Michael Noonan (Limerick City, Fine Gael)

The cost of these measures will be met by re-allocations from elsewhere within the capital allocations of the relevant Departments and from some of the proceeds of a new levy, the details of which I will set out shortly.

Delivering and maintaining necessary schools is one of the priorities of Government over the next five years. We will continue to invest heavily in our schools. An educated workforce has been central to our previous economic advances and is an absolute prerequisite for our future economic renewal. This will form part of the capital review which is just commencing and which is due to be completed in the autumn. To this end, a further €30 million will be made available for school works and associated works in 2011. Some €20 million of this will be re-allocated by the Minister for Education and Skills from within his own Department's allocation. An additional €10 million of Exchequer funding will be made available to the Department from the proceeds of the new levy. This will be allocated to immediately ready projects to be delivered by schools and will lead to the commencement of an additional €40 million investment, €30 million of which will be spent this summer on what are locally referred to as the summer schemes for schools. A targeted programme using re-allocated funds will enhance existing schools, address building defects and, most importantly, provide immediate, labour-intensive employment in localities throughout the country.

The Government has also agreed that the Department of Education and Skills will continue to invest in new schools. As a result, the Department will identify and deliver two further public private partnership schools bundles in areas where additional infrastructure is required post-2016. Planning and preparatory work will begin immediately. Details of these measures have been announced by the Minister for Education and Skills.

An extra €60 million will be re-allocated to invest in our regional and local roads to carry out much needed surface restoration and road reconstruction works. This important, remedial work is overdue and the additional money invested will allow local authorities to bring forward important projects to 2012 that had previously been pushed back to 2013. The local and regional roads network is fundamental to supporting economic activity away from the main urban centres and motorways. The existing road network must be maintained to a sufficient standard to ensure that the value of this important capital asset does not depreciate prematurely over the coming years. Indeed, if such work is not undertaken soon, the quality of the roads is likely to deteriorate markedly.

All in all, the re-allocated €60 million will help repair about 800 kilometres of local roads right across the country. In addition to this, a further €15 million will be spent on local sustainable transport projects in both urban and rural areas. These will include cycle lanes, pedestrian routes and park-and-ride facilities. These labour-intensive schemes will have a real local impact both in the provision of direct employment and enhancing the quality of local infrastructure. These two measures will support the creation of a number of additional jobs.

There will also be an additional €19 million in Exchequer funding to the Department of Communications, Energy and Natural Resources, for the national energy retrofitting programme, to be supplemented by €11 million savings from within that Department's existing allocation. This will double the funding for the retrofit home energy efficiency and renewable energy programmes in the second half of this year. Energy efficiency works are more labour intensive than other capital programmes and will therefore support additional jobs, as well as delivering long-term savings to households and to the economy in terms of carbon savings. It should also be pointed out that, under the retrofit programme, each €10 million of Exchequer funding provides leverage for up to €15 million in private sector spending.

The size of Exchequer funding for this measure in future years will be considered in the capital review, to be conducted by the Department of Public Expenditure and Reform. In accordance with the programme for Government commitment, we will prepare alternative measures to ensure more energy efficiency programmes can be funded without further recourse to the Exchequer by the end of 2013, if not sooner. In addition to these initial investment measures, we are committed to a more radical overhaul of the wider Exchequer finance capital programme in line with our changed economic and social needs and are putting in place a parallel, commercially financed New Era strategic investment programme in key works of the economy. Further announcements in this regard can be expected shortly.

The Government recognises that the small and medium enterprise sector is very important to the economy and that public procurement can be an important source of business for SMEs. The Government will build on existing initiatives to promote greater access to procurement opportunities for SMEs, including through identifying and overcoming barriers to their participation in the procurement process. We will also seek to foster greater SME engagement in developing innovative products and services to meet the needs of public bodies within the framework of EU law, and will explore schemes in other EU countries in this regard.

