Wednesday, 11 May 2011
Jobs Initiative 2011: Statements (Resumed)
On Thursday, 24 February, my canvass team was tired, worn out and tense, the weather was not ideal and there were only hours to go before election day. One of my sons, who was out of a job at the time, was on the team when a very angry lady constituent in Goatstown opened the hall door of her house. The following day, which was election day, she wrote me an e-mail, which I propose to read to the House. It stated:
Dear Mr Mathews,
This is both a message of good luck for today, and also an apology. Last night, a young polite friendly man knocked on my door canvassing for you. [It was my son]. It was five minutes after I had learned that my second (and last) child is about to move abroad to find work, and I was totally heartbroken. Her brother left eighteen months ago. I just wish it had been a Fianna Fáil candidate (or Sinn Féin) who had knocked on the door at that moment. They would have been more deserving of my comments.
I have read your manifesto; I will be giving you one of my top votes, and I wish you, and our poor country, the very best.
If by any chance you happen to know who the unfortunate young man was, would you please pass him my apologies, and give him my best wishes. Also congratulate him on managing to get your leaflet into my hands despite my anger, and because of him you will get my vote.
The reason I read this out is although we are only 45 working days into this new Government it is important, good, helpful and the right move to have a jobs initiative. Many Members opposite have noted there are good points in this jobs initiative, which is the case. However, only last week, Members discussed another document, namely, the programme review of the EU-IMF programme of financial support for Ireland, wherein our Minister for Finance and Governor of the Central Bank were forced to give those who tighten the laces on our straitjacket an update report on what we are trying to do to balance our budgets and to fix the country.
I will not take Members through the individual headings in this initiative because there has been much discussion of them and Members already are familiar with the VAT reduction rate to 9% for tourism in respect of hotels and restaurants, as well as hairdressers and so on. These are positive measures that show the Government is trying to think creatively and is trying, within the straitjacket, to get some movement towards ways of rethinking things out and of re-engineering jobs and work through traineeships and all the rest. However, what this really tells all Members is that a great lump of lead is weighing down the economy and is suffocating it and one must drill through and find out what it is. More accurately, although we know what it is, some people try to argue that Ireland can continue to bear this load and knapsack because it is manageable. While the sentiment in that regard is okay, the measurement is all wrong. This is the reason that when Morgan Kelly of UCD wrote his opinion article in last Saturday's edition of The Irish Times, he returned to the measurement problem and got it right. The onus is on all 166 Members to get across the message of the measurement to those who need to hear it because the approach to the answer which one can anticipate is becoming more clear and Members must be courageous and must highlight that area of answer.
It is possible for everyone to admit that the losses as a result of a massive credit and fixed asset price bubble following a €200 billion surge of lending over four years will result in losses of €100 billion and such a scale of losses now is beginning to be recognised. However, this message has reached those who have come with the bailout or assistance package from the European Union, the ECB and the IMF in a foggy way. They have been listening to a confused and bewildered story for the past two years and it is time for Members to sharpen the focus by getting to them the first page of a three-page message. Three A4 pages are needed to tell the story and to give an update report both to ourselves and to the people within the European Economic Community. Incidentally, I like the old nomenclature because it has the emphasis on the word "community". The first A4 page must show the losses, their location and how they arose. That is easy and as I have just noted, they will be approximately €100 billion. We are on our way to getting there and the stress test report was published on 31 March. Fair dues to the Minister for Finance who took the expensive reports commissioned approximately three months before the change of Government from BlackRock Solutions, Barclays Capital and the Boston Consulting Group. That was tweaked and edited, indicating a capital requirement of €70 billion. However, I suggest that €100 billion is a meaningful figure because only €50 billion of losses had been recognised up to the end of September 2010. That constitutes 50% of the story and may be the reason the ECB and the people in Europe decided to say "No" to the initial approaches that there might be loans write-downs of amounts due from our banks to the ECB or to senior bondholders. However, were we to update them on the true extent of losses, it would concentrate the mind.
The second A4 page should explain that at present, funding in the banks comprises approximately €170 billion of loans advanced by the ECB and the Central Bank of Ireland to our banks, while there still remain unredeemed senior and other bondholders of approximately €50 billion. Everyone knows, and people like Morgan Kelly and others remind us, that this is too great a load of debt. In particular, if a bailout package of €85 billion, or €55 billion net, that was signed up to at the end of November 2010 is too big a load for a small economy to work its way through, one must then examine what can be done about it. If, as is the case, €70 billion of the loans advanced by the European Central Bank into our banks within that €170 billion derive from loans made to redeem senior bondholders in full up to the end of last year, then they really are loans advanced to fund losses. However, the people of Ireland were not involved in creating those losses. This is another story, analysis or explanation to be told to Ireland's counterparts and one must ensure they understand it.
I suggest the third A4 page should have a solution, namely, there should be debt write-down in the order of perhaps €75 billion, of which €50 billion would be presented to the ECB and €25 billion to the remaining senior bondholders in the banks. This would represent a 50% write-down of senior bondholders from €50 billion to €25 billion. It would suggest a write-down of €50 billion or one third on the loans advanced by the ECB to banks which, when one mixes them together, stand at approximately €170 billion. Members should consider the scale of such a write-down in the context of the affairs of the European Central Bank and of Europe in general. The European Union has a gross domestic product, GDP, of approximately €9 trillion and Ireland's gross domestic product is approximately €150 billion. A write-down of debt owed by our banks to the ECB of €50 billion comprises one third of our GDP. As our GDP represents approximately 1.5% of the GDP of the European Union, then one third of that constitutes 0.5% of the total. Were such a report to be given to the European authorities clearly, in full detail and explanation and showing the provenance of the figures, they probably would begin to understand it, particularly were one to tell them that 0.5% of the European Union's GDP is the write-down requirement necessary against the loans due to the ECB.
What would that do for Ireland's economy?
It will be short. A stimulus package of €75 billion, in loan write-downs of approximately 25% to 30% for households and businesses, could be cascaded back to them. This gigantic stimulus to the economy would produce at least 5% growth in GDP, equating to a figure of €7 billion, which would counterbalance the sum of €18 billion.
I welcome Deputy Peter Mathews' sentiments on the European Union. I hope matters turn out as he described, as it would be wonderful if the European Union saw sense and started to treat us fairly.
Too often Members on this side of the House are accused of being negative about everything. I like to believe we honestly say what we feel. If what we tell the coalition is sometimes negative, that is unfortunate. I agree that the jobs initiative contains some good provisions. The Minister for Finance, Deputy Michael Noonan, was honest when he stated it was a modest measure and a start. It is a small monetary investment in the economy, a principle in which I believe. The philosophy of John Maynard Keynes took the world out of recession in the 1930s and is preferable to Milton Friedman's, of which we have seen too much in the past 30 years.
It would be great if we had more money to invest in this fashion. For example, we are to repair 800 km of roadway. The Minister without Portfolio, Deputy Brendan Howlin, mentioned how bad the roads seemed to be during the election campaign in County Wexford, an issue about which I also know. The roads are atrocious, but I did not promise anyone that I would fix them. As Deputies can imagine, 800 km is not much. In County Wexford alone there are 3,200 km of non-national roads. While fixing 800 km nationwide is a start, I hope there will be more of this work. Likewise, the money to be spent on school infrastructure is welcome, not only for the kids in leaky prefabs but also for a small section of the construction industry which is labour intensive. I know from experience that construction workers are inclined to spend money. They will stimulate the economy if we can find them enough work.
The VAT and PRSI measures will be welcomed by the hotel and restaurant industries, in particular. I have the good fortune to run five wine bars-restaurants and these measures will make a sizable difference to us in managing our businesses. Our industry has been struggling with difficulties. I employ more than 50 people and these measures will help me to stop shedding jobs. Whether they will create more is difficult to say. More people must spend money in our restaurants, but they cannot do so because they have none. If the banks start lending again, it will be a significant step in the right direction. Since September 2008 we have believed we can throw money at the banks and that they will eventually start lending with it, but the Government must play an active role in ensuring they are open for business. This would make a significant difference. I am surprised and disappointed, therefore, that the strategic investment bank has not been mentioned in the jobs initiative. Perhaps the Government is bringing it on stream, as something of that nature would be of considerable help.
The most disappointing element of the programme is the picking on pension schemes to come up with money. It does not grow on trees and must come from somewhere, but it is unfortunate that many of the people who made sacrifices during the years to save for pensions are to be treated unfairly. As Deputy Shane Ross stated yesterday, it is as if we are robbing them for their savings. It is not right. The Government might ask where we would get the money from if we did not take it from such schemes. As Deputy John Halligan pointed out yesterday, foreign companies operating in Ireland are making annual profits of €32 billion. While we do not want to frighten them away, since we appreciate how much work they provide and how important they are to the country, large global companies must make a fair contribution to our society, given how well they are doing out of it. It would be terrible to see Ireland go to the wall in order that these companies could keep their large profits. It would be great if the Government sought money from that source.
The jobs initiative announced yesterday must be a considerable source of disappointment to the Members on the other side of the House given what was promised a few short weeks ago. During the election campaign they were talking up the five point plan under which 100,000 jobs were to be created. The Taoiseach told people to read his lips and that the Government would create 100,000 jobs without ever explaining how. We had a jobs budget in the programme for Government that quickly became a jobs initiative after our so-called partners in the Troika had got hold of it and told the Government, "No way." Most of the jobs initiative could have been announced in a couple of press releases from the relevant Departments. There was no need to take up a week of the Dáil's time to hear statements on the minor adjustments contained in the plan. In the announcement the Minister made much of the return to growth, but he failed to mention the projected growth figure of 0.5% for this year. He played up the figures for next year and beyond. I hope these will come to pass, but, given how far out the figures for this year have been, it remains to be seen what will happen.
The plan has some positive elements. The reduction in the rate of VAT for tourism-related industries will be of benefit. I hope it will lead to greater spending as a result of increased tourist numbers. It is difficult to see how the reduction in the rate of VAT applying to vending machines will make any contribution. It will contribute to reductions in the cost of junk food in our schools, all of which seem to have vending machines, and increased spending by our young people.
The removal of the travel tax is also welcome, as it made no sense in the first instance. Unfortunately, airlines such as Ryanair will probably find ways to levy the tax in extra hidden charges that will increase their profitability.
As outlined in the House, rather than tax the pension funds of hard pressed private sector workers, a tax on the massive fees charged by and the hidden charges of pension companies would be fairer and possibly raise as much revenue. It remains to be seen if the Taoiseach will seriously take this suggestion on board and tax companies rather than savers. It will grate with the people who are constantly being told about the pensions time bomb and encouraged to contribute more and more to their pension funds to have the State levy these funds even at a rate as low as 2.5% for the lifetime of the tax.
The plan includes measures to allow the universities to hire researchers who will not be covered by the embargo. It is doubtful if there is any direct commercialisation of research that will contribute significantly to our economic recovery. In the United States the income from intellectual property only accounts for 4% of the universities' income. Encouraging universities to provide research and support for SMEs which could contribute to, for example, the food industry would be a more worthwhile development. The food industry has real growth potential, including export-led growth. This could also be the case in the SME sector. It is interesting that in Estonia and Slovenia more than 23% and 21% of SMEs, respectively, are exporters, while in Ireland only 11% of such enterprises export, with just 4.2% of revenue coming from these exports. If we want export-led growth, we should be targeting the creation of export-led SMEs and the food sector is where growth can be achieved. In the United Kingdom more than 30% of jobs are in the SME sector, yet our focus has been almost exclusively on foreign direct investment to grow exports. A real jobs initiative would focus on changing that while still encouraging foreign direct investment.
There are revenue-neutral stimulus plans that could have been included in this plan if the Government were so inclined. I raised the issue of business plans for fishery harbour centres in this House a few weeks ago, particularly with regard to my own town of Killybegs, where the Department of Agriculture, Fisheries and Food has large blocks of land lying idle. Without any cost to the Government, these tracts of land could be utilised for investment purposes and contribute to job creation in unemployment black spots.
There is no mention in the plan of the upward only rent reviews that are crippling small businesses and closing many of them down. The State as a landlord also operates upward-only reviews. Changing this policy would have real benefits for businesses and ensure they can survive and grow. It would also mean this plan would have a real impact.
Another area in which real jobs could be created is in the development of an indigenous wood-for-fuel industry. We already produce enough wood to heat the entire country, in fact we produce five times more wood than is necessary for this. Utilising our forests to develop an indigenous industry and incentivising homes and buildings to change over to wood for heat would in the long run offset over €2 billion in imports of home heating oil. The existing delivery systems could be changed over and adapted to the new fuel. This would create large numbers of jobs in rural areas harvesting wood. Instead of being sold off, Coillte's forests could be used to support this new industry. This could also eventually stimulate the development of an indigenous industry in the provision of home heating equipment.
The jobs initiative that the Government has outlined is a modest plan. It should provide some benefit in the tourism sector. The internship programme should give much-needed experience to educated graduates that will help them on the road to a career but strong measures must be in place to ensure that employers do not use it as a cheap form of labour and that it does not displace real jobs. It is a modest plan and apart from the tourism changes it is really much ado about nothing.
I said on my first day here that if I saw good things being done by the Government I would welcome them. I welcome the reduction in the air travel tax, which will cost €210 million. I also welcome the reduction in PRSI, which over the lifetime of the plan will cost €405 million, and the introduction of training places. However, having listened to Deputy Adams earlier, I must concur with him in his view that it seems more like a plan for a medium-sized town than for a country. Considering the number of unemployed people in the Shannon-side region, where I come from, it is clear that the number of training places would not be enough even for them. However, the Minister said it was a modest proposal, so that is fair enough.
