Willie O'Dea (Limerick City, Fianna Fail)

The devastating human, social and economic consequences of long-term unemployment need no elaboration. It is very difficult for an individual who has been unemployed for more than 12 months to get back into the workforce. It is very difficult and costly for the agencies of the State to get that person back into mainstream employment. There have been a number of studies on this, all of which have come to the same conclusion. The most recent detailed study of the recession and job losses suffered in Japan, published last year, found those who experienced long periods of unemployment in their early careers now account for almost 60% of cases of severe and chronic depression in the country, often leading to suicide or attempted suicide.

Ireland is relying on exports, but exports are very slow burners when creating jobs. The Minister extolled the success of the Government in regard to exports. Statistics show we have recovered about 75% of the export market we lost during recent years, but global volumes of trade have returned to their pre-crisis peaks, which means we have actually lost market share. It gives me no pleasure to say the export figures for July show a very significant downturn, which is extremely worrying. That is due to the economic ill-health of our trading partners, which I freely acknowledge. The Members on the other side of the House, who used to sit here, never acknowledge that. We have a small, open trading economy, as all speakers on the Government side have said, and naturally our performance depends on the economic health of our trading partners.

As acknowledged on all sides of the House, there are steps we can take. It is true we have regained some competitiveness since 2008. That said, many cost increases have been as a result of cyclical rather than structural factors, for example, subsidies for major energy consumers and currency fluctuations. The problem is that if the structural barriers preventing costs from adjusting to lower growth are not removed pretty quickly, recent competitiveness gains will be rapidly eroded once the economy starts to recover. Given Ireland's reliance on trade and the open nature of its economy, international cost competitiveness is a crucial determinant of our economic well-being.

The Government has identified all the areas where it needs to take action pretty urgently in this regard. We read about the impending legal services legislation, in respect of which there are reported divisions in Cabinet. I hope that is not correct. Although the areas of energy costs, utilities costs, rent, rates, insurance, and so on have been identified clearly, we are still awaiting action. I hope that, having given the Government a fair period of grace over its first seven or eight months, we will see early action on many of these fronts.

There is also the question of credit. There is a credit famine in the country and we discussed this matter today at a meeting of the Joint Oireachtas Committee on Jobs, Social Protection and Education. We were told one can appeal to a credit review committee but when we asked the departmental officials how many cases had been referred to this committee we were told the number was 100 cases, which is laughable, and that 30 of them were successful. This is a drop in the ocean. The fact is a credit famine exists.

I realise the Government has heavily recapitalised the banks, and the banks are now in a position to extend lending to business at a realistic level. However, they are not doing so. The Government has announced two impending initiatives - it has been announcing them for the past eight months and I hope we will see them shortly - which are the micro-finance initiative and the partial credit guarantee scheme. The figures we have heard they will cover are minuscule and are just the tip of the iceberg. Recently, I spoke to business people in the UK, which has a far more extensive partial credit guarantee scheme, and it is not working. The UK is experiencing exactly the same credit problems for businesses as are experienced here.

There is much we can do with regard to innovation in areas such as digital games, cloud computing and life sciences. The Minister of State, Deputy Sherlock, has pointed out to us on many occasions that programmes exist which trundle along but there now needs to be a step-change in how we approach these matters. I know of many SMEs which, because the domestic market is flat, have been trying to break into the export market but no assistance or encouragement is available for them. There is no mentoring or organised system for receiving advice. We should consider a MABS-type system for small businesses. It is in the Government's power to take various other initiatives at relatively little cost.

I will not get into a debate on the effectiveness or otherwise of the jobs initiative. All I will state is that it had some effect, particularly in the sectors of the tourism industry at which it was targeted, but the sad reality is that unemployment has increased by approximately 25,000 since the jobs initiative was announced. We all know that finance for the jobs initiative was secured by raiding private pension funds.

The centrepiece of the jobs initiative is a reduction in VAT. I was the first person to reply for the Opposition when the jobs initiative was announced, and I stated in so far as stimulating the economy was concerned a number of studies indicated that a scatter-gun VAT reduction is the worst way to go about it. I quoted the experience of Gordon Brown's Government, which was the previous Labour Party Government in the UK, which reduced VAT substantially. The result was disastrous; it created no jobs and plunged the country further into debt. We have not plunged ourselves further into debt; we have plunged private pensioners who have been saving for years further into debt.

If we are to get a grip on the problem and take action which is in our own power to take - I recognise all of this is heavily influenced by world factors such as what will happen to the euro - we must look to the next budget for a far more radical approach than the approach we have seen to date from the Government.

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