Dáil debates

Wednesday, 11 May 2011

Jobs Initiative 2011: Statements (Resumed)

 

12:00 pm

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

The jobs initiative announced yesterday is a clear statement that the new Government has a new approach to the economic crisis. This jobs package demonstrates the new Government has done more in two months to promote employment and economic recovery than the previous Government did in two years. Despite the very real fiscal constraints we have inherited, we have produced a package of measures of more than €1.8 billion. More important, we have made it clear that from now on, dealing with the jobs crisis is and will be the central component of economic strategy.

Unemployment is not a matter of statistics. The unemployed are our neighbours, our children and our friends. They are people who want nothing more than the opportunity to work in their own country, provide for their families and just to get on building their lives. This Government is determined to do everything it can to provide our people with those opportunities.

The task we face is difficult. We are experiencing the consequences of a very severe recession in which GDP has fallen by 12% between 2007 and 2010. The labour market has been subject to a profound shock. Employment is down by 300,000 and unemployment is over 14%. Many sectors of the economy have experienced job losses, including the construction sector which has lost more than 160,000 jobs and the wholesale and retail sectors are down by almost 45,000. Employment in industry is also down by approximately 50,000. We can recover some of these employment losses if we can get credit flowing again and if we improve confidence in the economy. We can achieve higher rates of economic growth through export-led expansion. The key goal of this jobs initiative is to give people that confidence; to believe that Ireland can and will recover and that we, all of us, can have a brighter, more prosperous future. This will not be done overnight. This is why the Government did not wish to talk-up yesterday's announcement. There is no package of measures or set of announcements that will put all our people back to work at the stroke of a pen even though I wish this were the case. The task is great, but so too is the determination of this Government.

The jobs initiative announced yesterday by my colleague, the Minister for Finance, launched a range of taxation and expenditure measures which are designed to help to get people back to work. The expenditure measures are, in the main, funded by a reallocation of resources towards areas that are more productive and worthwhile from an economic perspective and which, above all, are labour-intensive. The vast majority of these measures are to be funded through the prioritisation of existing resources, with additional total expenditure of €40 million in 2011, funded through the levy on pension funds announced yesterday by the Minister for Finance.

It is a fact that employment in some sectors of our economy will never again reach the inflated heights of the boom years, most notably in the construction industry. Other sectors have also seen a decline in employment opportunities due to changes in both the global and domestic economies. We have to meet these challenges with solutions that reflect the economy as it will be and as we want it to be, rather than how it was. That means giving people the skills they need to take advantage of the kinds of jobs that are being created now. This is the reason for our focus on training. We have prioritised and revamped our labour activation policy.

The Government is determined to help those who are unemployed to avail of job opportunities as they arise and as our economic circumstances improve, as improve they will. The labour market activation measures announced yesterday will ensure that those people who are now out of work are given the opportunity to maintain and improve their skills and experience to take best advantage of future and current employment opportunities. An additional 20,900 places will be made available for training, education and upskilling under this programme. The sheer number of unemployed means that we must invest in the development of a more comprehensive and effective labour market activation strategy, one that strengthens the links between receiving benefits, searching for a job and participating in employment and training programmes. We need to have these aspects joined up . A smarter, more integrated approach to labour market activation can stimulate the pace and influence the nature of the outflow from the live register. Such policies assist and encourage jobseekers back into work. They should range from relatively light interventions, such as job search assistance and monitoring, to more intensive measures such as training and education intervention and work placement initiatives. Our labour market activation policy needs to be re-invigorated to provide the full range of interventions that are now required to address the issue of unemployment.

More effective, regular and deeper interaction with unemployed individuals is required. The Department of Social Protection is putting measures in place to re-invigorate the national employment action plan, making it fit for purpose.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context

I did that.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

Is the Deputy laying claim to his great activity as Minister that led directly to 440,000 unemployed?

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context

I was very proactive. I am trying to help.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

Every assistance which the former Minister offers is no doubt welcome but the people have decided they have had enough of his help and they have now determined-----

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context

Like the Minister, the people also elected me-----

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

I ask the Deputy not to shout me down.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context

They decided they wanted me here just as much-----

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
Link to this: Individually | In context

Order, please.

Photo of Jonathan O'BrienJonathan O'Brien (Cork North Central, Sinn Fein)
Link to this: Individually | In context

He keeps getting mixed up; he is now the Deputy and not the Minister.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

The Deputy opposite should have the good grace to respect the decision of the people to elect a new Government and not shout down those who are elected to make decisions now and allow us explain the decisions that have been made.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context

The two of us were equally elected to this House. The Minister does not understand democracy.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
Link to this: Individually | In context

Order, please.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

It is further developing the pathways to employment programme which will provide interaction with each unemployed individual at clear milestones. The Department of Social Protection is doing important work which will underpin this enhanced approach to activation. It is developing a profiling system which will allow for a ranking of jobseeker claimants according to their probability of long-term unemployment and which provides the capacity to target resources to those who both need and can benefit from such activation measures.

It is essential to focus on cost-effective programmes and those programmes targeting the most disadvantaged groups and those most at risk of losing contact with the labour market. A worrying feature of the live register profile is the number of people who have lost skilled jobs in areas such as the construction sector because there will be no demand for their skills in the foreseeable future. We will not see high volumes of employment in the construction industry in the foreseeable future. This is the reason some specific measures, such as additional places on the back to education initiative and other specific skills training measures, are being targeted at adults with less than leaving certificate qualifications. It is an unfortunate outcome of the so-called economic boom that many young people, young males in particular, left school early to take up relatively unskilled employment in the construction sector. They need specific interventions to prepare them for other work opportunities that will become available in other sectors. If we are to support job creation, it is vital that we reduce the cost to employers of taking on new employees. The lower rate of employer PRSI on jobs that pay up to €356 per week will be halved from July this year until the end of 2013. Employers can generate new jobs only if they have the right incentives and the cash to invest in the growth of their businesses. As part of the jobs initiative, the Government will ensure employers are given greater access to credit and will support small and medium-sized enterprises by initiating a tendering process for the development of a temporary partial credit guarantee scheme. We need to get money into such enterprises. We will promote greater access to procurement opportunities for small and medium-sized enterprises. If we can open the procurement system to more Irish companies, we can do a great deal. The Government intends to initiate a microfinance start-up fund to provide loans for small businesses.