There is one part of the initiative with which I seriously disagree, namely the plans for spending the €880 million that will be obtained from pension funds over the term of the programme. It is proposed to reduce VAT from 13.5% to 9%. If we had the money to do this, it would be of benefit. However, with the amount of money we are talking about - €880 million - there are so many better things that could have been done. I do not want to sound parochial, talking only about my constituency, but it is the area I understand best. If we were to break down that €880 million on a per-head-of-population basis, it would mean that over the term of the jobs initiative, we could provide €17.6 million to my constituency to help develop projects. How would this money be distributed? It could be handed out through the development companies. There was great hurrah a couple of years ago when the Leader companies joined together and formed the Roscommon Integrated Development Company, and €12.8 million was available over a three-year period. We could double that amount.
What would we spend it on? In areas such as the one I come from, we could increase employment by developing products that we currently use but that are produced outside the area. With this money, we could develop six micro-breweries in my constituency with no problem. We could set up markets in every town with a population of 1,000 or more. What benefit would that have? I did a study in advance of the general election in which I discovered that in 2010, people in my constituency spent €13.5 million on draught beer and stout and €9 million on fruit and vegetables. Of course we could never produce all that locally but if we produced 50% of it locally it would introduce an extra €14 million into our economy.
Benefits to tourism have been mentioned. We could also benefit tourism by developing a product. In my constituency, we have easy access to Sligo, Galway and Knock airports, and there are two train lines. We have eight golf courses. We have the longest border with the mightiest river in Great Britain and Ireland, and we could develop a serious tourism product based on this. We could have used that money to put advertisements in Stansted Airport. We could have used it to develop facilities such as Castlerea swimming pool, which would have cost only €0.5 million, would have employed ten people for the year and would attract more tourists to the area. Unfortunately, the Government has made a decision that instead of doing that, it will reduce the price of a can of Coca-Cola by about 10 cent and entrance into a cinema by 50 cent - which would be great if we had enough money to do so. However, this pool of money should have been used to develop products and services in my area and areas all over the country, which would have been of benefit to us.
While it might sound parochial for me to talk about tourism just in my area, there are many other areas that have similar needs. When we talk about tourism, we nearly always talk about Galway, Kerry, Dublin and all the clichéd places. These are great places to visit but there are also wonderful places such as the area I come from where we could create jobs out of a tourism industry.
I am disappointed that there was no mention of rates in this initiative. I have a proposal for reducing rates. We could get rid of 75% of the glorified ribbon-cutters otherwise known as county councillors from around the country and strip out the level of director of services from every council in the country. I can easily prove that rates could be reduced in my area by 25%, making it more viable for people to go into business. However, I have not seen anything like this.
The initiative is a modest proposal because of a shortage of money but it could have been a wonderful proposal. Instead of reducing the price of a can of Coca-Cola, we could have had, in three years' time, six new micro-breweries in County Roscommon and a market in every decent-sized town in the area, with our farmers selling their produce directly to people. A farmer who earned money from this could then have a door hung or a house painted, giving money to more people, who would then spend it on cabbage and potatoes to eat, and the money would go around. Unfortunately, the Government has gone for something very simple which has not been thought out. Is there any chance that the Government would leave the price of a can of Coca-Cola or a cinema ticket the same in my constituency and give us the €17.6 million instead? We will drive job creation in our area. That is how to do it.
No matter which economist one believes - we have quite a number to choose from - the bottom line is that we are in a dire situation, and there is a real fear that we are facing bankruptcy. I wonder whether we have time to continue with adversarial politics in this country. There was an interesting exchange this morning in the House in which somebody on this side - Deputy Ross - made a suggestion that the Taoiseach, on that side, was prepared to consider. It is not the prerogative of the Government but of this House to come up with a jobs initiative. If we had taken that approach, inviting people from all sides of the House to make suggestions, we might have come up with a more comprehensive plan, although this is not to deny the good that is in this initiative.
Seanfhocal, "Tús maith leath na hoibre". A strong foundation is needed. Is the Government laying out mechanisms for high-quality economic activity over the long term, which will bring stability to Irish society, or is it a short-term, volatile fix subject to the vagaries of greedy global markets and the quick-buck gombeen men, both foreign and domestic?
One positive aspect is the summer works programme for schools. The money will be provided to those projects that are ready to start immediately. Tá Gaelscoil Bharra, i gCabrach, réidh chun tosnú leis an obair. Tá siad ag fanúint ar scoil nua le fada an lá anois, agus tá súil agam go mbeidh siad sa scéim sin. I hope the plans for two further bundles of the public private partnership schools programme will be based on real need and not influenced by voting considerations, as has happened in the past. I also hope that the internship scheme will offer a high quality experience and that the people involved will learn significantly and make a contribution. It should not be just another type of slave labour.
Our corporation tax rate appears set in stone as our salvation but I repeat that we cannot be a tax haven for multinationals avoiding paying their just taxes in their own countries. As to exactly how much of this 12.5% tax is collected, there are disquieting reports of companies paying as little as 2%. Of that 12.5% tax collected, how much will be invested in jobs-focused growth?
Job retention is also important. I appeal for community-based projects working with people with addiction issues, with youth, with Travellers and with unaccompanied young minors. They provide a very valuable service at very little cost. To cut those kinds of jobs would prove very problematic in the long run.
Many of us attended the See Change meeting this morning. We saw people there who coped with adversity, isolation and mental illness and they had such a positive message for all of us. There is a positive message for all of us, namely, that we have to grasp the nettle and look forward.
The devastating economic legacy inherited by this Government demands that we fundamentally re-examine what we do and look for new approaches. Our economic difficulties may be daunting but they also present us with an opportunity to question existing practices, how we do business and the role of Departments.
For too long Government has made piecemeal decisions and policy has developed on a fragmented departmental basis. The traditional economic Ministries have usually exclusively addressed economic issues and other Ministries have concentrated on their discrete areas of responsibility. Neither the Department of Justice and Equality nor the Department of Defence would, in the past, have been perceived as having something substantial to contribute to economic growth or job creation in the private sector.
Insofar as the Department of Justice and Equality has impacted on the economy, it has been essentially in a regulatory sense, for example, in the context of prescribing the rules applicable to publicans and off-licences or relating to the legal profession or to insolvency. Yet decisions made in these areas impact not just on public order issues or on curtailing unacceptable practices within the legal profession or in protecting creditors, they also impact on how business operates, on the capacity of business to create and sustain jobs and on the wider domestic economy. There are a broad range of initiatives that can be taken in the justice area not only to modernise and reform our laws and increase competition in a manner that ensures we properly address the issues and dilemmas of this 21st century but to ensure that our laws do not act as a barrier to growth and recovery and contribute to job creation.
It is not only a question of law reform. There is much that can be done in how we administer our existing laws and improve administrative practices that can contribute to economic development, reduce the costs of Government and generate confidence in our future. Reforming inefficient bureaucratic practices no longer fit for purpose has much to contribute and I will return to this theme on another day.
In the area of innovation, research and development, business start-ups and job creation, in addition to playing their important traditional roles, the Department of Defence and our Defence Forces have much to contribute. I visited the Naval Service at Haulbowline in Cork on Monday of this week and the National Maritime College of Ireland and I am hugely impressed with the links between the Navy, the college and innovative small companies developing products in collaboration with the Naval Service, to the benefit of the service, that have the potential to create substantial employment in the future and contribute to our export growth. There is a great deal more that can be done in this area by companies collaborating with our defence establishment to the benefit of our Defence Forces, as a contribution to economic growth and to the overall benefit of this country, as part of the defence organisations transformation agenda. This is an area I intend as Minister of two great Departments served by talented public servants to vigorously pursue.
I now turn to the specific initiative I have announced today with regard to the area of visas which are the responsibility of the Department of Justice and Equality. It has been my view for some time that we need to ensure that our visa regulatory framework does not act as a barrier to expanding our tourism industry and as a disincentive to potential visitors to this State. In the context of the dramatic contraction that has occurred in the number of tourist visitors to Ireland, it is vital to ensure that this State is an easily accessible and attractive holiday and business destination and that the tens of thousands who visit the United Kingdom as our immediate neighbour have an incentive to spend some time with us on this island. While the UK and American markets have been a central focal point for our tourism industry, I have for some time believed that much more can be done to attract tourists to this State from growing and emerging markets and to make visits here a good deal easier.
In this context, I am very happy to announce the details of a very significant initiative in the area of visa liberalisation. The programme will be on a pilot basis but it is capable of being extended if all goes well. As things stand, a person coming to the UK for a short-term visit who needs a visa from the UK authorities makes an application and pays the necessary fees to obtain the visa required. However, if that person wants to include Ireland on his or her itinerary, he or she requires a separate visa and has to repeat the same form filling and procedure with the Irish authorities and await the decision on his or her visa application. He or she also has to pay the Irish visa fee. It is not difficult to see how this can be a disincentive to those who might want to consider a trip to Ireland as an add-on extra to the United Kingdom. Given the large number of tourists annually visiting the UK and, in particular, those who will visit for the 2012 Olympics, Ireland risks losing out on a substantial tourism spin off. We also have people from visa required countries who come to the UK to do business and who currently might, for the same bureaucratic reasons, be dissuaded from flying to Ireland for additional business meetings.
The nature of the new arrangement is as follows. Nationals of 14 countries, who ordinarily need a visa to enter the State, at a cost of €60, who obtain a visa to enter the UK for a short-term visit up to 180 days and want to travel from there to Ireland will not require an additional visa for Ireland. The countries to whom the scheme applies are as follows: Belarus, Montenegro, the Russian Federation, Serbia, Turkey, the Ukraine, Bahrain, Kuwait, Qatar, Saudi Arabia, the United Arab Emirates, India, the People's Republic of China and Uzbekistan. The list will be kept under review in the light of experience and other countries may be added to it over the course of the programme. This is a major change in public policy - it is the first time that Ireland has contemplated such a scheme and, as such, it is proposed that it be pilot-tested from July of this year, that is, 1 July, to October 2012.
From the perspective of potential visitors, it will save them the inconvenience of applying for visas and all the associated, but necessary, form filling and document submission. In addition, there are significant cost savings, for example, if a family of four from, for example, India want to travel to Ireland as part of a trip to London, the cost of visas to them currently would come to the sum of €240. This will be zero-rated from 1 July. Last year approximately 30,000 people were issued visas from the participating countries to come here. These visitors helped to provide and maintain jobs in our economy. This new measure provides the potential for substantial growth in our visitor numbers and a much needed boost for our tourism industry.
This is not a simple stroke of a pen measure. Immigration is a complex issue and proposals for change demand careful thought. Immigration abuse is a major issue with potential to expose the Exchequer to very substantial losses if we get things wrong. However, my officials have looked at the potential risks and are satisfied that the way the scheme is set out addresses any concerns there might be in this area. Of particular importance is that the persons concerned have already entered the United Kingdom legally on foot of a valid visa and have passed through immigration control there.
The common travel area between Ireland and the UK is a cornerstone of the close relationship between our two countries. It has survived many threats over the years and remains alive and well. It has been a major influence in economic development, commerce and tourism and is indispensable to tens of thousands of people on this island as they go about their daily lives. Today's announcement will serve to further underscore that close relationship and our common interest in protecting, nurturing and enhancing it. What makes the common travel area possible is the close co-operation between our two countries in immigration and security matters and in protecting our collective borders. The measures I introduce will enhance the potential of the common travel area to deliver economic benefits to this State.
I will not go so far as to suggest that these measures will transform our tourism industry but they have the potential, if properly followed through, to significantly increase our tourist visitor numbers. The vast majority of our tourists currently come from the UK, the rest of the EU and the United States and they do not need visas. What these measures will do is allow the industry to pursue with confidence new opportunities in emerging markets for add-on tourism from people going to the UK. The pilot period for the new scheme will include the London Olympics. Together with the availability of cheap online flights and ferries, it should open up the possibility of attracting a significant number of new visitors to this State at low cost to them. It will also help tourism on an all-Ireland basis so that key market visa required travellers in Northern Ireland can now come South as part of their trip.
The new arrangements announced today are a challenge and an opportunity to all airlines and shipping companies that provide services between Ireland and the UK to target for new business the 14 countries named and I look forward to their responding to this new opportunity to create new customer markets.
In addition, special arrangements will be put in place to facilitate visits by nationals of the listed countries who are long-term residents in the UK and for visitors on cruise liners. In the case of the latter, the Department has very recently agreed a set of procedures with representatives of cruise liners which will facilitate the easy embarkation of passengers at ports. It was indicated that more than 80 cruise liners - some with more than 2,000 passengers - are likely to call at Irish ports this season.
While the need for immigration control is undiminished I am committed to the Department of Justice and Equality taking on an increasingly proactive role in using our immigration system as a tool to assist economic development. We will do so in a sensible way in consultation with colleagues and will use the accumulated expertise in immigration matters to inform policy changes. Any changes we make will be very carefully considered.
I do not see these reform measures as the end of a process but rather as a significant new beginning and an important milestone in the contribution of the Department of Justice and Equality to the roadmap to recovery. There are more things we want to do in this area. For example, we have to look at how we can configure our immigration system so that it does more to encourage entrepreneurship and investment. My Department is drawing up proposals in this area at present and will work through these with the relevant stakeholders shortly.
We are also working on revamping our immigration categories to provide a more diversified set of permissions that can be better tailored to cater for different migration scenarios. We will continue to reform the student immigration system, working in tandem with the Department of Education and Skills and the State agencies involved in the promotion of Ireland as a high quality destination for international students.
The message I want to send today, as the Minister responsible for immigration, is the same as that from other parts of Government, namely that "Ireland is very much open for business". I am happy that my Department, in the context of the Department of Justice and Equality, is able to make a significant contribution to that overall strategy and it will continue to do so into the future.
I congratulate the Minister for Justice and Equality, Deputy Alan Shatter, for introducing this visa waiver policy. In the short time he has been in office, he has shown courage and the conviction to see it will work. The Minister for Transport, Tourism and Sport, Deputy Leo Varadkar, has also put his weight behind the programme.
