Wednesday, 24 October 2012
Prospects for Irish Economy: Statements (Resumed)
Six weeks from today the Minister for Finance will deliver his second budget to Dáil Éireann. He delivered budget 2012 only nine months after the Government had inherited a disastrous situation, with the economy in freefall and riddled with numerous systemic problems. Before we entered office, there was no clear path towards recovery and the leadership to deliver such a recovery was lacking. When we recall the situation with which the Government was faced at the time, we are reminded of the scale of the challenge involved. Some 250,000 private sector jobs had been lost in the three years before we took office, our international reputation was in shreds, the property market was in freefall, there had been a massive flight of capital out of the country and there was a steady run on the banks. Our output had also been consistently falling and, above all, the people had been left to bear the brunt of the crisis. Emigration had returned and unemployment had been allowed to reach record highs. There was no clearly defined vision for the country, the situation was bleak and the people were bereft of hope. From the outset, the task of the Government has been to regain control over Ireland's fiscal and economic policies, grow the economy again and get people back to work.
Since taking office the Government has been addressing each of these challenges in a systematic fashion. We have taken real and meaningful steps to stem the tide of the downward trends and put Ireland back on a path to growth and recovery. We have focused many of our efforts on restoring international confidence in Ireland. All of the actions agreed under the ED-IMF programme have been met. As a consequence, international markets have recognised Ireland's commitment to doing what is necessary in order to steer the economy back to recovery. Our long-term bond yields are now under 5% and the NTMA has been making a phased return to the bond markets. We have successfully begun the process of restoring balance and order to the national finances. In 2011 the deficit fell to 9% against a target of 10.6%. This year we will reduce that deficit even further.
We have been restoring banking and financial stability and banking deposits are up 10% from a low in July 2011. We witnessed a modest return to GDP growth of 1.4% last year. We have secured an EU commitment to making Ireland's banking debt more sustainable and breaking the link between bank and sovereign debt. This commitment was reaffirmed at the meeting of the European Council last week. We have introduced a comprehensive restructuring and recapitalisation plan for the banking system, in conjunction with reform and restructuring of bank boards and oversight structures. New legislation has been published to tackle white collar crime in order to restore confidence in the financial system.
Each of these measures has been taken to ensure the conditions are right to allow growth to return to the economy and prudent management to be restored. Without this, we cannot move forward to address the most pressing part of the crisis, namely, getting people back to work. In the light of the scale of the crisis and the number of individuals and families affected by it, the Government has made this a top priority. Our priority in this regard must be to create the conditions for employment growth and we have used every opportunity at our disposal to make this happen. We want to make work pay and reward people for an honest day's work. To this end, we have not increased income tax. In this year's budget we took steps to ensure some 330,000 people would not be obliged to pay the universal social charge. In February we launched the Action Plan for Jobs. Unlike plans published in the past, we have made implementation our priority. We have been resolutely pursuing each and every target and action in the plan on a quarterly basis. We also announced a €2.25 billion infrastructure stimulus plan with the aim of creating 13,000 jobs.
We have undertaken the consolidation, reform and policy development to which I refer, while protecting the most vulnerable. We know that a crisis such as that being experienced leaves those who are already vulnerable most exposed and pushes many more into the trap of poverty. Cognisant of this fact, since taking office we have reversed the cut in the minimum wage, published the national carers strategy and the Children First guidelines, allocated funding to community mental health teams and provided additional mortgage interest relief for first-time buyers who purchased their properties between 2004 and 2008.
With the announcement of the budget for 2013 just six weeks away, we are very aware that a huge amount of work and effort are still required in order to continue to get Ireland working again and the national finances back on a sustainable footing. As a country, Ireland continues to spend far more than it collects in revenue. While the banking crisis has clearly affected some of the forces which impact on the tax take such as confidence, demand and spending, the gap between what we collect and what we spend is an issue with which we simply must deal. It cannot be ignored; it will not go away and cannot be fixed as if by magic. The Government has a plan for dealing with this deficit. We must and will see this plan through and allow the stability and confidence it will engender to act as a platform for future growth in the economy.
Our commitment to reduce the deficit to below 3% of GDP by 2015 remains central. Further current expenditure savings must be found. We must deliver more savings and reforms under the Croke Park agreement. We must ensure the reform of the public service delivers a world-class offering for the people which does not tolerate waste or inefficiency of any kind.
On the international front, we will continue to pursue a successful conclusion to discussions at EU level on an agreement to separate bank debt from sovereign debt. Our work in this regard is ongoing and involves many actors. Results will be delivered in different ways during the coming months. Against this backdrop, we will continue to intensify all of our engagements at EU level. We remain steadfast in our efforts to ensure the euro will be protected. We will prioritise the pursuit of a banking union and engage in robust discussions on an EU fiscal-political union.
During our Presidency of the European Union in 2013, one of our key messages will be to push for more EU growth measures. As a small, open, export-oriented economy, it is in our national interest that Europe should continue to develop the Single Market and promote trade and enterprise among member states and with external economic blocs. In this respect, during our Presidency, the Tánaiste and I will be seeking to advance further trade relations between the European Union and the United States, with other advanced and developing markets. Within the European Union, we need to break down the barriers to trade and introduce new measures to facilitate rapidly growing areas such as the digital market and on-line commerce.
At a domestic level, our focus next year will be on turning the stability we have fought so hard to achieve into jobs. We want to build on the beginnings of recovery in employment that we have seen to date. There has been a 13,000 reduction in the numbers on the live register during the past year and some 17,000 additional jobs have been created in the private sector since we came to office. In recent weeks there have also been a number of significant jobs announcements, a number of which have been made by indigenous Irish companies with a global reach. The numbers to which I refer are small given the scale of the crisis. However, they are moving in the right direction. Conditions in the labour market remain weak and long-term unemployment is a serious concern. Thus, we must continue to push hard to deliver the policies which will facilitate employment growth and job creation.
The new integrated employment and support service, INTREO, announced last week by the Minister for Social Protection, Deputy Joan Burton, will provide individualised supports for jobseekers to assist them in getting back to work and increasing their employability. This will ensure those who have lost their jobs will remain connected to the labour market and be ready to avail of opportunities when they arise. I attended the launch of INTREO in Sligo and it is a demonstration of the Croke Park agreement in action. INTREO brings together public servants from FÁS and the HSE and civil servants from the Department of Social Protection to work in the interests of those who are unfortunate enough to be unemployed and to understand these individuals have a contribution to make, that they possess experience and talent, that they are motivated and that they are willing to do things in order to be of help in their local communities and contribute to their local economies. It is hoped the process being introduced in this regard will make a major difference.
The 2013 action plan for jobs will see us redouble our efforts to ensure that every Minister, Department and agency will make the creation of the necessary conditions for employment the number one priority.
Access to finance is a critical issue for small businesses. Last week we launched the credit guarantee scheme which will facilitate lending to viable firms on the margins of commercial lending decisions in accessing credit. We will continue to focus our efforts on ensuring that viable businesses have the tools available for them to allow their day-to-day operations to operate as smoothly and effectively as possible. The Government will continue to engage with the banks so we move to a situation where people can see a demonstration of an effective and working banking system operating in the nation's interest. The central focus of this Government is to get Ireland working again. It is the unifying goal of this coalition. In doing so, we are making sure we do not repeat the mistakes made in the past, and that difficult decisions are faced up to and taken now which will benefit generations to come. Eighteen months ago, we had the privilege of assuming office but with a public system in chaos, cast adrift and rudderless by the previous Administration. Through hard work, determination and belief, we have set the country on a new path to recovery. We have a long way to go and there are challenging times ahead. We have taken only the first steps to stabilise the economy. The next steps will be to strive on for growth and jobs. These will be the priority pillars for our Presidency in the first half of 2013. The transition from the old, failed economy based on property, banking and debt, to a new, sustainable economy based on enterprise, exports and innovation, will not be easy. However, I have every confidence that the Ireland and the people emerging from this period of crisis will be stronger than ever.
I am pleased to have the opportunity to contribute to this debate. In discussing the economy in this House, it is well past time for a bit of perspective and a lot more honesty. When they look to this Parliament, the Irish people are entitled to expect better than fairy tale economics and the politics of denial. We need to be up front with people about how we got into this crisis and what it will take to get out of it. It is wrong to peddle false solutions but it is right to be hopeful about the future. Ireland will emerge from this crisis. We will create jobs, we will improve living standards, we will create opportunities for our young people and we will move on as a country. These are the tests.
Economic recovery is not about statistics. It is about people and it is about a better life for families who are suffering from the loss of jobs or income, who are struggling to get by and to manage debt, or who have been separated from each other by forced emigration. Recovery for people is what matters most. This Government in which the Labour Party is a partner, has one overriding objective, to secure economic recovery. In the 19 months since the Government took office, important progress has been made. Our country is in a far better position now than it was at the end of 2010. We all know that more remains to be done, but we also need to be realistic and clear-sighted about what can be done.
Austerity is one of Sinn Féin's favourite catchphrases. We are constantly told by those who like simple slogans that the Government is pursing a policy of austerity. This is not the case. The Government's policy is not about austerity; it is about solvency. In November 2010, under the Fianna Fáil Government, we reached a point where no one would lend to the Irish State because after the property bubble, activity in the economy fell by 10% in two years. The deficit skyrocketed, and Fianna Fáil, with the support of Sinn Féin, guaranteed the losses in a broken banking system. This did not come from nowhere. Fianna Fáil is now trying to give us lectures on economics, when the reality is that it destroyed this country.
When a country cannot borrow money, it is a problem not just for the Government but for the banks in that country and for the companies with headquarters in that country, because lenders become unwilling to advance them money. The result is a credit squeeze which can have a hugely damaging impact right across the economy. Restoring the creditworthiness of the State is an essential prerequisite, not just for exiting the programme, but for maintaining a functioning economy. Of course, thanks to the bank guarantee brought in by Fianna Fáil and supported by Sinn Féin, the fate of the banks and the fate of the State were already deeply intertwined. Unwinding the damage done and reconstructing the banking system so it can contribute to recovery has been a central concern of Government-----
If the Opposition can point to a functioning, modern economy anywhere, whose Government and multinational companies cannot borrow money on the open market, then we are all ears. If the Opposition can point to a country whose economy can flourish without a functioning banking system, then I ask Members opposite to enlighten us please. If the Opposition can explain how we can continue to pay for valuable public services while continuing to spend far more than we earn, then let them lay it on the table. We can have all the discussions about austerity, but we need to be clear about one core fact: it we do not have control of our public finances than we cannot control our destiny.
I believe in public services. I believe in having good schools, good hospitals and safe streets. I believe in them so much that I do not want to hand decisions about those things over to foreign banks or lenders of last resort. The bottom line is that every slogan rattled off by Sinn Féin, every drum beaten by the mé féin brigade that calls itself an alliance, is about policies that take us backwards to the isolation that has been supported by some people who have opposed every single EU referendum since 1972.