We need to support specific sectors such as tourism. This critical sector is partially export-orientated because money that comes to Ireland from overseas is as good as money from the sale of Irish goods in other countries. Tourism provides employment across all regions and skill levels. Accordingly, yesterday's jobs initiative announcement placed a significant focus on measures that would be targeted at stimulating the tourism sector. The second rate of VAT will be temporarily reduced to 9%, with effect from 1 July until the end of December 2013. It will apply primarily to restaurants, catering services, hotels, holiday accommodation and various entertainment venues. Deputy Mick Wallace will be interested to hear that when I spoke to my local radio station this morning, I learned that this measure had been warmly welcomed by the tourism sector in the county. It will be welcomed across the country. The air travel tax rate is to be reduced to zero on a date to be fixed by order, subject to agreement being reached with the airlines to bring more passengers to Ireland. We have invested millions of euro in our very good tourism product because we need people to come here. We can facilitate this by making it affordable and breaking down the barriers to access. Later today the Minister for Justice and Equality will announce an important reform to the visa application system for entry into Ireland which will make it much easier for overseas visitors to come here.

As well as providing direct employment, well targeted public infrastructural investment can stimulate economic activity and have a significant indirect job creation impact in the medium term. In this regard, a number of changes to the capital envelope were announced yesterday. An additional €30 million will be made available for school works this year, predominantly under what used to be called the summer works programme. Some €20 million will be reallocated from the existing budget of the Department of Education and Skills and an additional €10 million will be funded from the levy on pension schemes. An additional €60 million will be invested in regional and local roads. Those who travelled throughout rural Ireland during the recent general election campaign will be aware of the need for extra money for county roads. An additional €15 million will be spent on local sustainable transport projects such as cycle lanes, pedestrian routes and park and ride facilities.

Some €30 million will be invested in the national energy retrofitting programme, with €19 million being funded through the levy on pensions and €11 million being sourced from the existing allocation of the Department of Communications, Energy and Natural Resources. It is hoped the retrofit project will not be a short-term one. In the context of the comprehensive spending review, we will work on seeing how this important investment which is reasonably job-rich can be rolled out into the future. A further two bundles of public private partnership schools will be commenced in areas in which additional infrastructure is required beyond 2016. The aim of this approach is to make the impact of these measures last for as long as possible. When taken together, these measures will generate employment-intensive economic activity throughout the country.

The importance of immediate action to stimulate the labour market should not overshadow the need for structural improvements that will yield benefits in the longer term. I recognise that innovation and education are central to our longer term future. Therefore, I am announcing a relaxation of the numbers ceiling that applies to non-Exchequer funded posts in the higher education sector. The numbers ceiling provided for in the last economic control framework for that sector allows for a modest increase in the number of specialist posts that can be funded by third parties, as long as the posts in question are funded on a full recovery basis, including a 20% charge on the deferred pay costs associated with future pension entitlements. This applies regardless of whether the third party funder is an Exchequer agency or a non-Exchequer funder such as the European Union or private industry. It represents a significant concession at a time when public sector numbers generally must be reduced, as everybody knows. In order to facilitate the maximum possible employment creation potential of the third level sector, while encouraging institutions to seek to diversify their sources of funding, I propose to allow even greater freedom for institutions to recruit researchers and other specialist staff where this does not involve any cost for the Exchequer, including the deferred pension cost. Accordingly, I am announcing the removal of the ceiling on the number of non-Exchequer funded specialist posts that may be created in higher education institutions, as long as they are funded on a full recovery cost basis. It is envisaged that similar arrangements will apply to contract posts involved in research activity in non-commercial State agencies.

It has been brought to my attention that the new system for costing research projects on a full cost recovery basis, including deferred pension cost, is posing difficulties for some project proposals already in the pipeline. I refer to proposals that were well advanced when the new arrangements were introduced earlier this year and that had already been submitted and agreed or substantively agreed. To avoid the delays or financing difficulties that would be associated with having to reopen the issue of funding for such projects, I am proposing to introduce transitional arrangements for well advanced proposals in the pipeline. They will be permitted to continue to proceed under the old arrangements. In other words, the requirement to include a 20% pension charge will not apply in such cases already in the pipeline. Any requirement to fill staff vacancies that might arise during the lifetime of projects approved under the transitional arrangements, or projects already in train, will be able to be met under the old arrangements for the remaining duration of the project.

The measures I have outlined will not rejuvenate the economy or the jobs market overnight. The jobs initiative is simply the first step in ensuring we make the best use of our resources and deliver real change for the taxpayer. The aim of reforming the public service to deliver better results without additional resources - we do not have such resources and are not likely to have them in the immediate future - is the driving concept behind the comprehensive review of expenditure and the capital review. In both reviews, I am determined that we will realign public expenditure and investment in order that they support an economy driven by knowledge, which focuses on exports and can support employment and higher living standards for all our people. Both processes are under way, as Deputies are aware. They will involve a root and branch evaluation of the expenditure of all Departments and bodies within each departmental remit. This is at the heart of the project spelled out in the programme for Government which will last from 2011 to 2016.

As a nation, we are facing some difficult years. Savings will have to be secured in all areas of public activity and resources will have to be redirected to core priority areas. There is no scope for wasteful expenditure, lax management or the preservation of old priorities just because they happen to be embedded in old spending lines. For that reason, the important comprehensive spending review under way is a cornerstone of Government policy. I have been involved in the process of meeting these objectives. I have met Secretaries General and spoken to managers and representatives of workers. People understand the importance of achieving all the objectives set out in the comprehensive spending plan, on both the current and capital sides. It is not business as usual. We will find a transformational way of getting better value and flexibility within the public service into the future.

Yesterday, the Government delivered on its promise to bring forward an immediate jobs initiative. The initiative is intended to restore confidence among consumers and investors. By boosting activity where we can and ensuring extra activity is spread geographically across the country, we are seeking to encourage people to have confidence again and begin to spend more in the economy. This is not the Government's last word on jobs. It is only a beginning and there is more to do but we are starting as we mean to go on.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context

I am pleased to have an opportunity to speak on the Government's jobs initiative. I extend best wishes to the Minister without Portfolio, Deputy Brendan Howlin, in his new job. I know he will use to good effect the Croke Park agreement with which the Labour Party agreed and the Fine Gael Party disagreed. The agreement provides flexibility and is the bedrock on which we can transform the public service.

I have never accepted the view that public servants are generally inefficient or unwilling to work. While I fully recognise the need for radical change to the way the public service works, anyone who believes it can operate on the same system as the private sector has clearly not worked in both sectors. The norms and requirements in terms of information and justification of public sector decisions are completely different from requirements in the private sector.

During my time as Minister for Social Protection, I observed a change in attitude. For example, in March 2010 the previous Government announced that we intended to break up and move FÁS. By the end of the year, we had secured a comprehensive service level agreement between the Department and FÁS in which the latter agreed, in principle, to come within the remit of the Department again. In the same period we managed to integrate the community welfare office service into the Department of Social Protection, thus achieving an objective that had been sought for many years.

I wish the Minister well in implementing the Croke Park agreement and ensuring we obtain from it the maximum benefits for public servants and citizens. I also wish him well with his expenditure review. During my time in government I went through all the Estimates in my Department, including in the years before the hard times arrived, seeking ways to refocus expenditure. There are two types of waste - that which can be saved and that which cannot be saved - and it is the latter which breaks one's heart. The Minister will find that the figures on proposed savings which were bandied about when the Government parties were in opposition - I refer in particular to those cited by the Fine Gael Party spokesperson on health at the time - will not be easily realised. I will watch with interest what the Minister does in this regard.