In this new and different global era, we must think outside the box and do things differently. Traditionally, we in County Donegal always felt there was a weighted exodus of tourists from America to the south to counties Kerry and Clare. At the time, Donegal, as a Border county, had to deal with the perception of conflict which did not instil confidence among tourists. However, Border areas have relied on Northern Ireland tourists. In the past several weeks, we have recorded in Donegal a sharp increase in Northern Ireland tourist numbers again, even as far north as the Inishowen Peninsula.
Efforts in promoting Donegal tourism are made by Fáilte Ireland's county office, Tourism Ireland, the Donegal Local Development Company and the county enterprise board. Their aim is to think locally but act globally. For example, a Donegal live event will be held in Dublin on 22 May to highlight and advertise Donegal's full tourism potential. In the past, a similar event was held in Glasgow and, in August, one will be held in America with Derry tourism agencies to entice tourists from there.
To change how we market this country's tourism industry, we must work on initiatives such as those announced today. In 2008, I was given the responsibility by my party leader, Deputy Enda Kenny, to head up a Border counties forum to examine policy creation. The forum examined the bilateral arrangements for visa waivers between North and South and Britain and the Republic of Ireland. I am delighted that as an Opposition Member then I could formulate and take this policy to Government.
Members across on the Opposition benches should see Parliament as a conduit for policy. Policy, they should remember, does not fall from the sky. Many in the media think policy should be created only in Dublin and politicians should spend their time in the House scrutinising legislation, Monday to Friday. That is not how politics or policy formulation works. Policy comes from the people on the ground. The only way we can frame it is if we listen attentively to what the people suggest. The visa waiver policy announced today by the Minister for Justice and Equality came from suggestions from tourism industry representatives. They noticed declining numbers in American and UK visitors and sought new markets. By listening, politicians can formulate plans that are good for the country and instil confidence.
I notice a wry smile on Deputy Timmy Dooley's face opposite. We in Donegal are not looking to take any tourists from Clare. I congratulate both Ministers for running with this visa waiver programme. I also thank the Labour Party for ensuring the policy was included in the joint programme for Government and did not fall between the gaps. The policy is a good example of how Government and Parliament should work. When the new committees are established, I look forward to driving similarly constructive and co-operative agendas that can be worked on by both sides of the House.
This visa waiver programme is an example of a new way of thinking about tourism. We must begin inviting tourists from Bangalore, Dubai, Abu Dhabi and Uzbekistan as we have invited those from America.
Every Member wishes the jobs initiative announced yesterday by the Minister for Finance well and hopes it will put a serious dent in the live register figure of almost 440,000 people. We are all acutely aware of the upheaval and devastation that unemployment brings to a family. It did not take the general election to bring it home to us but, while canvassing, we all met thousands directly affected by the blight of unemployment. It is up to Members of this House to come up with initiatives and measures that are implementable and which ultimately will be successful. In that regard, it is important we give careful scrutiny to the jobs initiative. Were those of us on the Opposition side to come into the House and simply compliment the Government on its great initiative and wish it success, we would be doing a disservice to the Government and the people we represent. It is our function to give it critical appraisal, a function we intend to fulfil.
I will deal later with the thrust of the proposal, namely, the reduction in VAT and PRSI. First, I would like to touch on the activation measures announced yesterday by the Minister in regard to the provision of approximately 21,000 additional places in training, education and internships. While in the context of a live register figure of 440,000 this might appear insignificant, these places are, however, in addition to in excess of 100,000 training and education places already in place. It is important we target the resources going into training and education to areas of need in the economy and areas wherein there are skill shortages. While there may not be a lack of training and education places, there is in certain sectors a lack of relevant places in terms of training which is directly linked to employment opportunities. There is no point in the Department of Social Protection insisting that a person on jobseeker's allowance take part in a FÁS course if that course yields no prospect of his or her securing a job at the end of it. The planned reform of the social welfare provisions in terms of linking them to employment supports and initiatives will have to be at the core of this. We all want to see these initiatives as a stepping stone to employment. There is already in place a work placement programme, administered by FÁS, which provides a nine month placement to many people in sectors of the economy that are relevant to their background, skills and qualifications.
It is hoped the additional 21,000 places, though modest, will provide greater variety and additional opportunities for people wishing to avail of those services. Also, the Government should set out clearly how this initiative is to be funded. The extra €41 million going into the activation measures will be funded by way of the levy on the pension funds. However, €33 million of the €74 million allocated to this area will be reallocated from existing resources. In the interests of transparency the Government should set out from where that €33 million will come. Similarly, on the capital side an extra €29 million is being allocated, which again is modest. Some €106 million of the €135 million which is proposed for capital expenditure projects is a reallocation of existing resources. This money is being taken from one area and put into capital expenditure. Again, we need to be told from where the €106 million will come. The Minister for Finance, Deputy Noonan, stated yesterday that every €1 million spent on capital expenditure should yield between eight and 12 jobs. If we are only spending an additional €29 million on capital expenditure then the employment yield on an incremental basis will be only 200 to 300 jobs, which is quite limited.
The main thrust of the proposal is the stimulus which is being targeted at the tourism related sector, including an €880 million VAT reduction and an employers' PRSI reduction of almost €500 million. We all hope this works. It is a risk because it is difficult to predict what the outcome will be. I assume the Government's expectation is that it will lead to additional buoyancy in the economy, greater economic activity and will allow service providers in the tourism sector to reduce their costs, thus enabling us as a country to attract more tourists to Ireland, an objective we all share.
I believe the Government missed an opportunity in not extending the VAT reduction to other areas of the economy. For example, construction services will remain subject to VAT at 13.5%. At a time when the black economy is thriving, the Government had an opportunity to reduce VAT on construction related activities which would have given people an incentive to keep such transactions within the taxable system, but it missed that opportunity. The same applies in respect of agricultural services which remain subject to VAT at 13.5%. In addition, waste disposal costs, which are a significant cost for many businesses, will remain subject to VAT at 13.5%, even though the explanatory notes issued by the Department of Finance make clear they could have been reduced to the 9% rate and that some of the other goods and services subject to VAT at the rate of 13.5%, while they could not have been reduced to 9%, could have been reduced to 12%, including VAT on gas and electricity bills. Many people would have welcomed benefiting from a reduction in VAT on their bills. However, the Government has chosen not to go down that road. I understand the rationale that limited resources-----
The Government made choices and has targeted a particular sector. I am setting out alternatives that could equally have been chosen. The Government could, for example, have given a boost to building services by cutting VAT in that area. I am sure that would have resulted in more transactions in the black economy coming within the system. However, that is not the choice that was made. I am merely outlining that as an option the Government had.
The jobs initiative does not refer to the NewERA policy pioneered by the Minister, Deputy Coveney. That policy was flagged prior to the election and for many months leading up to it as the initiative that would lead to the creation of 100,000 jobs.
We had a jobs budget-initiative that was well flagged by Government, yet this document did not warrant a mention, which surprised me. Surely something that is in the pipeline and will deliver employment warrants a mention. However, the Minister for Finance chose not to mention it. The NewERA policy was the cornerstone of the Fine Gael economic and jobs strategy and it disappeared from the speech made yesterday by the Minister for Finance, Deputy Noonan, which surprised me.
The Minister with responsibility for public expenditure and reform, Deputy Howlin, in a radio interview this morning in response to an earlier interview I gave, referred to his belief that I did not realise there was such a thing as DIRT tax. The difference, of course, is that DIRT tax is applied to interest earned on savings. It is not a tax on capital, people's savings. To my knowledge, this is the first time a Government has crossed the line and has directly seized part of the savings people have put away to provide for them in later life. Some 2.4% of the pension value will be taken, which is one forthieth of the value of the fund. Therefore, a person who has invested in his or her pension fund for 40 years will, with the stroke of a pen, have seized by the Government one full year of their pension contributions when one strips out inflation and the performance of the fund and so on. I could make many further points but I know Deputy Dooley is most anxious to make a constructive contribution on this issue.
I, too, welcome the opportunity to discuss this important initiative brought forward by Government. Like other speakers, as a constructive parliamentarian newly in Opposition I believe it behoves us all to try to be constructive in terms of working through the initiatives and ideas that come forward. As my former colleague in the Seanad, Deputy Joe McHugh, said earlier, we should not try to exclude ideas or viewpoints put forward by those on the Opposition benches. I hope that was the case with the previous Government, although that may not have been the case to the full satisfaction of all concerned. However, there is a requirement for us, not just to come forward with ideas, which we will, but to offer our opinions, based on what has transpired or what the Government has put forward.
Yesterday's initiative is too little, given the hype that preceded it. The hype came primarily from the positions taken by the parties now in government in the run-in to the general election. Deputy Michael McGrath has talked about the great efforts made to promote the potential of the NewERA document and the funds that would be attracted from within the Irish economy and from outside, through the issuance of bonds. That has not been possible and has not formed part of the latest initiative. A Minister of State has been appointed and I hope that is not a wasted exercise. We may hear of the NewERA again in the not too distant future. There was some potential in the document for getting a more focused and broad spectrum approach to the development of our infrastructure. I hope that will raise its head at a later stage. I have no doubt Deputy Fergus O'Dowd will work to bring that about. At one stage there was a projection of €18 billion. It then became €7 billion and we are now back to €0.5 billion. However, that is history.
There was talk of a bank for national recovery. That was not part of the programme for Government. The strategic investment bank proposal, from Deputy Sherlock's party, was forced into the programme for Government but we heard little about that yesterday either. In the minds of some Labour candidates it was a panacea for the resolution of the banking crisis.
Notwithstanding their abhorrence of the notion of continued capitalisation of banks, the presentation of the strategic investment bank in the programme for Government seems to have satisfied their concerns about bailing out the banks and not burning bondholders. However, that is for another discussion. We all know the importance of getting our banks functioning. One of the key things the Minister for Finance stressed yesterday was the continued necessity to fix the banks.
I compliment the Government on its continued approach to fixing the banks, along the lines set out by the previous Government. The fundamentals of where the economy is now and where it was before the election have not changed, other than that the former Opposition parties are now in power and must face reality. Perhaps that may have tempered, to some extent, what the Government could have done yesterday.
I suppose it would be asking too much for the Government parties to progress their agenda of openness and transparency, which the Taoiseach regularly tells us about, and tell the public they hoodwinked them a little in the run-in to the election, that the promises they made are no longer achievable, that they knew this at the time and that they are sorry and will proceed with resolving matters in line with the fundamentals that were facing them.
We are not going to get that. We are going to get a continuance of the three card trick. They have now turned jobs into the three card trick. They presented them prior to the election, dangled them around and waved them under different agendas but, like the punter at the races, when the money is put down the queen disappears. The jobs have disappeared, sadly, on this occasion.
By any standards, this is a modest initiative aimed at stimulating the economy.
I hope it works. The focus on the tourism sector is a good idea. For some time I have believed the tourism industry is one of the great unsung heroes of foreign investment. We spent much time in the past talking about foreign direct investment and various initiatives in that area. Tourism has epitomised this. We need a greater level of effort in that regard.
However, I am not sure the VAT reduction, which does target the tourism sector, will work in the way the Government wants. For example, if two people go for an early bird dinner costing €50, the amount they will save through the reduction in VAT will not buy a cup of tea, let alone a cup for each of them. It is very meagre.
This may, ultimately, become a subsidy for the entertainment sector. Sadly, many of these operators are under pressure and they have told us about that. I am concerned that the reduction will not be passed on to the consumer. Even if it is, it will not make an appreciable or measurable difference to their capacity to spend more. At best, the reduction is a gimmick.
There were ways of targeting measures more effectively to attract people into the State. That has been done, to some extent, by the elimination of the €3 travel tax, which I was never in favour of. In the last budget, the Minister for Finance, Deputy Brian Lenihan, moved a considerable way by reducing the tax from €10 to €3. Last December, a scheme was put forward, with the compliance of the Dublin Airport Authority, to encourage traffic growth at the three DAA airports. I am not sure if it is still in place. It would have given a rebate of all airport charges to airlines that increased their activity above 2010 levels. I am not sure if that scheme is still in place.
I do not know if the Minister for Transport, Deputy Varadkar, intends to retain it or if the new measure will be added to it. It was a considerable incentive to increase traffic, based on 2009 levels. Perhaps we will get further clarity on that.
With regard to capital expenditure measures, the Government talks about shovel-ready projects. This gives movement to the retrofit programme, although I understand the grants for various initiatives have been reduced by up to 20%. I would not be opposed to this if we can spread it wider over a greater number of people. We all know of constituents who have a backlog of applications and we would like to see those progressed.
The €30 million of the schools building programme includes €20 million that had already been voted through the House and was earmarked for various projects. The piece missing from yesterday's announcement are the projects that will not go ahead as a result of the reprioritisation of this €20 million. Are there new-build schools, or other programmes, that will not happen as a result of this? it would be nice to know, in keeping with the policy of openness and transparency. The Taoiseach said today he would be honest and upright. He said he would tell us everything and be clear and that would be the great difference. He now has an opportunity to live up to that and tell us where the €20 million will come from and what will not happen as a result.
The same should happen with regard to the €75 million set aside for the transport Vote and the €60 million for local roads. Where will that come from? There is not new money. Of the more than €135 million that has been earmarked, some €106 is coming from existing programmes and projects. We would like a list of the projects that will be shelved as a result of this reprioritisation. Some of them were earmarked to retain and create jobs.
The initiative and the Government's focus on creating and retaining jobs are welcome. I will not deal with plan to take money from the pension plan. Others have spoken about that. The bulk of the investment taken from the pension plan will be used to retain jobs rather than create new ones. The Government has not been specific about what it hopes to create. That is, perhaps, wise. However, the Government will be measured by unemployment numbers. When the next set of numbers are published in six, eight or ten months time, if there is not an increase in employment numbers it will be a commentary on this initiative. At that stage it will be seen to be a success or a failure. I am prepared to wait to see that before we cast judgment on it. That is how this initiative will be viewed.
With the permission of the House I will share my time with Deputy Sean Sherlock.
