Thursday, 16 February 2012
Action Plan for Jobs 2012: Statements
I thank the House for making time available to debate this matter. No case is more compelling in Ireland at the moment than that of addressing the jobs crisis. Everyone elected to the Chamber is aware that in the past three years almost 350,000 jobs have been lost. Sadly, most of these have been lost by people under the age of 30 years. These are the people who will drive the economic future of the country. There is an absolute obligation on everyone in society to get in behind action to tackle the jobs crisis. I approach this debate in an open manner. We are keen to hear and develop ideas.
The purpose of the Action Plan for Jobs 2012 is to harvest what can be done across Government within the next 12 months and to set it out in a coherent way and set about implementing it. When we reflect on previous major strategies, whether to address climate change or health, we find that what went wrong was a failure to implement change or to hold people to account in the move from the good idea to delivering it in a coherent way. This is despite that these were well-placed ambitions
We believe this plan is different in an important way. Each measure has a responsibility assigned to it. The Taoiseach will play a central role in monitoring the delivery of each responsibility. As every one in the House is aware we come to this crisis recognising that a fundamental shift has occurred in the economy. Fundamental damage has been done to the economy. It is not a question of trying to get back to where we were with some stimulus package, even if we could afford it. This is about major change across many sectors. This has inspired the programme of actions and reform that the Government has undertaken on many fronts.
The Minister, Deputy Michael Noonan, has undertaken a major restructuring of the banking system. Without this restructuring and the creation of pillar banks that have the ability to lend we could not get the economy going. The Minister, Deputy Joan Burton, is undertaking a major transformation of employment services. Over the years, people have rightly been critical of the system in Ireland whereby often welfare was conditional on being idle and one was paid only if one was idle. The concept the Minister is developing is that people should be supported to be active, to develop their potential, to get opportunities and to move on with their lives. This is a fundamental shift in the way we think about the challenge.
The Minister for Education and Skills, Deputy Ruairí Quinn, is undertaking a major change of the training network. We all understand that the FÁS system probably got caught in a certain view of the world associated with the construction boom and, as a result, it lost ground. We need a more modern system of training focused on where the opportunities in our economy will come from. This is part of the major reform agenda. We must reorient our tax system to emphasise the importance of enterprise as opposed to property. The Minister for Finance, Deputy Michael Noonan, has undertaken this work. This is another considerable shift.
The work undertaken by the Minister for Public Expenditure and Reform, Deputy Brendan Howlin recognises that we own assets such as the National Pensions Reserve Fund. There are State assets available and we must think of innovative ways to use these resources to drive the necessary infrastructure of the future. The creation of a €1 billion infrastructure fund is central to this.
The new approach this document encapsulates holds that creating, promoting and supporting employment is not the concern of one or two Departments, it is the concern of every one and every Department can contribute. Each of the 15 Departments has put forward actions as part of this programme and 36 agencies have put forward actions as well. The idea is to put jobs first and foremost and this is what the Government has set about. At the same time we must do a good deal of work to correct the public finances.
Much restructuring remains to be done but there is a central goal which people have bought into. We have every right to be optimistic about our capacity to rebuild the economy and its employment base. Some of the most ambitious and creative companies in the world pick Ireland as the location of choice in which to set up companies. Despite the difficulties in the economy we continue to have one of the highest rates of business start-up in Europe. More and more people have the courage to take on the difficult task of setting up their own business and ensuring they generate customers and make the business succeed. These are fundamentals on which we can build.
We have set out what I believe to be ambitious but realistic targets in respect of the net employment increase and other targets. This ambition has been clearly articulated by the Taoiseach time and again in his declarations that he wants to make Ireland the best small country in the world in which to do business by 2016. This will involve a good deal of re-working of the system.
We are a team. The Minister of State, Deputy John Perry, is working on the small business dimension and examining how to audit the licences and the obligations that companies are subject to. The Minister of State, Deputy Sean Sherlock, is examining how we use the vast investment we have made over many years. Credit is due to previous Governments for creating this investment. We have invested in research and development capability in our higher education institutions. The challenge is to move from being a ship builder and of creating these individual areas of excellence to being an Admiralty where one organises and directs the resources to create commercial opportunities and to create companies and enterprises that can succeed. This is the task of reorientation we must carry out in this Department.
The sad truth is that Ireland forgot what it was to succeed in a small open economy. We got carried away believing that property could do it for us and, sadly, through the noughties we lost export market share. Each year, six years in a row, we lost export market share which was the lifeblood of our small open trading economy. Now that the crash has come, significantly more damage has been done than that property simply led us astray. Take for example the skill choices that young people made when choosing what to do in college. Approximately 10% of those who started in the year 2000 chose technology, an important sector where there are now huge skill shortages. In the boom years, those selecting this option fell from 10% fell to 3.5%. Therefore, it was not just that we got too expensive, but that other parts of our system became distorted through the choices people were making as to what they felt would build a strong future for us. The task of reorienting our system will need a major transformation that will involve many other Departments along with our own.
This is about going back to basics. The role of individuals willing to start a business is crucial and we must ensure that we provide the best opportunities we can to ensure those willing to take that risk have the best chance of success. It is for this reason that we are reorganising the local enterprise support service. The county enterprise boards have done great work, but we recognise now that there are gaps in that system and that small companies hit a ceiling in that system and do not have the chance to progress seamlessly to programmes that could help them develop and become major exporters and companies. We believe it is important to have a seamless ladder between Enterprise Ireland and the local enterprise office, setting standards for those local offices and for the local authorities. The local authorities have huge potential to shape economic development. They can make the licensing and planning procedures easier to undertake and make it easy to comply with requirements. They can create opportunities for procurement and thereby create an environment in which businesses can succeed.
It is important to see the reform we will undertake, in which the Minister of State, Deputy Perry, will play a central role, as not just about creating a one-stop shop, but about creating a location where the excellent new ideas on enterprise formation will be fed through Enterprise Ireland and where there will also be a new attitude to enterprise within the local authority system. This is ambitious, but it is right to be ambitious in this area. This first experience for small businesses starting up is crucial and we want to make it easier for them to succeed. We are also developing a micro-finance project. We recognise that banks, particularly at the current time, do not want to touch the very small start-up company, such as the one that needs approximately €20,000 to get started. Banks will not be interested in the administration and risk involved with that. Therefore, we must intervene in that area and are doing so.
We also need to see established companies expand and grow without being taken over by a foreign company because they have grown to a certain stage and capability. Therefore, we are putting in place a development capital fund of €150 million which is aimed at companies that are growing fast or at well established companies in traditional sectors that are not clients for venture capital but which need equity to go to the next level without being taken over by foreign interests. This fund is an important initiative.
We also want to see more companies break into new export markets. In that regard, I welcome the initiative proposed by the Minister for Finance, Deputy Noonan, which will be implemented this year and which will allow tax relief for placing people in the BRICS countries. These are emerging markets and while we are doing well in those markets, we are doing so from an extremely low base. The total percentage of trade from all the BRICS countries is less than 5%. These are rapidly growing markets and we need to recognise that and build our part of that market. We are also stretching further by setting up a first-time exporter division within Enterprise Ireland for the many companies that have never exported. We are targeting approximately 1,800 companies that do not export but which have the capacity to get a foot on the export ladder. This initiative is an important statement on how Ireland needs to transform for these markets.
There are practical ways in which we can help businesses win new contracts. We have looked specifically at how we can get public procurement more oriented towards innovative small companies so as to help them break into this area. As other Members are aware, it is always disconcerting to travel abroad and find some wonderful Irish companies doing business in places like India, China or America but to realise that they have not been able to get even one customer in Ireland for their innovative product. If we want to see small companies succeed, we must give them this first break.
The action plan also hopes to focus on developing sectors where we can stake out a lead. We have mentioned many of these areas, but ours is not an exhaustive list. We recognise that action can be taken in key sectors, some of which are traditional sectors like the agrifood business. Horizon 2020, which was developed by the last Government has put ambition on the map for agriculture and the food sector. It is important we deepen and strengthen this. However, there are new sectors, such as digital gaming and cloud computing. These offer opportunities in areas where Ireland has critical mass and can build success. We need to ensure the State nurtures these opportunities and that no obstacles stand in the way. When looking at sectors in which we can stake out a future, we must also look to see we have the skills base right, the access to investment capital and that we exploit the cluster we have and get people together to collaborate. We must ensure we have the research facilities to support those new sectors and that these are properly oriented towards the needs of the companies. This is an important theme of the action plan.
We must also recognise that foreign investment is vital. A high proportion of our exports - too high to be honest - comes from foreign owned companies. While it is great to see a major name, like Hewlett Packard last week, deciding to expand in Ireland, it would be even better if we could see some of the new dynamic companies establishing and starting their business in Ireland. This is an opportunity we intend to target. If one visits places like Silicon Valley, one will see that more than half of the companies that have started up there are not owned by US citizens, but by people who have chosen Silicon Valley as a location which has the dynamism to help them thrive. I believe we have that similar environment. We have many of the best companies in the world and we have many of the best skills in the world, particularly in the IT and medical device sectors. We also have a good research base, a good corporate tax regime, a good business environment and now have venture capital funds in place with the capacity to fund companies.