No one could argue with some of the elements in yesterday's jobs initiative. For example, the changes made on VAT and measures to stimulate tourism are positive and I am big enough to recognise that is the case. However, when I compare the initiative with the promises made by the Government parties while in opposition I am reminded of the answer given by a person who had previously held an important position when asked if he was busy in a new post. He stated: "I am busy, ach rudaí beaga", in other words, the little things. The jobs strategy brings to mind this reply in that it has good elements but they are all rudaí beaga and a far cry from what the Opposition told us it would be able to achieve if it got into government. Where, for example, is the investment bank which was to be funded by €2 billion from the National Pension Reserve Fund and a further €18 billion to be plucked from the air? To where did this €20 billion investment bank and the 100,000 jobs promised by the Fine Gael Party disappear? None of this is mentioned in the jobs initiative. However, bíonn gach tús lag - every beginning is weak - and I welcome the positive elements of the initiative.

I propose to address a number of specific issues in the statement made by the Minister for Finance. I am mesmerised with the Government's recycling of measures that were already in train. While I knew the Green Party was keen on recycling, it now emerges that Fine Gael and the Labour Party are even more enthusiastic about it. The Government states it will create 20,000 jobs through job activation measures and establish a new employment action programme. As Minister for Social Protection in the previous Government, I had all these measures in train. Before Christmas, we announced 13,000 activation places in the budget, of which 5,000 were in the Tús programme. In reply to a parliamentary question I asked the Minister for Social Protection last night, she indicated that only 1,000 of these jobs would be in place by the end of the first half of this year. This means 4,000 positions that we had created and which were linked to the employment action programme will not be filled.

The Government also announced a national internship scheme in the private and public sectors. I remember this scheme being announced in the previous budget. It has not been implemented and I understand the Government may be making improvements in the area of bureaucracy, which is welcome given that I fought to keep the scheme simple. Nevertheless, it is not a new scheme. I changed legislation at Christmas in three areas, namely, labour, employment and social welfare law, to facilitate the scheme. We proposed to allow employers pay employees €100 per week under the scheme, a figure the Government has reduced to €50. There is, therefore, nothing new here. It is time the Government got on with the job and created the positions the previous Government put in train before Christmas by passing laws which the current Government parties opposed at the time but have since implemented.

I was actively engaged in reforming the employment action programme. This is a simple matter of calling in for interview every person who has been unemployed for one year and offering him or her either a job or place on a scheme or a place on a training or education course. The Government is moving at a slow pace in this regard. As I stated, the proposed measures were ready-made because the building blocks were in place and pilot schemes were up and running. The Minister for Social Protection also referred to this in reply to a question I asked her yesterday. There is no question, therefore, that the schemes were in place.

I propose to discuss the source of funding for the jobs initiative. The Government's proposal to levy the pension funds is incredible. As a former Minister for Social Protection with responsibility for pensions, I was cognisant of two significant concerns in this respect. The Government was worried about the decrease in the value of pension funds and the pressure this was placing on them. In recent years, 90% of pensions were underfunded and the previous Government was forced to give extension after extension to defined benefit schemes to try to ensure the commitments entered into could be fulfilled. While 0.6% may appear to be a small figure, when one considers that pension funds returns are less than 2% per annum, it represents a significant amount of the money a person would gain each year on his or her pension fund. In recent years, some pension funds have been in decline and their policyholders would have been better putting money under their mattresses.

The previous Government adopted a pension strategy to encourage more people with modest means to invest in pension funds. There was an agreed value system that, as our population ages, we should encourage people to have private pensions over and above the State pension. The Government has undermined this approach. I recall giving an extension of time to defined benefit plans to produce viable solutions as to how they would fund pensions in future.

However, the sector that is in huge trouble now is being attacked by the Government. No matter how one looks at it, essentially the Government is taking €2 billion out of the pension funds. While some might put a spin on this measure to the effect that it is an attack on big pension fund owners, that was done by Fianna Fáil when in Government by proposing to reduce, over the four year plan, the amount of tax relief people may receive by investing in pension funds, by placing severe caps on the amount one can put into a pension fund and by imposing a heavy tax once a pension pot goes over a certain amount. The Government is hitting those ordinary people who had been encouraged to put money into pension funds.

I have heard an argument that the idea behind this proposal is that pension funds are invested abroad, which is largely true. At Christmas, however, the previous Government brought in legislation with the intention of setting up sovereign annuities in February. Basically, we were coming up with a win-win scenario that would have brought €4 billion of pension funds into the Irish economy and Exchequer in replacement of foreign borrowing on a 35-year basis. It would have involved twice the amount of money under discussion here and the interest rate would have been similar to that which Ireland is paying for loans at present anyway. There would have been a double win in that Irish people's money would have been kept in the country and rather than buying German bonds and the Government would have been paying a high interest rate to its own people. As they then would have spent it, the Government would have got tax back in a circle. The former Government was creating a virtuous circle that had the potential to bring in €4 billion according to the estimates I was given by the NTMA and the Department of Finance. However, instead of helping pension funds, the Government is penalising them and instead of bringing in €4 billion, it has come up with a way of bringing in €2 billion, which is bizarre.

Did the Government consult the Pensions Board about this issue or ask it about the health of such funds? Did it even consult the Minister for Social Protection? Did she not warn the Government about the perilous position in which many Irish pension funds find themselves or of the drastic measures that had to be taken by the Government, the Oireachtas and the Pensions Board to try to deal with the pension issue? Ultimately, the Government is hitting the ordinary people who have saved money over 20 or 30 years to have a small amount of money over and above their State pension on which to live in their twilight years.

While there are so many points one could make in this regard, I will now turn to the moving around of money in the Estimates. Basically, I understand what the Government is doing as my colleagues and I did it all the time when in office. However, we did not come into the Chamber to announce it as a budget initiative but just did it. In other words, in the event of a project not proceeding as fast as one thought it would or of an underspend in one subhead, one moved the funds into another subhead. For example, the Government has stated it will get €20 million from the budget of the Department of Education and Skills and will put it into the summer work scheme. I have no argument about this and it is a fantastic scheme that was established by Fianna Fáil. However, did this €20 million come from specific projects that had been announced but which will not go ahead or is it available because of a slowing down in the progress of such projects whereby the money happened to come to hand?

If specific projects will not now go ahead on foot of a conscious decision, rather than unforeseen delays leading to the money being surplus to the requirements of the committed projects for this year, in the interests of transparency and openness the Government should tell Members what are those projects. The people who have been promised them should be told what projects will not go ahead. Similarly, there is a so-called saving on road projects and money is being moved from bigger projects into maintenance. Is this because some of the major projects, such as those involving PPPs for example, are delayed and the Government is recycling the money? The Government would have done this anyway and there was no need for a big announcement as anyone running a Department with a bit of common sense would have done so as part of its daily management. Alternatively, has the Government decided to pull the plug on specific projects and if so, what projects? It is time the Government lived up to its promise to be open, transparent and clear in what it intended to do.