I am glad to have an opportunity to speak in this debate and to try to answer some of the questions asked by the previous speakers. The last comment Deputy Dooley made is a fair one. In time, we will be judged on whether this jobs initiative, or stimulus package, has been successful. We will be judged on tourism numbers, because we are targeting that sector, and some of the other specific target areas.
Being in Government is about making choices. This is one of several initiatives that are about reinforcing the message that this Government's priority is job creation and putting structures around our economy that can allow jobs to be created within the private sector. The evidence to date would suggest that, from the very outset, the Government's priorities on job creation were clear. We have made clear decisions around banking, although they are more costly than we are happy with. Nonetheless, around the structures of banking, we have made clear decisions that should have been taken two and a half years ago but were not.
I disagree with Deputy Dooley that we are continuing Fianna Fail's banking strategy. I noted Deputy Wallace and others were smiling when that was said because even Opposition parties apart from Fianna Fáil would not suggest that.
We have taken some clear decisions. Whereas Deputy McDonald and others are not happy about the approach towards burden sharing, there is no doubt the Government is restructuring the banking system in Ireland in a way that is responsible and makes sense.
NewERA is still Government policy. Elements of NewERA are in the programme for Government and a Minister has specific responsibility for implementing that.
It was not possible to put the structures in place to make NewERA a reality at this early stage because much of it, as Deputy Michael McGrath and Deputy Timmy Dooley know, involves restructuring, for example, the delivery system for water across the country, the way in which we carry electricity across the country and the way in which we roll out broadband. Despite this, elements of NewERA are already beginning, for example, in regard to broadband for rural Ireland. The McCarthy report deals with a whole series of recommendations, some of which are consistent with the NewERA policy. We will see this being rolled out over time.
This is not all the Government has to offer on job creation, far from it. It is what it was possible to introduce at this early stage in a jobs initiative that is affordable and cost neutral, whereby we have committed to raising funds so we can reallocate those funds to create stimulus and jobs. That is all it is. No one in the Government has been hyping up the jobs initiative. We have been saying for weeks-----
What we said before in regard to NewERA in particular is still the ambition of the Government to implement. Nobody ever said NewERA would be implemented within the first three months of Government. I certainly did not say that and I was the chief architect of it. Let us wait to see what happens in this regard.
I want to focus on the choices available to us. They are choices in terms of how we spend a modest amount of money to get the maximum bang for our buck. We have targeted tourism, for which I am unapologetic. When I was in opposition as spokesperson for transport for the last six months before the general election, I was utterly frustrated by Irish aviation policy. Over the past three years we have seen a 30% drop in passenger numbers going through our three main airports and a 40% increase in passenger charges - that is the Fianna Fáil record. This is why airports such as Shannon, Cork and Dublin airports are under such pressure at present while we try to pay for a €600 million new terminal - it was arguably more expensive than that but that was its stated cost. What we are trying to do is to reshape the tourism industry and make it cheaper to come to and holiday in Ireland. That is a good initiative which makes sense. One of the easy ways of getting stimulus into an economy is to bring people here to spend money. This can be done, for example, with cruise ships coming into Cork harbour, of which there will be 58 this year with an average of 3,000 passengers per ship. It is also about building passenger numbers in a proactive way through Dublin, Cork, Shannon and other airports.
This is what the Minister, Deputy Varadkar, is focused on when he talks about getting rid of the travel tax. Can anyone imagine putting a tax in place to charge people for the privilege of coming to Ireland to do business or to holiday here when we are trying to bring people here to get stimulus-----
Yes, that is an element of it, and it is a fair point. However, if one speaks to airlines, Tourism Ireland and hotel operators, they all want the ability to offer cheaper breaks in Ireland and they want people to be able to travel through airports as cost effectively as possible. That is essentially what this is about, no more, no less.
The initiative the DAA introduced in December did not make sense. It sought to measure the overall passenger numbers coming through Irish airports and once the number went above a ceiling, contributed to by all of the airlines, the DAA would reduce passenger charges for everybody coming through the airport. In other words, if Ryanair expanded its numbers, everybody would piggy-back on that. That is not a way of targeting different airlines to incentivise them to build their numbers, which is what we are now trying to do. I expect the Minister to be successful in that.
With regard to the transport sector and the reallocation of funds for the roads programme, at long last we have seen County Cork getting some priority as it receives nearly double the amount allocated to the next best county. This makes a change as it has been at the bottom of the list for years in the allocation of funds per kilometre of road.
With regard to energy-----
This is about labour intensive work that needs to be done anyway. What we are doing is front-loading it to try to get some stimulus into places such as County Cork and elsewhere - Cork and Donegal are the two counties that seem to benefit the most.
With regard to energy, one of the good measures introduced by the last Government under the former Minister, Mr. Eamon Ryan, was a retrofit programme. While I was critical of some aspects of it, the principle is a good one. I expect that retrofit programmes in the future will be based on a "pay as you save" approach so capital injections from the State will not be needed. This is a stimulus initiative that will work and build on the good work that has been done in the past in regard to encouraging people to upgrade their buildings and homes, which is also very labour intensive work. There are many people with the skillsets to do that work who are currently on social welfare.
In my area of responsibility, the food sector is another example of a jobs initiative that will be rolled out over time. We are operating to a blueprint called Food Harvest 2020, which is a set of exciting targets put in place by the previous Government. However, the challenging element is how we put in place a road map to achieve the targets. What we intend to do in the food sector in Ireland, which is a growth sector and had €8 billion of exports last year, is to ensure that the figure for exports is €12 billion by 2020. There are plans to increase the volume of food production in Ireland by one third by 2020 and we intend to add value to that food product by approximately 40% by 2020. For counties such as Waterford, Wexford and Cork, this will probably involve doubling milk production so we can meet a national target of increasing milk production in volume terms by 50%.
There has been much media coverage in Ireland this week concerning food production, rural life and where rural Ireland is heading in future. I suggest that one of the main drivers for the economy in the next five years will come from rural Ireland, in particular from the 400 food companies that are supported by Bord Bia and are building exports to the tune of approximately €400 million this year. Even in recession this is an exciting story to tell about certain sections of the Irish economy, whether about the potential growth of aquaculture, fish processing in towns such as Killybegs, which I will visit in the coming weeks, or the traditional strong food areas in which Ireland is the best in the world at exploiting the potential in beef, dairy, lamb, and so on.
This Government will introduce a rolling agenda of job creation and economic stimulus of which this is but one instalment. It is being paid for by a very small levy on pension funds which have been very generously supported by tax breaks by previous Governments. Now we are recouping some of that money in order to reallocate it in a way that can inject stimulus at an early stage in the lifetime of this Government. We will follow that by a series of constructive and positive measures that will keep the momentum going.
I welcome the jobs initiative. It was not designed to be a panacea and I do not believe a panacea can be achieved in such a short space of time. What it seeks to do, however, is to provide an overarching framework which will underpin the economic recovery. Within that framework there is a set of criteria so existing jobs can be maintained, the cost of doing business can be reduced, people can be helped back to work and there can be an attempt to restore confidence in the economy. In that way people can begin the recovery which is so vital to our national interest and to the interests of those people who are looking at this House and asking what we are trying to do to fulfil our mandate to them.
At this juncture members of the Opposition may posit the notion that the initiative does not necessarily fulfil all the obligations set out in the Labour Party or Fine Gael manifestos. However, a programme for Government was agreed and mandated by this House. In the normal day to day life of a parliament we score points off one another - this is vital and we have all done it. The situation is that we will not get the 400,000 people we want to see back in work back at work within eight or nine weeks. It is simply not possible. What we can do, however, is to try to instil some confidence and some pride in the fact that governance in this country is based on the idea that we will serve the people-----
-----to the best of our ability. We are trying within the very meagre resources we have - which were squandered - to try to fulfil a programme that sets down these very parameters.
I fulfilled the research and innovation brief and am greatly encouraged that the research and development tax credit will bring about a benefit in ensuring we can try to fulfil that agenda. It is vital to our national interest. I acknowledge that the parameters set down in the agenda for research and development are as a result of work by successive Governments in the past, including the previous one. Through the State agencies they identified the vital part research and innovation fulfils in supporting jobs. The single message that emerges is that if we do not support the research and innovation agenda now, over a longer period it will be very difficult to be able to maintain existing jobs acquired through foreign direct investment. If parent companies see that we are not continuing our investment in such research this may send a signal that this agenda is being sidelined. It is vital that through initiatives such as the one announced yesterday we send a signal to the world that we will continue to ensure we can maintain the number of jobs we have, as well maintaining the quality link between research and foreign direct investment related jobs and thereby continue to attract further jobs.
I wish to speak specifically about the area of research and development. The positive evidence for economic recovery is clear. This year, for the first time in three years, we can look forward to positive growth which we fully expect to accelerate as we move into 2012 and beyond. This is by contrast with the years between 2007 and 2010 when the volume of goods and services produced in Ireland fell by 12%. On foot of recent gains in competitiveness and improving external demand the exporting sectors of the economy are once again performing very well generally. Last year exports increased by 9.5% in real terms, the strongest rate of growth for more than a decade. Looking to the future, export growth is projected at around 6.75% in 2011 and 5.75% in 2012.
Our focus now, and for the foreseeable future, is on the maintenance and growth of sustainable jobs. I am glad to say the auguries are good on this front. The number of foreign investment projects in Ireland rose by 15% in 2010. These came about because of the proactivity of State agencies such as IDA Ireland which was responsible for the creation of approximately 11,000 jobs, more than double the figure of 5,000 for 2009. That transcends two mandates, two Governments. I acknowledge, as one must, this came about as part of a previous Government's mandate. Moreover, these are quality projects. In the area of attractiveness for research and development projects, Ireland is positioned in fifth place, behind Finland, Taiwan, Israel and Puerto Rico. The joint Forfás and CSO 2009-2010 business expenditure survey on research and development, BERD, was published on 29 April and it, too, tells a positive story. The BERD results indicate that in spite of expectations research and development expenditure in indigenous Irish businesses remained strong during 2009 and estimates indicate continued growth in research and development spend in 2010.
During a recession one might expect to see companies make cuts in areas such as innovation and research and development spend but the BERD figures show that Irish businesses continue to invest in this area, mainly due to recognition of the importance of bringing new and innovative goods and services to the market in order to remain competitive and to grow exports. This is very positive as this sustained research and development investment is what will underpin future economic growth, jobs and exports.
I wish I had more time but am glad to have what I have. Today I attended an event where Johnson & Johnson, a company with a significant presence in this country, had its global management structure meet at Carton House. That company sustains more than 2,000 jobs in this country. Arising from that, Science Foundation Ireland hosted an event which showed how innovative Ireland is. There was a showcase, with more than 30 companies and research functions coming together. There is one clear message that comes across when one talks to people from Johnson & Johnson and other companies of that nature. We must send a signal to them that we want to push out the boundaries on framework programme 7, which sees a target of some €600 million being achieved. We must show that we can look forward, via the European Commissioner, Máire Geoghegan Quinn, and an enhanced relationship with the European Commission, to continuing, in framework 8, to push the boundaries further. We must signal to companies like Johnson & Johnson our commitment to the research and development component and show we are committed to the spend in hitting certain targets that will see us grow jobs in the area. Investments made in recent years are already beginning to pay off.
The initiative launched yesterday is a signalling exercise to companies that have invested in this country. It states we are still very serious about ensuring we can retain them and the right kind of conditions so the companies and researchers we fund will be able to sustain this economy in the long run. During the 1970s we depended on agriculture in terms of inputs from a European Union perspective, while during the 1980s and 1990s it was infrastructure. The next big tranche in sustaining jobs will be on the research, scientific, technological and innovation side. We must continue with this agenda.
I wish to share time with Deputy Caoimhghín Ó Caoláin.
For the purposes of clarity it is only fair that I clarify a point. Deputy Sean Sherlock has stated the Fine Gael-Labour Party programme for Government was mandated by the House. It is more correct to say the Fine Gael-Labour Party programme for Government was mandated by Fine Gael and the Labour Party in this House.
With all due respect, I am not. For all the Minister of State's talk about innovation which is, naturally, welcome, this jobs initiative represents more of the same. It is most unambitious. There are 104,684 people jobless in Dublin alone and almost 500,000 throughout the State and the Government trumpets plans to spend paltry sums of money in response. Nero fiddles while Rome burns. As the Minister for Agriculture, Fisheries and Food, Deputy Simon Coveney, stated, politics and government are about choices. The Government has made a choice. Fine Gael and the Labour Party have found up to €24 billion of taxpayers' money for Anglo Irish Bank, but they have refused to invest even a fraction of this sum in a meaningful job creation and stimulus package. We all acknowledge a stimulus is necessary to deliver jobs in the domestic economy, improve public service provision and protect those in need.
By the Government's own admission - it is almost a boast at this stage - this initiative is a modest proposal. The logic seems to be that this is a first instalment and that it is all we can afford at present. I question this logic. If the Government is insistent, as it is, on sinking the State's resources into toxic banking institutions; pursuing the IMF-EU bailout package, as it is euphemistically called; and sucking billions of euro out of the domestic and real economy, how can it imagine for one second that in 12 or 18 months time it will be any more flathúlach or flush with money? Perhaps the real tragedy is that when the Government places job creation centre stage each time it comes to discuss job creation and providing a stimulus we continue to have the béal bocht. It will be the béal bocht because the Government has made other choices. Rather than provide a substantial stimulus, it chooses to invest more money in banks. Meaningful stimulus measures would not only put money back into the real economy, they would deliver a real social dividend in the longer term.
Yesterday the Minister for Finance, Deputy Michael Noonan, painted a picture of export-led recovery. He informed us this was in line with expectations. He knows full well that growth in the export sector has proved to be largely jobless. The truth is there will be no recovery, whatever about growth, without job creation. This means there is a need for a considered, intensive focus on the domestic economy, as well as substantial strategic investment. This initiative falls pitifully short of what in required. Also, it falls short in terms of the measures required to protect and create jobs in the private sector. Moreover, it ignores entirely the role of the State in tackling unemployment and boosting growth.