Instead, this Government's strategy is about making progress, grounded in a difficult reality. The yield on Irish Government debt has fallen. While markets can always be expected to rise and fall, there has been significant improvement in the Irish position. Since the European Council meeting in June, yields on Irish debt have come in by about 1% and sentiment towards Ireland is improving in debt markets. It will take some time for that to feed through to the real economy but it is an essential component of what we have to do. The Government has always made it clear that there is no solution without jobs and growth and that financial stability is only a step on the way to that growth. That is why we have taken a series of measures to improve the flow of credit in the economy. The financial reform programme is based on the construction, from the wreckage of the bubble, of two pillar banks with capacity to lend into the real economy. At the same time, a series of measures such as the partial credit guarantee scheme and the microenterprise scheme have been put in place to help viable small businesses expand and to grow employment. The Government is currently examining insolvency legislation for small companies in order to facilitate the working out of debt for small and medium enterprises which are encumbered by large debts. The Strategic Investment Fund has developed a number of initiatives to support investment in new start-ups and is examining ways of investing in the restructuring of small business.
We are seeing a return to growth, driven by higher export-intensive activity by IDA Ireland, by our embassy network and by several other Government agencies. These activities have helped to transform the view of Ireland abroad. Evidence that this work is paying off is clear in the strong pipeline of investments in the Irish economy. Foreign investment has created over 9,000 jobs since March 2011. It is also particularly important to see the implications for construction employment of several foreign direct investment projects that have been announced in recent times. Irish small and medium enterprises have made important progress in developing new markets. In France, for example, Enterprise Ireland has supported double digit growth in Irish exports with particular emphasis on construction products and food. Export performance in general has been strong, despite the problems in the eurozone. The core problem, however, remains the domestic economy where consumption has been a drag on growth. The IMF noted recently, for example, that the savings ratio of 14% means that households in Ireland are rapidly reducing their indebtedness. The problem, however, is that the pace of paying down debt by the household sector as a whole, is a drag on growth. If the savings ratio were to come down by only 4%, this would add 1% to GDP.
The mortgage market is critical. It is vital, both on grounds of human decency and for thehealth of the economy that the banks start working through their distressed mortgages and begin offering restructuring arrangements to customers.
At the other end, new mortgage lending is necessary to ensure recent signs of a more positive housing market are maintained. Normalisation of the properly market is an important component of economic recovery, just as dealing with the position of people in mortgage arrears is important to confidence in the economy as a whole.
The Government has taken a series of measures to bolster domestic activity. The jobs initiative, with its particular focus on hospitality, the Gathering and the Action Plan for Jobs are providing a boost for activity in tourism. The modest jobs initiative has already provided a spur for growth, with 10,500 more people working in the tourism sector now than when the Government took office in March 2011. The stimulus package will also boost demand through investment in infrastructure. In addition, budget measures have been introduced to help bring normality to the property market and the National Asset Management Agency is making a €2 billion programme of investment in its portfolio. My colleague, the Minister for Social Protection, Deputy Joan Burton, has also introduced the JobBridge programme and is engaged in a major programme of reform to assist people on the live register in finding work.
No one argues that the rate of progress has been ideal, but it is wrong to claim no progress has been made. Ireland's position has significantly improved in the past 19 months, both in terms of its reputation abroad and the perception of its particular challenges. There is a much greater understanding of Ireland's position and the reasons we are seeking relief from the bank debt taken over by the State. In this instance, again, we need some perspective. There is no instant solution to this problem. The European Council conclusions of last June were a game-changer and Ireland has experienced substantial improvements in bond yields in the intervening period. The Government is not setting a timetable for the completion of the deal. We have been absolutely clear that we will work at this issue until we secure a result that is good for the country and we will do so in private. We have made good progress this week, with very positive discussions between Dublin, Paris and Berlin.
The various meetings have built on the hard work done day in and day out by our small but talented diplomatic corps and officials in the Department of Finance. There is constant engagement by officials and Ministers with our colleagues in Europe, including at formal meetings, on visits and in meetings of our political families. In the past two weeks, for example, I have been in Paris and I also attended a meeting with President Hollande in Brussels. I will be in Berlin on Friday. The Taoiseach had a formal meeting with the French President on Monday and was in telephone conversation with Chancellor Merkel on Sunday. The Minister for Finance, Deputy Michael Noonan, has also been meeting his counterparts. This is the constant work in which we are engaged to put forward Ireland's case. It is the patient diplomacy that will successfully achieve the result we need.
I do not know what speech I am reading at this stage. The Minister for Finance indicated he would outline how policies adopted by the Government were beginning to bear fruit. For many of those listening to his remarks, this fruit will be bitter. Deputies need only speak to members of their respective communities to learn about how Government policies are affecting their lives.
Speakers have outlined to the House what they expect to emerge from the deliberations at European level. While we all hoped the recent summit would provide greater certainty, it sent mixed messages and created greater confusion. Uncertainty can have a disastrous effect on the markets and it will not help Ireland to return to the markets in 2014. Deputies listened to positive spin about the recent European Council meeting. As with everything else, it is possible to take something positive from the summit. We were not sent to the bold boys' corner at the back of the room, for example, and it appears some discussions on Ireland took place at the meeting. While I listened carefully to the Tánaiste highlight positive aspects of the summit, it is difficult to glean what these were and certainly most of those who are worrying about how to make their next mortgage repayment will not have derived much comfort from it.
With the Government set to announce a budget in little more than one month, people are worried that it will be heavy on austerity. They are concerned about how it will affect them and their families and wonder if it will instil hope. Given their experience of previous budgets, however, most of them are expecting more of the same. I genuinely hope the Government will do an about-face and recognise that austerity is not working either in Ireland or across Europe.
If the Minister of State does not understand the genuine concerns people have about what is coming down the line, he is living in cloud-cuckoo-land. One hears about those who live in bubbles and do not have a clue about what is going on in the real world. The Minister of State should be familiar with what is happening from his constituency, but he appears to be living on a different planet.
The most notable measures taken by the Government have been massive and crippling cuts in health, education and social welfare. The cruel cutbacks in the number of home help hours and health care packages show the most brutal side of the Government's austerity measures. These services have been cut to the bare minimum. The proposed cutbacks in the 2013 budget are not only a massive insult to some of our most vulnerable citizens but will also place lives at risk. The House recently debated how cuts in home care were affecting families. We heard, for example, that some helps were being given 15 minutes to complete home visits. I do not know how one could dress or help an elderly or vulnerable person in such a short time, but perhaps a Government Deputy with more experience in this area than I will explain how it can be done. All the home helps with whom I have spoken are extremely concerned about how the proposed cuts will affect them.
The Irish League of Credit Unions recently published its latest "What's Left" income tracker which shows that 1.3 million adults only have €50 to spend after paying essential bills each month. Many families are in difficulty, yet approximately €20 billion has been given to the banks on the Government's watch. Workers' hard-earned tax money is being spent on bailing out banks and paying a private debt they did not create or want to have placed on their shoulders. Many still do not understand how private debt was transformed into taxpayers' debt because no explanation has been provided for how this scenario came about.
The Government's procrastination over securing a deal on the debt is hurting ordinary families and households.
One of the most important jobs for the Government is to ensure private banking debt does not continue to impoverish taxpayers. We need a deal on our debt very soon, not rhetoric or unclear statements from EU leaders. We need proactive measures coming from Europe. We need a real deal that will make a difference to struggling workers and their families across Europe.
The Government must also create a stimulus package for the economy which will create jobs and facilitate investment. There must be an increase in the jobs stimulus package around Europe because it is not enough. If those leaders were focused on what is happening in their own countries they would realise that the jobs stimulus package is not working. Unemployment and emigration are at levels not seen for decades. The old policies and the old approaches are not working. New thinking, new policies and a new economic programme are required.
There are 435,000 people on the live register. That is unacceptable. The figure would be even higher but 87,000 people emigrated from Ireland last year alone. That is nine people every hour for 2011.
Sinn Féin recently released its jobs document which contains a suggested €13 billion stimulus, a jobs retention fund and a series of other measures to assist young people, assist struggling businesses, foster entrepreneurs, grow local enterprises and co-operatives, the use of State assets for job creation, rejuvenate the State enterprise sector and support the agri-food sector. This €13 billion stimulus would create an average of 156,000 immediate and long-term jobs, according to the ESRI. It would be funded from €5.8 billion in discretionary funding in the National Pensions Reserve Fund, €1.534 billion from the European Investment Bank, €3 billion in incentivised investment from the private pensions sector, and we would not cut the €2.6 billion the Government will cut from its capital budget programme.
On a political and practical level the austerity policies being pursued by the Government and the troika have failed the economy and they are failing across the European Union. Sinn Féin has raised the stimulus proposals with the troika. It has said it has not opposed the stimulus. In fact, increasingly, it appreciates the need for it. Its concern is around the way it is funded. It would rather the State spent resources on writing down our debt but it has not ruled it out, and realpolitik must rule it in. I do not envisage this stimulus being an issue with the troika as every report shows its austerity approach is not working to recover our economy. The irony is that it saw the need for it before the Government.
Every sensible economist in the world is pointing to the need for European economies to grow, not contract. We cannot have growth through contraction. We do not need to ask the economists but it is clear that we need jobs in this state. We have a well qualified and hard-working workforce which is the envy of many countries, yet the Government is standing over an unemployment rate of nearly 15%, with long-term unemployment at a shocking 60%. If the jobless numbers are allowed to grow revenue will continue to decline and social welfare will continue to rise. Unemployment paralyses an economy. According to the Government figures each person who is unemployed costs the State in the region of €20,000 directly through money lost in PAYE and social welfare costs.
In addition to the impact on tax and welfare, fewer people working is fewer people spending in the economy and fewer people paying their mortgages. It is a recipe for emigration, poverty, social inequality and rising crime. We must get people back to work, and what I am hearing is that jobs are people's major concern. The Government is failing to deal with that problem. We do not see any clear vision in regard to that entire area. That failure to manage the economy, plan for challenges ahead and properly regulate has left us where we are today, with so many people emigrating.
I am surprised to see the Opposition benches so sparsely populated, given all the bleating they do about the economy.
Over 18 months ago the people of this country got a new Government but the same old economy. It was an economy in deep recession almost submerged in debt, shedding workers by the thousand and crippled by multiple policy mistakes made over a decade. The new Government also inherited an economy being directed from outside, in particular in respect of the major fiscal parameters. Most people understand that a new Government cannot banish the past and start with a blank sheet of paper. The wreckage must be confronted, the economy must be recast, the public finances put on a sustainable path and the banks caused to start lending again. The process is a painful one, especially for some of the people.
The economic crisis that we have inherited is the most serious since the Second World War. I am not sure that this is a truth universally acknowledged. A banking collapse as well as a global slump is the perfect storm.
It is true that the economy has returned to growth but it is not experiencing the growth rates anticipated by the programme for Government. It is difficult to grow an economy as open as ours when our trading partners are themselves contracting and when the eurozone remains in some tumult. Stability in the eurozone, together with the return of the public finances to a sustainable path and a functioning banking system, will see the economy grow again. We are more competitive now and we continue to enjoy the competitive advantages well travelled in our industrial strategy. However, there is not yet stability in the eurozone although the very significant progress of recent months has to be acknowledged. It is crucially important, with the minimum of delay, that the refurbishment of the euro architecture is brought to finality. It is imperative that our banks return to the practice of skills that became redundant during the property bubble, in particular, skills on how to assess risk, lend to enterprise and, especially, to the SME sector.
As the Taoiseach expressed it in Paris, a European solution was imposed on Ireland but without European sharing. It is only important to history to establish if this was allowed to happen because of the level of dysfunction then engulfing the Irish Government. The fact is it did happen-----
I was making the point that a European solution had been imposed on the Government but not European sharing. It is a matter only for historians whether this was allowed to happen because of the level of dysfunction engulfing the Government at the time. The important fact is that it did happen and it was unjust. Explaining that injustice to our EU partners has taken up so much time for Ministers and senior officials. The opportunistic noises at home have never been helpful. I am looking forward to hearing some opportunistic noises from the only backbenches which are populated.