I refer to one sector of the economy about which I used to argue with my colleagues in Government and about which some progress had been made. Despite all the emphasis on tourism, the Government has not focused on this point but I was advised that 3,000 real jobs could be created in our economy by investing in rural recreation in all its many manifestations. It ranges from people walking around bogs to look at bog cotton to people abseiling, mountain cycling or walking or whatever because we happen to live in a country which, given its topography, probably has one of the greatest varieties of possibilities.

Another source of jobs that could be spread around the country based on natural resources is marine leisure, which is completely underdeveloped in Ireland. I believe that a modest investment, matched by private sector investment with proper planning, could create sustainable jobs that would bring in tourists who would continue to return here because of the available facilities and who would stay here for fixed periods rather than for short weekend breaks. Such tourism, based on quality products, is likely to be much more resilient in downturns than the other type of tourism involving people looking at the scenery and generally coming here for non-specific purposes.

There are all sorts of measures one can take and the sky is the limit in this sector. For example, one activity I had never considered but which now takes place in the west is descending into the deep river and mountain ravines. In addition, there are all the land-based activities such as mountain climbing, hill walking and so on. The previous Government had done quite a bit of work in resolving the issues with the farmers and there is now a completely different attitude on the ground on foot of the establishment of Comhairle na Tuaithe. Yesterday, I met a former Member of this House, Mr. Roger Garland, who told me that nothing is happening at present regarding this sector's development compared with what was happening when I was Minister for Community, Rural and Gaeltacht Affairs, when we did so much work to resolve the outstanding issues in order that the land mass could be used in a positive manner to increase the employment potential and wealth generation for those living throughout the countryside. Moreover, much of this can be done anywhere, from urban areas such as Dublin Bay to the most rural areas in the countryside.

In addition, mar dhuine Gaeltachta, tá iontas orm nach bhfuil aon airgead breise curtha ar fáil d'Údarás na Gaeltachta. Labhair mé leis an Aire Stáit, an Teachta McGinley, faoi seo aréir. Dúirt an Aire Stáit le gairid go mbeadh cruinniú don fhochoiste Rialtais atá ag plé le straitéis na Gaeilge. Tá a fhios ag an saol fodhla nach bhfuil dóthain airgead ag an údarás i mbliana. Admhaím gur dearmad é sin a rinne an Rialtas deiridh. Nílimid in oifig leis an dearmad a rinneadh a chur ina cheart. Is féidir leis an Rialtas nua é sin a dhéanamh. Ní thuigim an fáth nach bhfuil an méid sin á dhéanamh acu. Tá sé thar a bheith tábhachtach go gcuirfí€6 mhilliúin breise ar fáil don údarás i mbliana. Nuair a thabharfar ar aghaidh an reachtaíocht leis na moltaí seo ar fad a chur i bhfeidhm, tá súil agam go mbeidh an €6 mhilliúin sin curtha ar fáil, ionas gur féidir leis an údarás na feidhmeanna fiontraíochta atá aige a chomhlíonadh.

An féidir leis an Aire fiontraíochta a mhíniú conas a n-oibreodh sé le IDA Ireland nó Enterprise Ireland muna mbeadh an t-airgead ar fáil dóibh? Is rud é seo nach raibh ceart sa cháinfhaisnéis a d'fhoilsigh muid. D'admhaigh méé sin. Tá sé sin ráite agam. Bhí cuimsí faoi cén chaoi ar tharla sé. Is iomaí rud a dhéanann chuile duine nach bhfuil ceart. Ar ndóigh, is féidir leis an duine mór rudaí a chur ina cheart nuair a bhíonn an deis aige nó aici. Dá mbeadh mise fós sa Rialtas, chinnteoinn go mbeadh airgead curtha ar fáil chun an scéal a chur ina cheart. Bhí an ceart ag an bhFreasúra casaoid nach raibh dóthain airgid ann don údarás, ach nuair a bhí deis acu rudaí a chur ina cheart trí phingineacha beaga a chur ar fáil don údarás, ní dhearnadar tada faoi. Sílim gur trua é sin. B'fhéidir gur cheart dom focail níos láidre ná sin a úsáid.

Mar a dúirt mé, ní shéanfainn go brách go bhfuil rudaí beaga maithe sa tionscnamh seo. Neamhchosúil leis an Rialtas atá ann i láthair na huaire, nuair a dhéanann duine rud maith, tá mé sásta a admháil go bhfuil rud maith déanta. Is rudaí fíorbheaga ata i gceist sa chás seo, áfach. Níl mórán ann i gcomhthéacs an dúshlán atá romhainn. Tá go leor anseo nach bhfuil ann ach athrá ar rudaí a bhí socraithe agus déanta ag an Rialtas atá imithe. Níl sé de mhisneach nó d'ionracas ag an Rialtas a rá gur amhlaidh atá, agus gurb shin an méid atáá dhéanamh. Mar a dúirt mé ar ball beag, cén mhaith atá ann áiteanna breise a chur ar fáil nuair nach bhfuil na háiteanna gur chuir an Rialtas deiridh ar fáil faoi na scéimeanna fostaíochta líonta fós? Tá mé ag súil le freagraí soiléire ar na ceisteanna sin a fháil ag deireadh na díospóireachta. Caithfidh mé a rá nuair a fuair mé freagraí ar mo cheisteanna parlaiminte aréir, i go leor cásanna níor tugadh aon fhreagra ar an cheist a cuireadh. Tugadh eolas nár bhain leis an gceist, ach níor tugadh aon eolas faoin cheist. Ar ndóigh, ardóidh mé an ní sin leis an gCeann Comhairle.

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

With the Leas-Cheann Comhairle's permission, I wish to share time with the Minister of State, Deputy Brian Hayes, and Deputy Mitchell O'Connor.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
Link to this: Individually | In context

Is the Minister taking ten minutes?

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

Yes, please. I have listened to the former Minister, who is leaving the Chamber. It strikes me as bizarre that Fianna Fáil appears to have wonderful ideas and superior ways of doing things than the current Government, yet had 14 years in which to do them and does not seem to have surfaced with its own ideas. Fianna Fáil speakers have not uttered a word about the disastrous policy mistakes that have brought the country to its knees. From peak to trough, national income fell by 26% under Fianna Fáil and 20% of all people in the private sector lost their jobs. The vast majority of the 20% were young people. As such, it is difficult to take lectures from former Ministers about the follies of our ways when the evidence of their failed policies is there for all to see.