Therefore, Ireland can now say it is the go-to place for start-ups, particularly in certain sectors. We need to sell this vision. Just as the IDA actively pursues well established companies and seeks to get them to establish here, we need to supplement the work Enterprise Ireland does in identifying international players who could start first time businesses. We are very fortunate to have Dylan Collins as one of the ambassadors for this initiative. He is a serial entrepreneur in the digital gaming sector and has set up many successful companies, such as Havok. Someone like him can tell his peers what it is like to do business in Ireland and we need to exploit such opportunities.
I am pleased that an idea that came from the consultative process is being realised through the Succeed in Ireland idea. This is the idea to give a finder's fee to Irish people, or non-Irish people, who introduce a new company - typically a small company - which decides to use Ireland as a gateway to develop its European business. The IDA is an exemplary authority, but it cannot be in every location. All resources are strained and this idea is a worthwhile project to access the diaspora to look and work on Ireland's behalf to identify companies that could successfully locate and develop from an Irish base. We are looking forward to launching the details of this project next month.
We should also recognise that some of the basics must be got right, including the competitiveness of our economy. Difficult changes have had to be undertaken; we know all about this in the public service and in many private companies which have been restructured. Work practices have changed and wages have come down. We must ensure that right across the board we get a more competitive economic structure. This will include reform of legal services and cost of access, which is important, and consideration of our skills base to ensure the sort of choices and facilities we offer are cost-effective and recognise the needs of enterprise. That is really important to our long-term competitiveness. We must examine our research investment and get the best out of it.
There is an agenda across the costs and infrastructure that is crucial to create the environment where businesses can succeed. We are fortunate that over the past two years there has been a very significant improvement of almost 20% in our unit wage costs relative to the rest of Europe . That has given us a significant edge and is the reason we are now doing well in export markets. We must copperfasten this success and it should not be eroded at the first sign of recovery. We should examine what structural changes we can make in our economy to get all the different sectors, including energy, public service costs and red tape, addressed appropriately.
I have introduced this plan to the House and it is a really important first step. Action Plan for Jobs 2012 will be followed by another plan in 2013 and subsequent years because we recognise the need for relentless attention to this challenge. It is not a question of doing this and thinking we can rest on our oars. This debate is about hearing the best ideas from people, although this must happen with the knowledge that we are living in constrained times. People must recognise that we have limited resources. Much of this is about using our money in a smarter way to leverage activities by others who can support the challenge we face.
I have listened carefully to the Minister and at the outset I should say that I do not for a moment doubt his sincerity or enthusiasm for the difficult task he faces. As somebody who continues to live in the country, I sincerely hope the Government will succeed in creating more jobs and that unemployment rates will fall rapidly, and as soon as possible. I acknowledge that the Government inherited a difficult position but our current state is extremely grim and somewhat frightening.
In 2009 the official unemployment rate stood at 11.8% and it rose to 13.7%, unfortunately, in 2010. Last year - the first year in the life of the current Government - the rate increased to 14.2%. Statistically, there are 443,000 people unemployed but that does not tell the full story. Up to 77,000 people have emigrated in the past 12 months, not to see the world as the Minister for Finance suggested but rather in search of employment. That is more than 200 people a day.
The structure of unemployment is also serious. Of the 14.2% of the population who are unemployed, some 8.8% represents people who have been more than a year on the live register, or the long-term unemployed. There is another category, the "very" long-term unemployed, who have been on the live register for more than two years, and these people are rapidly approaching a pretty hopeless state. They account for a third of the unemployed, with approximately 120,000 people who have been unemployed for more than two years. That is grim reading.
The Minister has a very tough job and I do not doubt his enthusiasm or sincerity, as I noted. The bar that the Minister must surmount has been raised by a number of actions undertaken, not by him personally, but by the Government of which he is a member. For example, there was a decision in the budget to increase value-added tax, VAT, by 2%, from 21% to 23%. That comes at a time when the domestic economy is lying prostrate, with retail spending down for the 47th consecutive month, according to recent statistics. The Minister is aware that VAT is a highly regressive form of taxation, which tends to disproportionately affect the poor. It seems somewhat contradictory that the centrepiece of the Government's jobs initiative last May was a reduction in VAT for some sectors, as this seems to have been reversed - in part at least - by a VAT increase in the budget. This comes at a time when the Government's statistics show that 54% of the people in this country over the past 12 months have reduced their spending on essentials such as groceries. Those statistics also indicate that 5% of the people, or one in every 20 families, gets by from one end of the week to the other by not paying gas or electricity bills, which is very serious. The decision to increase VAT is a job destroyer.
Another decision taken in the budget was to make it more difficult and expensive for small firms, in particular, to let go people. I know a number of small and medium sized firms which have had to downsize to survive. The net result of the Government's decision on redundancy payments is that it is now two and half times more expensive to let go somebody in this country than it is in our nearest neighbour and competitor, the United Kingdom. The Government has cited the position in other countries, such as Sweden and Denmark etc., but the scenario in those states is completely different and we should not compare apples and oranges. It is estimated that this action will load another €250 million on business costs at a time when most firms in the country are struggling to survive. That is a job destroyer.
I know of firms that are approaching a crisis. As it will be difficult to downsize and make people redundant, these companies would prefer to go out of business altogether. I spoke to a businessman in Limerick last week who wanted to expand his operation but he is afraid to do so in case his plans do not work out and he will have to downsize again; the cost of redundancy is putting him off. That is another job destroyer. There is raft of costs and hidden charges in the budget which will destroy jobs.
In every town and city, and even in the rural areas, the level of commercial rates is destroying jobs. I have read the document as carefully as I can but there is no commitment in the plan to do anything about this, to the best of my knowledge. The Minister has stated we are relying on local authorities to act decently but a one-line amendment to the valuation legislation could have provided an inability to pay clause, which would do more than all the hopes and expectations that local authorities would act responsibly. If one authority acts responsibly and another does not, is a distortion not created? Why not allow an inability to pay clause across the board?
Most forms of direct taxation are progressive in that the more one earns, the more one pays. Commercial rates are an obvious exception as a business would pay commercial rates irrespective of profitability, even if money is being lost hand over fist. If a business is starting up and is making a loss until it can get properly established, commercial rates must be paid. I do not know what the Minister has been told about what local authorities are doing with regard to freezing or reducing commercial rates but in my city, the majority of businesses are unable to pay those rates. There have been all sorts of deals with the local authorities but some businesses have even had to renege on those deals which involved a reduction in commercial rates.
Some of them have not been able to comply with the instalment arrangements that were made. Many people who would like to establish small businesses, and might have access to the finance needed to do so, are being deterred by the extent of commercial rates in this country. There is no plan to deal with that.
Crippling rents have torpedoed businesses in urban areas across the country, particularly Dublin. Many retail outlets have gone out of business. We are familiar with the difficulties encountered by companies like O'Brien's sandwiches, Superquinn, Chartbusters, Arnotts, Hughes & Hughes and Golden Discs. Thousands of retailers have gone out of business as a result of the legal inflexibility of this country's landlord and tenant legislation, which is totally orientated in favour of property rights, takes no account of economic reality and destroys jobs.
The Minister will be aware of a campaign that the Labour Party ran from one end of the country to the other. It got plenty of publicity for the campaign, which lasted 18 months. It said it had received legal advice to the effect that upward-only rents could be abolished. Unfortunately it did a U-turn when it came into Government. I do not want to cast aspersions on any individuals but I suspect that the Labour Party has many of the same legal advisers that it had before last year's general election. I would be intrigued to discover how the legal advice has suddenly changed.
The Government has announced a new set of retail guidelines, apparently at the behest of the troika. Does the troika understand what is going on here? Has it considered what the net result of this will be? Major operators will come here to buy greenfield sites at rock bottom prices. They will be able to provide plenty of parking facilities, etc., at a time when we are trying to reverse a trend that was established when the heart was torn out of town and city centres. If we allow such a free-for-all to operate, we can forget about the regeneration of cities and towns.
Insurance costs are another factor in cost competitiveness. Health insurance costs have sky-rocketed as a direct result of a decision that was taken by the Minister for Health with regard to private beds in public hospitals. That outcome could have been foreseen. The Government's policy is to introduce a universal health insurance scheme. Given that so many people are dropping out of health insurance at the moment, I suggest that by the time the Government scheme comes into operation - in eight years' time, or whatever the target is - nobody will be paying for health insurance.
Another aspect of cost competition is the cost of legal services. I support the efforts of the Minister for Justice and Equality to deal with this matter. Although I admire the speed and enthusiasm with which he has introduced his policy it is the wrong policy. I am prepared to forecast, on this date in February 2012, that when the Legal Services Regulation Bill 2011 comes into effect, it will give rise to an increase, rather than a decrease, in legal services. It will increase elitism. It is wrong and misguided. The Minister should be man enough to listen to the valid criticisms of this Bill that have been made. He should go back to the drawing board. I do not doubt his sincerity when he says he wants to control legal costs but I suggest the legislation he has drawn up will do the reverse. I look forward to pointing out exactly what I mean when we debate the Bill next week.
Every Government has a duty to control energy costs, which present a major challenge to business, while at the same time ensuring there is a supply of energy. Ireland continues to be relatively expensive in this respect. That is likely to be exacerbated by the withdrawal of the temporary rebate for large energy users.
