Pearse Doherty (Donegal South West, Sinn Fein)

Listening to the Minister's speech I now fully understand why the Government downgraded today's announcement from being a jobs budget to a jobs fund to a jobs initiative and the reason is crystal clear. It gives me no pleasure to say that across the country, hundreds of thousands of people will be deeply disappointed by today's jobs initiative. There are 439,571 reasons the Minister and his Government colleagues should have done better and done more.

The election, held a few weeks ago and which brought this Government into office, was all about jobs. However, one must question how many jobs are being promised in this initiative and how many people will be taken off the live register. How many of the 439,571 people can look to a future of employment as a result of this major announcement from the Government? The capital projects such as retrofitting, schools maintenance works, investment in local and regional roads, the smarter travel project, will benefit by an additional €29 million. The Minister estimates that this investment will create jobs per million euro. I congratulate the Minister because this proposal for the total allocation for capital projects will create 348 jobs this year. I do not know if this is what he expected but people will be desperately disappointed at these announcements and hope has been snatched from them.

There is no doubt that the Government has entered into office when the country is in an economic mess left by the previous Administration. Despite projections to the contrary, almost all the economic indicators show that the policies of austerity implemented by Fianna Fáil and the Green Party since the 2008 budget continue to drive our economy into the ground. We all know that GDP continues to decline, by 0.7% for the last quarter in 2010 and unemployment continues to rise at 439,571 in April, up 1.6% since April 2010. Inflation and interest rates are steadily rising, creating additional pressures on businesses and families struggling to cope with lower wages, fewer working hours and depressed consumer demand. All the while, despite being told there is no money for investment in job creation, public service provision or adequate social welfare, the previous Government was willing to borrow billions of euros to prop up a banking system with no evident social or economic dividend for the ordinary citizen.

As a result of three long years of bank bailouts, savage cuts and increasing unemployment, it is no wonder that the Government deficit continues to rise. At the end of the first quarter of 2011, the Government deficit now stands at €9.9 billion, which is €3 billion up on the same period in 2010, thanks to a further injection of €3 billion into Anglo Irish Bank. According to the OECD, Irish debt as a percentage of GDP, continues to rise. It is projected to hit 113% at the end of 2011, up from 105% last year. The European Commission estimates that our debt to GDP ratio will reach 120% by 2014, which would bring the total debt to €190 billion. This is not new because Sinn Féin in this Dáil and previously said this was the direction and the trajectory which the State as taking under the austerity measures. Only last week, the UCD economist, Mr. Morgan Kelly, argued that when liabilities and expenditure from bank recapitalisation and NAMA are taken into account, the State will have a total debt of €250 billion in 2010, amounting to an incredible €120,000 debt per person per year.

Our society and our economy are in the middle of a perfect storm, comprising three linked crises, a jobs crisis, a debt crisis and a deficit crisis. The outgoing Government believed that the best way to exit this perfect storm was to ignore the need to create jobs, to borrow billions to bail out the banks and heap the burden of the recession on low and middle income families with wage cuts and tax increases. This approach is simply not working. Those who do not think the figures speak for themselves should go out on to the streets and talk to people who are struggling. I refer, for example, to families that are finding it difficult to pay their bills, businesses that are finding it difficult to secure credit lines and unemployed people who are finding it difficult to get work. Our society and our economy are on their knees. People are looking to the Government to devise and implement solutions to our jobs, debt and deficit crises.

I remind the House of what Fine Gael and the Labour Party said during the election campaign. They told the electorate that if they were elected, job creation would be the priority of the new Government. Deputy Kenny had a five point plan to get Ireland back to work. It is clear that it is now a five point U-turn. He told us that the protection and creation of jobs was his priority. Deputy Gilmore's jobs strategy involved the establishment of a strategic investment bank and was aimed at creating jobs and getting credit flowing to businesses again. Fine Gael was not embarrassed to say it would create 100,000 jobs over five years through the NewERA programme. It told voters it would invest €7 billion in the development of the State's water services, telecommunications, infrastructure and energy industries. I remind Deputies that Fine Gael said it would invest €7 billion in such capital projects. The investment in such projects that has been announced today amounts to an additional €29 million and will create 232 jobs. Fine Gael also promised that 45,000 new employment and training places would be created to target youth unemployment. Some 23,000 of these places were to comprise a national internship programme and 17,000 were to be second chance education places. It also proposed that 700 new places for apprentices and 5,000 new community employment places would be made available. The scale of Fine Gael's job creation, training and education proposals was ambitious, even if the costings were a little fuzzy.