It will take some time before we remedy the problems, but the significance of yesterday's announcement was that it represented a decisive change of direction. I have been listening in the Chamber to people who are craving a large number for jobs or a massive spending stimulus almost as if we could produce a rabbit out of a hat. Unfortunately, this notion is a legacy of the sort of thinking that got us into this hole. Believing that we can dip into our spending somewhere and turn it into X, Y and Z jobs is not the way a modern economy works. The sort of thinking we need is, for example, a consideration of the rate of return on our investment.

This shift in opinion is what makes yesterday's announcement so refreshing. It represents a decisive change of direction. Unlike the previous Government, we are no longer discussing how to nurse along the banking failures of the past, the failed developers and the ghost estates. Instead, we are discussing what to do about small businesses that can create something, how to give them partial loan guarantees, how to give them access to finance and how to get them on the road to creating something. No one on the Opposition benches is willing to pick up on this decisive change. It is not a question of closing programmes and cutting off recruitment, which we have often seen in recent years. Rather, it is a question of trying to open up some doors. Some of the provisions are modest, but the changes in direction are significant. More important, the provisions have in mind enterprises that can create something for us at home.

This is a short-term package. We are not even nine weeks in government, but this initiative is a clear direction as to the new type of thinking and transformative change that will occur. If we are to crack the problem, the Government will need to transform right across the board. The comprehensive spending reviews and the establishment of a public service reform Department are all about showing that how we did things previously is not good enough for the future. Transformative change will not only be required in the private sector and in its capacity to create jobs and a strong engine of economic growth from indigenous ingenuity and talent, but also in the public service, which must use ingenuity, reduce costs imposed on business and deliver good services with fewer resources.

A decisive change is under way, but too much of the language in the debate to date has been the language of the past, for example, "Count the jobs". Governments do not create jobs. Enterprises that find new markets, break into export sectors and become more competitive through their innovations create jobs, and we want to stimulate them. Every measure chosen for this budget was designed to help with the jobs challenge. Much of the budget is concerned with giving young talent the chance to influence the growth of jobs. For this reason, the internship programme is important. More than 150 companies have indicated to me their willingness to support it. It is positive that we can get quality companies that are exporting to take on young talent. The situation could then develop, as those people, who could be the entrepreneurs of the future, are getting relevant experience.

We want to adapt people's skills. Some people invested their talents in the construction sector, but it will not yield the same returns seen previously. We must reskill those people. A strong theme in this announcement is that we must support those who are in a position to start businesses. We must help people to win new markets. I am looking within my Department to determine how we can improve programmes to help Irish businesses to access new markets. It is depressing that 90% of our exports come from foreign-owned companies. This is a statistic we can change and it is gratifying that, according to recent figures, Irish-owned businesses are leading the charge and making significant progress. Last year's export figures were the best in a decade, with Ireland regaining market share lost during that period. We must build on and support this significant development.

However, such a change has not occurred in the tourism sector. For this reason, much of yesterday's announcement focused on how to make tourism a performing sector. These tax changes - a 4.5% cut in the product price of many of our offerings to tourists and a 4.25% reduction in much of the wage bill in the sector - are significant and constitute the Government making survival easier for businesses. The sector is labour-intensive, with a 30% to 35% labour content in its activities. This announcement makes a difference and has the potential to create positive spin-offs. As the Minister stated yesterday, we want the airlines to respond to the changes and the price advantages to be passed on. It is a genuine way to make the sector more competitive so as to reverse the trend of a 25% decrease in tourist numbers.

We need to be innovative in the way we exploit opportunities in new markets. I am delighted that an idea generated by the private sector is being imported into Government thinking, namely, a finder's fee for people who find investors willing to invest in Ireland. This new thinking is outside the box, so why should we not do it? The Government will take good ideas from anywhere. We will reform the visa system to make investment easier. It is crazy that an investor from India, one of the world's most rapidly growing economies, or China can visit the UK but cannot then continue on to Ireland because he or she would need a second visa. We are changing this situation. Investors considering the UK can investigate Ireland on the same visa. It is an obvious and simple measure, but one that has not been taken until now. We must consider the simple ideas and rely on being smart instead of on large spending programmes.

We can support enterprise. One of the key themes in the announcement is that of reducing costs for employers, such as halving the cost of PRSI in respect of 600,000 workers. We will follow this significant easing with a radical overhaul of the system for wage fixing in many sectors. We will open access to finance, but not only by way of the Minister for Finance's decisive banking resolution. We will create banks that will be well capitalised and have low loan-to-deposit ratios. They will be in a position to lend an estimated €12 billion per year. In addition, we recognise that some businesses simply will not be on the radar. A risk-averse banking system will not give succour to some businesses which really need funds to make progress.

We can be innovative in other ways, including in public service procurement. If even 1% more went to Irish businesses, that would represent €150 million. Other countries have blazed a trail in finding ways by which innovative small companies can get involved in public procurement. We want to model a system that is equally responsive.

Of course, this is just a start. There are other areas in which Government decisions and investment are important, including the infrastructure bank and the NewERA project. These are other opportunities for us to invest wisely in infrastructure that will make it easier for businesses to create jobs and we are working on them. It is important for the Government to put down a marker stating this is a decisive change in policy. It is not all about solving the problems of the banks and fixing the public finances. It is also about giving people a chance to create a strong and vibrant economy. I accept that it would be nicer if we did not have to ask pension funds to contribute, but if we do not ensure we have a strong economy, producing growth and creating jobs, we will not be able to meet our pension commitments. The best way of meeting pension commitments in the long term is to have a vibrant economy. That must be our priority.

Photo of Brian HayesBrian Hayes (Dublin South West, Fine Gael)
Link to this: Individually | In context

I wish to share time with Deputy Mary Mitchell O'Connor.

The most positive aspect of yesterday's announcement by the Minister for Finance to the House was his honest assessment that this was a modest proposal. The Government is not making extravagant claims about the number of jobs that will be created under this initiative. We are being honest and up-front with the public. As the Minister for Enterprise, Trade and Innovation, Deputy Richard Bruton, said, the future of the economy will not be based on grandiose plans, of which we have seen far too many in the last ten years, with extravagant claims that 50,000 jobs will be created here or 80,000 jobs there. The public do not believe this. We must get down to the task of restructuring the economy and getting people back to work through a series of measures that can make a difference.

The Opposition has known about this announcement since the programme for Government was first published and presented to the House. I recall the Minister for Finance and others at that stage asking Opposition Members to submit ideas to the Government on how they would do things differently. I recall deliberate opportunities given to the Opposition to provide submissions, as in the normal budgetary process, but we did not get any. I find it astonishing that the two largest Opposition parties did not submit proposals to the Government about a jobs initiative. Either we are serious about this or we are not. We can pretend to play Punch and Judy politics and have all the commentary that goes with this, or we can concentrate on the job in hand. It is unbelievable the Opposition parties did not submit proposals when they knew the Government was going to introduce an initiative in the first 100 days. The Opposition needs to be clear about this. It is a question of confidence. We are trying, slowly but surely, to return to the job-rich growth that occurred in the economy, particularly from 1995 to 2002 - that golden period when we were leading the way and creating jobs across the economy, especially in small enterprises. What happened after 2002, as we all know, was that the property boom took off and many of the jobs created in construction were unsustainable in the long term.

