Seán Fleming (Laois-Offaly, Fianna Fail)

I welcome the opportunity to speak on this important day for the 440,000 on the live register, 170,000 of whom are long-term unemployed. To be added to these figures are the many graduates and school leavers who will enter the jobs market later this year. All these people, well over 500,000, pinned their hopes on this announcement today. From that point of view, one will appreciate there is a level of good will for the Government in taking this initiative, as people hope to see some improvement in their employment prospects, with the possibility of long-term unemployed persons, graduates and school leavers finding jobs. Sadly, I am disappointed to say, I do not see that happening, although I would like to be more positive, as I came here on a positive note. Most people will be positive when they tune into the news. However, when they look at the small print, they will ask, "Where is the beef? Where are the jobs?"

The Minister says he is funding this measure with the pension levy, the 6% levy on the market value of pensions on 1 January 2011. People will see the nest egg they have built up during the years being raided. During the recent general election both Fine Gael and the Labour Party promised to increase the tax payable on interest on money people had saved on deposit in their banks. The Government is now committed to taxing the interest payable on bank accounts and raiding pension funds. People will be rightly concerned that perhaps it might raid their deposit accounts next. The Government must allay that fear; it must tell the people they need not worry that deposit accounts will be touched during its lifetime.

Most of these measures will be enacted by legislation by 1 July. I am concerned that the pension levy has been backdated to 1 January. This is a phenomenal shock. All pension funds made their plans and calculations for budgets and dividends on what they could afford towards the end of last year. On page 20 of the Government's own document it is stated the yield this year will be €470 million. That will also be the yield next year and the year after. It is a retrospective levy for the full year, even though it will only be taken in the second half of the year. People will be shocked that there is to be a levy, that it is so severe and being backdated for six months. That will be a further bone of contention for many.

There is a figure of €390 million in the capital programme for schools. The Minister says he will move a figure of €20 million from this to the summer works scheme and that an extra €10 million will be provided by way of the pension levy. Normally the capital fund creates eight to 12 jobs for every €1 million spent. We will assume there will be a doubling of that figure in the case of the summer works scheme, but even if 20 jobs are created per annum for each €1 million spent, it will amount to only 200 extra jobs. These 200 jobs in the construction industry will be welcomed and appreciated and we will support their creation, but in the context of the scale of the problem, the single greatest initiative will, at a maximum and on a very optimistic basis, provide for the creation of only 200 jobs in a full year.

People will be disappointed at the small number of jobs which will flow from today's announcement. Overall, I am shocked by this announcement. The Minister states that the pension levy will raise €470 million. I welcome the reduction in other taxes such as a reduction in excise tax by €15 million and VAT by €120 million, PRSI by €85 million and by €9 million and the Minister proposes to reduce other income taxes by €230 million. This means he will have €240 million available for job creation.

I refer to current expenditure measures proposed on page 22 of the Minister's statement:

Total additional current expenditure to specified areas will amount to €29 million in 2011 or €45 million in a full year. These will be funded by reallocations of €18 million from within existing current resources and €11 million from the introduction of the levy on pension funds in 2011.

The Minister is providing €11 million out of the pension levy for current expenditure job creation, which means the labour activation projects. The Minister proposes that total additional capital expenditure will amount to €135 million, funded by reallocations of €106 million from within existing resources and only €29 million will be produced from the introduction of the levy on pension funds. The capital expenditure fund will receive €29 million from the pension levy and €11 million from the pension levy will go to current expenditure, giving a total of €40 million from the pension levy. A total of €240 million will come from the pension levy, meaning that the pension levy is being raided today to the tune of €470 million, with €40 million of it going into capital and current job creation measures. The Minister states that his figures will produce a surplus from the pension levy of €200 million which he will use to reduce the deficit. This is a raid on the pension fund to cut the budget deficit by €200 million, with a few scraps of €40 million given to job creation and a reallocation of a couple of hundred million. There is no sign in the Minister's document of the vast bulk of the pension levy being spent on job creation.

I remind the Minister of the old cliché that one should not judge a book by its cover. This is very true with regard to this document. The title cover reads "Jobs Initiative May 2011". However, one can judge this book by what is written on the final page where it states that according to the quarterly national household survey the unemployment rate at the end of 2010 - just a few weeks before this Government came into office - was 13.6%. The Minister's document forecasts that the unemployment rate at the end of 2012 will be 13.7%. The Minister is predicting an increase in the unemployment rate over the first two years in office of this Government. Some people may be fooled by a book cover but people cannot be fooled all the time. They will see that most of the pension levy is being used to cushion the budget deficit. In the final paragraph the Minister predicts an increase in unemployment in the period from last year to the end of next year. People will be very disappointed when they read the details of the initiative.

The Minister states that he will reduce the deficit to 3% of GDP by 2015. This will mean extra borrowing and extra interest rates to be paid for an additional year. I ask the Minister to say outline the resulting extra cost to the Exchequer of funding the jobs initiative.

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