Although they are limited, I welcome the capital expenditure measures. Accelerating capital projects that are shovel-ready and labour intensive would create employment and deliver a social dividend. Unlike the Government, we sought an intensive focus on investment in this area, to which I have referred. We seek an investment of €1 billion of additional capital in infrastructural projects, €600 million in job creation and retention measures and €400 million in State child care services and the pre-education sector. Furthermore, we would target an additional €500 million towards families, making tax credits refundable and putting money back into people's pockets and, therefore, the real economy. These would be real, substantial cash investments. The money is available, but the choice has been made to dedicate the moneys elsewhere, not to provide a stimulus.
It is notable that the Government has resisted at all costs setting job creation targets. I heard one contributor suggest these would amount to nothing more than extravagant claims. Targets must be set since we need to set goals and benchmark achievements if we are serious about creating and retaining jobs.
The failure of Fine Gael and the Labour Party to include commercial semi-State bodies and local authorities in the labour activation measures is a missed opportunity. The number of unfinished apprenticeships represents one of the serious fall-outs for younger people following the collapse of the construction sector. However, the Government displays a limited world view and fails to recognise or harness the potential of the public sector or the commercial semi-State sector to address the problem. There is no reason these sectors cannot facilitate young apprentices to finish their training.
Last year the local government efficiency review group reported that staffing levels in local government had been reduced by 5,000 in the period between mid-2008 and early 2010. This represents a cut of 13% in the overall number of local government staff and staffing numbers have fallen again during the past 12 months.
Yesterday the Minister, Deputy Michael Noonan, promised a modest proposal to boost employment, with a focus on minor capital works, away from new build projects. However, no employment targets were set. Let us remember that not long ago Fine Gael promised voters a €7 billion investment in the State's water services, telecommunications infrastructure and energy industry. These investments have bitten the dust post the general election. No additional water infrastructural projects are included in the Government's proposals. It is satisfied, however, to impose a flat water tax of €175 on every household, but it will not invest additional resources in the State's water supply infrastructure and in the process create employment. The efficient supply of water to homes and industry is the responsibility of local authorities. Funding for maintaining and improving the water supply infrastructure comes from the Department of the Environment, Community and Local Government. The relevant Ministers, Deputies Michael Noonan and Phil Hogan, are aware that Ireland lags behind its European counterparts in terms of its water systems. Despite this, there is to be no increase in the allocation of moneys to be spent on the water services investment programme which is already limited in its scope and will tackle only a mere 3% of the national water infrastructure network. The net result of the Fianna Fáil, Fine Gael and Labour Party local government strategies is near nil investment, inadequate infrastructure and increased unemployment.
Some 2,000 public sector jobs have been cut in the first quarter of this year and a further 28,000 jobs are to go. That is some target. There is nothing like it mirrored in job creation. The Government could have ensured the employment of apprentices in public projects. It could make the employment of apprentices a condition in the awarding of public contracts to contractors to build public infrastructure. It could and should have done these things. However, it would require an actual investment in critical public infrastructure, something it is intent on shying away from. The Minister, Deputy Michael Noonan's promise of 1,000 specific skills long-term training places to be delivered by FÁS will stick in the craw of the unemployed in my constituency, a constituency which fought hard against FÁS's decisions to close two training centres, one in Jervis Street and the other in Cabra, one year and 18 months ago, respectively.
The approach to this initiative, as far as it relates to the public and semi-State sectors, is not so much labour intensive as Fine Gael intensive. The party's commitment to - for some it is almost an obsession - small government will drive down growth, deepen the recession and increase inequality. The Labour Party must step up to the plate and shout "Stop". The people cannot be asked to continually carry the can for bad banks and reckless lending practices by big financial institutions. The Government has a role to play in the creation and retention of jobs; we cannot afford to shy away from that fact. This Government has, however, shied away from it. That is a serious error and a missed opportunity.
I sincerely wish the Government had produced a substantial plan. We all have wishes in this matter and I do not doubt the sincerity of many of those on the Government benches on this.
It is very important that we remember that we must return to our respective constituencies from this place of engagement. Our constituents are asking us to give them hope and to point to a viable way forward. It is so sad so many of our respective constituents, those in each of our areas of representation, are currently unemployed and many others have been forced to leave our shores in recent years.
This jobs initiative, so called, is not going to create that hope. It does not spell out a viable way forward. I wish the Government had come forward with a plan we could bring to struggling small and medium-sized businesses to say here are the measures to help them survive and thrive, to access the credit they so essentially need in so many cases today and to start to rebuild and look forward to the future with confidence.
Instead, I have to say this plan is very disappointing and I do not believe for a moment that view is confined to the Opposition benches. After all the promises of a real jobs strategy from both Fine Gael and Labour in the general election, a view put forward by their candidates and canvassers so strongly because the people articulating it believed it themselves, if this is a plan for jobs, they and we must ask where the targets are in the plan. Where are the targets in terms of numbers and the types of jobs that will be created as a result? Fine Gael and Labour promised during the election a plan to create 100,000 jobs and 60,000 training places. Those commitments have now disappeared because they are certainly not in this initial effort.
The billions that will be required to stimulate growth in our economy have also disappeared, something we have referred to here ad nauseam, those billions that have disappeared into the banking black hole courtesy, clearly, of the disastrous banking policy of the last Government and, sadly, continued by this coalition Government.
I acknowledge this evening that there are some positive proposals in this jobs initiative but they are, with respect, much too thin and much too weak. They are very weak; this is a very poor effort when we remember there are almost 500,000 people unemployed in this State. Let us not forget, as some all too readily do, the many more tens of thousands, particularly of our young people, who have already left our shores and who on their return might very well find themselves in the next number of years being treated as non-persons in their own country courtesy of the crazy and maddening habitual residency clause regulations. I have no doubt that colleague Deputies on the Government benches are at least as familiar with all of that as I am in terms of their constituents' needs.
The Government plans to spend €135 million on capital projects but €106 million of this is from existing allocations. That is only an additional €29 million in terms of this set of proposals. It is our strong belief that the Government should invest in this year €2 billion directly from the National Pensions Reserve Fund while there is still a crumb in it into a real job retention and creation plan. This is something we have proposed and that others have articulated.
The Government has a duty to give real hope to the unemployed and real substance to any jobs initiative it would bring forward. We need schools, improved hospitals, primary care centres and child care facilities. We have tens of thousands of unemployed people who have the skills to build these essential resources and infrastructural needs, to maintain them and to staff them. Government, however, continues to pour the billions required to develop all of these essential needs into zombie banks.
At best, I believe the jobs plan will be jobs neutral. I have to say that with great sadness because it strikes me that it has the potential to cost jobs because an incentive has been presented to drive down already low wages and the risk clearly will be that it will leave people with less money to spend. The threatened attack on long-standing wage agreements must be resisted. There are many people in Fine Gael who do not hold that view but the Labour Party representatives would be strong advocates and I appeal to them, first and foremost. How can they possibly let this happen? This is another imposition on us from the IMF-EU deal. It will primarily affect low paid workers in areas such as retail, construction, catering, hotels and the tourism industry.
I call on the Government to resist the demands of certain employers to drive down the wages of these workers. This will not create jobs, make no mistake, it will cost jobs and compound the poverty that is already so much in evidence across this country. It will reduce or eliminate the expendable income of tens of thousands of workers and thus further depress the economy and the local and regional economies we come from.
In my own constituency, there are just short of 14,000 people on the live register in counties Cavan and Monaghan. In the very week the Government has announced this jobs plan, the services available for those people are being placed under threat. I ask the Government to hear me on this because it is not the first time that something that has visited my constituency became a template for other locations around the country. Last Friday, staff in the Monaghan FÁS office were told by regional managers under the direction of FÁS head office that there is potential - as they described it - for temporary redeployment of all staff from the Monaghan office to other centres across the region, in Cavan, Drogheda, Dundalk and Navan. This proposed redeployment is for the summer months at the same time as school-leavers are seeking assistance in finding work or further training, when summer jobs become available and people generally require assistance in accessing them. This is not the formula to deal with annual leave needs or any other cost-cutting requirements which FÁS must address. The FÁS staff in Monaghan have given a commitment to flexible working and co-ordination of leave over the summer months in order to keep the office open. I urge FÁS head office to take up that offer from the staff which is very generous and responsible. Monaghan Town Council met last evening in emergency session on the issue. It has requested a meeting with the Minister for Social Protection, Deputy Joan Burton, on this matter. I urge her to accommodate that meeting and I hope she will take note of my appeal. I hope the Government parties will revisit their proposals in this jobs initiative and come forward with a set of proposals which really will allow us to go back to where we come from with a message of hope. Surely this is what every one of us must want to deliver.
I wish to share my time with Deputies Olivia Mitchell and Denis Naughten.
I have listened to this debate and I note that all sides are in agreement on many issues. We all want to effect significant progress for our people considering the new economic reality of more than 450,000 people unemployed while at the same time continuing to work within the EU-IMF assistance package. We have to find ways to stem the human tragedy of more than 1,000 young people emigrating every week to Canada, Australia, England and the United States. The lifeblood of our nation is leaving our shores. Under our former Government our finest export was our young, bright-eyed and highly educated workforce. We cannot allow the brain drain of the 1980s which crippled our economy for more than a decade, to recur in this decade.
This Government is meeting the challenges head-on. In the first few weeks of office we have presented a constructive, positive plan within the confines of the EU-IMF and within the constraints with which the Fianna Fáil Government left the country and the banking system. We have to deal with the resultant economic collapse in a way which affects the EU-IMF deal as little as possible.
The programme for Government is a plan to create employment through the NewERA authority. Significant areas for future recovery are clearly identified for future recovery. Now is the time to invest in those areas in order to have the skills and jobs in place to meet the future and to make the much-needed changes. The NewERA plan will streamline and restructure the semi-State companies. There will be significant additional investments over and above current plans over the next four years in next generation infrastructure in the areas of energy, broadband, forestry and water. These investments and the accompanying semi-state restructuring process will be financed and proactively managed by a new economic and recovery authority which will absorb the National Pensions Reserve Fund. This is my responsibility as Minister of State and it is my current work.
I note a constructive engagement from all sides of the House in this debate, across all political parties and none. We are all trying to do the very best for our country, putting our best foot forward and dealing with these issues constructively.
It is a question of how to create jobs. The Government's national development plan has identified four significant areas to be dealt with by the NewERA authority. We need to address the significant deficits in the water infrastructure, some of which are due to climate change and resultant lower rainfall in certain parts of the country. The 34 existing local authorities need to be organised in a better way as they individually manage each of the water investment programmes. I hope to have a final consultancy report on the creation of Irish Water - Uisce Éire, by next October and to have legislation in place by early next year. This will change how water infrastructure is managed and will lead to the creation of many new jobs in that area.
The next generation telecoms network is a significant area in which we must play a leading role. Unfortunately, under the previous Government, Ireland had fallen behind in this regard. We have also learned many lessons from the unfortunate case of Eircom and what happened when it was sold off in its totality. The State will co-invest with the private sector and the commercial semi-State sector to provide next generation broadband to every home and business in the State. This will be achieved by delivering fibre-optic to the home or to the kerb in the case of 90% of homes and businesses with the remaining 10% provided with high speed mobile or satellite broadband. The Minister for Communications, Energy and Natural Resources, Deputy Rabbitte and I will be meeting with the chief executives of Irish telecoms companies with a view to finding out their plans for future telecoms infrastructure.
If Government, semi-State and private companies involved in telecoms or water provision all work together to put forward plans in this most difficult and desperate of times, then the best progress can be achieved. My hope is that we can provide 100 megabytes per second to most homes in the country which is what is provided in many other states with the same pattern of dispersed population as Ireland. The structures must be put in place but we must acknowledge that the State cannot invest in telecoms unless there is a clear market failure. However, the NewERA authority will enable us to identify areas where jobs can be created.
The 21st century smart grid is critical to improving energy transmission. Beginning with the handing over of ESB's transmission assets to Eirgrid, a new smart grid company will be created with ultimate full ownership and responsibility for the development of Ireland's electricity and gas networks. Bio-energy and forestry is the fourth area in which the NewERA company will be involved. The development of Ireland's forestry and bio-energies need to be developed. NewERA will merge Bord na Móna and Coillte to create a new State company which will become a global leader in the commercialisation of next generation bio-energy technologies.
The plans and discussions are in place with the Departments of Communications, Energy and Natural Resources, Environment, Heritage and Local Government, and Finance. Many individual professional groups are also involved in this effort to effect a real change in how jobs are created. I refer to a report, Future Skills Needs of Enterprise within the Green Economy in Ireland, which was published some time ago. It clearly identifies a roadmap for young people in our education system. It suggests what courses they should do, and on what areas the academic institutions should concentrate, so that they have the skills the economy needs if it is to move forward.
I take the point made by some Deputies to the effect that under the last Administration, approximately 7,000 apprentices were unable to complete their apprenticeships and now have no employment. If our young people and educators were to examine this society's future skills needs - I refer to areas like renewable energy, energy efficiency, water and waste water, waste management, consultancy services, smart technology, electrical engineering, marine and tidal studies, foreign languages, green chemistry, smart grids and wind turbines - they would appreciate that the educational attainment of our young people could be improved significantly. Thousands of jobs could be created in renewable energy.
We need to organise ourselves so that we can work with all the interest groups, particularly the semi-State companies. We need to step forward together under the umbrella of the NewERA entity or company. That will provide the leadership and reorganisation needed. It will direct the educational future of our young people. If the State sells certain semi-State assets at an appropriate and reasonable time as suggested in the programme for Government - it should not be a fire sale - it could acquire up to €2 billion to invest in the creation of the jobs I have mentioned. We must put in place the climate required to create thousands of necessary jobs. I hope we can all step forward together in that regard. I hope to report to the Dáil as soon as possible on this issue.