We have had successes in the first few weeks of the Government. As promised, we have raised the national minimum wage by agreement. Importantly, the next tranche of loans of €20 million or less that were to be given to NAMA were not transferred because of the agreement we sought. We have obtained agreement from our international partners on this series of measures because they recognise that the future must be based on job-rich growth. The Government is continuing to work with our EU colleagues in attempting to achieve a reduction in the interest rate on the EU portion of the loan.

We recognise that the only way forward for the economy is to get the banking system working again. The management and directors of the two pillar banks have a fundamental responsibility to get their hands dirty, to get on the floor and realise what goes on at branch level, in order that they can better understand their business. When restructuring occurred in the United Kingdom in the early 1990s, at the height of the recession there, those who ran the banks were obliged, for the first time, to get onto the floor and learn about what was going on. Our banks must learn about pubs and ordinary businesses. They must go back to traditional banking methods. This is an essential part of the restructuring process that the Government is driving.

The other part of the restructuring process is something that was referred to yesterday in the House by the Minister. A commitment was given by the banks to invest €30 billion in the economy in the next three years, including €20 billion in the SME sector. This must be driven politically. We need to find out on a month by month, quarter by quarter, sector by sector basis whether it is happening. That is the challenge for the Government, the Department of Finance and the Central Bank: to make sure the essentials of that restructuring - getting money out, through the banks, as the best way of improving the economy - actually occur.

There is an orgy of negativity and the people want to move on. They want to get back to a path of growth. We see growth re-emerging this year after three years. We still have 1.8 million at work in the economy. Although it is crucial to increase the number of jobs, we also have a plan to retain every single one of these jobs by making sure the economic environment is right. As the Minister said, we saw exports rise by 9% last year. We are in a good position in terms of the balance of payments; we are paying our way in the world again. It is through such slow, deliberate, step by step, brick by brick confidence-building measures that we can get the economy working again. Within the banking system, there is €96 billion in ordinary deposits. There is no confidence to spend because, although the export sector is doing well, the domestic economy is lagging far behind. The trick is to ensure confidence rises again in order that people will start spending because that money is still there. At the heart of the announcement made by the Minister yesterday is confidence that we can create new jobs by adjusting taxes on the PRSI and VAT sides, particularly in tourism. These are focused measures that can deliver the confidence we need.

With regard to the pension levy, it is worth pointing out that at the last count, the amount of money invested by the taxpayer through tax forgone in pension reliefs was about €3 billion, compared to about €450 million in property reliefs. Understandably, the taxpayer has provided enormous benefits for those who put their money aside, up to a marginal rate of 40%. What the Government is looking for is a figure of 0.6%, in a context in which, on an annualised basis, the management fees for many of these funds run to more than 1.5%. This is not a huge levy. It is a temporary measure to ensure we will have some funds to contribute to growth in the economy. It is well tested and will provide the funds needed to help reboot the economy. The Minister wants to speak with representatives of the pensions industry to work out the details, but he is absolutely convinced, as we said before the general election, that this is a measure that can help to improve the economy. It is well tested, well timed and modest.

1:00 pm

Photo of Mary Mitchell O'ConnorMary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
Link to this: Individually | In context

I welcome the jobs initiative announced yesterday. This is the first step in getting Ireland back to work. It is not a grandiose press release but an honest effort to give hope and confidence to employers and the 430,000 people unemployed.

Many TDs spoke in this Chamber last week about the incidence of suicide and the effects of the downturn of the economy on people who are unemployed. I am aware of a number of high profile and not so high profile people who have taken their lives because of the prospect of unemployment. It is incumbent on a Government and on all elected representatives to give hope to our people. We cannot have our people drowning in negativity.

As an elected representative for Dún Laoghaire, I welcome the injection of cash into the tourism sector. We in Dún Laoghaire are working to the best of our abilities to entice people to our county and the business people and the community have come together to ensure that tourists come.

As a former school principal, I welcome the extra €30 million for the summer works programme. Many school buildings throughout the country are in a dire condition and that is unacceptable in 2011. I am aware that much more work needs to be done in our schools for our children to get the best education in a modern and secure environment. Many people contacted me during the past 24 hours to say they are delighted and happy that they will have an opportunity to upskill, retrain and undertake internships.

It is very easy to sit on the fence and be critical and cynical. I ask all Members of this House to come together and engage, and if Deputies and members of the public have good ideas to create jobs, to let the Ministers know. It is important that we work together to get Ireland back to work again.

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
Link to this: Individually | In context

Ar dtús, ba mhaith liom cúpla rud a rá. The Irish people are not drowning in negativity; they are drowning in debt. That is the biggest issue facing this country. The previous Minister of State who spoke said that no submissions were made with regard to this jobs initiative. Our party made a submission to the Irish people, which was called our election manifesto, only nine weeks ago. Therefore, that statement is patently untrue.

I will speak first about the importance of the issue at hand. Some 439,000 people are unemployed in this State. These are men and women of all ages, skills, backgrounds and experiences. These people are living with the daily reality of having had their wages plummet and of having to hunt for jobs that are not there. The outworking of a Fianna Fáil Government policy has forced hundreds of thousands of competent men and women on to the dole queues. The curse of unemployment does not stop with those 439,000 people. There are hundreds of thousands of children whose parents are unemployed and their collective incomes have plummeted while their expenditures such as mortgages, fuel, food and so on have remained rigid or have increased. That is not to speak of the collapse in confidence and the depression and despair that is often brought about by unemployment. Hundreds of thousands of others have been forced to emigrate. Roughly the same number of people who sit the leaving certificate each year are now emigrating from this State. That is a phenomenal figure. The GAA generation is being gutted, with some of its brightest, most energetic, most intelligent people being forced to leave this State. Communities are being decimated and the most energetic of our people are being deflated.

The core of business in this State is closing down. Construction companies, retailers and wholesalers are closing at a rate never seen previously. At the end of February figures released showed that there was a 46% increase in the rate of business closures. There were 2,900 corporate closures in 2009 and 2010 and the number of insolvencies from January to April in 2011 was 588, which is an increase on the number for the same period last year. That figure indicates that there are 46 corporate insolvencies a week. It is estimated by the Small Firms Association that a potential of 62,500 small businesses could close in the next year, which means 200,000 jobs are under pressure. These jobs are under threat as a result of a contracting economy, reduced demand and rigid cost base. The contracting economy and the reduced demand are a result of an economic shock and Fianna Fáil policies, but these are being accentuated by Fine Gael-Labour policies being implemented today.