With regard to competition policy during the debate on the Competition (Amendment) Bill 2011, the Government refused to accept an amendment I tabled that would have allowed civil fines to be imposed when organisations and businesses act in an anti-competitive way. As a result, the legislation in question, which was passed by the Dáil recently, will be largely ineffective. The Minister, Deputy Bruton, seemed to indicate that we can export our way to full employment. That is very misguided. The chief executive of the Irish Exporters Association, Mr. John Whelan, recently said:
We cannot underestimate the challenges ahead for exporters ... Steps must be taken to support those companies looking to target markets in the rapidly growing economies in Asia , Middle East and Africa, particularly small and medium businesses, who must be supported to take risks and seek out new markets.
As the Minister pointed out, exports to the BRIC countries account for less than 4% of all Irish exports. Such exports grew by less than 5% in 2011. The average increase in exports to the BRIC countries across the 27 EU member states was 22.5%. The Irish Exporters Association is forecasting that total exports will grow by 3% in 2012, with a heavy emphasis on the United States.
The chief executive of the association has correctly noted that this level of export growth is significantly less than the 5% level that is necessary to deliver the Irish economic and employment recovery levels that are implicit in the EU-IMF programme targets. He said that additional pressure for public expenditure cutbacks will result from such a level of export growth to ensure debt to GDP benchmarks are adhered to.
I acknowledge the Minister's remarks about the previous Government's investment in innovation. When one examines what has been done and what is being done in innovation, it strikes one as a case of "as you were". No new ideas that are bold or radical are emerging. In 2010, under the last budget allocation to Science Foundation Ireland by the previous Government, there was an undertaking to retain the existing research centres and add to them. That is precisely what is being done. It does not require a great stretch of the imagination to say there is a bright future in cloud computing. The Government's plan does not make clear how we will take full advantage of that as a country. A great leap of the imagination is not needed to realise that the digital games industry in this country, which has substantial potential, needs to be better organised. I read a detailed Forfás report to that effect during the year. The principles of that report are repeated in the Government's plan. I look forward to seeing how they will be achieved. I wish the Government the best of success with that.
The Minister said it is intended that a net 100,000 jobs will be created under this plan. I recently asked him for a gross figure of how many jobs that will entail. We are aware that employment will be lost and the workforce will be growing. The Minister told me that the plan entails the creation of 200,000 jobs. On a television programme an hour previously, a Minister of State, Deputy Cannon, said that between 300,000 and 400,000 jobs would need to be created. That was a gross figure. I want the Minister to clarify where exactly we are on that. Are we plucking figures out of the air?
I welcome the proposal to provide for an evaluation of performance every three months. I look forward with great interest to seeing how it will work. I have no doubt the Government will say after three months that it has had success in some areas but there has been conspicuous failure in a certain Department headed by a specific Minister. We will look forward to the reports in question.
I welcome the action plan. I was particularly pleased to hear the Minister say that this area will receive relentless attention. I acknowledge that much of the report relates to activity rather than action that will be taken today. The Government has effectively abolished the county enterprise boards. During an earlier debate, the Minister for Finance, Deputy Noonan, asked Deputies not to come to the House without offering solutions. He was perfectly right to say that. I admired the Minister, Deputy Bruton, when he took a similar stance in opposition. It is on the record that when I was a Minister of State, I commented on the contribution that was being made by Deputy Bruton. However, I have to say that since he was appointed as Minister for Jobs, Enterprise and Innovation, very little of the action he promised when he was in opposition has been delivered on in Government. Dumbing down the county enterprise boards and merging them with county councils will not do the business for the Government. They are being merged with entities which have outsourced to the private sector the only profitable area of their operations, waste collection, because they have been unable to make money out of it. Local authorities cannot even make a profit from housing where they have a captive audience. Instead, they are proposing to outsource rent collection and local authority housing or transfer responsibility for this function to a single agency.
Local authorities do not have the commercial mindset required to understand the needs of the small and medium business sector in local communities. The county enterprise boards have created many jobs through small businesses and have acquired a reputation for doing business in local communities. The Government's decision to dismantle the boards is a retrograde step which should be revisited.
What are the various Ministers in the Department of Jobs, Enterprise and Innovation doing? With responsibility for the county enterprise boards having been transferred to the Minister for the Environment, Community and Local Government and the Minister for Foreign Affairs and Trade assuming responsibility for Enterprise Ireland and trade missions, the Department has been left with little else to do other than engage in rhetoric. That will not solve the problems of today.
My party in government promised the small and medium enterprise sector money through the banks. The Government did not learn from the failure of the banks to deliver on this promise and it does not have a game plan for solving the problem. Why does it not use the country enterprise boards to fund credit unions, as is being done on a voluntary basis, and allow them to provide soft repayable loans to small businesses? The banks are not lending money and are doing a disservice to the economy. Regardless of what steps the Government takes, businesses will not function without capital. The banks will not provide them with the money they need. The statistics the banks provide the Government are false. If a bank restructures an overdraft, it records this transaction as a new credit line, as the Minister of State, Deputy Perry, must know from his background in business. The Government must understand this issue if it is to tackle the problem.
The Government argues we must expand trade with the BRIC countries - Brazil, Russia, India and China - and claims to have an Asian strategy. Under what part of this strategy did it close down the representative office in Taiwan, which costs €50,000 per annum? Why did it close an office which allowed Irish companies to avail of trade agreements between Taiwan and China to protect their entities that are trading with China? I have made submissions to the Taoiseach and Minister for Foreign Affairs and Trade requesting that they reverse this decision immediately.
I ask the Minister to bring the company consolidation legislation, which brings together in one Bill the 1,300 sections of 15 different companies Acts, before the Committee on Jobs, Social Protection and Education. The enactment of such legislation would speak volumes to indigenous businesses and indicate to those who wish to invest in this country that we have in place modern legislation which they can understand.
I hope the Minister will make further arrangements to have the House discuss small business in much greater detail than it is doing today. I ask him to follow his beliefs on the legislation governing joint labour committees, which he knows will not work for the 20,000 businesses that create 200,000 jobs locally. I ask him to return to the position he held while in opposition and follow his own beliefs.
The jobs crisis is one of the biggest issues, if not the biggest issue, facing the State. Some 440,000 people are unemployed and the unemployment rate has remained static since the Government came to power. In addition, long-term unemployment has increased by 14.5% to a shocking 200,000 people. Recent research found that the unemployment rates for 15 to 19 years olds and 20 to 24 year olds currently stand at 45% and 33%, respectively. These are staggering figures which indicate we have a lost generation.
At the same time, 76,000 people emigrated last year. This amounts to 1,346 people per week, of whom the majority are young people. Last year, in excess of 1,600 companies became insolvent, as did thousands of sole traders. Behind these statistics lie individuals who invested their heart, soul and savings in their businesses and a large number of workers, many of whom have been left with only a future of unemployment.
As one of a large number of new Deputies, I find it immensely frustrating to witness the lack of action on jobs. Behind the mountain of spin and press releases on job creation, there is damningly little substance. It has become apparent in the past year that some Ministers have little or no experience or knowledge of enterprise and job creation. This is a dangerous position for the State to be in at this juncture.
I had hoped the announcement of the Action Plan for Jobs 2012 would be a turning point which would demonstrate that job creation was the main priority of the Government and Taoiseach. However, as the announcement was made, it became despairingly clear that this all singing and all dancing document was mainly a rehash of existing announcements and polices. While the document contains a number of small and potentially beneficial initiatives, it is short on substance. At its launch, an apparently confused Taoiseach stated it would create 100,000 new jobs. However, when asked in the House to set out the targets in detail he blustered that it would be easier to count the seagulls over Phoenix Park, a bizarre answer to an important question. When RTE put the same question to the Minister of State with responsibility for training and skills he indicated the Government would create 300,000 or maybe 400,000 jobs gross. One cannot have two targets. What we saw on television was a Minister flounder as he tried to answer a question on a jobs plan which, at its core, is flawed. The responses of the Taoiseach and Minister of State were extremely telling as they indicated that the entire plan is a substance-free press statement and that we have a soundbite scripted Taoiseach who is free of pivotal detail.
In business one has the term: "One cannot manage if one does not measure against targets." How will the Government know if its plans are working on a quarterly or annual basis? How will it know what changes to make and what economic levers to pull to address problems? The absence of quarterly or even annual job creation targets shows the Government is not attempting to manage or measure. The only target we have is a statement from the Department of Finance that unemployment will remain at 14% this year. This figure is based on an excessively optimistic growth figure of 1.6%. When will Ministers receive a briefing from the Department that the projected growth rate of 1.6% is pie in the sky?
On a point of order, I ask the Ministers present to listen to my contribution. In announcing the Action Plan on Jobs the Minister was at pains to point out that it would be delivered within existing budgets and without additional finance. The budget for Enterprise Ireland has been reduced by 14.3% since 2009, while the budget for city and county enterprise boards has been reduced by 30% in the same period and the budget for the IDA has been reduced by €10 million since last year.
The amalgamation of a number of some of the enterprise bodies is a cause for concern. As Deputy McGuinness noted, the decision to merge county enterprise boards with local authorities is a potentially dangerous development. Most small businesses regard local authorities as entities to which they pay rates and charges. While most local authorities do a good job, their staff are generally not orientated towards enterprise or jobs. We have also heard that an administration function will transfer to Enterprise Ireland. I would like to tease out how this will be done. What impact will Enterprise Ireland have on the county enterprise boards and what will be its new function in respect of local authorities?
Councillors must exercise some degree of local control over the enterprise agencies.