The Labour Party promised before the election that it would put in place a €500 million jobs fund to support new ideas and create employment in strategic sectors of the economy. It also promised to establish a strategic investment bank, with a lending capacity of €2 billion, from the National Pension Reserve Fund. Like Fine Gael, the Labour Party outlined a series of training, education and work placement schemes. It promised to provide 60,000 places during the lifetime of the Government - 30,000 in work experience places for graduates and 30,000 in training and education places for the unemployed. If we were to believe the pre-election promises of Fine Gael and the Labour Party, some 100,000 jobs and 60,000 training places were to be funded to the tune of between €2.5 billion and €7 billion. These commitments were used to win votes, to get the former Opposition Deputies into the positions they are in today and, ultimately, to form the new Administration.

The speed with which Fine Gael and the Labour Party have abandoned their promises is truly breathtaking. Within two weeks of the election, they agreed a programme for Government that contained no figures or targets for job creation in its 64 pages. The strategic investment bank and the NewERA proposals survived the negotiations, but the proposed investment of between €2.5 billion and €7 billion did not. The programme for Government sets out a target number of education, training and work placement programmes, but it is half the figure promised by Fine Gael and the Labour Party during the election campaign. The number of places proposed dropped from 60,000 to just 15,000. Just 20,000 places have been announced today. If ever there was an example of political parties breaking election promises as soon as they got into office, this is it. During the election campaign, the Labour Party promised a jobs strategy and Fine Gael promised a jobs budget. In the programme for Government, these weighty commitments were downgraded to a "jobs fund". This weaker proposal has now been diluted further and is now a revenue-neutral jobs initiative. The spending commitments are gone and the job targets and training places have been slashed.

Before the Minister for Finance and his Fine Gael and Labour Party colleagues came to the House today, it was clear to Deputies on this side of the House and people in the wider community that we would get very little. The Government had been playing down the initiative and rightly so because very little was to be presented. Today's announcement needs to be read in conjunction with the savage austerity measures that have been proposed by the Government under the EU-IMF programme. The measures outlined during last week's debate will further depress consumer spending and lead to higher levels of unemployment in the public and private sectors. There is no two ways about it - the measures in the austerity programme, such as the introduction of water rates and property taxes and the reduction in tax credits and tax bands, will depress consumer spending and lead to more people becoming unemployed in the domestic economy.

Some aspects of today's initiative are undoubtedly to be welcomed. When the proposals that have been outlined by the Minister, Deputy Noonan, are taken together, it is clear not only that they will fail to create substantial employment, but that some of them will depress consumer spending and lead to a rise in unemployment. Sinn Féin is on record as welcoming the reversal of the cut in the minimum wage. This is especially welcome for the thousands of workers who lost a significant portion of their income when Fianna Fáil introduced the cut last year. The positive benefit of this measure for the economy is dramatically undermined by the Government's assertion - repeated again today - that it intends to attack the wages of up to 300,000 low-paid workers across the State under the guise of a review of joint labour committees. Any reduction in the income of this section of the workforce will have a devastating impact on thousands of small and medium sized local businesses that depend on the spending power of lower income earners to survive. This will be compounded by the cuts to social welfare being proposed under the guise of removing so-called disincentives to work in the social welfare system. These cuts will further reduce the spending power of the increasing number of people who receive social welfare payments and, in turn, further damage our local retail and service sectors.

The employers' PRSI initiative was a targeted jobs scheme. It meant that those who employed someone who had been undertaking a FÁS training programme or had been unemployed for six months did not have to pay PRSI for 12 months. It was specifically targeted at new employment. It was not available to the existing employees of employers. Although the scheme will continue until the end of this year, it is disappointing that the Minister for Finance failed to announce today that it will continue thereafter. Instead, the Minister announced that he intends to reduce the rate of employers' PRSI from 8.5% to 4.25%. Sinn Féin is concerned that the reduction to 4.25% in the rate of PRSI applying to jobs for which employees are paid up to €356 per week will incentivise employers to decrease the pay of those who currently earn more than this amount, or engage in firing and rehiring to achieve the same end. I ask the Minister to keep a close eye on the practices of those who avail of this incentive. The existence of two rates - 4.25% and 10.75% - will offer employers a major financial incentive to reduce the pay of employees in order to avail of the lower rate. That was not the case in the past because the rates were closer together.