Our economy is flatlining as a result of three years of deflationary policy. The deficit in April 2011 was €9.9 billion, which is in contrast to €7 billion in the first four months of 2010. Debt servicing on our national debt in that period cost €1.8 billion. The Government is at one level introducing paltry jobs initiatives but at the same level the thrust of its economic policy is gutting an extinguishing demand that is necessary for jobs.

Unemployment is a devastating issue and an urgent crisis that demands a comprehensive response. This information is not new to the Fine Gael Party and the Labour Party. Both parties made jobs the most important issue in the run up to the general election nine weeks ago. They spent their election campaigns hyping the jobs initiatives in which they would get involved. The Minister of State, Deputy Brian Hayes, said a few minutes ago that people would not believe extravagant claims about producing 50,000 jobs or 80,000 jobs. Nine weeks ago the Fine Gael Party said that it would produce 100,000 jobs in government and that it would produce a €9 billion stimulus. The Labour Party spoke of a €500 million jobs fund and of a strategic investment bank with funds of €2 billion from the National Pensions Reserve Fund. Cynically, nine weeks later both parties have retreated fully from their election promises and have gone into reverse mode. They are reducing the significance of this jobs initiative every day, and it is no wonder.

When I looked at the figures yesterday it was clear that €40 million was assigned to creating jobs. That €40 million must be contrasted with the depth of the problem, namely, the 439,000 people unemployed and it also must be contrasted with the €24 billion the Government is pouring into the banks. On the figures in the Minister's document yesterday, €40 million would create 400 jobs. Four hundred jobs is the response of this Government to the 439,000 people who are unemployed. That is equivalent to opening up two Tesco stores. It is the equivalent of three days of young people emigrating from this State. There are more than 400 unemployed people in any two large residential housing estates in Dublin, Galway, Limerick, Cork or any of the small towns throughout the country. The Minister's response to the largest crisis this country has seen is shockingly disproportionate. There are many good people on his side of the House who know that and who will be frustrated and disgusted at the paltry measures brought forward in this jobs initiative.

It is important also to mention that there is so much more missing in this jobs initiative. The agrifood sector is very important to the constituents of some of the Ministers on the benches opposite who come from rural constituencies yet there is nothing about agrifood in this jobs initiative. It contains no reform of enterprise development agencies or any programme for small businesses with fewer than ten employees. Other than the PRSI initiative, no attempt has been made to reduce costs to small businesses or rents and rates, an important issue to hundreds of retailers across the State. A major opportunity has been missed to produce a far and wide reaching jobs initiative that could have reached into every community.

Yesterday my party colleague, Deputy Pearse Doherty, said there is a need for a major stimulus injection into the economy, a policy considered good economic practice in any recession. There is no doubt a stimulus package would work best in a large closed economy. It can, however, work in a small open economy like ours if it is targeted, strategic and linked to improving economic competitiveness.

Competitiveness can also be improved with labour intensive infrastructural projects while investment in education can be increased to create a knowledge economy. The previous Government spoke of a knowledge economy yet produced a property bubble and reduced the level of investment in education. This Fine Gael-Labour Government is still reducing the moneys going into education.

Sinn Féin has stated it will take €2 billion from the National Pensions Reserve Fund to fast-track labour intensive investment projects, such as a schools building programme. The Minister of State, Deputy Alan Kelly, knows of schools in his constituency that need proper refurbishment. This policy was similar to a proposal made by the Labour Party during the general election nine weeks ago.

Sinn Féin would invest €600 million in supports for viable businesses to maintain employee levels while providing a €500 million stimulus package for families and ensure income for the retail sector. Sinn Féin has also said it will abolish the universal social charge, another Labour Party election pledge. Retailers have said the effect of the charge and consequent drop in income will be the closure of 400 retailers and associated jobs.

Another gaping hole in the jobs initiative is the lack of enterprise agency reform. It is possible to reform, create jobs and save money. Will the Government consider amalgamating IDA Ireland, Enterprise Ireland and Invest Northern Ireland? Selling Ireland as a tourism product is already done by Tourism Ireland on an all-Ireland basis, yet three separate enterprise organisations are dealing with selling indigenous businesses abroad and attracting foreign direct investment. Only one agency is needed for the State on an all-Ireland basis. Amalgamating the existing agencies will reduce duplication in office provision and organisational infrastructure while creating more jobs as a result.

While Enterprise Ireland does a good job in developing business, it is still too reactive. It should be going into local communities, engaging with small businesses to ensure they grow and export. It is incredible only 80 high potential start-up units open every year. Enterprise Ireland must be given a proactive remit to generate more start-up businesses.

County enterprise boards are at the coalface of small business. The jobs initiative contains no export programme for these boards. Many of them have massive knowledge and skill-sets but their funding was cut by the last Fianna Fáil Government by 30%. Again, this initiative makes no provision for the creation of one-stop shops or business incubation centres with the country enterprise board structure. Neither is FÁS linked with third level institutions to create partnerships to grow small businesses in small communities.

The initiative does not address cutting costs for small businesses. Rents, rates, telecoms are still costing small businesses too much. All Members were asked by small businesses during the election to do something about these rising costs. The initiative, however, contains nothing to address this matter which is disappointing. I have already asked the Minister to consider creating a progressive rate which would depend on a business's income and take into consideration if it is export-driven or heavily involved in research and development.

Commercial rents are squeezing small businesses out of existence. While the Government may claim it is busy and will deal with the issue in due course, it should be remembered rents are forcing businesses to close every day with jobs lost and many forced to emigrate. In the time it took for the Government to draw up this initiative since it took office, up to 13,000 people have emigrated. There are vested interests in the commercial rent area, including NAMA and certain property owners. I hope Fine Gael and Labour will stand up for the interests of small businesses rather than putting NAMA and developers first and ensure exorbitant rents are not charged. If exorbitant rents are not tackled sooner, more people will be forced on to social welfare.

No measures are contained in the initiative to tackle energy, telecoms and waste costs for small businesses. Last week Bord Gáis flagged the fact that it was inevitable for it to increase it charges by 20% before the end of the year. How many jobs could this increase cost businesses?

In 2005, net foreign earnings in the agrifood sector amounted to 32% of total earnings from primary and manufacturing industry. In 2008, Ireland's food and drink exports were €8.2 billion, representing approximately 10% of overall merchandise trade exports, while one in seven people is employed in the sector. However, not one single sectorial measure has been introduced in the jobs initiative. Considering the current upward pressures on commodities internationally and the competitive advantage Ireland has in the sector, it is shocking the sector has been ignored by Fine Gael and Labour. Despite the largest crisis we have seen, massive unemployment levels and promises made by Fine Gael and the Labour Party nine weeks ago what we have received is a revenue neutral stimulus. Anyone with a background in economics will know that revenue neutral stimulus is by definition an oxymoron. A stimulus must not be revenue neutral. It must be an infusion of revenue into the economy.