Under its Action Plan for Jobs, the Government aims to create up to 400,000 jobs on a reduced budget. This would be next to impossible in a period of economic growth and inward investment. Right now, private investment is in serious retraction and this Government has intensified the level by pulling its own investment out of the State. That means creating jobs without funds. When the funds are going in the opposite direction it will be almost impossible. It is clear the priority is neither jobs nor people. We need not look at the words or the rhetoric but at the actions. On 31 March this State will put €3.1 billion into Anglo Irish Bank, almost seven times the amount it gave to the three enterprise agencies tasked with creating jobs, developing exports and creating foreign direct investment.
The austerity policies the Government is inflicting has pushed demand off a cliff. The decision to implement regressive taxation, including VAT increases etc, undermines the notion that the priority is jobs. If that were the case why has this Government not found a mechanism to deal with upward-only rents? These rents undermine competitiveness. The rents in this State are 100% the European average. If the minimum wage was 100% the European average this Government would engage very quickly. In the past 46 months the retail sector lost 55,000 jobs and 40,000 further jobs appear to be under major pressure. Retail Excellence Ireland recently discovered that rent accounted for between 20% and 40% of costs in retail businesses in this State, as opposed to a European average of 6.5%. Grafton Street is the second most expensive street in Europe and the fifth most expensive in the world. All other streets in the State are a formula of that expense. This is unsustainable in the medium to long term.
Fine Gael and the Labour Party are hiding behind unpublished advice from the Attorney General on this issue. We believe they have buckled under the lobby of wealthy landlords. However, Retail Excellence Ireland has legal opinion which identifies that action in this regard is possible. The proposals of micro finance and credit guarantee schemes are welcome but there is a major delay involved. This might not come about until May or June when thousands of businesses will have closed. Given that €23 billion has been put into recapitalisation of the banks in the past year the need for a loan guarantee scheme shows up the nonsense of the Government's policies. The Government should ensure the low interest rates these banks now enjoy from the ECB are passed on to small business.
The European Union has also operated the European Progress Microfinance Facility, which I mentioned to the Minister's colleague, the Minister of State, Deputy Perry. Last March €200 million was made available in this development and eleven countries drew it down. How much did Ireland draw down? The Minister has guessed it - a big fat zero.
I am pleased this Government has recognised the need to invest in and support new industries and to provide support for research and development, cloud computing and the gaming industry. However, even in the mid to long term, that potential for job creation pales into insignificance when one considers that 1,300 people leave our shores every week through emigration. Little or nothing is being done for the domestic economy even though 72% of employment is found in small and micro-sized industry. These sectors are most affected by the negative cuts of the Labour Party-Fine Gael Government. They need targeted support. In the House I asked the Minister if he would develop an emergency enterprise unit, perhaps as part of his Department or of an existing agency. I telephoned the Department which stated there was no way in which it could access or engage with businesses such as Spicers bakery, an example from a large number of small Irish businesses that have been on the go for generations but which are being forced to contract radically because of the environment they are in. A unit such as this could go into a small business, look at its costs and infrastructure and see whether there are other elements outside the core business of the company, for example, bad property debts etc, that could be hived off in some way while the core business remained functional. However, the answer seems to be no. There is hand-wringing and shaking of heads when a business closes even though it costs €20,000 per year for each individual who goes on the dole, never mind the personal costs to those individuals.
We asked the Government to do something about the size of contracts and even in this document we can see an ambition to reduce contracts. However, the Government is going in the opposite direction by centralising the entire procurement process which makes contracts bigger and makes it more difficult for small businesses to get the jobs. There is the example of Bord Gáis, which has a contract for €500 million over the coming ten years. That will have the effect of pushing out small contractors who were employed in that infrastructure until recently.
At a macro level, therefore, the Government has turned the State into a debt repayment agency. What we need is a Keynesian type of counter-cyclical stimulation. In January alone 750,000 jobs were created by the Obama Administration. The United States is obviously much bigger than Ireland and its economy is much more closed than our small open one but the Government must take a leaf from that kind of Keynesian policy. It could invest in infrastructure now. It could download funds from the European Investment Bank and the European Progress Microfinance Facility, the European investment fund and could create competitiveness. That would be jobs intensive and would also make this country attractive to foreign direct investment in future.
The second issue in which the State must involve itself is domestic business. It must cut costs and make small businesses competitive and must look at the cost of upward-only rents, credit, energy etc. The third issue is to reform the enterprise development sector giving entrepreneurs access to mentoring, training and grants, and a neutral space away from the local authority that would be clean and professional where they could bring new businesses and try to sell to their new customers.
Fourth, we must develop the all-Ireland economy. It must be noted that in this 124-page document seven lines were given to that idea. Right now we have IDA Ireland, Enterprise Ireland, Invest NI and a plethora of embassies around the world that duplicate their roles. If they were rationalised and focused on the growing economies such as those of the BRIC countries there would be extra funds available which could be harvested to increase the output of these organisations. There is no effort to bring Invest NI, the IDA and Enterprise Ireland and the expensive embassy infrastructure into alignment.
How many jobs has the embassy in South Africa created in the past year, or the consulate in New York? How many jobs have each of the 76 embassies around the planet created? Has there even been a cost benefit analysis? If one asked a small Irish business which used an office abroad for its exports how much profit that office was making the answer would be on the tip of its tongue. Unfortunately, I very much doubt it is on the tip of the Minister's tongue.
We welcome that the Taoiseach has taken responsibility in this regard even though he and his Ministers remain somewhat confused as to the exact number of jobs, gross and net, they expect to take out of this plan. The Taoiseach is now on the hook with the responsibility of job creation in this State. It is a heavy responsibility and one that Sinn Féin will not allow him to shirk.
I welcome the opportunity to speak in this debate, one of the most important debates of the past 11 months since we were elected as Deputies. We all agree that jobs must be the number one priority not just because they are important in the drive to get the economy back on track but also, and more important, to meet the needs of the people the economy should serve.
I shall deal with IDA Ireland and its strategy. Although I and my party support the move towards inward investment which forms an important part of the jobs infrastructure, I wish to consider the regional performance of the IDA. Last year, the IDA performed better than normally, which is welcome. It was 20% up in respect of the number of jobs it brought in throughout the State in 2011. In Laois-Offaly, however, there was no improvement in the IDA's performance; it actually got worse. In spite of good infrastructure the situation deteriorated. There are now 17,993 people unemployed in Laois-Offaly, in spite of massive emigration.
The two counties have good infrastructure, with Laois served by the N7, N8 and the N80, which connect to the ports, airports and major cities. Offaly is connected by the N6 and N80 and both counties have good rail connections. The number of IDA-backed companies in Laois has fallen from four to two in 2011 and employment in these companies fell from 124 to 100 people, an all-time low. Offaly did not fare much better. The number of IDA-backed companies remains stuck at ten, while those working in such companies dropped by 47 last year.
The total amount allocated to IDA-backed companies in Laois came to a grand total of €370,000 in 2005-10, the smallest amount in the State. The total for Offaly, which does not fare much better, is €510,000 over that five-year period. This compares to €6.4 million in Westmeath, which is deserved by the good people of Westmeath, and €40 million in Kildare. It is very poor and weak and I ask the Minister to take note of it. The number of client visits in Laois in 2011 amounted to two, with one in Offaly. This is appalling when there is good infrastructure, business parks and empty units. As a councillor, I asked the IDA about this point and why it is not paying attention to Laois and Offaly. Westmeath had 15 visits, rightly so, and Dublin had 150 visits in 2011 and 197 in 2010.
There is clearly an imbalance and in the midlands region. We can contrast the difference between the number in Westmeath with the number in the two more southern counties in Leinster. I do not argue against Westmeath because there should be 15 visits but I ask why the IDA is not dealing with Laois and Offaly. There is something wrong and the taxpayers in Laois are asking me to ask the Minister and the Taoiseach what is happening with their money. This is a publicly funded organisation, which is we fully support and from which we want better results. We must ask why we are not getting a bang for our buck in Laois and Offaly.
In order to get good economic development, we need balanced regional development. The Minister understands that we should have balanced regional development but it is not reflected in our industrial development policies. I ask the Minister to raise this with the IDA. Regions such as the midlands must be prioritised and jobs must be created.
We must have affordable access to child care if lone parents are to be brought back into training and employment. Some 60% of them are already at work, despite the myths. However, community crèches will not survive without good community employment schemes. These are necessary to provide training and skills to allow those working in them to move on to more permanent employment. I ask the Minister to take this on board because progression to full-time employment is important. It is cost-effective, a good service is provided and there is a 20% progression rate despite the recession. I asked the Minister to take it on board.
Regarding construction, vacant local authority housing stock lies around the country and is under the control of local government. Why are we not renovating it and getting rent into the council? On an economic basis, we should renovate and insulate those houses and let them so that local government receives rent. This also addresses housing needs and creates employment in the process.
We need to move quickly with wind power, reduce the amount of imported fuels and create energy security. Whether on the right or left of the political divide, we all agree that we need energy security. We need to retrofit houses. The Institute of International and European Affairs estimates that 1.4 million houses require an upgrade to bring them to the C1 standard, which will save €1,496 per year for the average household and reduce our energy costs. This could be financed through a ten-year bond, where people continue to pay the same energy bill and repay the difference to a green fund. I ask the Minister to take this point on board.