I am pleased to have an opportunity to speak during this debate. I welcome the announcement made by the Minister for Finance yesterday. It is a long time since this House spoke positively about jobs. That we are doing so now should be welcomed. Deputies on the Opposition and Government benches need to place a far greater focus on jobs as we go forward. The Opposition claims that the Government is not dedicating enough funds to the programme, while at the same time criticising the source of the funds being allocated to the programme.
The Minister for Finance made it clear yesterday that the Government was taking its first steps to start creating jobs. We accept that much more can be done that does not involve new funding but requires a change in the approach that has been taken up to now. In far too many cases, we have had a jobs barricade because bureaucracy and red tape are stalling job creation and retention. The Minister for Justice and Equality addressed one of those areas today when he spoke about the visa waiver scheme. That is just one example. I could mention numerous examples of barriers to employment that have been created in the Department of Social Protection and elsewhere.
Many jobs in small businesses are going to the wall as a result of a lack of prompt payments. The current average delay for payment is 74 days, which is having a direct impact on the cash flow and credit of small businesses. A small business in my constituency is on its knees because a State-appointed contractor is using every possible loophole to avoid paying its subcontractors. The business in question is owed €300,000, whereas its liabilities are just €50,000, but it is under serious financial threat because it cannot get the money it needs. Some of the moneys in question are owed by the Revenue Commissioners. Delays of up to six months can be experienced when one tries to get a refund from the Revenue Commissioners. In another case, one arm of Revenue is demanding €1,150 from a business even though another arm of Revenue owes €7,000 to the same business.
The problems to which I refer do not just relate to the Revenue Commissioners. Serious blockages are also being encountered with NAMA. I am aware of businesses in my constituency that are waiting to expand or be established, but are left in limbo because no clear decisions are being made by NAMA. They are in economic purgatory because NAMA is not telling them "Yes" or "No". At the same time, properties in many urban areas are getting dilapidated and are becoming a blight on their communities. Equally, the creation of jobs and the completion of developments is being delayed. In cases where a clear proposal or offer is on the table and employment is being directly affected, surely it makes sense for NAMA to be decisive and to sell the property, dispose of it in some other way or do something else with it.
While I am speaking about employment and development, I say that something needs to be done to deal with alien objectors to developments. I refer to people who submit objections to developments even though they have no association with the community in question. I have no difficulty with those who object to developments that would have a direct or indirect effect on them. Such people have a legitimate right to object to such development. I am aware of many cases in which people from the far end of the country, who have no connection to the area in question, lodged vexatious objections purely to delay a project. In some cases, they did so because they did not want a competitor's operation to get up and running. Something needs to be done about that kind of obstruction of developments that would have a clear jobs benefit for the local community.
The Garda vetting office was raised on the Order of Business this morning. I cannot understand the logic that requires a separate Garda clearance to work in a job similar to one for which a person already got Garda clearance. Every time one applies for a job, one has to submit a new application for clearance. Similar difficulties are being encountered by sporting organisations. If one is dealing with separate senior and minor boards within a single club, or separate hurling and football sections of the same club, one has to submit two separate applications to the Garda vetting unit to get clearance. Surely something can be done to streamline that process. If one is cleared to work with young people, one should be allowed to proceed from there.
There is no doubt that our future is uncertain. We know for sure that if we are to climb out of this economic hole, we have to get people back to work. Over several years, we have spoken at length in this Chamber about how this country's fiscal and banking challenges might be resolved. That debate was rekindled at the weekend when Professor Morgan Kelly delivered his bleak analysis. Regardless of the steps we take to try to find a solution - such as debt restructuring, debt reprofiling or debt-for-equity swaps - it is absolutely certain that if we are to return to anything like the living standards of the past, we will do so by growing our economy. That means putting people back to work, producing real goods and services and putting money into people's pockets.
I regret that we have had to tax people's savings to fund this package. I do not like it, just as I did not like the increase to 27% in the rate of deposit interest retention tax at the last budget. I dislike many taxes. The only reason to stomach this measure is that it will make some contribution to sustaining and maintaining the State pension for older people. If we do not put people back to work, we will not be able to pay the existing State pension into the future. It is a question of establishing priorities. I have to accept this measure, even though it is unwelcome. I ask the Minister to clarify what it means for people and to state how long it will last. That is important.
I welcome the package of measures announced. It will make a real difference, if not a big one, in generating employment and particularly in employment retention. As it is modest, it will not come anywhere near to getting each of the 500,000 unemployed back to work. It does not purport to do so. Any Government that cannot borrow and has a limited ability to cut services and raise taxes is constrained when it attempts to stimulate the economy. I do not accept the argument that because this initiative is revenue-neutral, it will not stimulate the economy. The manner in which one taxes and spends will either stimulate the economy or cut down on economic activity. There are things we can do, however.
The real value of this package is that it will raise confidence. It is a good news story because it presents Ireland - however beleaguered it may be - as a country that is trying to do something to solve its problems.
Yesterday morning, I visited a multinational company which last year located its European shared services in my constituency. This is a good news story, especially as the company continues to recruit. However, it also warned that bad news stories emanating from Ireland keep our financial difficulties at the forefront of people's minds back in its US headquarters. While we cannot deny our difficulties, we must show ourselves willing to tackle them. The package on jobs before the House reflects such a willingness.
We must do much more than is provided for in this initiative, which is the first in a series of packages. We have an opportunity to make certain changes which, if implemented previously, may have enabled us to avoid the current crisis because they would have countered the reduction in competitiveness and reduced our dependence on the property sector. While change is not easy to accept, the crisis offers an opportunity to effect changes that will create an environment for future growth. At times such as these, even the most vested of interests, including Members of the Oireachtas, must realise and accept that things cannot go on as they were and nothing is as it was. I refer specifically to the monopolies, closed shops and restrictive practices in the private sector, including the medical and legal professions, and public sector, including Dublin Bus.
During the recent general election campaign, employers and potential employers repeatedly raised a number of concerns. One recurring theme was that developments in the area of alternative energy were inhibiting employment. A worrying number of entrepreneurs expressed utter frustration with the regime in place for new entrants to this sector. While some of their complaints related to planning, all of them stated that those trying to enter the alternative energy business faced barrier after barrier. Complaints were articulated by such a variety of players as to make it imperative on the Government to identify and remove barriers to entering alternative energy, particularly given that those who first invested in the sector in this country have, in utter frustration, taken their money, expertise and investment elsewhere.
I am aware that a report has been done on registered employment and joint labour committee agreements. This issue was raised with me repeatedly during the election campaign. Reforms in this area must be radical as these agreements are no longer appropriate and act as a disincentive to employment and business. Last weekend, one entrepreneur who charges €2 for a cup of coffee informed me that he is paying €20 per hour for a staff member to wash dishes. At more than twice the minimum wage, pay rates such as this make discussion of the minimum wage almost irrelevant.
The social welfare trap, which was relevant in the 1980s, is relevant once more. A system which encourages people to work for only three days per week is nonsensical and must be reformed. Employers who are willing to provide work are frustrated because they cannot find people who will work for more than three days per week.
I propose to share time with Deputy John McGuinness.
We all welcome initiatives which focus on jobs, the number one issue facing this country. However, many issues need to be clarified when the Minister for Finance comes before the House tomorrow. Given that seven or eight Departments are affected by the jobs initiative, it is a matter of concern that only the Minister for Finance will speak tomorrow.
I welcome the Government's commitment to introduce a temporary credit guarantee scheme. The former Minister for Enterprise, Trade and Innovation, Deputy Batt O'Keeffe, had substantially progressed this initiative before leaving office. I am concerned that the document, as published, does not make a financial allocation for the scheme in this year. I am even more concerned that the Taoiseach did not know anything about the initiative or its funding when I questioned him on it this morning.
The initiative announced by the Minister makes a clear commitment that the scheme will be up and running in the autumn. Will it be restricted to export companies or, as is typical of such schemes, companies employing more than ten or 30 staff? Alternatively, will it be a focused scheme which gives smaller businesses a chance? Small businesses are struggling, particularly in the retail sector which is bearing the brunt of the economic crisis. We need answers to these questions.
The Minister stated that a tendering process would commence almost immediately. Who will be involved in this process? Will he seek opinions from the committees of the House, if they are ever established, or the interest groups directly affected by the scheme? Such consultation would ensure the scheme is focused and designed to be effective and relevant to those involved in business. I hope the Minister will clarify this matter tomorrow and I intend to table parliamentary questions on the issue.
Lowering of the VAT rate in the interests of tourism is welcome given that tourism is a key product, albeit one which we tend to take for granted. Those of us who live here may not realise how much the Irish countryside is appreciated. Having examined the detail of the measure to lower the VAT rate on the Revenue website this afternoon, it is clear the reduction is taking place in a farcical manner, to use a diplomatic word. Surely a tourism initiative should affect every aspect of a tourist's experience. While the VAT rate has been lowered for a meal in a restaurant, it has not been lowered for any drinks served with a meal, except where it is purchased from a vending machine en route to the restaurant. A cup of coffee will cost 4 cents less as a result of the decrease in VAT but, as Deputy Mitchell noted, there is still no white smoke with regard to the archaic system of joint labour committees. The Government has not given a commitment to reduce the 13.5% VAT rate for car hire companies or tour guides, which have been specifically excluded from the scope of the reduction.
Tourists will arrive in airports which will have lower landing fees. I am not convinced that airlines which charge €40 to print out a boarding pass will pass on small discounts in landing fees to passengers. Tourists had better walk around the country because the cost of car hire or tour guides will not have fallen. Furthermore, they had better buy their drinks in advance if they are eating out. Surely a proper examination of this issue would have shown that in an island nation which most tourists access by air the majority of tourists need car hire. Rates for car hire are generally higher here than in other European destinations.
Aside from tourism interests, it is unfair that the Government has decided to exclude fuel from the reduction in the VAT rate, particularly as fuel prices are going through the roof. We all know from our constituency offices the difficulties people are experiencing with fuel poverty. The Government has missed an opportunity to address this issue. I ask the Minister to rectify the matter before the finance Bill is published.
I endorse the comments of Deputy Mitchell on joint labour committees, JLCs, and employment regulation orders, EROs. The Government has given a commitment to increase the minimum wage and introduce VAT reductions in certain areas of the economy by 1 July. Will the Minister clarify whether any of the recommendations of the report on JLCs and EROs, which should be published, will be implemented by 1 July? If the report is to have an impact on prices and the competitiveness of the retail and tourism sectors, we will have to address premium pay rates, particularly Sunday premiums, which are out of sync with those in place in the Six Counties and other countries with tourism markets. If wage rates and prices are to be changed by 1 July, is it dangerous to assume that changes in premiums and so forth will also be introduced on 1 July? For this to occur, the report must be published as soon as possible.
I have heard the usual chorus argue that the review of the joint labour committees and employment regulation orders is an attack on workers. The review was designed specifically to allow Members of the previous Dáil to make a contribution. I specifically inserted this term of reference to allow the usual chorus to place its cards on the table and offer solutions. I am not sure it has done so but I have no doubt we will hear it issue the usual rallying cries.
In the coming months, as we consider further jobs initiatives and commence preparations for the 2012 budget, which must focus on job creation, the big issue facing business is the level of local authority rates and charges.
Nationwide, shops, retail and tourism operations and snooker clubs are being hammered by rates, which in some cases were established at the height of the so-called Celtic tiger or by valuations that have been in place for nearly 100 years. Moreover, those who pay rates do not receive anything for the rates they pay as they are obliged to pay separate charges for water and for refuse and if they are located within Dublin's business improvement district. The Government should spend time between now and December in identifying this issue and coming up with a fairer way because together with credit, this is the number one issue being faced by businesses. The issues that constrain job creation are businesses' inability to get credit and the pressure under which they operate from unchanged fixed charges.
Many of the programmes announced in this jobs initiative are pre-existing programmes that have been rebranded or refreshed or have had budgets reallocated. While I heard some Ministers assert that this was the first time we have had joined-up thinking or the first time this or that has been attempted, that is not the way. Ministers will be aware that for the greater part, these are existing initiatives that have been rebranded, repackaged or re-financed. During the election, Fine Gael in particular with its five-point plan created expectations by stating it would great things with regard t job creation. Fianna Fáil's criticism is of the creation of this expectation in the knowledge of Ireland's financial position and the Government now faces the reality of delivering on that expectation. Over the course of this initiative and as the Government prepares a finance Bill, it should take on board the thoughts being expressed in the House. As I stated last Thursday in the debate on the EU-IMF programme, this exposes the need for the committee structure to be in place. This document should be debated hammer and tongs within a committee structure in which people have a chance to feed in suggestions or ideas. Two months have elapsed since the establishment of this House and yet there still is no sign of the committees. Apparently they will be established next week but it is a bit like Christmas in that next week is every week when the Taoiseach is asked about the committee structure.
There is much to be welcomed in this initiative. It is to be welcomed that the Oireachtas is focusing on unemployment. However, there are anomalies in the system the Government has two weeks to address before introducing its finance Bill. I refer to the anomalies regarding the VAT rate as it reflects on the tourism product and in particular, given the great pressure being experienced on fuel prices at present, there is a chance to do something substantial that would affect people's daily lives and the Government should take this chance.
I wish the Government well in the course of its term in office and encourage it along the route it has taken in recent days in respect of the jobs initiative. Anything positive that comes from the Government, such as this initiative, should be supported on all sides. While Fianna Fáil has described the measures as modest proposals, one can only expect modest proposals in the context of Ireland's current economic position. Bearing this in mind, I welcome all the proposals. The initiative sends a clear signal to those who create employment that the Government at least has acknowledged that there are serious difficulties for businesses in respect of job creation. Moreover, it sends a signal to the 14% of the workforce who are unemployed at present that at last, someone is listening to them. From this perspective, I support what the Government is about.