Turning to more specific actions, the widespread availability of high speed broadband is a key requirement in delivering future economic and social development. With basic broadband services now widely available, the challenge is to accelerate the roll-out of high speed services. The Government's recently published national broadband plan aims to radically change the broadband landscape by ensuring high speed services of at least 30 Mbps are available to all citizens and businesses, well in advance of the European Union's target date of 2020. Speeds of 70 to 100 Mbps will be available from the commercial market operators for more than half of the population by 2015. At least 40 Mbps and, in many cases, faster speeds, will be available to at least a further 20%, or possibly even 35% of the population, during the lifetime of the Government. A minimum of 30 Mbps will be available for every remaining home and business during the lifetime of the Government.
The initiative under way to equip all second level schools with high speed broadband by 2014 is transforming the learning environment. This will enable students to acquire and engage with the digital world which is so crucial to the modern economy. This infrastructure is critically important for business growth and development, as well as many other facets of modern society, including entertainment, education, e-health, and e-government. Apart from providing the infrastructure, it is becoming increasingly important to stimulate demand for broadband. In this regard, I intend to publish a national digital strategy by the end of the year. A particular target will be small enterprises and the small and medium-sized enterprises sector generally, with the aim of helping these firms maximise the opportunities available from building an on-line presence.
One of the immensely valuable aspects of today's digital switchover not much mentioned is the freeing up of important spectrum which will be auctioned and greatly enhance broadband quality. A figure of €185 million has been pencilled in to the national accounts for 2012. The spectrum auction to be conducted by the regulator could realise somewhat in excess of that figure, but it will take another month or so before we have an indication of the real figure.
Regarding the energy sector, it is clear Ireland is very dependent on imported sources of fuel. Imported fuel is subject to price volatility and there is a compelling security of supply case that we should develop the large renewable energy resources we have available here on the island. The fundamental requirement of being able to develop renewable resources at scale is to be able to access a much larger electricity market. In that regard, increased interconnection with the United Kingdom offers us the opportunity to access a much larger market which facilitates the development of our renewable energy industry. Renewable energy sources development on that scale will encounter technical, logistical, planning and environmental challenges. In meeting these challenges the potential opportunities could be very considerable for exports from Ireland and could provide real benefits and economic opportunities for the regions where the renewable resources are located.
Construction job opportunities will arise as new renewable energy resources generation plants are being built. Additionally, such generators are commercial businesses which would form part of the rate-paying base. At a time when local government finances are under pressure, such developments are and will be a long-term and stable source of income for local authorities. Typically, such generators would pay around €7,000 per annum per megawatt of installed capacity in commercial rates. Our aim is to create a low-carbon economy which will deliver benefits in terms of growth, innovation, competitiveness, job creation, energy security and environmental quality. Achieving these objectives will provide us with the opportunity to transform the economy and the regions.
Our energy infrastructure is crucial for our economic and social development. Our ability to attract and retain foreign direct investment and sustain enterprise depends on guaranteeing an energy supply at competitive cost. Rebuilding the economy, delivering regional development, creating jobs and growth, as well as realising the economic potential of our renewable energy resources, will all be facilitated by investment in our energy infrastructure. Investment in the national networks will underpin economic development not just at the national scale but also regionally. Rural and remote areas particularly need stronger electricity infrastructure to provide the necessary facilities for economic activity.
On 18 July I published the Government’s policy statement on the strategic importance of transmission and other energy infrastructure. This policy statement reaffirmed the Government's commitment to the imperative need for development and renewal of Ireland's energy networks to meet both economic and social policy goals. The key elements of the statement are that the planning process provides the necessary framework for ensuring all necessary standards are met and that comprehensive statutory and non-statutory consultation is built into the process. It also acknowledges the need for social acceptance and the appropriateness of exploring ways of building community gain considerations into project planning and budgeting. It accepts delivering long-lasting benefits to communities is an important way of achieving public acceptability for infrastructure. It also provides that network companies are mandated to plan their developments in a safe, efficient and economic manner and are also required to address and mitigate human, environmental and landscape impacts in delivering the best possible engineering solutions.
The major investment under way in the high voltage electricity transmission system is under EirGrid's Grid 25 programme, the most important such investment in the transmission system for several generations. While the Government does not seek to direct infrastructure developers to particular sites or routes or technologies, it endorses, supports and promotes the strategic programmes of the energy infrastructure providers, particularly EirGrid's Grid 25 investment programme, across the regions. Such investments are very much in the national interest, not least in the current economic circumstances. It is crucial these investment programmes are delivered in the most cost efficient and timely way possible on the basis of the best available knowledge and informed engagement on the impacts, as well as the costs of different engineering solutions.
In addition to EirGrid's Grid 25 programme and other network and connection reinforcements, the network investment programmes by ESB Networks and Bord Gáis Energy in recent years have given us energy networks which have met the test of severe weather episodes and record peak demands. Ireland's energy networks compare very favourably with those in other countries in terms of safety and resilience. Continuing the steady level of development and renewal of the networks is essential to ensure Ireland's energy system is fit for purpose, safe and secure, and ready to meet increased demand.
Another critical issue in terms of security of supply, lowering costs and reducing our carbon footprint is energy efficiency. The Sustainable Energy Authority of Ireland administers several schemes under the better energy programme, including better energy homes, warmer homes and workplaces. Exchequer funding of €76.146 million has been allocated to the programme in 2012 which is projected to deliver 567 GWh, gigawatt hours, in energy savings this year, which would be the equivalent of an energy spend of €34 million. These measures have also supported a large number of jobs, alleviated fuel poverty and provided healthier and more comfortable homes and workplaces for thousands of people.
I am committed to the further development of our communications and energy infrastructure markets. This will play a key role in driving forward the wider economy and fully realising the recovery towards which we are all working. I regret none of my friends from Fianna Fáil is in the House. One of their young Members in the Upper House today tweeted that I had made a speech without mentioning them. Regrettably, I have had to repeat it here. However, I do not want them to take this as a guarantee for the future.
I wish to share time with Deputy Donnelly and we will take five minutes each.
I note the Minister's jibe about opportunism. Sometimes I wonder whether the Government could have taken a lesson from those whom it accuses of opportunism and taken certain opportunities on various occasions when it could have during this short Dáil, especially in light of the story that broke yesterday on the report on pensions. The Government decided to introduce the pensions levy more than one year ago. I suggested - it was an opportunistic suggestion but a practical one - to the Taoiseach that the way to get rid of this levy was to take the money out of the industry rather than the fund members. The Taoiseach said that it was a good idea, that the Government would look at it and that it was always keen to hear constructive suggestions. That sounded reasonable to me and an entente cordiale developed between the Government and the Opposition which was welcome in a time of national emergency. What did the Taoiseach do with that suggestion? Eventually, it found its way to a committee. That committee took considerably more than one year to report, but it reported yesterday. It found exactly the facts as enunciated in this House more than a year ago - that is, that the industry was ripping off members of pension funds.
The report echoed something found out by George Lee more than a year ago in a programme he presented entitled "Future Shock", which found once again that the industry was ripping off pensioners. Instead of acknowledging this at the time, those in the Government decided that there was a big pot of money, amounting to €80 billion, and that they would put their hands in it and take money off pensioners at a rate of 0.6%. If the Government is serious about not being captured by industries such as the pensions industry, it would have acknowledged at the time that investment managers, bankers, lawyers, auditors and brokers had their hands in this pensions pot. The Government might as well have put its hands on these actors rather than taking the money from pensioners in the way it did. The naked figures from the report yesterday are startling and illustrate to the Minister, to me and to others that although there is a crock of gold in the pensions industry, it is all being taken by the top dogs in that industry, and this is continuing. There is a crock of gold, but for some reason the Government is captured by those in the industry and is taking no action whatsoever.
Investment managers are possibly the most overpaid group of people in the country and they are being paid for doing something which they do extraordinarily badly. Pension funds in Ireland have had the worst performance in the world in the past decade, yet pension funds continue to be ripped off. One figure from the report yesterday stated that an average person putting €250 per month into an occupational pension fund would get, over 30 years, a return of approximately €10,000 if there were not so many people dipping into that pot. Instead, such a person gets €6,900 per annum. The difference is going to the greedy fat cats by whom this Government and successive Governments have been captured.
It is simply a measure of the fact that those in government cannot possibly take decisions without referring first to the Civil Service. Some of the people on the committee to which they referred this task were people by whom they have been captured. Two of these were top civil servants, who enjoy a sacred level of pay and working conditions, which the Government seems reluctant to attack. Another was the chief executive of the Pensions Board. Why, in the name of God, when the Government was looking into reform of the pensions industry, did it approach the chief executive of the Pensions Board to be an arbiter of the process, when he has been in charge of this rotten industry for so long?
The Minister said he looked forward to opportunistic noise from this side of the House, but in his new way of doing politics he has chosen to leave the House straight away. Obviously he has had enough. I confess to not having the Minister's county council experience, which he seems to think necessary to understand macroeconomics, but I will do my best nonetheless.
I have only one message to get across to the Government in preparation for 2013. The regressive nature of last year's budget cannot be allowed to happen again. Analysis of last year's budget by the ESRI showed that there was a perfect correlation between household income and how much pain a household was required to take. Unfortunately, the correlation was as follows: the less money one had, the greater the share of the burden the Government asked one to carry. This has been independently verified by the ESRI. There is a perfect correlation between having less and being asked to pay more by the Government. Last year, a single parent with three children was asked to stump up €4,600 while an individual earning €200,000 was asked to stump up €100. This is what the Government did last year by choice. It made a lone parent with three children contribute 46 times more to correcting the deficit than a high earner earning €200,000.
Are we surprised to hear that one in ten children in our country are living in food poverty? This is one of the most developed nations on earth and a country that still has one of the highest average incomes in the world; the fact that it allows one in ten of its children to suffer from food poverty is nothing short of disgusting. Not only did last year's budget not alleviate this, it made it happen. I do not say this lightly or for effect, despite cheap jibes from senior Ministers. Every Labour Party and Fine Gael Cabinet member should feel a deep sense of shame for agreeing last year's budget.
I suggest two things to try to avoid such an occurrence this year. An impact analysis of the proposed measures should be carried out before they are announced. We need a poverty impact assessment. This is standard practice in other countries. We need to know how many more Irish children will be in food poverty after this budget. We need to know how many more families will fall below the poverty line. We need a gender impact analysis. When the vast majority of decision makers are men, policies tend to be unbalanced. Eighty-five percent of Members of Dáil Éireann are male and 88% of Cabinet members are male. The statement of the Minister for Finance, Deputy Noonan, on the budget earlier today is a perfect example. In his contribution on the labour market, the only sector of the economy he referred to was the construction sector. The vast majority of jobs which will, I hope, be created by the €17 billion capital expenditure programme will be for males. This is despite the live register figures showing that the greatest increase in unemployment has been suffered not by men but by women.
I propose that the Government consider more investment-led options. Investment capital can be raised from a range of sources. We have existing cash reserves which could be used. We can target taxes to raise some of the funds. We could have sensible expenditure savings - for example, a pause in increments, for which €170 million is factored into the budget this year.