I propose to share time with Deputies Luke 'Ming' Flanagan, Maureen O'Sullivan and Pringle. Aspects of the jobs plan are welcome and I hope the target of 100,000 jobs will be exceeded, even though it is a round figure and was picked out of the air. The net increase in the number of jobs is a key issue. I welcome a number of measures and have criticisms of a number of others. There are also elements missing from this plan, one of which is the fact that the National Pensions Reserve Fund should be used if we are serious about creating a large number of jobs.
The opening section of the jobs plan relates to the economic outcomes from investment in research. The document makes reference to PhD students and a number of actions. At the moment, there is a showcase at the RDS where colleges have offerings on postgraduate courses. By comparison with last year, only a trickle of people are turning up because of Government policy of pulling the support for grants at postgraduate level. People are voting with their feet. It is one thing being aspirational but another to put the policies in place. These people can potentially create jobs at a high level.
I worry when I see reference to reducing the cost of doing business, with the first point of the plan a proposal to enact legislation to reform wage setting mechanisms. So many other factors have an impact on the cost of business, including energy, rates, upward-only rent reviews and insurance. We want high-value jobs and the focus on this concerns me.
The Legal Services Regulation Bill is being cited as reducing costs but the elaborate framework introduced in the Bill could end up costing us more than is the case at present. The Government asks local authorities to exercise restraint in setting rates for businesses but it cannot have it both ways. The Government cannot cut the budgets of local authorities and then tell them to exercise restraint on rates. That is aspirational and if it is to be more than this, the Government must do something about it. We know about Irish Water, which is a long-term proposition. We do not know how long some of the elements of this plan will take and many of them are not costed. It is welcome that there will be a quarterly review and that targets will be set. These are necessary if we are to deliver something.
Springboard is being criticised by those who look to take on people. They say that they cannot turn a plumber into an IT professional in 18 months, which may be the case. I have asked the Minister about county enterprise boards on a number of occasions. A compromise has been reached. Two Ministers will now have responsibility, one for Enterprise Ireland and one for local authorities. There are a lot of questions in regard to leases and the number of staff that will transfer across. We need to have an enterprise culture to deliver on it. The jury is very much out on that. We want to see returns very quickly.
I welcome some of the initiatives on the green economy, if the plan goes beyond being aspirational. There are great opportunities. We could be to the forefront in many initiatives. The green IFSC idea was never taken seriously by Fine Gael and the Labour Party. Developing a brand or a GM-free island would be well worth considering. I am sure we will have another opportunity to address these issues on an incremental basis.
I would love an hour to talk about the plan because it is the most important thing that has come before the House. I like the idea that the Government will do something about competition and rates. I cannot welcome the plan because it is a plan to fail. Even if the Government succeeds and no jobs were lost in the meantime, there will still be 350,000 people unemployed in this country in four years time. What is the plan for them?
If it does not have a plan, can it kindly tell the Minister for Social Protection, Deputy Burton, to stop goading people who were on the dole, accusing them of being useless and telling them they should be ashamed of themselves and should be looking for jobs? There are no jobs out there. The Government has admitted that in four years time there will not be jobs for 350,000 people. It should kindly treat people on the basis that it will not find them a job and not make them feel bad for having to rely on social welfare.
One important element in creating jobs is that the skills are available to fill them. An important part of doing that is having guidance counsellors in schools to guide people along a certain path. I have been told guidance counsellors are gone and it is up to principals to allocate resources. We are told we have to face reality, that the country has no money and that we have to do this. It is the equivalent of cutting down all the signposts in Dublin and selling them for scrap to pay off the national debt, but not taking into account the fact that no tourist will know where to go.
I agree we have to become more competitive but I do not think the Government wants to. When we discussed the competition Bill it was made quite clear that no matter what provisions were included if they were not funded they would not have any effect. I said the Government could include the death penalty for a person and his or her family for not following competition law, but the reality is that if there are only two gardaí in the country, the same number as in a village about five miles from my town, it will not succeed. If the Government wants competition to work it has to fund it. We were told the amount of money available would be limited. If that is the case the Government is not very dedicated.
I agree that rates should be reduced. How will the Government make that happen? It will not make it happen under the current local government system. I have personal experience of hell from my six years in Roscommon County Council. I thought I was in heaven the day I became mayor - I would be able to drive down rates, sit in at budget meetings and find bits and pieces that could be saved. We did not get all the information we looked for. We were given a document with emotional phrases to the effect that if rates were cut the pool or library would be gone, which might not go down well with constituents. When we looked for further information I found there was no power. Local government is a joke in Ireland.
The Government wants to save money, make the country more competitive and reduce rates. The mayor of Roscommon was refused access to figures because there is no democracy at local government level. Rates could be reduced if there were directly elected mayors in Roscommon and Leitrim. I would find a way to cut rates without cutting services. Why can we not be given that power? It would go a long way towards making this country more competitive.
We cannot have a situation where the Government says it will reduce rates while at the same time the person who is has the opportunity to reduce them is told by a director of finance he or she will leave if any more information is sought. The Government should change that and do something about funding competition, and then I will believe what it is saying. Otherwise, like my family before me where 19 out of 20 of us had to go to London, my children will have to do the same and I will not sit idly by and watch that happen.
Losing one's job is probably one of the most devastating things that can happen to somebody. It is a life defining and life changing moment because of all the feelings that come with it. Graduates are affected but I am concerned about 40 and 50 year olds who find themselves unemployed for the first time in their lives. They can feel worthless because of not being able to contribute to the household. There are endless days with no focus to them.
When we had a Private Members' motion on mental health we found there were direct links between recession and the economic downturn, which have serious effects on people's mental health. I hate using the term "suicide" in a threatening way but I have no doubt some of the reasons for the increase in the numbers of people taking their lives very tragically in this country has been because of the economic downturn.
One would hope that with every Government Department and over 35 agencies and offices involved with actions to support job creation and job retention we will see radical change. The monitoring group is positive. There will be quarterly reports on the work and the action delivered. The plan will be continually measured and, it is to be hoped, delivered on. All the paper plans are worthless unless they can deliver. I hope there is also an action plan if they are not.
There is a lot in the plan about encouraging foreign direct investment. We have a lot going for us as a country. We have a well educated English-speaking workforce. Particular skills might be missing but our young people are imaginative, creative, innovative and inventive. We see this all the time in craft fairs, markets and at the Young Scientist & Technology Exhibition. We have a mild climate and are not subject to natural disasters like other countries.
Foreign direct investment has generally been beneficial for communities but also for investors. There are ambitious plans in this regard. I note one deals with education services. There was a presentation to the Joint Committee on Foreign Affairs and Trade in which authorities said having foreign students in this country is a very lucrative area.
I am sure economists can give me the arguments in favour of incentives. I find one section quite bizarre, namely section 14 on the special assignee relief programme. There will be tax breaks for people coming into the country. Some 30% of salary will be exempt from tax for up to five years and there are provisions for holiday homes in the countries of origin. One aspect which really affected me is the financing of children's education. It seemed to give a thumbs up for fee paying schools in this country. What is wrong with non-fee paying schools? Much money is given to fee paying schools to the detriment of other aspects of education.
On indigenous start-ups, as others have said we need banks to start to release funding and take on board the sound business plans available. They can be criticised but the banks must have an open policy with the money they have been given.
We also have to be more proactive on job retention. I know of small businesses which are in trouble. A small injection of funding would have kept them going. I met a man who runs a small business some months ago. He employed 20 to 30 people and dealt in construction but a major developer went into NAMA or to sunnier climates to make more profits. He was left high and dry and had to let people go.
There are great opportunities in tourism, particularly in terms of culture and sport. Many commemorative events are coming up.
I refer to community employment schemes. They have provided fantastic services to many communities, in terms of child care, home school, care for the elderly and care for the disabled. They were done at a fraction of what it would have cost the State to provide those services.
I chaired a meeting last night of Debt and Development Coalition Ireland that looked at development aid. Given our finances are dictated by the World Bank and IMF, the discussion was on the countries of the global south, in Africa, Asia and Latin America, which have been receiving these loans, as we are now. The loans were given to those countries in the knowledge that those countries could not repay them and that they would drive them into further poverty. The loans were given in the interests of the creditors and political and business economic elites in those countries and the policy conditions attached have devastated the recipient countries, with local industries such as cotton being decimated following the opening up of the markets. I hope we are not going down that road but if history teaches us anything it is that we do not learn from history. The facts are there, however, to show what the IMF and World Bank have done to these countries and we are now borrowing from them and I hope we do not end up in the same situation.
Much has been made of this jobs initiative, which is probably the fourth announcement that has been made in the year since the Government came to power. The spin in the plan is remarkable, with much of it being stuff one would imagine the IDA, Enterprise Ireland, the county enterprise boards, local authorities and the Department of Jobs, Enterprise and Innovation should already be doing. Why must we dress it all up again in a glossy plan so the Taoiseach, Tánaiste and Minister for Jobs, Enterprise and Innovation can have a grand launch? I was amazed how much of it is actually what those people should be doing anyway. Why do we have the IDA if all this has to be put in place? I hope it has already been doing all these things. This was an occasion for spin, dressing up the plan and saying it would provide 100,000 jobs to get good PR for the Government for a week.