The elements of the initiative that I have mentioned, such as the review of joint labour committees, have nothing to do with job creation. They involve trying to suppress the cost of labour in a vain attempt to increase economic competitiveness. The employees who will be most affected by these wage cuts work in the domestic rather than the export sector, which demonstrates that this is simply a cost-cutting initiative that will drive down wages, increase poverty and lead to further job losses. Any new programmes or expansions of existing schemes that are aimed at improving people's employment are to be welcomed. I have said that some of the Minister's proposals are welcome. Sinn Féin will study in detail the proposal, as outlined today, to provide 20,900 new places under various training schemes. My colleague, Deputy Crowe, will elaborate on that when he addresses the House during this debate on Thursday. The 20,900 new places are a far cry from the 60,000 places promised several weeks ago. That the total additional expenditure in this area is a meagre €29 million speaks for itself. Increased investment in labour activation measures is only worthwhile if there are meaningful jobs on the other side of it. The Government has not properly addressed the issue and is not prepared to stimulate the economy. There is deep fear that we are about to see a repeat of what took place in the 1980s and that people will be trained for a future of social welfare or emigration.

The substance of today's jobs initiative deals with issues of labour market costs and activation. The questions many people will ask are, "Where are the jobs?" and "How many jobs will the initiative create?" As with the programme for Government, the jobs initiative does not contain job creation targets. The Government proposes to spend a total of €135 million on capital projects in the coming year. Of this figure, €106 million is from existing capital allocations. This means only €29 million of additional expenditure will be allocated in this area in 2011. According to the Government's figures, slightly more than 200 jobs will be created as a result. Considering the level of immediate job growth that could be delivered in this area and the funds at the Government's disposal, its unwillingness to significantly increase investment in labour intensive capital projects constitutes a complete failure. As for the much promised measures to assist small and medium sized enterprise to access credit, the Minister's proposals do not provide detail.

The Minister has argued that the Government's hands are tied, the jobs initiative must be financially neutral and an alternative is not available. There is always an alternative. We elect Governments to bring forward proposals and, as my colleagues have noted, stand up for Irish interests. Sinn Féin has put forward alternatives. My party has long argued that the Government can neither cut nor borrow its way out of the jobs, debt and deficit crises. While we need to reduce the deficit and debt to GDP ratio and require a strategy to allow the State to return to the international bond markets to resume normal lending, none of these objectives can be achieved through the economics of austerity. We have had four austerity budgets since 2008 and each time unemployment, debt and deficit levels have increased. Austerity is not only incapable of fixing these problems, it makes them worse. The only way to exit the perfect storm of the jobs, debt and deficit crisis is to invest in job creation. The only way to get the economy back on track is to invest in a major stimulus package aimed at saving and creating jobs, assisting small and medium sized businesses, helping hard pressed families and boosting consumer spending.

If Sinn Féin were in Government, we would invest €2.9 billion over the next 12 months to stimulate economic activity, job creation and consumer spending. Not only is such an approach affordable, it is urgently needed if we are to break the downward spiral created by the Fianna Fail Party policies of austerity which are being followed by Fine Gael and the Labour Party. Most of us know that there is €14.7 billion left in the National Pension Reserve Fund, of which €10 billion has been committed by Fianna Fáil, Fine Gael and the Labour Party for future bank bailouts under the terms of the EU-ECB-IMF austerity programme. Sinn Féin in government would use €2 billion of the remaining €4.7 billion over the next 12 months to fund a job creation and retention programme. Combined with a €900 million package aimed at boosting consumer spending, it would be possible to protect and create in excess of 75,000 jobs.

Sinn Féin would spend €1 billion of the €4.7 billion on fast-tracking labour intensive infrastructure projects, including schools and hospitals building projects, upgrading water infrastructure, developing public transport networks and rolling out State-wide broadband services. According to the Department of Finance, every €1 billion invested in capital infrastructure projects generates more than €4 billion in GDP over time, which would amount to an increase of GDP in the order of 3.2%.