My concern relates to the 0.6% levy and how the initiative is being funded. The retrospective legislation is something that is new to me and it is interesting to see it being applied in this case. I note that in all other cases, when Members sought to catch the big fish such as the bankers and others, it was explained to them that they could not apply legislation in a retrospective manner. Consequently, this is something new and I look forward to it being applied to those cronies in Irish society who are well-off, well-placed and are being well paid. I look forward to it being applied to claw back at least some of the moneys being made by major organisations, including State agencies. It would have been better had the scheme been funded by the Government's imposition of a form of levy on those State agencies that are making money. I refer to those entities that can afford to pay their top management colossal sums of money, such as, for example, €740,000 in the case of the ESB and others.
One issue I have in respect of government in general is that while this is a positive step to a degree, it is a little bit of window dressing that does not tackle the real issues that must be confronted. Another example in this regard is the Government's decision to reduce salaries. The Taoiseach, Deputy Kenny, led by example by reducing his own salary to €200,000 per year and by then extending reductions to the other Ministers. However, although the real people who needed to be caught by such a decision were the Secretaries General of Departments and other chief executive officers of State agencies, the reductions could not be applied to them. I wonder why? This decision should be applied right across the board. If it is good enough for the Taoiseach and Ministers to take a salary cut, a way should be found to ensure that those who are well paid should in turn make a contribution with regard to the correct decisions and courses upon which the State now is embarked.
While these were the big decisions, what is the big decision in this regard? Behind this decision lies the other side of the balance sheet. How much more pressure can be put on companies to pay taxes to support a system which the Minister, Deputy Howlin, has described as being not fit for purpose? When I suggested it was not fit for purpose in 2008, Deputy Stagg was aghast that I would have said that about the public sector. However, all focus is now on middle and senior management in the public sector, their pay, their outturn and on value for money. Reform of the public sector is essential to the delivery of efficient schemes nationwide and to ensure that taxpayers' money is spent wisely and well. Many issues that were addressed by colleagues when in government and by the present Government when in opposition should now be taken on board.
For example, what would be wrong with the Ministers for Finance and Environment, Community and Local Government introducing a new scheme of rates? I refer to a system of rates that would be fair to the business sector. It would ask those on the outskirts of cities, who may not make as much as those on the main street, to pay lesser rates. Why should one's valuation be increased when one applies for planning permission? Why should one be penalised by the State through the payment of additional rates simply because one has been a good and prudent business operator who is able to expand? Why can valuations struck in better times during the Celtic tiger period not be adjusted downwards to ensure less is paid by those businesses that are struggling at present? Why can retrospective legislation not be applied to upward-only rent reviews, as it has been in the context of pensions? Some of the recipients of those rents probably are financial institutions that operate pension funds and which we support. There must be a level playing field for everyone. I do not believe this to be the case. Similarly, local charges for pubs and hotels of €3 per cubic metre for water in and water out is costing them a fortune.
Moreover, I do not believe the money being collected is being spent wisely or that value for money is being achieved. The Minister, Deputy Varadkar, knows this and the Minister of State, Deputy Perry knows it only too well because he is in business. I am on the Government's side in this regard and I encourage it to take up the challenge. It has a huge mandate and should do this for the country. It should do it for the businesses that struggle day in and day out and will not be affected by the positive message or the initiative the Government has taken under the jobs initiative under discussion. The Government must reach beyond what it is doing at present. It must do things differently and must be brave in so doing and it will have support from this side of the House.
Similarly, money was given to the banks on the basis of what they told the Government. Only now, we discover that what they said was not true at the time. How much is yet to be told about personal debt in the banks? How many more billions of euro in bad debts are we to be told about? The answer is, many more. Some 33 companies go into liquidation every week. Families with small businesses and their employees are suffering the hardship and indignity of going through that process, not to mention the other companies that are going bust because the banks will not give them money. Recently, a businessman told me he wanted a review of his loan to determine whether he could spread it out over a longer period. He was paying interest of €7,000 per year. He came out of the bank with a reviewed position of €15,000 in interest per year. It is outrageous that the banks are not telling us the truth.
IMF deal or no, the Government might not be right to follow the Fianna Fáil policy. Perhaps it should stand back and review its position. If the policy was wrong back then, as described by the Minister for Finance, Deputy Noonan, it is wrong now. While we are and have been reasonable Europeans, Ireland is becoming the EU's whipping boy. This is not good enough. We are being bullied into taking all sorts of measures. When Greece put it up to the EU and stated it would leave the eurozone, there was panic. We were not even told about the meeting, which was held behind closed doors. We should do the same as Greece, which will now get a better deal. We should get a better deal. I do not mind saying this, as our last deal was not a good one in hindsight and the banks did not and are not giving us the information necessary to make a complete and final appraisal of the situation. The Government is up against it.
When on this side of the House, many Government Members stated that FÁS was not fit for purpose. I agreed with them then and continue to do so. Why not devolve the workings of FÁS to the county enterprise boards, CEBs, and ask them to reskill those in need? It would create a connection between the employer, the entrepreneur and the person looking to be skilled or searching for a job. The Minister of State, Deputy Perry, is responsible for the enterprise boards. The Government is going to dump them into the local authorities. Councils can no longer collect refuse because that service was privatised and someone made money on it and they will hand housing issues over to someone else to make money on it because they cannot handle that situation either, yet we are to give them the CEBs. I hope the Minister of State will stand up for the boards and ensure they are retained in the Department of Enterprise, Trade and Innovation, which itself requires a great deal of work. I also hope there will be a good connection between the Departments of Foreign Affairs and Enterprise, Trade and Innovation and Enterprise Ireland because Irish companies, including family businesses, are our future. They created 800,000 jobs in the indigenous sector. They will lift us out of this recession and I encourage the Government to support them. I believe in them and am passionate about the fact they have skills, innovation and courage. The Government must ensure they get the money from the banks they need to trade, to fund their businesses and to create and sustain jobs. This is what the situation will be about. I hope the Government gives the banks hell in the coming period to ensure money is made available to those in the business sector who need it.
I conclude by wishing the Minister, Deputy Varadkar, well. I listened to him carefully while he was in opposition and admire some of the positions he has taken and the policies he has begun to roll out since being in government. I do not agree with him on everything, but he is moving in the right direction. I have confidence in the Minister of State, Deputy Perry, given his good business background and his connection with those at SME level who require this support. I appeal to the Government to address their concerns, to make the big decisions and to be courageous. It will then be able to put in place the right policies, which will be supported on this side of the House.
Before attending the Chamber, I watched the Greek strikes and riots, which are occurring as we speak, on the "Six One" news. Given what I have seen on television, I am not convinced the Greeks have received a better deal. I would be interested in seeing what happens. If a country wants to be a guinea pig and default or exit the eurozone, I would rather it be someone else's country and not mine. Let us see how it works out, as I am unsure that it will be as rosy a picture as Deputy McGuinness suggested.
I am delighted to speak on the jobs initiative. Yesterday was a good day for the new Government and a very good day for the people. For the first time in three years, a Minister for Finance stood up and had good news to impart. There has been a strong focus on tourism, which falls under my responsibility, through the reduction to 9% in the VAT rate on tourism-related services, such as hotels, accommodation, restaurants, catering and the sports and leisure sector. There has been a reduction in employers' PRSI in respect of people working in low pay sectors, many of which are connected with tourism. There will also be a radical reform of the joint labour committee, JLC, system later this year. Approximately 200 tourism internships will be organised through Fáilte Ireland, a number I hope will be increased if the programme works well. An offer has been made to the airlines concerning the abolition of the travel tax, a revised growth scheme at the Dublin Airport Authority, DAA, to reduce airport charges for additional passengers this year and a marketing campaign funded jointly by the DAA and Tourism Ireland to promote certain routes. We await the airlines' response with interest.
On the transport side, approximately €60 million has been transferred to road maintenance from other projects that did not proceed this year. This is to be spent on improving roads that were badly damaged by the winter weather. Some €14 million will be spent, mainly in the cities, on improving public transport, for example, cycle ways, bus lanes, bus stops and other low cost measures. I welcome the €1 million to be spent on renovating approximately 20 train stations around the country through low cost measures.
I do not want to spend too much of my time discussing the jobs initiative, which has been debated all day and will be debated during the coming days. Instead, I will address a number of points that have been raised during this debate. Regarding the 0.6% levy on pension funds, it is worth stating, if it has not been stated already, that the money in these pension funds was invested tax free and, in most cases, enjoyed a 40% tax subsidy. The levy represents a small clawback of that 40% tax expenditure paid to people who invested in private pension funds. It is also worth pointing out that the capital gains made by private pension funds are tax free and remain so. When one removes money from a private pension fund, the lump sum element is also tax free. It is worth reminding the House that this proposal was contained in the Fine Gael election manifesto. We made it clear that we intended to fund the PRSI and VAT reductions in this way. Indeed, the proposal was used against us in a number of debates during the election campaign. With these facts in mind, we have a mandate to introduce the levy and intend to do so.
It is worth extending some words to the pension industry, which applies large charges to people's pension funds. It is typical for a pension fund to take 2% of contributions annually in addition to a 0.5% charge on the value of the total fund. These charges are much higher than in other countries. If the pension industry is so concerned about this levy - I have seen many among it shedding crocodile tears today - it should bring its charges into line with those in the UK and elsewhere, in which case the levy would have no impact whatsoever on the consumer. Given the way in which it is structured, it will have no appreciable impact in any case.
Regarding personal retirement savings accounts, PRSAs, it is also worth pointing out that the maximum charge a pension fund can impose every year is 1% - many of them do - and they can charge up to 5% of the initial contribution. I agree with the comment of Deputy Ross this morning that we should consider those issues and perhaps impose lower maximums on how much they can take out of people's pension funds every year, which they have been doing consistently since pensions were invented.
Deputy O'Dea said earlier that a line had been crossed and that the next thing the Government will do is to impose a levy on bank deposits. However, a line has not been crossed. Money that is put on deposit in a bank is already taxed. Before a person puts money in the bank, he or she has paid income tax and PRSI on it. That is not the case for money put into a pension fund, which is put in tax-free, with a 40% tax subsidy, 0.6% of which is now being clawed back. It is also the case that money on deposit is subject to deposit interest retention tax. People already pay tax on the profit they make on their bank deposits; that is not the case for pension funds. No line has been crossed here. The only thing that is being done is that a small proportion of the tax-free bonus allowed to people who invest in pension funds is now being recouped to invest in job creation through the jobs initiative.
The jobs initiative is modest, but it represents a real stimulus to the economy. It is as much as we can afford in the current circumstances. A package of something close to €500 million - the figure used by my colleagues in the Labour Party in their proposal for a jobs fund - will provide a stimulus to the economy and generate a higher level of growth and employment than would have occurred otherwise.
I would like to address another issue that has come up in this debate and in articles written in newspapers in recent days. A number of Deputies have alluded to the macro picture. They have pointed out quite rightly that this jobs initiative is modest and that it is only a first step. That is what those of us on this side of the House have said. They have also pointed out, on the opposite side of the House, that this does not solve our budget deficit, which is true, and that it does not solve the problems in the banking sector, which it certainly does not. We must accept that this is a first step, although an important one, in restoring employment to our economy.
There is a bigger picture, which is being discussed today in other chambers. I was interested to read at the weekend an article written by Professor Morgan Kelly about the situation we face. It is important to listen to what Professor Kelly has to say because he called it right; he was one of the contrarians to whom people would not listen in the past, but they should listen to him now. That does not mean that what he says now must be true, because what he said in the past was true; that is not how it works. His essential contention was that the burden of our public debt added to the burden of our banking debt will be too much for this State to service. It is important that people get the figures right. Our current national debt is in the region of €100 billion, and €6 billion of that is because of banking. Most of our national debt is public debt - money borrowed to pay salaries and social welfare payments and build public buildings. Even when one takes a bigger figure including promissory notes - our general Government debt, GGD - only €60 billion of the €160 billion is banking debt. That is debt we should not have, I agree, but it is important to understand the context. While people may argue that it is the banking debt that will tip us over, anywhere between half and two thirds of our total debt is public debt - debt borrowed by Irish Governments to spend on Irish people.
There is one area in which I think Morgan Kelly is very honest, and I challenge the Members on the left and the Independent Members on the right to be as honest as him on this matter. He has stated that in order to act unilaterally, Ireland must balance its budget and do so immediately. We cannot act unilaterally when we are dependent on the EU and the IMF to pay nurses, teachers, pensioners and people who are dependent on welfare payments. His contention is that we can only act unilaterally, in the way that some people on the far left and far right in this House demand, after we have balanced our national budget, which would require an €18 billion adjustment in one year. This would mean trebling the universal social charge and implementing cuts of 40% in pay and welfare. This is the Morgan Kelly prescription, plan B to current Government policy. I challenge Members on the left and right who sit on the Opposition benches to be honest in saying whether they support the view of Morgan Kelly - that in order to act unilaterally and dump the Irish banking system on the ECB, the first thing we must do is to balance our books - and to state whether that is what they are really advocating.
Job creation is central to our economic recovery, and the programme for Government has job creation at its core. That is why the Government set the jobs initiative as a key high-priority deliverable within our first hundred days in office.
Small businesses are the backbone of our economy. We currently have some 250,000 such small businesses, employing approximately 700,000 workers. By appointing a Minister with specific responsibility for small business, the Government is clearly signalling to the business community and to the public at large that small businesses are and will continue to be central to economic recovery.
My Department's roll is to ensure that we have the right policies in place to support and enlarge our enterprise base to facilitate job creation and retention. It is only by creating the right environment for businesses to expand that we will see the creation of new jobs. We must champion the cause of businesses, particularly small businesses, which can create good jobs in sustainable activities.