I was amazed when reading the plan to see one of its actions is the development of a simple, one page guide for small business entitled "Managing out of the Crisis". I urge the Taoiseach to send that to Brussels as soon as it is ready because it will be a magic panacea for everyone to get a one page guide on how to get out of the crisis. It is beyond belief it would be considered for inclusion as an action, that we would condense this all to one leaflet and hand it around small businesses in the hope it will keep them going. In one town in Donegal, five small businesses have closed since Christmas, with 20 to 30 part-time jobs lost and owner occupiers out of business. It is a pity we could not give them this leaflet before they got into bother otherwise they would have been able to keep going. It beggars belief.
In the section on the agrifood industry, there is only one mention of aquaculture, to develop offshore fin fish farms. There will be two or three offshore fin fish farms and that is the height of the Government's expectations for aquaculture between now and 2020. We can take it the Government has written off all the aquaculture businesses on the coast already. In Donegal there are at least three companies that are ready, willing and able to create jobs if only the Government could get its act together and sort out licensing arrangements. It would be much better to spend time sorting that out in vital areas, where the potential exists for 1,500 to 2,000 jobs but there is no mention of it at all.
The plan then refers to the creation of 150 jobs in fish processing between now and 2020. How do we even know this? When I contacted BIM about the Killybegs report on job creation to ask where these jobs in fish processing were, I was told it was a secret. How will the jobs be verifiable? We will never know if they are there and that seems to be the whole point.
There were three mentions of ICT and broadband in the 270 actions, with mention of 100 bits per minute broadband for schools and a lot of waffle about a next generation broadband taskforce and agreeing targets. We have come up with another fudge where some places will have access to fibre power broadband while others must depend on mobile or satellite broadband. Donegal no doubt will have to depend on satellite and mobile because it looks like the Government has no intention of rolling out a proper broadband infrastructure. That, however, could create jobs and foster local enterprise by providing fibre power access for businesses and people across the State. To provide the fibre optic network to every town in the country of more than 1,500 would cost just one year's promissory notes' payments for Anglo Irish Bank, payments we must make for the next 20 years. Imagine what we could do if we had control of that money for the next 20 years.
I will focus on key action 2.2, to do with the county enterprise boards. The plan refers to Enterprise Ireland working with local authorities to establish a new network of local enterprise offices in each local authority. The new LEOs will combine the enterprise service of the previous CEBs and the work of the business support units in the local authorities. This is a bad idea. It is a bad idea to let some local authorities anywhere near an enterprise support service. Why? Because in some cases local authorities are completely removed from the realities of the commercial world. I would go so far as to say that in some cases they represent the exact opposite of the mentality needed to create jobs right now. Senior officials in many local authorities have no business being involved in any new structure to replace the city and county enterprise boards because they do not have the skills.
I have limited experience of the private sector and for those who come from the private sector and end up serving on a county council, they quickly realise the mindset is very different. Senior managers in county councils in my experience have the "us versus them" attitude in many cases, with "them" being the business sector. They spend their careers squeezing rates out of businesses, they do not spend their careers facilitating business ideas. The concept of risk and reward does not thrive in the public sector. When it comes to senior management, it is more a case of safety first, of keeping the head down and not upsetting the manager. Local authorities are not organisations that have the ability to create wealth or drive growth right now. The concepts of commercial creativity, risk, the desire to make money, the basic elements of economic development, are not exactly found in the denizens of our local authority system and they should have little to do with any new structure when it comes to start-up businesses.
What did we find out this week? According to a report in the Irish Independent most local authorities are overdrawn or running a deficit. In many cases directives to reduce costs and borrowings are still being ignored. Effectively, many local authorities are incapable or unwilling to balance their budgets. Now we want to kick start indigenous growth and house it in local authorities. The Irish Independent reported that councils are haemorrhaging cash, while rules on public sector recruitment are being flouted, contracts are being awarded without being advertised and hundreds of millions of euro are owed in uncollected rates and taxes. We are now seriously contemplating abolishing some of the local authorities because they cannot run their finances.
If any new structure is enveloped into the local authority system, political influence and all that goes with it becomes involved. All new structures must be separated completely from local politics and the clientilism that goes with it. For the record, I expressed this opinion to the Minister for Jobs, Enterprise and Innovation's staff some months ago. I am led to believe this was not his idea or approach and I am glad to hear that because this is idiotic. It might not have been his approach but he made a mistake ceding this to the Department of the Environment, Community and Local Government and local authorities. It demonstrates a stunning lack of understanding on the part of central Government about how local government operates. This will set local business development back 20 years.
The Minister for Finance said earlier that one should not come down here if one does not have a solution. One of the solutions is not to do this and leave it alone. We would be better off doing so, frankly, rather than putting these structures into local authorities. By all means, we should assess the productivity of each of the enterprise boards and the people who work in them, and integrate this into Enterprise Ireland. However, local authorities - which in some cases are the least business-friendly structures in the country - should be kept away. This element needs to be stripped out of this plan as it was a mistake. The Minister has lost me on this plan. I will vote for the legislation that goes with it but if the plan is still in it, I will do so with major reservations.
I am extremely happy with parts of this plan. As regards the initial targets, it is commendable that the Minister should commit 270 actions to paper. It is also commendable that the Taoiseach and the Minister should be answerable to the House on a quarterly basis for progress on foot of these actions.
I wish to refer specifically to the hugely important role education plays in the jobs market. Ireland has always prided itself on its education system and we depend on it for highly skilled workers who attract foreign investment here by multinational companies. There is a major link between the multinational sector and our highly skilled workforce. The action plan contains an important initiative concerning the STEM subjects, science, technology, engineering and maths, which have a strong link to multinational companies.
In my own county of Kildare, there is a positive scholarships initiative between NUI Maynooth, Kildare County Council and local businesses. These scholarships will cater for students taking STEM subjects. Part of the reason our education system is so important is due to foreign direct investment which requires a highly skilled workforce. The announcement by Hewlett Packard of 280 new jobs in Kildare and Galway is very welcome. The fact is that companies like HP are willing to take on extra highly skilled staff. Some people may say that it does not have a benefit for the general economy but there is a trickle-down effect. It has been proven that companies like HP and Intel have a knock-on effect in the local economy with up to six jobs for every one they create. There is therefore a huge benefit stemming from such activity.
The multinationals are seeking students who begin cultivating their skills as early as possible. Efforts should be made to introduce students to the STEM subjects in the primary school system. It is a sad fact that currently primary schools spend as much time on Irish as on mathematics. When one considers it, however, spending time on maths is more likely to generate a job for a student than studying Irish. I spoke to a parent recently who said her daughter, who loves mathematics, is worried that she will fail Irish in her leaving certificate. If that girl fails Irish in the examination she will not be allowed to enter any of our universities. We should consider removing compulsory Irish as a requirement for university entrance, otherwise we will exclude many people who have an interest in pursuing a university course.
I am a member of the Committee on Jobs, Social Protection and Education which has identified the important link between education and foreign direct investment, and is so vitally important for the future. I commend the Government's sense of accountability for the targets that have been set in the Action Plan for Jobs.
I welcome the chance to speak on the latest jobs plan from the Government. If we had not been here last April and December for the previous plans, we might have more respect for this one. I have a lot of respect for the Minister, Deputy Bruton, and his departmental team but I get the feeling that we have been here before. We had the jobs initiative in April 2011, which possibly had some good things in it. For example, the VAT rate for tourism was more than likely responsible for some job creation in the tourism sector. When one looks at the figures, however, there are more people unemployed now than at this time last year. We have had more announcements of plans than jobs being created since the Government took office.
As regards accountability, I welcome the fact that Ministers will answer to the House concerning their parts of the plan, but what happens if they do not deliver? It is unlikely that they will come in here and say "We couldn't do this". The Government has a huge majority so all we can do is give them a rap on the knuckles saying "Go and do your homework properly and come back again". Accountability means Ministers appearing before a committee, but I am concerned because so many Departments are involved. We need a central committee that would hold Departments to account. I am not talking about Ministers who are all genuinely committed, but the departmental machinery does not understand how serious this problem is. They need to be brought in before one central committee and held responsible for what their Departments are doing. If that were done, we might actually move towards delivering some of the targets in the Action Plan for Jobs.
Much of the focus has been on assimilating county enterprise boards into local authorities. Deputy Deasy is right to say that many local authorities do not get it. They feel that the business and enterprise sector pays rates, and should move away after that. In changing this area, however, we should not lose focus on county enterprise boards.
The Minister is right to say that, between small SME start-ups and multinationals, we have lost a middle cohort of people who want to create jobs. I have an enormous respect for Enterprise Ireland whose work in promoting Ireland abroad is fantastic. I have had the honour of accompanying a few foreign trade missions and I have seen the phenomenal work they do. Enterprise Ireland identifies high potential start-ups. For example, the Action Plan for Jobs focuses on targets for gaming. Two years ago, nobody knew what gaming was but because of Enterprise Ireland's work we can justifiably say that it will create jobs. Nonetheless Enterprise Ireland still does not understand the small and medium enterprise sector. Local SMEs find themselves caught in the middle - too big for the county enterprise boards, but too small for Enterprise Ireland.
The Leader partnership companies are missing from the jobs plan. In rural areas, these companies offer significant grant assistance. Also missing from the plan are towns designated as gateways and hubs in the national spatial strategy. Businesses within such towns are excluded from accessing funds under the Leader programme, even though such towns have high unemployment. That decision needs to be reviewed, particularly given our ongoing engagement with Europe. If Leader is about creating jobs, towns like Ballina and others are dependent on the rural economy and so a link can justifiably be made.