The Taoiseach recently signalled the Government's willingness to pilot an incentivisation scheme to encourage a broad diaspora to work for Ireland in finding potential foreign investments that result in sustained employment in Ireland. The initiative will be piloted by IDA Ireland and is intended to complement the IDA's initiative to attract more fast-growth emerging companies to Ireland. The focus will be mainly on generating projects from SMEs which are not reached through IDA's marketing and networking structures and ideally have the potential for rapid international growth.

To ensure additionality, the pilot will be structured around projects that would not otherwise have found their way to Ireland. It is intended that private sector partners, who could be from the "for profit" or voluntary sectors, will be selected following open competitive tendering, based on objective criteria such as the ability to deliver appropriate leads; the international reach of the persons involved; the ability and quality of the proposed mechanism to filter leads for real potential; a proposed fee and fee structure; and proposals to encourage the use of the fee income for philanthropic purposes. The details of the scheme will be agreed between the Department of public expenditure and reform and the Department of enterprise, jobs and innovation.

The Minister for public expenditure and reform is announcing tomorrow a relaxation of the numbers ceiling applying to non-Exchequer funded posts in the higher education sector in order to further facilitate the maximum possible employment creation potential of that sector, while also encouraging institutions to seek to diversify their sources of funding away from the Exchequer. It is envisaged that similar type arrangements will also apply to contract posts involved in research activity in non-commercial State agencies.

The various tax reduction and additional expenditure measures which I am announcing today will be funded by way of a temporary levy on funded pension schemes and personal pension plans. I propose that the levy will apply at a rate of 0.6% to the capital value of assets under management in pension funds established in the State. It will apply for a period of four years commencing this year and is intended to raise approximately €470 million in each of those years. The levy will not apply to pension funds established here and providing services and benefits solely to non-resident employers and members. Further details regarding the proposed measures of the levy are set out in the summary of initiative measures.

I am conscious of the concerns of the pensions industry about the impact of a levy in circumstances where the pensions sector, in common with other sectors in our economy and society, is finding the current economic and financial environment very challenging. However, the imposition of the levy is for a relatively short period and its purpose is to improve that environment by providing the means to encourage job creation in areas of our economy most likely to deliver that employment quickly. These pension funds, the vast majority of which are invested in overseas assets, have been the beneficiaries of massive tax relief in recent decades. In our current circumstances, there is sound economic logic to clawing back some of the tax relief on capital invested overseas to finance greater domestic employment in Ireland.

The levy is being confined to pension funds because I believe the alternatives for increases in taxation elsewhere at this time would be more damaging to the economy. I will be glad to consult the pensions industry on the legislative provisions which will give effect to the levy so as to seek to minimise, where possible, any unnecessary difficulties to which this measure may give rise.

The pension levy represents a very significant contribution by the pensions industry and the many individual savers it represents to our commitment to getting the economy moving again. I am aware that the pensions sector is also concerned, given the temporary levy, about the commitment in our agreement with the EU-IMF to reduce the tax relief on pension contributions starting next year. I will examine this issue in the context of the results of the comprehensive review of expenditure currently being undertaken by the Minister for public expenditure and reform, and any resulting scope for fiscally neutral changes to the EU-IMF agreement.

At the end of March, a range of measures was announced to reorganise, recapitalise and de-leverage the domestic financial system in order to restore the banks to health and continue to provide a secure banking system for deposits. The three main elements of this strategy - recapitalisation, strong liquidity standards and a radical reorganisation and downsizing of the banking sector with the establishment of two pillar, full-service banks - are fundamental to economic recovery and job creation. The restructuring of the banking system will result in banks that are more proportionate to the size of the economy, that can better serve business and households and provide the vital supply of credit needed to support industry and consumers.

The banking system must provide substantial new lending into the economy. The business plans submitted by the pillar banks provide for over €30 billion of total new lending over the next three years across their core business areas. Up to €20 billion of this figure will go to small and medium size businesses, which are the lifeblood of economic recovery. The authorities will be rigorously monitoring the banks' activities to ensure credit is available for borrowers meeting reasonable credit standard requirements.