The jobs initiative is part of a strategy by Government to kick-start economic activity. The intention of the measures announced yesterday by my colleague Deputy Michael Noonan, the Minister for Finance, is to target our limited resources at key sectors of the economy that can assist in getting people back to work, provide opportunities for those who have lost their jobs to acquire new skills, and build the confidence that will encourage consumers to spend. In particular, the jobs initiative focuses our limited resources on measures that offer the greatest potential for expansion and employment creation in the domestic economy. It focuses on labour-intensive areas that will generate jobs quickly, which is important.
One of the key issues that affects the ability of viable small business to create jobs is access to credit. This is a challenge the Government is determined to address. The recently announced plan to restructure and recapitalise the banking system is the principal response to this challenge. These plans are designed to secure an adequate flow of credit into the economy to support economic recovery, even as the banking system is down-sized.
The banking system must provide substantial new lending into the economy. The business plans submitted by the pillar banks provide for more than €30 billion of new lending over the next three years across their core business areas. Up to €20 billion of this figure will go to small and medium-sized businesses which, as I mentioned earlier, are the backbone of our economic recovery. The financial authorities will rigorously monitor the banks' activities to ensure that credit is available for borrowers who meet reasonable credit standard requirements. This will be reviewed by Mr. John Trethowan of the Credit Review Office.
Notwithstanding this, there remains an issue, predating the recent banking crisis, whereby new companies or expanding companies trying to develop new products or markets struggle to secure finance. This can be due to a lack of familiarity or understanding of the new industry or product concerned or the potential of new markets. This market failure in the provision of credit to viable businesses became particularly acute in Ireland during the property bubble, during which time Irish banks lost the capacity to assess credit risk in companies that were unable to offer property-related collateral. That is why my Department will work with the Department of Finance over the coming weeks to flesh out the lending targets of the two pillar banks, agreed as part of the bank restructuring plans, and develop a package of additional targeted initiatives designed to address specific market failures in the provision of credit for viable businesses. These measures will be subject to EU state aid approval where necessary.
As part of this package of initiatives, and in accordance with the commitment given in the programme for Government, we will also initiate a tendering process for the development of a temporary partial credit guarantee scheme. The design of this scheme will draw on international experience to support new lending that would not otherwise have been extended by the banks. In this way, the scheme will complement, rather than be a substitute for, existing lending activities by the main financial institutions. It will be designed to encourage banks to lend to new or expanding commercially viable SMEs so that they can enlarge their companies, develop new products and expand into new markets. The Government's commitment will be for an initial period of one year. Specific performance criteria will be set down that will allow for review and revision of the scheme at the end of that initial period before committing to a roll-over of the scheme for subsequent years. There will be a modest, and known, level of exposure to the taxpayer when the scheme is launched, but I expect it will have a significant positive knock-on benefit for the economy in terms of job creation, welfare savings and returns to the Exchequer by way of tax revenue generated. With my colleague, the Minister, Deputy Bruton, we will work with the Minister, Deputy Noonan, to develop this proposal further. The details of the scheme will be announced in June with a view to having a targeted scheme in place by the autumn.
The proposed partial credit guarantee scheme has the potential to support 25,000 jobs directly and indirectly; contribute an estimated €300 million to the Exchequer from increased tax and PRSI receipts and decreased social welfare costs; and to have a positive impact on exports, contributing to further jobs in the medium-term.
The microfinance start-up fund is an important initiative. The Government also recognises the importance of supporting business start-ups if we are to encourage entrepreneurship and create more jobs. We acknowledge the difficulties which can be experienced by micro-enterprises, in getting access to finance at such an early stage of business development, which is critical. Therefore, the Government is committed to developing a suitable micro-finance fund for micro-enterprises, drawing on funding from the National Pensions Reserve Fund and other sources. Arrangements for the establishment and operation of such a fund will be developed in consultation with the relevant stakeholders, with a view to formalising proposals in the context of budget 2012. This commitment on a micro-finance fund is the Government's contribution to filling this gap in the area of financing enterprise.
Another important initiative is ensuring that there is 15-day prompt payment across the public sector to improve the cash flow of businesses, particularly small businesses. The Government will require the HSE and the local authorities, excluding commercial semi-State bodies, to pay suppliers within 15 days. Ensuring payment is made within 15 days is an important measure.
With regard to SME procurement, public procurement in Ireland is worth approximately €15 billion per annum. It is a critical area for small companies and it will also foster greater SME engagement. The Government will build on existing initiatives to promote greater access to procurement opportunities for small companies. It is important that there is greater access to procurement opportunities for SMEs within EU public procurement and such greater access can generate increased businesses. As well as being an important source of income, winning public sector contracts can have a very positive impact when companies are seeking to win contracts abroad.
The Government has undertaken, in the jobs initiative, to build on existing initiatives to promote greater access to procurement opportunities for the SME sector. Enterprise Ireland will assist its client companies to build capability in responding to tenders, will also foster greater SME engagement in developing innovative products and services to meet the needs of public bodies and will explore similar schemes along the lines of the small business innovation research fund. Enterprise Ireland will be very much involved in this respect.
The State provides a range of supports to help enterprises run their businesses better, reduce costs and help job creation. Take-up of some of these schemes by business has been less than optimal. For example, Revenue's job assist scheme, which allows employers generous tax deductions if they employ a person who has been unemployed for 12 months or more, has been taken up by only a few hundred people, even though in excess of 153,000 people have been unemployed for 12 months. In the past 18 months, neither the employer's PRSI incentive scheme, nor the FÁS work placement programme reached their targets. The Government believes that a higher rate of take-up can be secured on these schemes and on the new initiatives being published today. The Government will work with business representatives to encourage better take-up of these schemes.
The Government will also redouble its efforts to promote other supports to businesses, such as those provided by the Sustainable Energy Authority of Ireland. The employers' PRSI reduction is very much welcomed and will encourage job creation. Reducing business costs and burdens is important. The Government is committed to keeping all costs which impact on business as low as possible. This will require a joined-up effort across all Departments, and I will work to ensure this.
Small businesses are the backbone of the economy. As Minister of State with responsibility for small businesses, I will ensure that the concerns of small businesses continue to be to the fore in Government initiatives that harness the growth and job creation potential of this critical sector. This jobs initiative represents the first steps of this new Government on the road to improving the economy's international competitiveness and promoting job creation.
I recognise the contribution of small companies to the economy and their potential for job creation and job retention. This jobs initiative is a first step. The reduction in VAT for the hotel sector, the removal of the travel tax and so on will encourage confidence. The role banks will play in creating credit in the economy and the€20 million that has been ring-fenced for small companies will encourage the entrepreneurial spirit in the country and create jobs. If only 100,000 of the 270,000 small companies were to employ one extra person, great progress would be made. The announcement of the jobs initiative yesterday will encourage the potential to create jobs. I compliment the Minister, Deputy Noonan and the Government on a very worthy document that will connect with the Irish people, employers and small companies and will result in the potential for this economy to expand in the not too distant future.
I congratulate the Minister of State on his appointment to his position of responsibility and wish him well. I know from my interaction with him in the previous Dáil that he has a great understanding of business, especially small businesses in terms of what makes them tick and makes small business people get involved, develop an entrepreneurial spirit and the courage to develop businesses and take on people. I agree with his final point of the progress that would be made if 100,000 of those small businesses were to take on one or two persons, which they are capable of doing if they were allowed to do so. However, they are allowed to do so because they have had their hands have been tied behind their backs with regulation, lack of finance and barriers in many areas prior to and during the Celtic tiger. Their initiative, progress and foresight in many cases has been diminished, dampened and extinguished by their treatment by many agencies. I am not knocking any particular agency but officialdom grew too unwieldy and there was too much form-filling and red tape.
I encourage the Government in this respect and welcome most of its proposals in the jobs initiative. It has acknowledged the problems facing small businesses. I am sure the Minister of State, Deputy Perry, had a good input into framing this initiative. I hope it will continue and the Government has said that it will be the first of many. We all know what the parties now in government promised prior to the general election, but the trend is that such promises seem to be made by parties in opposition and in government and that is a pity. Deputy Martin said that he did not want politics to be a Punch and Judy show, but that is still going on and members of the public are sick of it. They want real activity, the problems tackled, the red tape cut out and to be allowed to work.
The Government was too soft in many areas, as in the case of higher earners in the public service. The salaries of Secretaries Generals and CEOs of State companies are simply not fair. The Taoiseach and the Ministers took a cut in salary and such reform must extend across the senior public service management.
The issue of rates must be tackled, as it has become a joke. Many of the rates reviews occurred during the Celtic tiger years. A small businessman in my town of Cahir who has paid rates this year suffered a 50% increase in his rates at a time when business is on the floor, so to speak. One has to appeal such a rates increase to the Valuation Office, the people who set the rates in the first instance. One has to pay a fee of €300 or €350 for the pleasure of having one's property rating revalued. Those people then call out and see the building, which will be in the same condition but they do not examine the books and take account of the fact that one's business has diminished and that the rates accruing must be decreased rather than increased.
Local authority charges also crept up in the good times. I was a member of a local authority who voted for those charges in terms of the community aspect benefit of them. We were on a roll at the time and we secured some good community initiatives and supports from such charges but they now have to be re-evaluated because people cannot pay them. Water rates are charged to cover the supply of water into a premises and waste water out of the premises but people cannot afford to pay them. They are unfair because the only people being charged for water rates are publicans, restaurant proprietors and so on. I welcome the cuts in VAT, PRSI and initiatives for lower wages which will help publicans and restaurant owners who were on their knees begging for them.
Many family businesses are being liquidated and suffering scurrilous treatment from their banks - this from the banks that lied all time. The deal from Europe and the IMF was so bad probably because the facts had to be dragged out of the banks. The other new business in town is liquidation. Legislation should be introduced post-haste to deal with liquidators. Many of them charge what they like and often they terrorise business people. We must examine alternatives to liquidation for viable businesses such as examinership or other supports. I am concerned the Construction Contracts Bill seems to have fallen off the Order Paper. Many small construction and associated businesses, with five to ten employees, get nothing if a larger business which owes them money is liquidated. The barristers and liquidators involved in the wind-up have phenomenal and obscene charges. Will the Minister of State, Deputy Perry, check out this racket?
I agree with Deputy Shane Ross on the pension levy and that the vast sums earned by pension fund managers should be examined. I am glad the Taoiseach and the Minister for Transport, Tourism and Sport, Deputy Varadkar, have acknowledged they will examine them. Many pension funds, built up with hard-earned contributions, often perform poorly. Why not impose the levy on pension fund managers? We need to encourage people to set money aside for their pensions as up to 1 million people have no private pension provision. Private pensions are generally under-funded while the State pension comes to less than €12,000 per annum and most will have to wait until they reach 67 years for it. The proposed pension fund levy may create further problems down the line as it may demotivate people from making meaningful pension provisions. Pensions are no more than deferred taxation as one pays income tax on withdrawals. In 2005 the Combat Poverty Agency produced a report on the future of pensions, pointing out that by 2036 the number of people over 80 years in the State will rise to 320,000. We must bear this in mind when addressing this area.
I welcome the Minister's commitment to the 50-day payment by State agencies. I often worked for local authorities and it was difficult when there were delays in getting paid and it was unfair. If an invoice is correct, it should be paid on the due date. I welcome the Minister's enthusiasm to deal with the public procurement process. Sadly, with the previous Government, we heard stories of public contracts going abroad because they were not split up to allow Irish companies go under the bar. If other EU countries do it, why can we not? The public service must wake up to deal meaningfully with this issue.
I am glad Deputy Perry was appointed to the enterprise portfolio. I wish him well and tá súil agam go n-éirí an t-ádh leis.
I welcome the jobs initiative. Any proposal to lift ourselves out of our current economic dilemma is positive. While I appreciate that the Government must operate within the strict parameters of the EU-IMF bailout agreement, this jobs initiative appears to be a conservative plan. We need a more radical plan with more innovation and inventiveness if we are to make a dent in our huge unemployment figures.
I was disappointed the initiative did not mention the thousands of partially completed houses in ghost estates. Local authorities, in co-operation with NAMA, should strive to make these houses available to address the growing waiting lists for social housing. It would also provide an immediate boost for the construction industry and thousands of skilled tradespeople who have few opportunities for work.
Recently, I received correspondence from a Killorglin-based construction company which employs 26 staff on reductions to home insulation grants. For example, it is proposed the attic insulation grant will be reduced from €250 to €200, cavity wall insulation grants from €400 to €320, BER certificate grants from €100 to €80 and dry-lining insulation grants from €2,000 to €1,800. The Sustainable Energy Authority of Ireland claims these reductions are because market prices have become more competitive. The owner of the Killorglin construction company informed me this is incorrect as all insulation materials and other costs incurred, such as fuel, have gone up 20% to 40% in the past several months. He will be forced to lay off five workers this week and by the middle of the summer he expects to be employing only ten people. Will the Government intervene and rescind the authority's decision to reduce the grants?
I welcome the Government's action in reducing tourism VAT and the commitment to eliminate the travel tax, subject to an increase in passenger numbers which I believe is achievable. Tourism marketing resources will be made available to Tourism Ireland to assist the three State airports in promoting visitor traffic through co-operative marketing with the airline companies. Will this be extended to include viable regional airports such as Kerry Airport and Donegal Airport as this could also assist tourism promotion in these counties?
I welcome the reduction in PRSI and the scheme for 5,000 internships. They could be extended to 30,000 to provide practical low-cost job training for the State.
I am glad the Taoiseach will give some deliberation to the matters about pension funds raised by Deputy Shane Ross earlier this morning. Many owners of small businesses prudently put aside money over the years into pension funds to provide a nest-egg for themselves and their families in their retirement. It is wrong to victimise these people through a pension levy. Many of them will only have something like €12,000 a year from their investment. To demand that they pay €2,500 to €3,000 in an annual tax on this is somewhat severe.
As Deputy Shane Ross said earlier, we should go after the bigger pension pots. There is one example of a chief executive officer in one of our financial institutions with a €28 million pension pot. I cannot see why we cannot go after them in a more substantial way while a ceiling is put on the amount to which this new levy will apply.