Deputy Lawlor and others spoke about the strong record of inward investment, although it did not suddenly arise in the past ten months. All the big names are here, and small supplier companies extract the benefits. Enterprise Ireland should put in place a system so that when large companies come into an area there will be a tightly focused supplier programme enabling suppliers to upskill and supply them. In that way they can create a business stream for them. Deputy Lawlor referred to the announcing of 300 jobs, but it is a question of spin-off jobs. The programme to which I refer would allow us to maximise the jobs. What occurs at present is haphazard, or it occurs when someone has cop-on locally within the enterprise board or the development company. We need to focus on what I propose.
Everyone tends to criticise the focus on multinational companies coming to the country. We should celebrate their doing so. That they are responsible for nearly 350,000 direct jobs here should be celebrated. They do more to spread the Irish message and the innovation-island message than any Government, regardless of hue, could do. If a company makes a decision to invest in this country, its doing so reverberates throughout the investment community. That is more important than anything any of us can do.
The Taoiseach finally realised - he was not too sure about it this time last year - that Governments cannot create jobs. It is confidence and investment that do so. Rather than disparaging multinationals by stating they would come anyway, we should realise they would not. We need their support.
I spoke before against budgetary decisions in the presence of the Minister of State, Deputy Perry, and am sorry if I sound like a broken record. The increase in the VAT rate by 2% was in our four year plan but was not to be implemented immediately.
I am like a dog with a bone in respect of the redundancy rebates. What has been done in respect of them is wrong. The justification given for them in the social welfare legislation by the Minister for Social Protection, Deputy Burton, was that we could not pay for the TalkTalks and Dells of this world. I agreed with her on that so I tabled a parliamentary question on how many such companies actually received the redundancy rebate. I asked for the breakdown in terms of large, small and medium-sized employers. The Minister stated the Department does not have the information.
The difficulty with what has happened and the manner in which it has happened is that it is the small guy again who will take the brunt of the decision. The decision should be reviewed in the context of next year's budget. Perhaps we should set a ceiling such that if a company with 50 employees or less must make a redundancy, it will get the 70% or 75% and bigger companies will get less. The bigger companies can afford it and small ones cannot.
I have no doubt that decisions were taken, in the weeks preceding the introduction of this plan, to lay off people who might not otherwise have been laid off because of the fear that a bigger rebate would have to be paid.
With regard to upward-only rent reviews, there is much talk about the constitutional convention in respect of social issues. That is very important but we are being told this problem cannot be addressed because of the Constitution. This was known before the election, which reflects the joys of being in government. The constitutional convention should examine this issue. It should have job creation at its heart in addition to social issues. If there are provisions in our constitution that, for whatever reason, are blocking the support of enterprise in a way that was never envisaged, such as the clause on upward-only rent reviews, we should change the Constitution. We have changed it for much less important reasons. I hope that in the construction of the constitutional convention, which I gather is a Labour Party creation, an enterprise clause will be slotted in and that this issue will be focused on.
In three months, we will see the colour of the money and what accountability actually means. I have no doubt the Minister for Jobs, Enterprise and Innovation, Deputy Bruton, and the Ministers of State, Deputies Sherlock and Perry, have no difficulty coming to the House to answer for their actions but my difficulty concerns the system behind them, which involves so many Departments that must come here to be answerable. Committees on enterprise, education, social protection, agriculture and tourism are involved. Within the Houses, there should be one committee responsible for the plan. Nobody should be able to hide behind a sectoral committee. The function of the committee I propose should be to monitor, on an all-party basis, the implementation of the jobs plan and to be responsible for its delivery. If we did this, it would do a lot of good for parliamentary democracy.
I congratulate the Minister on the very welcome plan launched on Monday of this week. Its implementation improves supports for job-creating businesses and removes barriers to employment creation across the economy. It pays attention to the key areas of supporting home-grown businesses, encouraging foreign investment and competitiveness and targeting key sectors where the Government has identified strong potential for employment growth.
The range of measures proposed by the Government will achieve the necessary growth to stimulate jobs and strengthen our economy, thereby making businesses more competitive. First, the Government has had to provide evidence to the international community and investment sectors that the borrowing and spending spree of the previous Government, which nearly broke Ireland plc and placed the country in such dire debt, is now firmly over. The Government, to the annoyance of the Opposition, has demonstrated its control over our deficit and has started to pay off our debts.
Until the Government made these critical decisions, most leading high-tech and finance companies delayed decisions about major investments and new research projects in Ireland. The first priority of the Government is to create jobs and give businesses the support they have asked for by introducing reforming measures that will attract vital foreign investment to Ireland and allow local businesses to expand and flourish.
These initiatives will attract many multinational businesses to Ireland and add to the expansion of existing enterprises. The Minister has quite rightly pointed out that, as a society, we must all become obsessed with job creation. The Opposition has criticised our plan to create 200,000 jobs over two four-year enterprise cycles as over-optimistic but we must be optimistic and look forward. As a people, we can only create economic growth if we get the country back to work. The comprehensive range of measures that the Minister introduced will achieve this.
The Government's announcement that it will not increase income tax or corporation tax is crucial to attracting as much inward investment as possible and sustaining existing businesses. We already have great success stories, such as the fantastic growth in the agriculture sector and a reputation for excellence in research and development. The latter is still recognised internationally.
The launching of a diaspora finder's fee will help tap into communities such as the 48 million people in the United States who claim Irish descent, and this will motivate investors to consider Ireland. We could not get much better than the recent plaudits from Bill Clinton encouraging investors to think about Ireland.
The manufacturing sector is the first sector of a total of 20 mentioned in the report with growth potential. The report suggests it can provide 20,000 new jobs over the next five years. I welcome in particular the establishment of the new micro-finance fund, which will result in investment in small companies, seeking sums of less than €25,000, that will create jobs.
I am particularly interested in some of the comments made after the announcement on Monday. Mr. Danny McCoy of IBEC stated the plan contained a range of practical measures that will create jobs. It is vital that all Departments work together to tackle unemployment and create the best conditions for growth and recovery. Businesses will create jobs. Our Government has a major role to play in putting the right environment in place. The Small Firms Association commended the Government for recognising the key role small firms have to play in the economy.
There is no magic bullet but the plan can promote more optimism across the economy and communities, which have been decimated by the previous Government. It will take a while to absorb the integrated list of actions on creating jobs but the plan will have an impact. All the new measures are steps in the right direction, namely, towards putting the country and its citizens back on the road to recovery, thereby restoring our self-confidence and putting Ireland back on the map of the world economy as open for business once again.
I very much welcome the opportunity to speak on this important initiative. I begin by rebutting what I have heard from some Opposition speakers, although not all of them. They stated the latest action plan on jobs lacks credibility because it follows on from other measures. Their argument misses the point entirely. The Government has said consistently - the Minister of State and the Minister, Deputy Bruton, said so as recently as this week - that this plan is the latest instalment and builds on other difficult plans and actions of the Government to try to get this country back on the road to economic recovery. Most specifically, I refer to the Finance Bill, Second Stage of which has now been passed, the jobs initiative, considered earlier in the Government's term, the intensive and ongoing negotiation with our partners in Europe and the IMF and the very difficult decision to recapitalise our banks because every functioning economy needs a functioning banking sector.
This plan is the latest step. There is no magic bullet and the plan builds on what has been done to date. It is important that this debate is taking place when the Taoiseach is in the United States, for what I believe is the second time in five days. Just like a politician canvasses door to door during an election looking for votes, we need our Taoiseach and every apparatus of the State to canvass every potential investor across the globe. I applaud the Taoiseach for leading that effort. It is also important we instruct our embassies and all State agencies working around the world that this must be their focus too. Embassies must be more than just diplomacy and lavish functions but also become trade missions to bring about jobs and investment into Ireland.
One criticism I heard about this jobs plan is that it is overly ambitious. That is a badge that all Members on this side of the House will wear with pride. The country needs the Government to be overly ambitious. We have to set targets that one would not usually have to set in normal economic times. These are not normal economic times. The 400,000 plus people on the live register need the Government to be overly ambitious.
Many of the good initiatives in this plan are targeted. We saw in the jobs initiative how targeted measures work when they resulted in 6,000 extra employed in accommodation and food services, 3,000 extra in wholesale and retail and 20,000 extra in work placement and training places. Broad-brush approaches do not work.
The most exciting element about this jobs plan is that beside every one of the 270 specific measures is the name of the organisation accountable for delivering it. Deputy Calleary was correct that the success of this plan will not just be down to the Ministers, Deputies Bruton and Perry, and the Government. It is about every State agency accepting responsibility for the delivery of its target. It may be worthwhile examining Deputy Calleary's suggestion to have a committee of the House that can hold the agencies responsible to account. From my membership of the Committee of Public Accounts, I know the opportunity to hold people to account leaves little room for hiding.
In a plan with 270 measures not everything can be a big ticket item nor does it need to be. Many small changes can sometimes have a large impact in the day-to-day running of a business. The jobs plan singles out 15 key action areas which will be central to job promotion. Among these is the establishment of the one-stop shop to provide small and micro-enterprises with supports at local level.
I also welcome changes to the county enterprise board structure with which some Members disagree. We need a national consistency in the services provided by Enterprise Ireland. If we are talking about real local government reform, what local government system in any developed country does not have enterprise and job creation at its heart? There is room for great progress to be made in this area.
