Stephen Donnelly (Wicklow, Social Democrats) | Oireachtas source

If we are to have full sustainable employment in Ireland, I suggest to the Minister that we need to do the following in this Dáil term. First, we need to increase investment in business-critical infrastructure, particularly broadband and transport. Second, we need to increase investment in our education system, coupled with serious reforms at secondary and tertiary levels. Third, we need to increase investment in basic scientific research, something that has been cut to shreds in recent years. Finally, we need to systematically reduce the costs of doing business, including in such areas as interest payments, compliance, energy, insurance and legal duties.

We need to be just as ambitious and provide just as much support for our small and medium-sized enterprises, SMEs, as we do for the multinationals. This includes cutting red tape, supporting innovation, getting credit flowing, equalising taxation and social protection for the self-employed and making it easier for people to go to work, for example, by making childcare affordable. All of these things are possible but they require a clear focus and determination by the State in the coming years. This includes us in the Oireachtas, local government, the Civil Service and a range of other State agencies.

The Minister probably does not agree, but I would posit that the previous Government got many things wrong. However, it is important to give credit where credit is due, and nobody can deny the job growth that we have seen and continue to see. Approximately 135,000 jobs were created during the term of the last Government. Unemployment is now thankfully below 8% and continues to fall, and we continue to lead the world in attracting high-value foreign direct investment, FDI, to Ireland, which is something for which IDA Ireland and the former Minister, Deputy Richard Bruton, deserve great credit. Interestingly, in the first quarter of this year tech firms in Ireland raised €237 million in venture capital. That is twice what was raised in VC for tech firms last year, so there are some very encouraging signs this year in the marketplace.

However, I think we would all agree that job creation has been very unbalanced. One of the largest failures and areas for focus to date is youth unemployment, which is still nearly 20%. The research by the World Bank shows sadly, that in terms of economic and social indicators, this high level of unemployment will stay with and affect that generation until retirement.

Business in rural Ireland has been decimated. I travelled last weekend around towns and villages in Mayo and I would say there were some where one in every three shopfronts was closed and others where two in every three were closed. Entire towns and villages are becoming ghost towns, which clearly needs to be addressed. In Wicklow, my constituency, vacancy rates in commercial property are still at 13%. I am sure the Minister is talking to business owners around the country, as I certainly am, many of whom are still hanging on by their fingernails.

Sadly, of course, the greatest reduction in unemployment over the last five years has been due to emigration. 35,000 people emigrated last year alone and - I was shocked when I read this figure this morning - 220,000 people under the age of 25 have left the country since the economic crisis began. That is a huge number of people for the size of our population.

The question we are addressing today is how to turn a fragile and uneven jobs recovery into a sustainable and full one. I would like to suggest a range of different measures to consider. We must utilise much more fully the multinationals that are here. Long may these companies continue to come and long may they stay, but we must start linking indigenous industry much better to the multinationals. The original FDI strategy, if one looks back a few decades, was that the multinationals would come and Irish indigenous industry would become the supply chain to them. However, that has not happened. The multinational base in Ireland is becoming more productive, but the data show that the gap in productivity between the multinationals and the indigenous sector is growing. Dr. Catherine Mann of the OECD stated recently at a conference, "The assets are here [that is, in Ireland], but they're not being linked in to the domestic economy. They're not being levered up by domestic firms, and they're not being married to domestic workers". Enterprise Ireland is tasked with creating these linkages but it is operating on a very small scale. There needs to be a lot more investment and Enterprise Ireland's team needs to grow. This is a huge area of potential for the indigenous sector.

We also must get much more serious about helping our SMEs access not just credit, but affordable credit. The ECB's latest statistics show that Irish companies are paying on average 5.8% interest on loans under €250,000. In France the average rate is 2.4%; in Austria it is 2.2%. Our firms are therefore paying between 60% and 100% more for their credit. We need our firms to be internationally competitive but they will only become competitive if they can borrow at the same rates as the international firms - the French, Austrian and American firms - with which they are competing.

There are many things we can do here. We can work with the banks to find ways of reducing their average cost of capital. We can establish a community banking system. The credit unions alone have about €8 billion on deposit that they are waiting to use and lend out but because of the current legislation, the Central Bank rules, they are not able to do so. We need to make firms much more aware of the Credit Review Office. When firms go to the Credit Review Office they are getting very positive responses. If one does a straw poll of the firms, however, to ask them whether they are aware of the Credit Review Office and the other supports around, be it the local enterprise offices, LEOs, or other areas, the level of awareness is not that good. There is therefore very important work to be done to reach out to the SME sector and educate SMEs as to what is already available.

Ireland's investment in infrastructure needs to be increased. This is critical. IBEC, ISME and everybody else are calling for it. I understand investment levels are about half of the OECD average at the moment, at about 2.2% of GDP. We must get the national broadband plan back on track. The dates that are now being used have been pushed in some cases by two years so far. It is already slipping a lot, and my fear is that it will continue to slip. It is probably the single most important piece of strategic infrastructure required for job creation in the country at the moment.

Some very critical transportation links also need to be completed. A high-quality connection between Cork, Limerick and Galway is one and the ring road in Galway for the multinationals is another. The latter has become a car park. It has become so bad that many people are saying they cannot get to and from work, so very serious investment is needed.

We probably agree on the need for investment. Where we may disagree - I ask the Minister to have a very serious think about this - is that if we are to be serious about having the money to invest, then a tax erosion policy is not the way to go. We are a fairly low-tax economy, so I ask the Minister to consider that if we are to have the money to invest, further erosion of the revenue base is not the way to proceed.

We must also invest in education. The Minister has a serious background in education. Class sizes are still far too high. Per-student investment in third level has fallen off a cliff in the last eight years. It is at about 50% of what it used to be. Funding to basic scientific research has been cut by about 60%. That may save a few euro today, and maybe it was necessary in the recession, but it is cutting off a pipeline of innovation and high-calibre scientific research for decades to come, something that must be addressed.

There are also many ways of making business easier in Ireland. We can reform the commercial rates regime, not to just take into account the theoretical value of the property, but also to perhaps take into account turnover. Perhaps we should also consider the number of people employed so that we do not disadvantage small firms competing with bigger firms or higher-turnover ones, such as some of the supermarkets. They have the same footprint as smaller firms but a huge turnover and therefore pay much less tax as a percentage of revenue or profit.

We can simplify compliance for small businesses all over the place. We can implement a user-friendly web portal. The Norwegians did this very successfully in 2003. It is called Altinn and we should examine it. It was established for tax compliance and is used for a range of services in Norway. We need something similar here.

The Commission for Energy Regulation, ComReg, urgently needs to be tasked with examining energy prices. They are far too high for households and businesses. It must be systematically addressed. There are many ways we can make it easier for people to go to work. Child care is a major trap for people returning to work. New apprenticeship programmes, including advanced qualifications would be very useful, as would equalisation of tax credits for the self-employed and social protection. Making research and development tax credits much easier for small firms to access would be very useful. I would love if innovation were taught as part of our educational curriculum in some way.

Ireland is a very small country competing in a highly competitive and increasingly globalised world. It is not enough for us to be successful in attracting foreign direct investment and multinationals which can leave just as quickly as they arrive. We must back our own businesses as much as we do the multinationals, and we can. The Social Democrats have laid out a wide range of ideas and I would be delighted to sit down with the Minister, her team and officials and go through them. Now is the time for significant investment and to systematically reduce costs, remove barriers for people returning to work, back our indigenous sector and be just as ambitious for our indigenous sector as we are and should be for the multinationals.

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