Mick Wallace (Wexford, Independent) | Oireachtas source

I propose to share time with Deputies Richard Boyd Barrett and Catherine Murphy.

Examining the Forfás annual employment survey for 2012 it is difficult to discern what is being done by State bodies such as Enterprise Ireland, Shannon Development and Údarás na Gaeltachta to promote Irish enterprises and job creation. What makes it even more difficult is the footnote at the beginning of the survey that states, "The population of firms covered in the survey includes companies receiving assistance at any stage from these agencies or their predecessor agencies". In effect, this renders the numbers in the survey inaccurate as a representation of the work being done by these State bodies.

The Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, has repeatedly boasted that in 2012 the 35 county and city enterprise boards created 4,858 full-time jobs, but he has failed to mention that, according to his figures, the net increase in the number of full-time jobs in firms engaged with the enterprise boards was only 256. According to him, speaking in the Dáil, in 2011 and 2012 his office spent over €1 billion and in that period companies which at some stage in their history had received assistance from IDA Ireland, Enterprise Ireland, Shannon Development and Údrarás na Gaeltachta created a net increase of 9,754 full-time jobs. In the same period 35 county and city enterprise boards spent €30.2 million on current investment and €40.8 million on capital investment and there was a net increase of 456 jobs, approximately half of which were part-time. These figures seriously question the claims of the Department of Jobs, Enterprise and Innovation in the Action Plan for Jobs that the Government does not create jobs, as it is successful businesses and entrepreneurs that do so; it is obvious that the Government does not create jobs and that companies and entrepreneurs that have money thrown at them also seem to be struggling to do so. Every time IDA Ireland and Enterprise Ireland announce a new project, there is abarrage of statements and public relations reminders on what a good job they and, by association, the Government are doing to stimulate the economy. Two weeks ago the Minister quoted Central Statistics Office figures which indicated that the number in employment had increased by 58,000 in the year to the third quarter of 2013, with promises of another 48,000 jobs in 2014. How many have been created with the aid of State agencies is not clear, but if the 2012 figures are anything to go by, it is only a fraction. We are eagerly awaiting the 2013 Forfás employment survey.

What is excluded from the public relations effort is a discussion of the number of jobs the Government has destroyed. The position on the ground is quite stark and certainly does not provide scope for self-congratulation. In October Mr. Michael Taft collated data from both the ESRI and the Nevin Economic Research Institute, NERI, to give a rough estimate of the effects the previous two budgets had had on employment. Looking at the outcome of six fiscal adjustment measures, he estimated that budgets 2012 and 2013 combined had resulted in the destruction of between 43,000 and 57,000 jobs. He noted:

In other words, if there were no fiscal adjustments, there would be approximately 50,000 more people at work. And this does not count all tax measures (e.g. capital). That is a lot of jobs. Even if this crude estimate is off by 25%, this is huge.

I can provide a further insight into Mr. Taft's research. It indicates that the Government had cut public investment by approximately €1 billion in the previous two budgets, with the NERI estimating a loss of between 18,000 and 19,000 jobs and the ESRI estimating a loss of between 9,000 and 10,000 jobs, although the ESRI admits the estimate in this category is an underestimate. The Government has raised approximately €1 billion in indirect taxes, mainly in VAT and excise duties, with NERI estimating a loss of jobs of between 9,000 and 10,000. The Government has cut social transfers by approximately €1.3 billion, according to the budget papers, but some have not been implemented. Therefore, we can estimate the cut at an even €1 billion, with the NERI estimating a loss of jobs of between 9,000 and 10,000. Since the Government has taken office, public sector numbers have fallen by 12,000. The ESRI estimates the number of job losses at 14,500. The level of non-wage consumption has remained stable in the past two years, but in 2014 the Government intends to cut it by approximately €300 million, with the NERI estimating the number of job losses at between 3,000 and 3,500. Property tax is being introduced in two phases, with the ESRI estimating the number of job losses, when property tax is implemented in full, at between 1,000 and 1,250. What is clear from these figures is that all of the fiscal policies pursued by the Government are hurting the people, but most damaging of all are the cuts in public investment, an issue I will address.

One question concerning the Government’s preoccupation with foreign direct investment must be discussed. The Minister and others in the little neoliberal cabal that speckles the Government benches relentlessly and unquestioningly repeat the free market dogma that foreign direct investment and private sector initiative will perform the magic in looking after the economy only if our legislation - now a product competing in an international market of norms - is tilted far enough in favour of big business that they might be attracted to use us for a while. In this arena where legal systems are for sale, social protections for workers, environmental protections, decent wages and anything resembling a fair tax system are about as attractive as syphilis. This dependence undermines our ability or inclination to regenerate our own industry with anything resembling imagination; the dependence becomes stronger, the majority of profits leave the country and the likes of PricewaterhouseCoopers advise on how to best avoid taxes to enable these companies to stay longer.

Dr. Proinnsias Breathnach has recently pointed out that while US firms invested $129.5 billion in Ireland in the five years to 2012 and there was a total foreign investment inflow into Ireland of nearly €30 billion in 2012 alone, the vast majority of this inflow goes nowhere near productive activity; roughly 60% goes into financial activity, mostly financial intermediations which "have little connection with the real world where people work in producing goods and services". Given this situation, the question that arises is what the Government is building in Ireland, if not a tax break funnel for international capital, with little or no lasting benefit for the people. When these figures are reported in the press, minus any meaningful context, the Government gives itself a little pat on the back. Dr. Breathnach provides a little context when he questions how so much foreign direct investment in the country can be coupled with a drop in employment of 8% in foreign firms in the past five years. He states:

The main part of the answer lies in how statistics agencies measure foreign direct investment, FDI, flows. Thus, earnings of foreign companies that are reported in an economy but are not taken out are considered to be "reinvested earnings" (even though very little of it may be directed to productive activity) and are counted as an inward investment flow. Last year, these earnings accounted for three quarters of the total recorded FDI inflow into Ireland. Most of these earnings actually originated abroad but were declared in Ireland for tax purposes.

There are other avenues that the Government could take to create jobs, one of which was touched on by Mr. Taft. He argues that the State must be willing to contemplate being an employer of last resort through local authorities or the provision of social employment. The idea behind the State being an employer of last resort is that in times of high unemployment and when the private markets cannot employ enough people who want to work, the State should employ people in the interim until the market recovers. This has been done many times and with great success. As Mr. Kieran Allen and Mr. Brian O’Boyle remind us in their recent book Austerity Ireland, de Valera and Fianna Fáil proclaimed that it was the duty of the State to guarantee a right to work. Roosevelt’s New Deal, in circumstances very similar to today’s, put hundreds of thousands of people to work in building the public infrastructure of the United States, while today China has avoided the worst of the recession partly because it has ignored the failed advice of the IMF, borrowed a lot of money and embarked on a massive public spending programme. In 2013 alone it increased spending on health care by 27%, on education by nearly 10%, on the environment by 19% and on culture, sports and media by 9.3%. Its unemployment rate now stands at around 4 %; it seems, therefore, that government intervention works, not just when one wants to protect the bondholders of failed banks but also if one cares to protect people's jobs and livelihoods and the institutions and services that increase standards of living across the board.

The Government might state it is not the role of the State to provide jobs, but it forgets to mention that that viewpoint is strongly ideological, namely, a neoliberal belief in the primacy of the demands and powers of the free market. History has proved and is proving that ideology to be socially bankrupt and corrupt in that it exclusively favours corporations, their shareholders and CEOs. It is also now clear to the people that any power that professes we need less government involvement in providing social protections such as employment, health care, education and transport-----

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