The Minister for Finance, Deputy Noonan, stated that this will not be a large Keynesian stimulus package, which makes him Minister for Finance and minister for stating the obvious. This jobs initiative is at best a rearrangement of the deck chairs. At a time when Ireland's domestic economy is in urgent need of a stimulus all we get is a drop in the ocean. Some business and unemployment organisations have given a guarded welcome to these initiatives. There are several positive elements in the initiatives, which I welcome, including the creation of training places and work placements. In an economy so devoid of new business, a drop in the ocean, which this is, is obviously considered welcome.

I urge the Members opposite, whom I know will be devastated with this although they will talk the talk, to push as hard as they can within their parliamentary parties for a loosening up investment to create a major stimulus package which will bring about radical change in this State.

Photo of Alan KellyAlan Kelly (Tipperary North, Labour)
Link to this: Individually | In context

I wish to share time with Deputy Peter Mathews.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
Link to this: Individually | In context

Is that agreed? Agreed.

Photo of Alan KellyAlan Kelly (Tipperary North, Labour)
Link to this: Individually | In context

The jobs initiative represents the first of what could be 1,000 steps taken towards bringing about a full recovery of our employment, banking and public debt crises. Let us not pretend to be unaware of the scale of the problem, which is, to say the least, of potentially enormous and hugely challenging proportions. Turning it into a shouting match will not solve anything. It may well take decades to fully solve this Fianna Fáil created crisis. This jobs initiative should be judged not as a solution but as a step; not just preamble but progress. While it is only a step, a radical and imaginative one, it is extremely important nonetheless not alone because of the jobs it will create but because it demonstrates to the people of this great country that for the first time in 14 years the Government is listening.

The Government has represented the needs of our economy and people when it comes to our 12.5% rate of corporation tax. This is non-negotiable.When I was an MEP, while the other Administration was in place, I noted that many EU countries were of the opinion that we would be weak-kneed on this issue. Well, this Administration will not be weak on it. It is part of a package that works given our close relationship with the US, our well educated and highly skilled work force and the fact that English is one of our spoken languages and we will protect it. The contradictions are obvious across Europe when one parallels our rate with that of France , Bulgaria and so on.

The Minister for Finance, Deputy Noonan, has correctly outlined a five pillared approach to getting us out of this economic crisis. This includes restoring our reputation, restoring the banking system, making the public service cheaper but not compromising on social justice and most important, supporting and protecting job creation. What we have in this plan is a proper stimulus for the economy, one that is targeted and does not allow for mass leakage of the stimulus out of the economy. We want to kick-off construction but not reinflate the asset bubble. This is designed to get money working in the local economy of every part of the country, which is important. It does not have a totally urban focus. The construction workers whom this will rehire will, it is hoped, spend the money in their local communities, while improving school and road infrastructure. There will be regional spread, which I am sure Deputy Tóibín will welcome.

Unlike the Opposition, I do not believe in handing out funding to people who will spend their money on goods outside the state. This is a stimulus that is community driven not invented in the imaginary tales of the Opposition who seem to think they can solve Ireland's problems with idealist solutions, ones which they did not have a few months ago. This jobs initiative contributes to rather than undermines stability in the public finances. This is crucial for confidence going forward. This initiative is about spending existing resources with a jobs focus in mind. We are freeing up capital that would have rested in a Government account and is now being used to get people back to work. To be honest, it is not enough but it is a start.

Let us take for example the €75 million coming from Department of Transport, Tourism and Sport. It is being targeted at shovel ready initiatives. Rather than leave funding lying around until next year we are using it now in a time of crisis. This will produce many jobs in local areas where small contractors can get work they had not planned for. This will have a ripple effect throughout the economy, which I am sure the Deputy welcomes.

The local authorities will get work done at a really good rate given the greater value there is now in tendering for such work. This work is badly needed. Everyone knows our secondary and regional roads are in an awful state. The same applies in respect of the summer works programmes in schools. I am sure many Members have been lobbied about schools needing windows, roofs, toilets and so on. This work is badly needed and will create safer schools for our children. From a Department point of view funding needed to be provided as there was very little left in the coffers of the previous Administration. Also in the transport area, €15 million has been made available under smarter travel programmes across our cities and through applications through our local authorities. Again, these are labour intensive measures that should be welcomed. The retrofitting initiative will also be labour intensive and create a double whammy saving in the long term. This is good use of resources as each €10 million spent equates to €15 million that will be spent by the private sector in return.

It is important to remember that many of these initiatives, if not sustainable, will be reversed. The VAT reduction to 9% in the tourism area is part of a targeted incentive to create business. I believe it will work. I have a great deal of experience of the tourism industry having worked for Bord Fáilte for several years. This initiative is very much welcomed. We have an overflow of tourism accommodation, in particular hotel accommodation. This was fuelled by the insane tax policies of the previous Government. We should try to lower prices and to create demand. If we generate people traffic, those people will spend money and contribute to low-skilled primary job creation in this sector. It is critically important that the lowering of the VAT rate is passed on to the consumer and that they see the benefits. In particular, we need to see the benefits coming through targeting the domestic and British markets. This ties in to the visits by President Obama and the Queen. The push by the Government on the tourism sector has been considerable and I know it has been welcomed by the tourism industry.

On scrapping the air travel tax, I welcome this incentivising process. The airlines will have to deliver visitors for it to work, otherwise it could be reversed. It is a novel and welcome approach. The message for our tourism strategy is clear. Ireland was an expensive country to visit. It is now cheaper to come here, stay here and have a good time. The other unique aspect of our tourism industry is that it has the potential to create jobs in rural areas. Our strategy must be based on fair distribution of employment and this is achieved through changes in the VAT levels, the school building programme, regional road repairs and a new priority for tourism.

The new flexibility in the research and development tax credit should not be under-estimated. It is what will help companies when choosing to locate to a destination like Ireland. As a Government, I expect that we will want to do more in this area in the future and in particular that we will target certain sectors like software, gaming, computing and so on. The 20,900 places provided for people under the various internship, skills training courses, back to education and third level springboard programme and the specific conditioning of these places shows this Government is specifically targeting people who have lost their jobs. In addition to these measures, I expect that this Government will pursue with great vigour applications for further assistance from the European Globalisation Fund for workers that lost their jobs in the construction, financial and retail sectors. I understand the construction application is being actively pursued. I hope the Government will be in a position to use such funds in a much smarter way than did the previous Government, in particular with regard to the Dell fund.

I welcome the restoration of the minimum wage to €8.65 from July. This confirms the commitment given when this Government was formed. The Exchequer benefits from the €1 cut introduced by the last Government did not materialise. It only acted as a disincentive to work. Workers deserve this revision and it will help to rebalance peoples choices. Restoring the Irish economy will be like running a marathon. Following yesterday's announcement, we are on the right road and are now out of the blocks. More will come.

Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.