We could extend the troika correction timeline. Having met them last week, I believe they would be open to a longer programme correction. We could invest this in human capital and in job supporting infrastructure. There has been far too much attention directed to supply-side initiatives.
In July 2006 there were 170,000 signing on. Six years later that number had increased by 300,000. The issue here is not people unwilling to work or who need increased incentives to work. People are desperate to work and solving that requires addressing the demand side. It requires more rigorous investment. It is not acceptable for these people to be written off. The IMF forecast for 2017 is that Ireland's employment rate will be 11%, that is, 325,000 unemployed. It is not acceptable for us to view these as collateral damage of the crisis. It is not acceptable to continue to refuse to hire new teachers in the name of the Croke Park agreement. It is not acceptable to award €410 million in increments between the previous budget and this one, and claim there is only €90 million available for a micro-enterprise fund. It is my hope that the Government takes a very different approach to Budget 2013 and that it will begin finally to start putting the citizen ahead of the health of the balance sheets of the banks.
I welcome the opportunity for us, as representatives of the Irish people, to discuss the state of the economy. I presume we are having this debate because we have been in recession for the last four years.
The previous Governments, between 1997 and 2011, were reckless. A dictionary definition of "reckless" we looked at suggests wild carelessness and disregard for consequences. This describes perfectly the behaviour and standards of those Governments, mainly dominated by Fianna Fáil aided by the now defunct Progressive Democrats and the Green Party.
There were others. Our banks lacked any sense of morality or even decency in their quest for profits where bonuses were paid on turnover and deals done. This led to a kind of a rush for a pot of gold buried under a Celtic rainbow that was as unsustainable and as false as the myth, helped along by our regulators who did not have the integrity or guts to call stop. We now see the results, with over 250,000 jobs lost between 2007 and 2009. The unemployment rate in 2008 was 7.4%. In 2012, it is 14.4% which, regrettably, does not include the thousands of our young people who have sought to seek work abroad.
At the end of 2011 the national debt stood at over €119 billion or almost €26,000 for every man, woman and child in the State. These figures are broken down as approximately €60 billion in borrowing to cover the costs of mismanaging the State so abysmally and another €60 billion to cover the deficit in the accounts of our financial institutions, of which €30 billion has been to cover the losses of the former Anglo Irish Bank or €6,500 of debt for every man, woman and child in this country.
The Government has found itself in the most difficult position ever faced in economic terms in this country and bound by the agreements that the previous Government entered into before running to the hills. I mention the bailout agreement and the Croke Park agreement, both of which are necessary and have restricted the hands of the Government in the options that it can take to bring the country back to being a sound economy.
At a time of record growth, the then Government should have had restrictive policies. They should have cooled the jets a little, but did not have the ability or the wherewithal to implement the most basic economic principles. At a time of recession, the Government should now have the ability to invest but, as a result of the previous Administration's waste, it simply does not have access to the funding necessary to carry out those programmes.
I am very disillusioned by the disjointed opinions expressed by those occupying the Independent seats in the House. They continue to oppose many new revenue generating schemes going as far as advocating not paying legitimate taxes that were voted for in this House. One must wonder whether they accept the basic principles of the democracy in which we exist and of the representation that they are honoured to hold to sit here in this House. They also oppose every cut on the expenditure side. They oppose every possible move to rectify the situation. It is hard to understand. We have not heard one credible contribution as to how we can go about providing a secure Ireland in future for citizens.
We cannot borrow money if we cannot pay it back. Sometimes Deputy Stephen Donnelly talks about macroeconomics. Sometimes he talks about microeconomics. He talks about a country operating the same as a household. Sometimes the same principles apply. One must cut your cloth to fit the measure. The situation we have inherited, according to the 2012 Estimates, is that we as a Parliament on behalf of the people will spend over €55 billion to run the country. We are raising only €38 billion. We are overspending by almost €3,900 for every single person in the country.
We have an unemployment rate of over 14% but also an employment rate of 86%. For example, in my constituency of Cork South-West the figures show there was an increase in population of over 6,000 persons between the recent census and the previous one. The amount of people who are at work remains the same and one could easily extrapolate that maybe 6,000 emigrated. The critical point, if one examines the figures, is that 2,500 lost their jobs in the construction and retail sectors while there was an increase of 2,200 jobs in administration and public services. That happened only in one small sparsely populated constituency in this country and if one extrapolates it to every constituency in the country, one sees the problem of a basic unsustainable characteristic in the economy that must be addressed. We cannot afford to allow this trend to continue where the public sector is growing at an unsustainable rate while the number employed in the private sector is contracting at an alarming rate. This shows at the local level how the public finances at a national level are in such a negative state, and that is what needs to be fixed first.
We need to recreate an economy that will encourage enterprise that will create sustainable jobs throughout the country. The Taoiseach and the Ministers have this as their first priority and I note this would be the wish of every Member in this House. There have been recent announcements by Irish companies such as the Kerry Group and in my constituency, multinationals such as Eli Lily in Dunderrow near Kinsale, achieving tremendous results in different sectors and providing different opportunities for the people.
We need to encourage those who want to work rather than dependence on social welfare payments. We need to increase the mobility of those taking up short-term or temporary employment who are being deterred if it take up to six weeks to regain their social welfare payment following the cessation of their work. Unfortunately, in many constituencies where there is seasonal work that is a real factor. We need to examine the possibility of fast tracking the bureaucracy associated with these applications for social protection when they did take up an employment opportunity even if it was of a temporary or seasonal nature. Everything helps. We need to examine the poverty layer that is perceived in moving from a social protection scheme back to employment.
I ask the Minister for Social Protection to examine the operation of the back-to-education allowance. For example, I was recently contacted by a constituent who had a third level qualification in the construction sector and who had been employed for eight years as an architectural technician. She has been unemployed since 2008 and has been informed that the software has moved on so far that she would no longer be qualified in that sector. She sought a place on a back-to-education scheme to train as a technician with the guarantee of a job once the course had been completed.
However, because she would be taking a course at the same FETAC level, she was not allowed. She is still on jobseeker's allowance. I ask the Minister to examine the possibility of allowing retraining when a person's original qualification is out of date or the prospect of employment in his or her original profession is non-existent. We must be more flexible with these incentive schemes.
We also need to look at child benefit and its relationship, for example, with other social protection schemes such as family income supplement. The latter is not taken up enough and would possibly encourage more people to consider working. Our Ministers must make hard choices every day of the week. We have inherited the Croke Park agreement, which is a delicate balance between looking after the interests of those working for our State and reducing our deficit. I would like to encourage those in the public service to make a contribution to rebuilding our economy. I note a report carried by The Irish Timesthis month on EUROSTAT data which indicates that Irish employees spend an average of 38.5 hours in the workplace per week, which is two hours less than the European average. I also note that those in the education sector have the shortest working week, at only 31.5 hours, which is six hours below the EU average. If we are to be competitive again, perhaps we will have to consider working a little bit harder or a little bit longer - maybe an hour extra per week. I note the success of the Minister for Justice and Equality and the staff in his Department in reducing the processing time for citizenship applications from two and a half years to nine months. It would be great to see similar improvements throughout the public sector, which would prove that the Croke Park agreement is in the interest of all of our citizens. Reform can happen.
There are some parts of the economy in which confidence and trust are real and tangible characteristics. They are as tangible and real as regulation and investment. However, the noise that we constantly hear, sometimes in this House, on the streets and in the media, with some notable examples in The Wall Street Journal recently, do no service to this country. If we are to get the retail sector back on its feet or the construction sector back to a sustainable level, we must increase our confidence and belief in the ability of our people to get the economy back in hand. We must believe that we can get the country up and running and back to work.
I am somewhat disappointed at the nature and tenor of the debate so far. Members of the Government parties are falling back on the old routine of attacking Opposition members, blaming everybody and not dealing in a calm and insightful way with what we are currently experiencing. To hear Deputy Noel Harrington speak about the honourable Independent Deputy as "ranting and raving" sums up the Government's approach. If an Independent Deputy or anybody else who is not in Government says anything that is mildly critical-----
I actually heard the Deputy speak and thought he spoke very constructively. One might not agree with everything he said but he made some good suggestions. His contribution was described as a rant. I heard the Tánaiste earlier, still in election mode 21 months on, blaming Fianna Fáil for destroying the country. It was almost a repeat of the election debates, with him talking about "Frankfurt's way" and "Labour's way". He was giving out about the bank guarantee, claiming he voted against it. He knows his Taoiseach voted for the bank guarantee. His own party voted against the bank guarantee, not because of the guarantee itself but because he felt the Government would have too much power and control over the banks. He wanted to nationalise the banks but there is no great difference between nationalising the banks and guaranteeing them. Their debts still have to be dealt with either way.
An awful lot was said before the election and a lot of mythology was peddled and continues to be peddled. The bottom line is that the bank guarantee was introduced because of liquidity issues, not only in Irish banks but across Europe and the United States.
I ask the Deputy to allow me to speak. I have only ten minutes. With the greatest of respect, please allow democracy to take its course and permit people to speak.
If Deputies read Alistair Darling's account they will see that the very same thing was happening in Britain. He received a telephone call one afternoon informing him that Royal Bank of Scotland, RBS, one of the largest banks in the world, was about to go bust. Why was that the case? It was because of a liquidity crisis across the entire banking system in the developed world. In the aftermath of the collapse of Lehman Brothers, banking confidence was shattered, banks stopped lending to each other and we had an enormous crisis. That was the initial manifestation of a much deeper crisis, which became a solvency crisis subsequently. These are the issues and, as Professor Honohan said in his analysis of the bank guarantee, something substantive had to be put in place to avoid a further catastrophic hit on the Irish economy over and above the hit that resulted from the general economic collapse in Western developed economies. I agree we made contributions to the problem in terms of domestic policy, but what was interesting was the Tánaiste's claim that the Government is rescuing the situation. He basically opposed every single item of the programme he is now enthusiastically endorsing for three or four years before he entered government. The Tánaiste fought tooth and nail against every single taxation measure that was proposed in this House, as did the Taoiseach and the Fine Gael Party. They also opposed every cut and followed every lobby group wherever it wanted to lead them. The Tánaiste made commitment after commitment, as we know from the debate about Roscommon hospital and so on.
Anything to do with fiscal consolidation was opposed and yet now, one year on, hey presto - this Government has rescued everything. I wish to remind the Tánaiste that €21 billion of the €30 billion consolidation of the public finances was carried out by the previous Government and he opposed it tooth and nail.
The European monetary system did not work. The euro did not work. This was never an Irish crisis on its own. We know that now and to suggest that it was is dishonest. I urge Deputies to read Kevin Rafter's book, which is good in terms of explaining the inner workings of the Fine Gael operation and how its members had to label things. The mantra was that this was a Fianna Fáil banking problem and they had to keep saying that, no matter what. They had to keep saying it on every television and radio programme. That is fine; it is the way things are in elections. However, I did not expect it to continue 21 months on. The situation is serious.
