Alan Kelly (Labour)

I welcome the Minister to the House. I compliment and thank Fine Gael for putting forward this motion, one of the longest since I became a Member of this House. It is urgently needed. I agree with other speakers who said that from time to time we should return to the issue of the economy and debate it. We are in changing times and such a debate is necessary.

To get some of the good news out of the way, until recently we had a diverse and well performing economy. As a country we have had a great history in terms of entrepreneurship. We also have a well educated people with a great work ethic and a great deal of energy, and it is important we acknowledge that. That is the good news but there is a good deal of bad news and, as requested by Senators MacSharry and Boyle, I will make some positive suggestions later on the way we can help the economy.

On the bad news, it is my belief that this Government has been living in a type of cuckoo land in respect of the impact of the recent economic downturn on tens of thousands of people across the country. The thousands who have lost their jobs, the businesses that are in trouble and the home buyers who are facing negative equity, particularly in urban centres, are aware of the current situation. The housing market, as a driver, is obviously dead. While it was booming we were in reality eating our own flesh from an economic point of view as it did not contribute to exports and we were always looking internally. I would argue that in many ways it innured us for a number of years from international competition and affected our competitiveness because we were looking inwardly to such a degree. We did not believe we could compete in many sectors as the migration of the construction industry and the consequent production of mass sprawling housing estates led us into some form of cocoon. Now that we are out of that cocoon and in the fresh air, so to speak, we are to a degree struggling to stand on our own feet. The immune system of the Irish economy was attacked over a number of years and the failure of the current Taoiseach and former Minister for Finance to address that in the past five years was partly the reason for this change in the economy.

Regarding the construction industry, the Minister, Deputy Gormley, recently proposed windfall charges on speculative land purchases. To someone in my party that comes across as a fairly decent proposal but it was shot down by the current Taoiseach. He also shot down the proposal on the section 110 loophole used by property developers to avoid tax. They would be good initiatives if they were brought in but, unfortunately, the patronage given to Fianna Fáil put paid to that.

We also know that the Government is continually pushing down the expected growth rate, despite the admittedly positive report from the ERSI today — we must wait and see if it bears fruit — but the actual level is 2%. Revenue receipts are down across the board, not just in one or two areas. It includes corporation tax, VAT, capital gains tax, etc. Inflation is high. We have seen the largest monthly increase in the live register since 1967 while 1,600 people are losing their jobs every week. The cost of living is increasing at 4.3%. Retail sales are falling. Consumer confidence is low. Cuts in hospital budgets are being imposed this year which in real terms are the most severe since the mid-1980s. There have been significant losses for investors in the stock exchange, as we heard about earlier. Our competitiveness indicator has slipped 17 times. The strength of the euro vis-À-vis other currencies is having a dramatic impact on the potential of our companies to export. The number of house repossessions has increased. As a nation we have the highest level of personal indebtedness in Europe. There is also the issue of the high fuel prices. That is not something that is in the control of the Government but it is a serious issue.

What are the issues and what can we do about them? A serious issue has arisen regarding the cost of living, which has increased a good deal in the past few years. There is a massive problem with rising food prices. I could not believe that the price of flour and milk has increased 40% and 30%, respectively, in the past year. That is amazing and very concerning because it is the people on fixed and low incomes who will be most dramatically affected.

There is also the issue of fuel price increases including diesel and particularly home heating oil, which is affecting the same people referred to earlier. The Minister of State, Deputy Hoctor, congratulated her own Government on extending the fuel allowance by one week in the year. The reality is that if we take off the delivery costs, the VAT and the other tax, what those people are getting is minuscule. That problem must be addressed.

When a currency is strong we would expect a dip in inflation yet our inflation is above the eurozone average. That is a serious concern. At a time when our exporters are taking a hit from a weaker dollar and weaker sterling, our consumers are faced with higher prices. It is obvious that sellers are not passing on the benefits of cheaper imports to the consumers. We should all admit that this is a rip-off. One can see the sterling and euro prices in the stores and it is obvious we are being ripped off. It is a very simple problem in terms of how this is being dealt with by the Competition Authority and it must be addressed. It is one of the suggestions I will make when I sum up my contribution. This is an area that the Competition Authority and the National Consumer Agency must address.

A programme of training and reskilling in education for those coming out of the construction and manufacturing industries must be put in place. We have all discussed that previously. There must be a significant focus on opportunities for those people. The cap on the number of participants in the vocational training opportunities scheme should be removed immediately. That would be a positive move. We should target those people for such training rather than wait for people to fall into the trap of long-term unemployment because we know what that can spiral into.

Including school building programmes to fill the void in the construction industry would be a positive move. The summer works scheme has ended and if this were put in place it would be a positive development and would tie into the area of building up the educational profile of those who are coming out of the workforce.

Public sector reform is a phrase on everyone's lips. We in the Labour Party would support proper reform that delivers better services but it has become somewhat of a buzz phrase. What does it mean? We do not believe that reform that takes the heart out of public service and tries to turn people, whose jobs are very much vocation led, into machines is the way to proceed. We must examine the area in a more holistic manner and decide where we want to trim the fat. The Taoiseach could have begun by doing something about the 21 Ministers of State. He could have reduced the number to 17 or 15. That would represent the beginning of public sector reform. For example, why does Dublin have four tourism buildings and three tourism agencies?

To sum up, the Government must give a direction to the National Consumer Agency to insist that all goods are priced in euro. That would be a major step forward and simple to do. We should put in place a major programme of education and reskilling. We could introduce a "begin to buy" scheme to restore activity in the residential construction area, a recommendation my party has made for many years.

An issue about which I am passionate, and it is something we will have to do if we want to diversify our economy into the high value areas, is shift the balance of advantage within our tax code from property based investments to high tech, high risk ventures. There are not sufficient incentives available. There is a divine trinity in regard to the whole technology area based on education, which we are fortunate enough to have, infrastructure, which unfortunately we do not, and broadband, about which I will not go on ad nauseam except to say everyone knows it is a disgrace. Eastern European countries with economies much smaller than ours can address that area through very innovative ways but we cannot. Also, we need the investment techniques to be provided by this Government, which it is not doing currently.