The changes to the public procurement process are to be welcomed. Allowing small and medium-sized enterprises to have a clearer path to accessing State contracts is welcome.
Chapter 6 is the most exciting in the plan because it addresses the issue of transposing the plan to local communities. If we want to get people off the live register, apart from doing what the Taoiseach is doing now in the United States, we need to empower the community leaders in all our constituencies. In Bray, County Wicklow, people got together from the local council and the Chamber of Commerce to set up a Bray economic think-thank which is actually creating jobs using similar suggestions from this plan. I know the Minister of State enjoys being on the road and meeting with businesses. I hope he will take this plan to communities, bring it to life and explain to people how the plan's recommendations and actions can make a difference in every town and village.
Debates such as this and some degree of an oversight committee are central to ensuring this plan progresses.
In his opening remarks, the Minister for Jobs, Enterprise and Innovation, Deputy Bruton, said this jobs plan marked a new approach. I wish it did because job creation is key to the country getting out of the economic quagmire it is in due to its over-reliance on the construction industry while not concentrating on indigenous job creation over the past ten years.
There is nothing new in this plan. It is actually the third big fanfare of a jobs plan we have heard from the Government so far. Last April, it projected up to 102,000 jobs would be created by 2015. That projection was reduced in December by the Department of Finance to 62,000. Now we are told there will be 100,000 new jobs by 2016 with 200,000 by 2020. That is an eight-year wait for 200,000 people to get a job. What about the remaining 250,000 on the live register or those emigrating? This is what we really must contend with.
The Taoiseach claims Ireland is the best small country in which to do business. Who are we competing with – the Cayman Islands, Jersey, the Isle of Man? Is it about incentivising top earners and multimillionaires with low taxes, which is not new anyway? A policy based on austerity, along with an acceptance of a collapse in domestic demand and activity in the domestic economy, coupled with a hope that exports will keep the overall economy's head barely above water, is incompatible with claims the Government's priority is job creation.
With the collapse in domestic demand, a reliance on the private sector is like whistling in the wind. Since 2009, non-financial corporate profits rose by €2.6 billion to €37.8 billion but since 2007, investment has declined by €30 billion. There has been a strike of capital by private industry over this period. Some Members claim this is the opportunity to open this up and give confidence back to the private sector. I am not convinced that will happen. The idea of selling off parts of successful State companies to create a structural development fund of €1 billion is economic vandalism. To quote the Tánaiste, Deputy Gilmore, it is economic treason.
The State instead should be used to create new jobs. I do not agree with the Government's position that it is not its responsibility to create jobs but to create the environment to create jobs. When we do not get investment from private industry, as is happening now, it is the Government's role to step into the breach to create jobs in key economic areas which can support long-term investment. State investment in modern industry through State companies must commence using €5.3 billion from the National Pensions Reserve Fund as the investment strike in the private sector continues. There must be no privatisation of our State companies.
Reliance on foreign direct investment incentivised by low corporate tax has failed with up to 100,000 qualified people on the dole and 4,000 postdoctoral researchers in casual employment. This cohort must be enabled to contribute to Ireland rather than to other countries through emigration. State companies such as the ESB, Coillte and An Post could begin to develop advanced modern industry in areas such as offshore wind and other clean energy generation, super fast broadband, food processing, pharmaceuticals, electronic devices etc. Such industries, efficiently run and with an effective corporation tax of 4% to 7%, would give a far greater return to the Irish people than that provided by multinational companies. State-owned industries would not be subject to pull-outs such as with Dell, TalkTalk, Aviva and MBNA.
A Government-sponsored programme of necessary public works would play a significant role in job creation and give confidence back to the country. In addition to the public capital programme, the Government should put in place a programme to ensure not fewer than 150,000 people are taken off the dole and working in three months. Such a programme should be maintained for at least five years.
Examples of key economic areas that such a programme could target includes child care. Up to 30,000 child care workers could be trained and employed to provide high quality public child care in a national child care infrastructure. Unfortunately, however, in the small number of existing community employment schemes that provide child care, there is a concern they will be closed.
Significant adult literacy and numeracy problems have been identified by the OECD as affecting the long-term unemployed. Training and employing 10,000 adult education teachers to provide literacy, numeracy, computer application and language courses to the long-term unemployed with a target of obtaining FETAC level 5 in five years to open the way to third level courses would be another important State programme. There is considerable interest in cloud computing at present. Computer software training and conversion courses could be provided through the institutes of technology for unemployed workers with third level maths qualifications.
The money for these initiatives is available. We have been condemned for failing to indicate where the money can be found but we are ignored when we point out that assets of €219 billion have been proven to be available. If these assets were taxed at a rate of 5%, the State could invest €10 billion in jobs. If they were taxed at 10%, €20 billion could be injected into the economy. We could also increase the tax rate for those earning more than €100,000.
There are grounds for hope but the Government is looking in the wrong direction. If it asked these millionaires to be patriotic by investing in job creation in the Irish economy, we would be in a better situation to bring people back into the workplace over the next five years. Public works programmes would create offshoots in terms of small private industries that could play a key role in giving confidence to workers and putting money into people's pockets and the local economy. The current environment of small businesses and pubs closing and vacant buildings springing up in the heart of our communities is impacting negatively on people's morale. If we get the message into the public domain that the money is available for these programmes we could build hope and confidence among the people.
I welcome the Government's jobs action plan as a timely and necessary intervention. I wonder how the members of the previous Government can maintain a straight face when speaking about job creation given their failure to grasp the enormity of the unemployment problem at a time when the crisis was growing. They vowed on several occasions to tackle the scourge of unemployment but only on the basis of one press conference at a time. I am familiar with unemployment and I am aware that many of my colleagues in this House have a similar understanding. I know how human dignity and self-worth can be compromised and undermined. This is why the Government is sincere when it says it is obsessed about jobs.
When I asked the people of County Louth and east County Meath for their votes, the message was repeatedly delivered that we need to restore the conditions necessary to create jobs. We began that task as soon as we entered power with the jobs initiative, which introduced the national internship scheme and successfully targeted VAT cuts at the tourism and hospitality sectors. Thousands of jobs were created last year as a direct result of that targeted intervention.
The grand pledges we heard from the previous Government, which were backed by little more than vague promises, insulted the intelligence of the Irish people and damaged the faith of the unemployed. This plan is distinguished by the honesty of its ambitions. It is clear that we are prepared to be held to account for its success or failure. Creating jobs involves a series of complex and interconnected tasks. There is no silver bullet. We are targeting sectors of the economy that can grow and we will work together to identify what we can do better than any other country in the world.
In the arts sector, which is of particular interest to me, we will double the number of people working in the film and audiovisual sector over the lifetime of the action plan for jobs. Without the leadership of the then Minister for Arts, Culture and the Gaeltacht, President Higgins, 20 years ago nobody would have believed that we could create a productive film industry that would create thousands of jobs and cement Ireland's place on the international film production stage. Approximately 5,000 people work in the film and audiovisual sector at present and we aim to double that figure to 10,000 over the next few years with State support. The creative industries will flourish under this plan. Few other sectors have shown as much innovation and imagination. Our unique arts and culture offering exemplifies what is best about Ireland and what it means to be Irish. I am confident the sector can deliver the job increases outlined in the plan.
The assimilation of county enterprise boards into the local authority structure will be beneficial for both the enterprise boards and the local authorities. The performance of local authorities in developing enterprises has been patchy, to say the least. The enterprise structure and philosophy can imbue local authorities with a more pro-enterprise approach. Local authorities have a key function in job creation, as we have seen in the impact of Louth County Council's economic development unit under the leadership of the county manager, Con Murray, and former head of the IDA, Padraic White.
I am very enthusiastic about the potential for the export unit in Enterprise Ireland and baffled as to why that issue has not been addressed previously. Anecdotal evidence suggests that dozens of small and medium enterprises in my area alone could benefit from advice from Enterprise Ireland on creating jobs through exports.
Procurement has long been an issue for small and medium enterprises in this country, which believe they are not adequately supported in benefiting from State contracts. It is important that we deal with this issue. The replies to a series of parliamentary questions I recently put to Departments and State agencies indicate that our performance is improving in terms of awarding contracts to businesses based in the Republic of Ireland. It is important in these times of limited Exchequer funding and constrained capital projects that we target local industries because otherwise we would be throwing good money after bad. We need to achieve value for every euro we spend on jobs.
The most significant measure in this action plan is that Ministers and State agencies will be made accountable. It takes an action orientated approach. I agree with previous speakers that accountability needs to inform everything we do to create jobs. That has been a failing in previous approaches, which merely amounted to cosmetic exercises.
Deputy Harris pointed out that our international embassy network needs to focus on trade. The Government took a deliberate decision to include trade with foreign affairs. It is important that every Irish Embassy is heavily imbued with the attitude that it also has a job creation agenda. We have seen the benefit of that in recent times.
I appreciate the opportunity to speak on this plan. Obviously the plan does not happen in isolation and relates to a number of different strategies, some of which have attracted criticism just as the jobs initiative had originally. That jobs initiative was launched almost a year ago. Figures recently published indicate there were 6,000 additional jobs in the hotel and catering sector which had benefited from the reduction in VAT. The people want to see these sorts of decisive measures taken by the Government and the connectivity between the measures in terms of the pensions levy and the result. Regarding this jobs plan, the Government, which is leading the country, needs to come up with a narrative about why we are doing this and where we want to go.