One of the reasons I called for this debate was that the reports from the ESRI, the Central Bank and the Irish Fiscal Advisory Council are all casting doubt on the capacity of the Government to see through the programme accurately. When my party put forward amendments to the Fiscal Responsibility Bill to require that the Government should at the very least respond to opinions from the fiscal council, they were voted down by the Government. There has been much talk about learning lessons from the crisis. The establishment of the fiscal council was supposed to be one such lesson, but we are not giving it any teeth or allowing its opinions to have any impact on public policy formulation. We may not like the observations of an independent fiscal council but the very least it deserves is a studied and considered response from the Government of the day. For the Taoiseach to glibly come into the House and say that we are not bound by that, with a wave of the hand, and dismiss an independent fiscal council is not healthy. Nor is it in the long-term interests of the country. In Sweden-----
That is symptomatic of the Government's approach to the wider economic situation, and that situation is not healthy, irrespective of what figures one looks at. I expect that the next report from the troika will be somewhat more nuanced than the previous ones. Strictly numerically, we are on target, because of the work of the previous Government. The current Government has followed through on that and has introduced one budget so far, involving €3.5 billion. The main area in which I would fault the Government is its approach. It seems to be going for the line of least resistance. There is no radical reform taking place that will have a sustained influence on Government finances.
The Government took a hodge-podge approach to the budget in the hope that economic growth would take care of our problems. The economy is not growing at the rate predicted, however, which means the targets are not materialising. That casts a shadow over our sustainability. Our EU partners, who continue to hear a confused message, ask us why we are looking for a reduction on bank debt if we are performing so well.
The troika's target on mortgages has been missed, the Personal Insolvency Bill is being delayed and those who desperately need help with unsustainable debts are left in a financial limbo. It is also a poor Bill. Second quarter GDP is flat and it avoided slipping into recession this year by a mere €3 million. Consumer spending and investment is down by 18%. The labour force has shrunk by 30,000 in the last year. We have a huge problem in the domestic economy and the measures implemented by the Government have been ineffectual. The 430,000 people who are on the live register will be taken aback to hear the Government's claim that it is 95% on target with the jobs action plan given that it has had no impact on the numbers unemployed.
The stimulus plan was disappointing. We calculate that the €2.25 billion in additional spending is being spread over seven years, which averages at €320 million per annum. That is a fraction of 1% of GDP. The Government cut capital expenditure by €750 million this year and a further €550 million next year. It is not making the cuts to current expenditure because wants to avoid as much pain as it can but if it is genuine about a stimulus plan it should maintain the capital programme by investing in school building, summer works and other projects that would stimulate a measure of employment. We estimate that last year's cuts to the capital programme cost approximately 8,000 jobs. It could demonstrate its commitment to address the jobs crisis through the capital programme.
I welcome the Taoiseach's statement on the debt issue with Francois Hollande. He stated that Ireland is unique because the European position was imposed on it and the Government did not have the opportunity to burn bondholders. It was the first time he admitted in a calm and non-partisan environment that the bailout was imposed by the European institutions. Despite the promises by Fine Gael and the Labour Party to burn the bondholders -----
The Government did it until the most recent of times. What is even more incredible is that it paid back those who bought the bonds at a significant discount. The Taoiseach's assessment was correct but that did not suit the message that had to be articulated during the election campaign.
It is noteworthy that the Minister of State's comment on "Prime Time" that the debt is unsustainable directly contradicted the view of his own Department. In May 2012, the Department produced a document, The Irish Economy in Perspective, which stated that our debt is sustainable.
How can he expect Angela Merkel or the Dutch and Finnish Prime Ministers to address the issue of our debt if the Department of Finance states that it is sustainable? The Government should at least get its thinking in sync between the politicians and the Department in regard to debt sustainability.
I welcome the opportunity to speak in this debate on the economy as the Government prepares to introduce a difficult budget. I acknowledge the fear and concern that exists around the country about what will be in the budget. People need a long-term roadmap which would allow them to make decisions about the level of spending that is sustainable for them on an individual basis. That certainty would release some of the additional spending which is critical to our recovery.
I cannot let the previous speaker or the right honourable Member from Dublin South, Deputy Shane Ross, emerge unscathed given the comments that they made. Deputy Shane Ross lamented that the Government failed to take on board his suggestions on the pensions industry. It is not that long ago that he was a cheerleader for disgraced bankers, whom he lauded as role models for business in this country. I commend the Minister for Social Protection on her initiative and hope it is acted on in the context of the budget. Sometimes the shrill announcements from high on the Opposition benches disappoint me considerably because the Members opposite know better. It is not always easy to appeal to the populace if one takes a rational approach in politics.
Deputy Micheál Martin did not offer a single positive suggestion on how the Government might frame the budget. The banking guarantee was marketed to the last Dáil as a means of addressing liquidity. The problem transpired to be insolvency but the guarantee would not have been extended to all the institutions if the Government had done its homework. That is why we are facing our current difficulties.
I agree with the Minister of State, Deputy Brian Hayes, that the level of private and public debt is unsustainable. We need a deal and every effort is being made by the Government through the diplomatic corps and at a political level to secure that deal. The critical timeframe for the promissory note and the Anglo Irish Bank debt is the first quarter of next year but shortly thereafter we also need a deal on assistance towards the cost incurred by the State. Our banks may not be functioning well but they have been recapitalised. We need some acknowledgement of the hit we took for the eurozone team. I hope the Government is conscious of that timeframe.
I confess to oscillating on occasion between despair and optimism in terms of where we are going. This is understandable, given the roller coaster we have been on in recent years. My colleague, Deputy Harrington, referred to the fact that some 250,000 jobs in the private sector were lost between 2008 and 2011. All of the associated human carnage inflicted on families the length and breadth of the country constitutes a severe body blow, but allied to this is the debt associated with bank recapitalisation and we have some notion of the extent of the challenge confronting us. This challenge is unprecedented, even in the context of the challenges faced by those who founded the State. The economic challenge facing us is unprecedented in our history.
There are indications that we are turning the corner. In 2011 some 16,000 additional people were working in the private sector. In the context of public services, it is important to remember that the engine that drives the economy is the private sector. It pays to enable the State to deliver public services. We need to get the economy working in order that private sector companies can respond, create jobs and wealth and pay taxes, which taxes may be invested prudently in public services such as education, health and social welfare, etc., which are critical to a normal functioning democracy.
There are signals that we are recovering. In 2011 some 6,000 foreign direct investment jobs were announced by IDA Ireland for the first half of 2012. Such announcements are an indication that we are recovering internationally and that we are regaining the confidence of outside investors. However, because of the nature of the economy, we need the international market to pick up also. This is an exporting economy and we need export markets. Therefore, the health of the eurozone in recovery is critical.
I see a critical road block for Government investment in job creation in the construction sector owing to the dormant status of the industry. Most people associate the construction industry with housebuilding, but that is in the past. The industry will never recover its position. However, Governments also provide for critical investment in industrial infrastructure such as advance factories. In key areas of the country such as Limerick, Waterford, Galway and Cork city there is very little, if any, industrial infrastructure available for showcasing to attract foreign direct investment. It is in this area that NAMA needs to recapitalise the construction industry. It needs to provide working capital to enable this to happen and allow the industry to get on with providing the necessary infrastructure in order that IDA Ireland can market these locations as being suitable for inward investment. Amber, if not red, lights should be flashing in the Department of Jobs, Enterprise and Innovation and the Department of Finance in this regard in the context of NAMA and job creation. We are sleepwalking into a difficulty that needs to be addressed urgently.
With regard to the reform agenda, I am not happy with the pace of reform. We had a welcome announcement last week in the context of reform of local government. However, reform needs to be embraced by all Departments. One area in which reform is crucial to the recovery of the country is the education system. We need to be much more ambitious with regard to the subject choices we offer in schools, primary schools and teaching of languages and post-primary schools and the teaching of the sciences. We need to look at the roll-out of educational infrastructure, particularly in provincial areas in which we have a number of schools building little empires, when instead the Department should be driving a programme of amalgamations, providing for greater subject choice and much improved school infrastructure. It should be more proactive in this regard.
I wish to address an issue that is causing significant difficulty in provincial Ireland, namely, social welfare fraud. An employer came to my constituency office last Friday and related a story to me which does not involve an isolated case. I do not want to use it to undermine the bona fides of unemployed persons, for whom the current rates of payment offer no bed of roses and who want to get back into the workforce as quickly as possible. However, we must tackle this problem in order to be able to make adequate provisions. In this context, I have questions about the current rates of payment for the unemployed. Take, for example, a married couple with two dependent children who receive €370 a week in jobseeker's allowance. There is no comfort in this. However, the State's capacity to improve these rates is being undermined by individuals such as the person involved in the circumstances related to me in my office. An employer offered a job to a young man who worked with him for one week from 9 a.m. to 5 p.m. daily. The employer paid him on the Friday evening and explained that because he had a contract to complete, he would like him to work on the Saturday. He responded by saying he would not come in on the Saturday and that because the working hours did not suit him, he would not continue in the job. He left and signed on the following Tuesday. Unless we get serious about eliminating such attitudes, we will not be in a position to address the needs of bona fide individuals who are stuck on an inadequate rate of unemployment assistance. I make a comparison with the married couple with two dependent children who probably have a number of household commitments to meet such as a mortgage, loans, etc. This couple receives €370. A retired couple receives €440 by way of the State non-contributory pension. It is critical to our recovery that we address social welfare fraud and I urge the Minister for Social Protection to take a much more aggressive approach in dealing with it.
I will conclude with a comment on the back to education allowance. The principle of progression stymies many who see a pathway back to work. I have come across a case in my constituency office on which I am arguing with Department of Social Protection. It involves a nurse who has no computer skills but who can obtain a job as a GP practice nurse if she can improve her skills. However, because the FETAC level 5 course she proposes to undertake to improve her skills is not considered to provide for progression in terms of her nursing career qualifications, she is being told she cannot do it and must go back on jobseeker's allowance. As a consequence, she will not get back into the workforce. We need to see the back to education allowance as a pathway back to work and if an application to participate in training makes sense, it should be approved. The payment is the same whether the person is in receipt of a social welfare payment and at least the person concerned would be improving his or her skills. I appeal to the Minister to take this point on board.
The policies being pursued by the Government have failed utterly to date. The previous Government brought us into the ice age economically and sold out on our economic sovereignty in the process. The Government is squandering any hope of change people had prior to the general election last year. The programme for Government promised a lot and proclaimed a democratic revolution had taken place, but we have since had a rise in the levels of unemployment and child poverty, while businesses are struggling to survive. We certainly have not seen a revolution. The programme for Government agreed to by Fine Gael and the Labour Party promised much on jobs, a commitment to developing a universal single tier health system and the elimination of poverty. However, keeping these promises is another day's work. One of the promises that was kept was to slavishly support the objectives of the so-called EU-IMF programme of support. We are as much and more slaves to the troika now than we were in February 2011 under the previous Government.
Unfortunately, we have many indicators of how life has deteriorated for ordinary people in the past 19 months. Since the Government came to power, unemployment has continued to rise and is at a staggering 435,200, according to the September figures. This does not include up to 100,000 people who have emigrated since 2008 or those who are not entitled to sign on. We all know such persons who are unemployed and would like to work, but who cannot sign on.
The health care system limps along from crisis to crisis. Recently we had the scandal of stroke politics in the system in the context of primary health care centres. It had all the hallmarks of the practices of the previous Government. The Labour Party tells us repeatedly why it is in government, but this instance shows us that it is either incapable or unwilling to stand up against the use of such tactics. Unfortunately, the Tánaiste sacrificed one of his Ministers of State, rather than challenge the Fine Gael Minister for Health on the matter.