Sinn Féin would use a further €600 million for a specific job creation and retention fund which would subsidise small and medium sized enterprises to retain existing staff and, where possible, take on additional staff. This proposal is similar to the successful model developed by the German Government. We would invest €400 million in the State child care and pre-education sector with the objective of building a public child care service, creating jobs and incentivising parents to return to employment by providing child care at an affordable price. Studies have shown that for every €4 invested in child care, €7 is returned to the Exchequer in increased workforce participation.

In light of the fact that 50,000 young people are due to emigrate in the coming 12 months, we would ring-fence €500 million of the spend in each of the three areas I have cited to specifically target employment opportunities for young people, ensuring that at least 20,000 of the 75,000 jobs would go to those under the age of 25 years.

In addition to this €2 billion job creation and protection fund from the National Pension Reserve Fund, Sinn Féin in government would inject a further €900 million into the economy in the form of a family stimulus package funded through additional tax revenue and the abolition of the universal social charge. The aim of this package of measures would be to reverse some of the heavy burden placed on working families and those on social welfare by the previous Government and, in so doing, boost consumer spending. Our family stimulus package would be funded through a portion of a new 1% wealth tax that we would introduce on net assets of more than €1 million. We estimate this proposal would generate an additional €1 billion in a full calendar year. The package would include €140 million investment in refundable tax credits for 113,000 of the lowest income earners, which would benefit 240,000 people in total.

We would also restore the Christmas bonus and thereby put €225 million into the pockets of the State's poorest families and, in turn, local economies across the country. We would boost employment and consumer demand through an additional €50 million per annum investment in frontline community sector employment and an €85 million investment in easing the recruitment embargo in frontline public services such as education, health, the Garda and social welfare.

In addition to this family stimulus package, Sinn Féin would immediately abolish the universal social charge, thereby releasing a further €400 million of spending power into the local economy. We would replace the revenue lost to the State under this measure by introducing a third rate of income tax of 48% on individual incomes over €100,000 per annum.

Combined, the measures proposed by Sinn Féin amount to an investment of €2.9 billion in saving and creating jobs and boosting consumer spending. Alongside this package, we would introduce a range of measures to assist small and medium sized enterprises, the full detail of which my colleague, Deputy Peadar Tóibín, will outline when he addresses the House tomorrow afternoon.

The policies of austerity implemented by the Fianna Fáil Party and now supported by Fine Gael and the Labour Party are not working. The approach outlined by the Government today, written under the watchful eye of the European Commission, European Central Bank and International Monetary Fund, will continue to push our economy and society further into the cycle of unemployment, debt and deficit. It is ironic that for the past six weeks the Government has bored us with the mantra that its jobs budget must be revenue neutral and its hands are tied as a result of the economic circumstances when, only a few weeks ago, it committed to inject €24 billion of taxpayers' money into failed banks. Even last week, it repeated that, subject to the stress tests in Anglo Irish Bank which are due in the next couple of weeks, it will commit further billions of euro, in addition to the €30 billion it has already committed, to this failed bank.

Many people are asking why it is not possible to have a revenue neutral banking policy when we must have a revenue neutral jobs budget. Such an approach would make a major contribution to solving the problem we face. The Government appears to believe it is fine to take a revenue neutral approach to its number one priority of getting 437,000 into work while investing not millions but billions of euros of our money in failed toxic banks which will never pay a dividend for the economy or to citizens. There are alternatives that can break this cycle, based on investment in jobs and boosting consumer demand. The economy is crying out for stimulus and ordinary people are crying out for a change of direction. Sinn Féin today laid out proposals for a €2.9 billion investment in our society and economy, which is the only credible and costed alternative to the failed policies of austerity that were introduced by Fianna Fáil and unfortunately, despite all the pre-election rhetoric, now are being supported Fine Gael and Labour.

What was presented in the Chamber today will be revenue neutral but unfortunately also will be jobs neutral. There is a better and different way and Sinn Féin has led the charge in this regard. While some of the measures announced by the Minister are welcome, they are not even a drop in the ocean of what is required. I appeal to the Government to take up Sinn Féin's proposals, change direction and get the economy back on track. I appeal to it to give hope to the aforementioned 437,000 people, many of whom have given up hope on the present Government and who are giving up hope on this country and are emigrating as a result of failed policies of the past. Unfortunately, these failed policies now are being implemented by the new Government and I appeal to it to change direction.

See this speech in context