made that proposal I remember the Fianna Fáil PR spin merchants sent its Deputies out to berate us from on high. How times have changed given how the Government has raided the National Pensions Reserve Fund at will without getting any return.

In July when we last debated the important issue of unemployment here in the House, I proposed that the Government introduce an SME loan guarantee scheme — the Government claims we have no policy in this area — but unbelievably nothing has happened in the interim in this area. Such a scheme would make an important contribution to assist small businesses and companies get key credit and cash flow. Small and family businesses across the country cannot get the loans they need to keep the show on the road. Paying wages and suppliers is a struggle. Viable, profitable, well run businesses are going to the wall because they cannot access credit. Two years on from the introduction of the blanket guarantee, our banking system is still in crisis. We were promised that the guarantee, NAMA and the recapitalisation would get credit flowing, but our banks remain critically undercapitalised and risk averse.

I have been calling for the introduction of a SME working capital guarantee scheme for a considerable period of time and on the last occasion I outlined schematically how it might operate. The Minister for Finance and the Minister for Enterprise, Trade and Innovation should explore options for this scheme in order to help address the small business credit famine and help save jobs. These jobs in small businesses in every town and village across the country are the backbone of the economy. It is no use paying lip-service to this. Real and positive action is required to ensure they will continue to be the backbone of the economy. Similar schemes are operated successfully in the UK, Japan and Hong Kong, among others. Why is there a reluctance to introduce such a scheme here? I do not want to hear any more guff out of Members on the Government benches claiming the Labour Party does not have ideas. What is wrong with this proposal we have introduced? Today the Taoiseach told the Labour Party leader, Deputy Gilmore, that he was prepared to look at constructive proposals from the Opposition. That was a blatant lie. Every time we put forward a proposal, he finds some way of criticising it. I want a critical and proper evaluation of these proposals rather than the Taoiseach's lip-service, disdain and curling of his lip.

What is envisaged is a co-guarantee, risk-sharing scheme where the banks themselves make the lending decision but the Government steps in to guarantee 50% to 75% of the loan. The beauty of such an arrangement is that there is an alignment of interests between the loan originator and the guarantor.

Where the bank's capital is under pressure, as is the case with all our commercial lending banks, the presence of such a guarantee would reduce the level of its risk-weighted assets and, by extension, the level of capital it would need to retain on its balance sheets to back those loans. As all the banks concerned are short of capital, the deadweight loss is minimal while additionality is potentially significant. Again, the expected loss on these loans through bad loans would be likely to amount to less than 5%. The volume of loans, therefore, that could be supported through such a guarantee would be significant with the State maximising its bang for its buck.

If ever there were an indictment of the apathy with which the Government has treated the important issue of unemployment and the necessity to sustain and retain jobs, it can be found in the ham-fisted attempts to bring in the employers PRSI job incentive scheme. It promised up to 10,000 jobs but to date only 629 successful applications have been approved. As my colleague Deputy Shortall has ascertained, at this rate of progress only about 2,000 of the 10,000 promised jobs will have been created by the time the scheme is scheduled to be wound down at the end of the year. When it was announced in last December's budget, €36 million was set aside for jobs created in 2010 while it was indicated that employers could expect a saving of an average of €3,000 each. However, it took six months before the scheme commenced in June this year. Will this initiative be extended into 2011, as it is at least revenue neutral while providing a stimulus to employment?

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