Some 706,371 people now live in poverty. A staggering 19.5% of children live in poverty, which is worse. The number of children living in poverty - approximately 200,000 - has increased by approximately 35,000 in the past three years. Last year's Labour Party manifesto declared that in government, the party would adopt a new and radical area-based approach to tackling child poverty. We have not seen that. It would be an understatement to say the Labour Party has not had an effect in this area. Its presence in government has been a failure. The myth that Fine Gael is good for business simply does not stand up. New lending to small and medium sized enterprises amounted to just €407 million in the first quarter of 2012. That represents a reduction of 29.6% on the fourth quarter of 2011 and a reduction of €700 million on the fourth quarter of 2010.
Time and time again, we have heard ridiculous comments from the Government benches and more recently from Fianna Fáil to the effect that Sinn Féin is devoid of solutions. We do not pretend to have all the answers. I will use the rest of the time available to me to offer a few solutions. I hope we can debate them and learn from each other. Last week, Sinn Féin launched its jobs plan, Create Jobs - Create Growth. Although it is ambitious, it is based on reality. Every euro has been costed on the basis of information from Departments. Sinn Féin is proposing almost €13 billion in additional investment over a period of four years.
Our plan for economic growth has the potential to create 156,000 jobs and to retain 15,000 existing jobs. It would be funded by €5.8 billion in discretionary moneys from the National Pensions Reserve Fund. It is worth noting that there was €23.2 billion in the fund in February 2011. Some €1.53 billion would be borrowed from the European Investment Bank. That is the only outside borrowing part of this package. Some €3 billion would come from incentivised investments from the private pensions sector. I will speak later about how that would be repaid. Sinn Féin would not cut €2.6 billion from the capital budget as the Government is proposing to do. We will expand on that when we publish our budgetary proposals as we have in previous years. We have costed this. Under our jobs plan, we will invest in essential infrastructure.
I listened carefully to what Deputy Creed said. I identified with what he said about house-building. I agree that there will have to be a different approach to the construction industry. We have to invest in essential infrastructure that will create jobs, improve competitiveness and help kick-start the economy. We should focus on areas like renewable energy, eco-tourism, agriculture and rural development. The renewable energy sector and the green economy were neglected during the boom years, unfortunately. We are committed to investing €800 million in wind energy. We will introduce reforms to reduce the lead-in time needed for projects. We will mandate the ESB to develop offshore wind generation over a five-year period. It is estimated that the alternative energy industry has the potential to create 50,000 jobs over a 15-year period. We strongly believe renewable energy must have a State foothold. We must ensure that wind energy projects are built in full consultation with local communities.
Sinn Féin would invest €500 million in this country's crumbling water infrastructure, with a particular focus on losses from reservoirs and the distribution network. The NewERA document that was produced by the Government committed to an investment of €4.2 billion as part of an upgrade of Ireland's water infrastructure. It pointed out that Ireland spends €700 million each year on the production of clean drinking water. Approximately 40% of that water is wasted through leaks from the water system, unfortunately. The investment we propose would assist local councils in their ongoing attempts to protect and upgrade the water supply and to conserve water.
We are committed to investing €5 billion in retrofitting this country's housing stock. Some 1.4 million houses and 130,000 non-residential buildings in Ireland need insulation retrofits. We have a very poor record in this regard. According to the Institute of International and European Affairs, an investment of approximately €14 billion would be required to bring this country's residential housing stock to an average building energy rating of C1. That is required if we are to have any kind of reasonable standard. According to the institute's figures, an investment of €10,000 in each house is required. Given that the average household would save €1,496 per annum, it is clear that the necessary expenditure could be incentivised. It is obvious that the savings would be repaid into the pension funds. Critically, this work would help Ireland to reach its 20% efficiency target by 2020. One of the benefits of this approach is that it would allow us to reduce the amount of fuel we import every year.
I have outlined some solutions in the few minutes available to me. I agree that the old policies have failed and the old approaches have not worked. We need to have new thinking. The response to this huge problem needs to be proportionate. Sinn Féin is concerned that the current response is not in proportion to the scale of the problem. We must get people off the dole and back to work. Every person who is not working is costing us €20,000. An unemployed person could be paying €10,000 in revenue to the State if he or she were working. We must turn around the wheel. We are committed to proposing ideas to that end. We must work to do that.
In February 2011 the Government inherited a country that had been placed in the pawn shop after a decade and a half of reckless economic and fiscal mismanagement. In the light of the presence of my colleagues in the Chamber, I do not want my speech to become an attack on Fianna Fáil or on any of its coalition partners. I simply want to state some facts. The weakness and incompetence of the last Government, under the pressure of the European institutions, brought the liabilities of failed private banks onto the shoulders of the ordinary people of this country. A previous Government had narrowed the tax base to the extent that the fiscal consequences of an economic downturn would be catastrophic. The massive increase in Government spending was not based on sustainable economic or fiscal propriety, but on the once-off proceeds of the property boom, which has left thousands of people burdened with debt and in crisis. Difficult issues were not resolved by reform, but by throwing money at them. Radical reform in welfare, education and health should have been done when we were in a time of plenty. That was simply not done. The Government is responsible for implementing such reforms at a time when resources are scarce. We have to get on with the job.
While I agree to some extent with what Deputy Stanley has said, it must be accepted that a disaster which took 15 years to create will not be resolved in 20 months. It will probably take the lifetime of the Government to resolve 15 years of economic mismanagement and the vandalism of our country. There is a deceit in the simple assertion we often hear from the Opposition benches about burning the bondholders and taxing the wealthy. It simply will not happen that way. It is misleading people to suggest that is a genuine message. In its own right, the bank debt is not our greatest problem in some ways. As I mentioned earlier, under a previous Administration the tax base was narrowed and spending was recklessly increased. When the crash came, we were left with a large gap between taxes collected and moneys spent. If the bank debt issue could be removed entirely, we would continue to face a crisis in this country, namely, the fiscal gap between what we take in and what we spend. Every day, we borrow more than €40 million to fund essential services and to keep our schools, hospitals, welfare, policing and general public services running.
Perhaps we should consider the example of a European country that has burned its bondholders - Greece, which applied a 50% haircut to its bonds. I invite Deputies to reflect on a report on this matter in the Financial Times of 18 October last, which states:
Greece’s top security official said he was determined to crack down on an alarming rise in rightwing violence .... (He) admitted that some individual officers may be sympathetic to the neo-fascist Golden Dawn party, which has been blamed for much of the violence and won a surprising 7 per cent of the vote in June elections .... (His) comments came amid concern about a string of assaults by rightwing thugs on immigrants and leftwing opponents, and accusations that Greek police were either sympathetic or [with the fascists]. .... As in the rest of the Greek public sector, police numbers are being reduced. Fewer than half of country’s 52,000 officers earn more than €1,000 per month and they are facing further pay cuts [as a consequence of the burning of the bondholders].
There have been reports in the Italian media in recent weeks suggesting Greek women are engaging in prostitution in Italian cities to feed their children in Greece.
The Government inherited a situation where private bank debt was effectively turned into sovereign debt in order that any default would be seen as a default on sovereign debt and treated as such. Any idea that we could have defaulted without consequences is wishful thinking or worse and those who express this view are deliberately misleading the public. We would have moved from being reliant on a moneylender who would have imposed conditions through dialogue to the situation similar to that in Greece where conditions would have been imposed on us by threat of the denial of critical funding. We could, of course, have freed ourselves from any need to borrow by closing the deficit immediately though making radical cuts and providing for massive increases in tax. The consequences of this would have been horrific for low income households and those in receipt of welfare payments. There is no doubt that middle class incomes would have been demolished and a mortgage crisis would have infested our society.
The Government found the ship sinking and had to make choices about which aspects of the ship it should save. We chose to reverse the cuts to the minimum rates of pay, thus raising the incomes of the vulnerable in society by €40 a week, which is significant when one is struggling to put money into a purse to bring a child to a doctor. We removed the very low paid from the universal social charge net and have protected, where possible, core social welfare payments. While there are some issues with the JobBridge scheme and, like all schemes, should be subject to critical analysis, it has to be acknowledged that 60% of the participants have managed to secure full-time employment.
We are working hard to encourage inward investment and secure employment for the people. Central to this is the restoration of Ireland's reputation and credibility as a place in which to do business and where we honour our debts. Investment and the creation of employment will do most to get us through this difficult time. Central to restoring our reputation and giving confidence to those who might want to invest here is the issue of trust. The Government has sought to address the issue of the bank debt by engaging in careful diplomacy and has made significant progress, however maddeningly slow it has been. I appreciate that we have been waiting a long time for a resolution, but this country will be given a deal.
While others may not be in a position to say it, the debt is unsustainable. I understand why the Taoiseach and the Tánaiste do not say this. They are sending a signal about the critically important foreign direct investment and the way we would like to conduct business. We need to enhance our reputation by encouraging trust and confidence in a way that will secure that investment. There is no easy way of doing it. We have to proceed by way of patient diplomacy, not knee-jerk reactions. This, with the progress we have made in addressing the fiscal position, has been evidenced by the fall in our bond yields in excess of the fall in the yield for other EU member states.
There are issues we need to address with regard to the burden imposed in the fiscal adjustment. The only consequence for me, as a well paid civil servant - I must be honest - is that I am €100 worse off as a result of the household charge and €5 worse off as a result of the septic tank charge. The CSO survey clearly indicates the gap between those who have and those who do not. The Government and all of us who sit on this and the other side of the House should show caution on the growing gap and the potential consequences in terms of social unrest in the country. There are many in the middle classes who are being squeezed by increased charges, wage stagnation, debt payments and increased costs. They represent the core of our society and economy and, when the fiscal position improves, we must focus reliefs on those who have carried the burden of recovery. It is the spending power of the middle classes that will help the economy to recover. The budget must address the proportion of the burden of fiscal correction on those who have high earnings and a capacity to pay. The budget will not be accepted by the citizens if social justice does not feature. The issue of tax exiles must be addressed. How can people who avoid paying tax in this country, in a just society, allow their families to benefit from publicly funded services such as schools, roads, hospitals and so on? How can we find that the financial consequences of a budget for those on higher earnings have sheltered them in many ways from the effects of the cuts in services? We have to address this issue in the budget. We see powerful groups such as consultants refusing point blank to engage with the State on playing their role in addressing the crisis. The Government needs to address this challenge and take whatever legislative action is necessary in order to force these changes.
There is light at the end of the tunnel and I am confident we will emerge from the crisis. However, we must ensure those most in need have the protection of the State. We must ensure recovery, when it comes, will keep the economy and society intact. Most of all, we must ensure the concept of social justice will not be sacrificed for expediency or the lack of participation of powerful vested interest groups in society.
I have the height of respect for Deputy Colm Keaveney most of the time. However, the constant mantra from the Government parties which obviously comes from a survey or an opinion poll of views and is based on an easy narrative that it was all foreseeable and so easy to figure out and that Fianna Fáil was solely responsible for what happened is given the lie by an analysis of the policies brought forward by Fine Gael and the Labour Party in opposition, when they had access to the exact same information and all the time they were calling for more and more expenditure. At no time did they seek more taxes such as, for example, a property tax. In fact, if one looks at the manifestos of both parties in 2007, one will see clearly that they were calling for "More of the same. We are not hitting the wall." That is the reality. As the Minister of State, Deputy Brian Hayes, knows, now that he is in government, nothing goes to the Cabinet in terms of economic information that is not available publicly either before or very shortly afterwards. Therefore, to say we had knowledge of a lot of things to which the rest of the country was blind is just not true. I say this not because I am particularly interested in raking over what happened in the past because I am happy I always acted in good faith as a Minister and my conscience is absolutely clear; rather I say it because, if we want to solve the problems of today, we have to understand the collective problem that arose in the past.