The plans to restructure and recapitalise the banking system represent the principal response to the challenge of ensuring the availability of credit to viable businesses. These plans are designed to secure an adequate flow of credit into the economy to support economic recovery, even as the banking system is downsized. Notwithstanding this, there remains an issue which predates the recent banking crisis, whereby new companies or expanding companies trying to develop new products or markets struggle to secure finance. This can be due to a lack of familiarity or understanding of the new industry, the new product or the potential of new markets. This market failure in the provision of credit to viable businesses became particularly acute in Ireland during the property bubble, during which time the Irish banks lost the capacity to assess credit risk in companies that were unable to offer property-related collateral.

This is why my Department will work with the Department of enterprise, jobs and innovation over the coming weeks to flesh out the lending targets of the two pillar banks agreed as part of the restructuring plans and to develop a package of additional, targeted initiatives designed to address specific market failures in the provision of credit for viable businesses. These measures will, of course, be subject to EU state aid approval, where necessary.

Among the issues that will be examined will be the role of the Credit Review Office, the credit assessment procedures and skills of the two pillar banks, the reporting procedures of the banks regarding new lending and what the Government can do to support the continued operation in Ireland of foreign-owned banks. As part of this package of initiatives, and in accordance with the commitment in the programme for Government, we will also be initiating a tendering process for the development of a temporary, partial credit guarantee scheme.

The design of the scheme will draw from international experience to support new lending that would not otherwise have been extended by the banks. In this way, the scheme will complement, rather than be a substitute for, existing lending activities by the main financial institutions. It will be designed to encourage banks to lend to new or expanding commercially viable SMEs so they can grow their company, develop new products or expand into new markets.

The Government's commitment will be for an initial period of one year. Specific performance criteria will be set down that allow for review and revision of the scheme at the end of that initial period before committing to a roll-over of the scheme for subsequent years. There will be a modest and known level of exposure to the taxpayer when the scheme is launched but I expect to see a significant positive knock-on benefit to the economy in terms of job creation, welfare savings and returns to the Exchequer by way of tax revenue generated. The Minister for Enterprise, Jobs and Innovation, Deputy Richard Bruton, and I will develop this proposal further with our officials. It is our intention to announce the details of the scheme in June, with a view to having a targeted scheme in place by the autumn.

In line with the commitment in the programme for Government, a microfinance start-up fund to provide loans to small businesses is being developed. A workable scheme and optimum delivery mechanisms are now being considered and this work will be brought to fruition for the December budget.

There is no escaping the fact that we do not have the resources available at present to fund large-scale policy initiatives to help to generate economic activity. Given the weak state of the public finances, the costs associated with the measures we are implementing as part of this jobs initiative must be paid for through the introduction of off-setting measures. In practice, this means the initiative must be budget-neutral over the period to 2014. That in turn means the direct stimulatory effect of today's package of initiatives will be modest and there will be no extravagant claims made in its regard from this side of the House.

However, the measures announced principally represent the first steps by this Government towards improving the competitiveness of important sectors of the economy and enhancing the functioning of our labour market to better facilitate the return to work of those who are currently unemployed. These first steps will be followed by further movement towards this Government's vision of rebuilding a prosperous and productive economy by the end of our term in office. In addition, I believe today's jobs initiative will help to rebuild confidence among households and firms at home and amongst potential investors abroad. In the first instance, as an initiative it points to a Government which is alive to the fact that, despite the tight constraints within which economic policy must now be pursued, it is still possible to make policy changes for the better. The Government is prepared to initiate those changes. Second, I believe the jobs initiative will help to rebuild confidence because it points to a Government which has a vision of what it wants to achieve, a strategy for getting there and the energy and decisiveness needed to adopt the measures required.

I believe the House will agree that in the early days of its tenure, this Government has not been found wanting. We identified priorities for action in our programme for Government and are well on the way to delivering on each of these although barely two months in office.

I commend the jobs initiative to the House.

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