Deputy Colm Keaveney said we should not have taken on the bank debt. I have to give credit to the Taoiseach who was honest enough to admit that there was no choice but to do so for three fundamental reasons. The first was that the European Union would not accept a burning of bondholders.
The second is they would have taken us to court. The third is that if we had done so unilaterally, it would have closed every bank in the country. It is a simple, mathematical, absolute certainty. We would have burned deposit holders all across the country because the entire banking system would have collapsed. I agree with the Government, although it is well known that I would have approached matters in a slightly different way, that we must have the bank issue resolved. That is why there are promissory notes, rather than bonds or other such measures. That was always part of our long-term plan. I will go further and say there is a moral obligation on the German, French and other banks that lent to this country to accept at least half of the liability created. If I lent to a person, he or she lent on and the middle person was not get paid, the person who gave the initial loan could not expect to get his or her money back.
I can understand the fear in Europe if one were to let rip on bondholders. One must allow for the fact that much of the money in bonds, again, contrary to the illusion created that it all belongs to Goldman Sachs, mainly belongs to ordinary people in life insurance and pension funds. Therefore, I can understand why an unscrambling of the bonds is a problem. It is much more important for us to say that no matter how we arrived where we are, we have huge challenges to face and they are getting worse. I was interested to hear Deputy Colm Keaveney say we should now try to burn bondholders such as was done by Greece. One of the interesting issues one would have to examine in the context of burning sovereign bonds is that there has been a nationalisation of bondholdings and that where one year ago 18% of them were owned within the country, the current statistic is that 28% of sovereign bonds are now owned by Irish interests, according to the National Treasury Management Agency. Therefore, if one were to go to burn them, one would be burning a lot of people one did not intend to burn.
Therefore, while we must reduce the debt, it cannot be done unilaterally; rather, it must be done in a structured way. I am insistent that it would not be a case of a hand-out or favour from the European Union. Countries in Europe would take their share of the reckless actions of their banks which lent to our banks. Money came into this country, some of it through the banks that were covered by the regulator, but a lot of it also came in through banks that were regulated abroad.
We have a huge problem. The amount borrowed by this country in the first nine months of 2012 amounted to a deficit of €11 billion. Interest associated with the sovereign debt has nothing to do with the banks. The money associated with bank debt amounts to €1.7 billion. We have borrowed €10 billion in nine months and one can estimate that it will be €12 billion by the end of the year, minus bank-related funds. We must close the gap to about €4 billion and have €8 billion to go. One cannot do this by raising extra taxation and making cutbacks. A reasonable part must be achieved by generating growth in the economy. We must have a clear way forward in order to generate growth. We must create confidence that the problem can be solved and explain to people the quantum of extra taxation we must raise, the size of the cutbacks we will have to make and how much we are expecting to gain through growth. The big problem with the plan we have entered into concerns the total lack of growth. The economy is stagnating because of what is being done to depress people’s confidence in the future, as well as consumer confidence. All of the rumours about the budget and the way we do our business creates uncertainty. We tabled a Private Members’ motion tonight on the uncertainty created about the cost of employment to the tune of €89 million. Many other uncertainties are being created.
It is time for us to reform how we do our business and move away from the crazy budget ritual in which we engage. In the old days at least the budget ritual did not continue in the way it does currently. From the time I came into this House until less than ten years ago the way the budget was produced was that we published the expenditure Estimates first and then the budget dealt with taxation issues and some minor expenditure items on the day of the budget. Now we have five months of uncertainty that depresses activity in the economy because it is all done in a big-bang way. I do not wish to return to the old way of doing things; what I would like to see the Government doing is deciding early on the final figures and then in an open way going through the choices Department by Department. Rather than playing games with leaks, we must openly discuss the choices, try to achieve consensus on them and agreement on how the budget should be framed. We must involve the House in what the Cabinet does behind closed doors in order that we work towards consensus. If we did this, there would be much more confidence in what we are doing and if we have confidence, we will have activity and investment and the tax take will increase. If that were to be the case, without putting up taxes or making cutbacks, the gap would begin to close, as happened in the late 1980s and 1990s, which would create a virtuous circle that would solve the problem. The reality of the way we are proceeding, with the depressed air we are creating around the country, is that the hole is just getting deeper and deeper. Even if someone were to wipe away the entire bank debt in one fell swoop, we would still not be able to handle the rest of the debt because, as I indicated based on the figures, we are still spending more than we are earning. There is only way one to ultimately resolve the issue, that is, to create more wealth and more tax revenue.
Since taking office the Government has made significant progress in restoring sustainability to the public finances. We have worked hard to build a new and sustainable economic model for the country from the ashes of Fianna Fáil's debt-fuelled property bubble that we inherited. In recent weeks and in the past six months we have been heartened by the new jobs announcements. Announcements by the Kerry Group and Paddy Power are a clear statement of confidence in the economy and a strong signal that Ireland is a good place in which to invest and grow businesses. That is particularly striking in terms of foreign-direct investment, especially potential investment from the United States. The United States sees potential, as well as being aware of the crisis and crash that has occurred. While that is good news for all of us, big challenges remain, of which, undoubtedly, the most significant are the difficulties presented by employment and unemployment challenges. Last week with the Taoiseach and the Minister of State, Deputy Perry, I attended the launch of the first Intreo centre in Sligo, which was an important step On the road to changing the Department of Social Protection and stepping on the road to recovery.
It is one of the central elements of the Government's twin track approach to increasing employment and reducing unemployment, involving the Action Plan for Jobs and the Pathways to Workinitiative. The Action Plan for Jobs is tasked with creating new jobs; the priority in Pathways to Work is to ensure new employment opportunities go to people currently on the live register who will then have an opportunity to pitch for whatever jobs become available. If an employer in Sligo has three jobs, the local Intreo office will be able to offer that employer suitably qualified and interested people at whatever level the jobs require. We must rebuild these connections on a local basis with employers.
Intreo offers a new service that provides better and more efficient advice for people who are unemployed in order that they will be enabled to get back to work as quickly as possible and receive the supports they need to become job-ready. It is a new approach to engaging with people who are unemployed. We have taken into account international best practice to ensure we offer the best service possible. In the past the service in Ireland could have been characterised as passive and a benefits-based approach to supporting job seekers. Intreo offers a much more active and targeted approach which is focused on the person becoming activated and on mutual responsibility. The taxpayer is supporting the individual because he or she has become unemployed, but the individual has a corresponding obligation to the taxpayer and the citizens who offer income support in order that they can engage and do their best to get back into work.
Employer support and engagement with the service are critical to Intreo. The Department of Social Protection intends to work closely with employers to support them with their employment needs and provide access to the financial supports available to help them to growtheir workforce. To date in 2012, our Jobs Ireland service has advertised over 50,000 job opportunities, representing a diverse range of industry sectors and occupations. It is interesting that last year 140,000 people left the live register to get work. Those involved in employment will know that people often get work for a period and then return to the live register - there is a turnover. However, 140,000 people left the live register, not to emigrate but to find work in Ireland. We have to ensure people on the live register have the maximum opportunity to fill vacancies.
Employers have found the service useful. We want to work closely with them to develop and enhance the services provided in order to ensure they reflect the needs of business communities. We want to ensure employment opportunities are offered to people who are currently on the live register. The employer job (PRSI) incentive scheme which exempts employers from liability to pay their share of PRSI for certain employees for 12 months, was extended into 2012 and to cover the first 18 months of employment, as part of a range of supports aimed at assisting employers in providing employment opportunities for unemployed persons. In order to promote these services, build links with employers and find out from them what they would like from the Intreo service, I am hosting a series of seven business briefings around the country. These briefings started last week in Limerick. It will take time to build up employer confidence in our services, but I am confident that we will succeed. In JobBridge we have had the very satisfactory experience, with the 5,000 places made available, of having almost 11,000 people take part, with 5,000 completing the programme and 5,000 still taking part.
A survey and examination has been conducted by Indecon. One of the experiences I have found as Minister is that one receives surveys from bodies such as the ESRI that offer critical examinations. However, these have been based on work done three or four years earlier when the employment market was different. It is interesting that many people who have participated in the JobBridge programme have gone on to find work with the same or another employer, which is what the programme is about. Most of the people who avail of the opportunity have been in the 25-35 year age category, but the placement rate has been highly satisfactory. The programme is not for everybody: it is a specific programme for those who benefit from an internship opportunity.
I refer to stimulating the domestic economy. While the foreign direct investment and exporting sectors of the economy are witnessing very strong and sustained growth, this is not the case for the domestic sector. That is why the Government has directed so many of its efforts at stimulating domestic demand, including the measures included in the jobs initiative that have lifted the tourism sector and the recent stimulus package that will deliver significant investments in labour intensive infrastructural projects. We are spending a lot of money building and developing schools which is very important because it will provide localised employment in badly needed, small-scale construction projects. We must go further, however, and focus, in particular, on the implementation of policies that assist domestic demand, including making credit more widely available for SMEs by ensuring the pillar banks meet their lending targets.
It is interesting that the policy that ranked highest in the US Congressional Budget Office's evaluation of the 2009 Obama stimulus package was the one on the extension of the duration of unemployment insurance. The reason was that the money was all spent in the domestic economy. This analysis echoes something by which I have been struck since I became Minister for Social Protection. Welfare expenditure acts as what economists often call a Keynesian "automatic stabiliser''. This means it acts in a counter-cyclical manner to support the domestic economy by putting money into the hands of consumers and thus into the tills of businesses, many of which are small and medium-sized. That is the reason many American economists, for example, Joseph Stiglitz, write very favourably about the European model of having strong social welfare and income supports because they enable the spend in the domestic economy which keeps local businesses, large and small, at work.
The Department of Social Protection makes approximately €20 billion in payments to beneficiaries. Most of the €188 paid per week to a recipient of jobseeker's allowance is spent in the economy. If we consider pensioners, almost all of their money is spent in the economy. We must ask ourselves what is the impact of social welfare payments on domestic business. It is very strong. This is the case, even though not all of the welfare spend is targeted as effectively as it could be, a point I accept. Last night I indicated to the House how astonished I was to find, as Minister, that 300,000 people, or 16% of the working age adult population in Ireland, were in receipt of an illness, disability or invalidity pension. That is a very high number of people in the labour force who are in receipt of such a payment, compared to the number in most other countries. We have to think about this and about how we can help more of those involved who have an illness and recovered to get back to work. These are the social welfare problems everybody in the House must consider. We have to reform the system of welfare to make it more effective and ensure it does not act as a disincentive to employment or promote welfare dependency. Its central aim must be to engage with people to help them out of dependency on a social welfare income to become independent and financially self-supporting. If they cannot get a job in the current jobs market, which is difficult, it must help them back into education and training.
We want to move away from an economy that was based on a bubble in construction to one that is real. The level of construction is too low.
We have fallen from the height where some 25% of the domestic economy was dependent on construction to a point where the level of dependence is way below 10%. The norm in this regard for most modern economies would be 12% or 13%. That is why the building of schools which leads to the creation of local employment is so vital for a recovering Irish economy.
Having listened to the Minister, I am torn between laughing and crying. The idea of helping the unemployed to fulfil their responsibilities and ensuring they are not so dependent on the welfare state is so ridiculous that it really does not bear thinking about. Many of the people to whom the Minister refers have worked for most of their lives. What they need are new jobs. There cannot be economic recovery without jobs and therein lies the problem for the Government. The greatest indictment of the Administration is that there are fewer people at work now than there were when it took office 20 months ago. The Minister can waffle on all she likes about all the programmes with fancy names for which her Department has responsibility. The reality is, however, that even though 5,000 people may have gone through the JobBridge scheme, not too many of them obtained employment at the end of their involvement with it. The scheme has been unmasked as nothing more than a cheap labour scam from which only a couple of hundred people benefited by obtaining full-time employment.
In recent months we have witnessed an assault on the idea of the permanent pensionable job, which is becoming something of which people are almost ashamed. That is another mark of the record of the Government, which has facilitated a race to the bottom. Everyone is aware that these are difficult times. That is obvious, but the point which is being missed is that there is an alternative. The difficult choices which are being foisted on people are actually been foisted on those at the bottom. As a direct result of the Government's policies, those in the bottom 10% of the population have experienced a 26% reduction in their incomes, while the wealth of those at the top has increased by 8%.
A vicious campaign has been carried out against public sector workers - supposedly the root of all evil - by Independent Newspapers and others. We saw the reality of what was actually happening earlier today, when teachers protested outside Leinster House. Those who are now commencing their careers in teaching are going to be paid approximately €100 more than those on the minimum wage. Those to whom I refer currently receive a handful of hours' worth of teaching each week. They hang around schools in the hope someone will get sick in order that they might get jobs. The people concerned cannot claim social welfare because they are working every day and cannot apply for family income supplement, FIS, because they are not working 19 hours a week. The Government's answer is that it is not possible to change the computer system in order to accommodate them.
The Government is presiding over a policy that involves upside-down economics. In other words, it is doing the opposite of what should be done. The opportunity is being taken to reverse the State welfare benefits that were fought for and developed over decades. There has been a great deal of discussion about competitiveness and wages. However, wages only account for 2% of the measure of competitiveness. In fact, wages are not the problem at all. The Government's approach in this regard was summed up in an e-mail I received from the Minister for Jobs, Enterprise and Innovation inviting me to the official opening of a 24 hour McDonald's restaurant in Swords. Does the Government ever intend to get real? Any value that will result from the creation of jobs at this restaurant will be completely wiped out by the drain on the health service to which the consequent increase in obesity levels will give rise.
The Government should accept that hanging on to the coat-tails of the private sector is not delivering and should reverse its policy in this regard. I would not expect anything more of Fine Gael. For the Labour Party, however, what is happening is an absolute embarrassment. Has the penny not dropped that the private sector cannot deliver any more and that the only way to turn matters around is by putting in place a State-led stimulus package of socially necessary work? The work to which I refer needs to be done and if it were, it could make Ireland a better place. On each occasion we have raised this matter, the Government has asked from where we would get the money. The Administration has no difficulty in borrowing money in order to pay unsecured bondholders and a banking debt that has nothing to do with ordinary people. Why can it not seek funds from the European Investment Bank and invest them in Electric Ireland - formerly the ESB - which has a tremendous track record as a powerful semi-State company? The company could then use this money to develop the tremendous potential in our wave and wind energy resources and make Ireland a world leader in energy generation. What we should be doing is promoting the type of pioneering spirit that marked the Ardnacrusha project which was completed during the ESB's early years. The projects to which I refer are instead being given to private companies, many of which have former Labour Party people on their boards. These companies stand to make billions. Unless we take the lead, borrow money from the European Investment Bank and use by means of incentives some of the funds from private pension schemes or those invested in credit unions to finance job creation measures, all that will happen is that Ministers will run around opening 24 hour McDonald's restaurants and make an absolute laughing stock of themselves.
I attended the pre-budget briefing given by the community and voluntary sector yesterday in the audio-visual room, at which it was suggested the first question we should ask was where we would like the country to be ten years from now. In conjunction with this, we should consider what are the core values by which we should be guided when we are examining matters relating to the budget. I accept that we are in a recession, that times are difficult and that we are spending more than we are taking in. There is no doubt that the money which was available during the good years was squandered. Huge amounts of money were wasted on a long list of projects - those relating to a particular prison, the national children's hospital, the purchase of e-voting machines, the development of transport infrastructure, etc. - which never came to fruition. I will not even mention the money that has been wasted on the bondholders.
Our discussions on the economy are usually dominated by figures and percentages relating to GDP and so on. In reality, the economy is people. There is no doubt that the recession is having a disproportionate effect on people in certain sections of society. However, there are others for whom life goes on as usual. This is because they have not been unduly affected by what has happened. Statistics show that the poorest people took the largest hits in last December's budget. A recent survey carried out by the Irish League of Credit Unions of this matter makes for grim reading. Nobody wants to be obliged to accept cuts, but there are those who can afford to do so. If 10% is taken off a salary of €200,000, it is a mere dent. If, however, it is taken off a salary of €20,000, the impact is massive. Social and equality audits are required of all budgetary measures in order that we might gauge their potential impact.
No one wants to see a recurrence of the all-night protest by people in wheelchairs which took place outside Leinster Houses some time ago. People with physical or mental disabilities or both should never be obliged to fear the additional stress that can be caused by the introduction of a budget. These individuals should feel confident that regardless of which group is in power and of the economic circumstances that obtain, they - the most vulnerable in society - will be protected. Some of those to whom I refer have had enough and cannot survive further cuts.
There is a kind of sacred cow in this country which we know as corporation tax. The rate of this tax, 12.5%, is low, but we do not even collect this. It is difficult to obtain information on the actual amounts collected. Transparency International has carried out a study which indicates that the world's biggest companies need to be a great deal more transparent. Transparency International reviewed 105 of the largest companies across the globe - 61 of which are based in Ireland - and only one indicated the amount it paid in corporation tax. In a report it compiled recently the Council of Europe called for an appropriate policy on tax havens. This is because member states are losing billions each year as a result of the tax avoidance, evasion and fraud facilitated by the offshore financial system. This massive tax cheating on the part of wealthy individuals and enterprises is penalising ordinary taxpayers, affecting public finances and reducing the level of social spending. It is also a major threat to good governance.
I acknowledge the work done by Christian Aid and TASC in their report on tax injustice. Tax dodging and tax injustice are global issues and have an impact on people everywhere. The report to which I refer indicates that the consequences of tax dodging for ordinary people - whether they live in Dublin, Darfur, Letterkenny or Lesotho - are real. Every euro or dollar in tax that is dodged by an individual or a corporation must be replaced by governments and this is done by either increasing taxes on ordinary people or cutting public services. Will adding an extra 1% or 2% to our corporation tax rate lead to multinational companies fleeing Ireland? Some of these companies have openly stated it is not primarily our corporation tax rate which led them to establish operations here but rather that the attractions of our educated workforce, climate and stability. I hope that, at the very least, we will collect 12.5% in corporation tax from the multinationals.
There must be country-by-country reporting and there must also be fair policies and transfer pricing in order to reduce the opportunities for multinational businesses to manipulate the reporting of profits and taxes due. We could start the ball rolling in this regard and lead by example in this matter. However, we are not giving good example. I am totally committed to our overseas aid budget, but it is somewhat ironic that we are giving this money which is badly needed to other countries through Irish Aid and we are not vocal on the tax injustice relating to countries in the global south. We are not vocal in this regard because we allow tax injustice to be perpetrated in this country.
If the Government is committed to fairness, its policies must reflect this. We must employ the principle that the more one earns, the more one should pay. A fairer tax system is, therefore, vital. Our total tax take is the lowest among countries in the developed world. Broadening the tax base fairly and eliminating those tax breaks and reliefs which mostly benefit the better off is the way to proceed. The tax breaks and reliefs to which I refer reduce the tax bills of high earners who get more money at the expense of ordinary citizens who endure austerity. I agree with TASC's call to the effect that all tax breaks should be subject to a cost-benefit analysis. I agree that all tax breaks should be subject to a cost-benefit analysis and a sunset clause, which means they expire after three years, with the possibility of renewal only after a positive cost-benefit analysis has been undertaken. Section 23 tax breaks in the property sector encouraged investment, but at what cost? We must separate sovereign debt from banking debt if the country is to survive, never mind prosper.
I refer to the CSO report on children published this morning. It contains grim statistics in respect of children, households with children and the increasing risk of poverty. I note the Minister has left the House. She also missed the debate on my Topical Issue matter about community employment schemes. The cuts to schemes are disastrous for people living in inner city communities.
Job creation is central to Ireland's economic recovery. The programme for Government has this target at its core. I note the recent jobs announcements by Paddy Power and the Kerry Group which highlight the important role of indigenous companies in the country's economic recovery. Paddy Power and the Kerry Group could have taken their good tidings elsewhere. They are publicly traded companies and both are listed on the Stock Exchange. Their loyalties are to their shareholders rather than to the country but both chose Ireland.
The Government is absolutely focused on ensuring Irish companies are supported in every way to develop their business, increase exports, create jobs and ultimately to rebuild the economy. The first progress report on the action plan, published by the Government in April, showed that 80 of the 83 measures due for delivery across the whole of government in the first quarter of 2012 had been implemented. The Succeed in Ireland initiative, aimed at delivering at least 5,000 jobs in five years, was launched. Enterprise Ireland also established a new division for potential exporters, targeting some 1,800 firms. The new €150 million development capital scheme, aimed at addressing a funding gap for midsized high growth companies, was also launched. A global second call was issued under Innovation Fund Ireland, worth more than €60 million, to target investment in high growth technology companies. A total of €20 million was allocated to a new education and training fund. Other measures delivered include the extension and simplification of the employer's PRSI exemption scheme and the enactment of the Finance Bill, giving effect to several pro-jobs measures.
By far, the most talked about problem facing small business in recent years is the lack of adequate credit facilities. We all know that access to finance is a key issue for small businesses and critical to long-term economic success. The microfinance loan fund has been designed to stimulate lending to sustainable micro-enterprises and is targeted at start-up, newly established or growing micro-enterprises across all industry sectors, employing not more than ten people. It will provide loans of up to €25,000 for commercially viable proposals that do not meet the conventional risk criteria applied by commercial banks.
Positioned in between the United States and Europe's mainland, Dublin is growing into a business hub and was ranked recently by Forbesmagazine as one of the six best global cities regarded as hotbeds for start-up businesses and innovation. Dublin has also been recognised as the top western city in the Global Services top 100 outsourcing cities list. Banking on its surging opportunities, many big businesses have established their headquarters here. The Silicon docks area houses business giants such as Google, Facebook, Linkedin and Twitter. The IMD World Competitiveness Yearbook 2012has ranked Ireland first for the availability of skilled labour. We have a rich pool of niche, specialist talent, especially in areas in which cost is not the only consideration. Testing, application development and the life sciences are key areas. Both Galway and Leixlip are centres of excellence within HP and Irish-based engineers are increasingly developing new leading edge capabilities servicing the needs of clients in the USA, China, India, Europe and Asia. We are well on the way to establishing Ireland as one of the cloud computing capitals of the world. Seven of the world's top ten cloud data centre operators are already in Ireland, including Amazon, Google and Microsoft. Last week Europe's largest tech conference was held in the RDS in Dublin.
As we mark the 25th anniversary of the IFSC, there is a renewed focus by the Government and all stakeholders on the international financial services industry in Ireland. In July 2011 the Government published its strategy for the international financial services industry which serves as a road map for targeting growth opportunities in order to support the wider economy.