Paul Bradford (Fine Gael)

I welcome the Minister of State to the House and I am grateful for the opportunity to debate the issue of unemployment and, more important, job creation. It is appropriate that we are taking this debate on the same day as we take statements on the budget because they are very much interlinked. While the focus of yesterday's budget debate was the immediate financial crisis facing the country and the taxpayer, from now on we must examine in depth issues such as job creation and employment figures and bring forward proposals to ensure the sadly increasing trend in unemployment is reversed.

A Government Member earlier mentioned the creation of the magic figure of 1,000 jobs per week, which happened for many years. However, during the mid-1990s when the rainbow Government was in office, that figure was achieved for the first time and it was looked on as a major step forward. Until recently, that rate of employment was maintained. The construction industry led the growth in job creation and while we should not be overly critical of the industry because it responded to demand and it was good that the boom lasted so long, it must be conceded the Government adopted a construction culture rather than an enterprise culture. It must be recognised all has changed from a construction perspective and the same number of new houses will not be required annually in the next ten to 20 years. The number of people working in the sector will, therefore, reduce, which will result in an increase in the live register.

I expected the measures in yesterday's budget to deal with the crisis facing the public finances and, hopefully, support and develop rather than hinder job creation. That is why I am concerned about a number of yesterday's announcements and the immediate negative impact they will have on job creation and retention. The change to VAT could be presented as a modest 0.5% increase but the Government is attacking the services and retail sectors in which many people work. Money is being taking out of the economy, which will hinder rather than help job creation.

I appreciate an economic and political argument can be made for introducing all these measures. Fianna Fáil, its partners, the previous Taoiseach and our present EU Commissioner always proclaimed loudly that the reduction in capital gains tax did wonders from an economic perspective by bringing in money to the Exchequer, putting money in circulation and creating jobs but that policy was reversed yesterday when the tax was increased by 2%. That will not help job creation. The 1% income levy may not have an immediate impact on the jobs market but I fear one of its negative aspects, apart from affecting every person other than those on social welfare, will be to push a small number of people into the black economy. Due to employers who are not offering high wages, there will sadly be an incentive for people at the lower end of the salary scale to work on the margins and in the black economy instead of within the system. It will not do much for employment or job creation in the long run.

We must start looking for new ideas and solutions. Senator Alex White outlined some of his party's proposals and my party produced a substantial document last week on broad economic issues, including job creation. There is as much of a domestic side as there is an international side. On the domestic side, the Government must put in place certain financial parameters. It is disappointing that some of yesterday's budget announcements will not help job creation.

Senator Boyle mentioned the world's future growth regions, such as Brazil, China and Russia. A major Government initiative must be undertaken to link our economy with some of those growing regions. Given how Ireland has developed as a society, country and economy since joining the EU and our considerable amount of inward investment, Ireland has been the bridge into the EU for many companies, particularly from the US. This has created tens of thousands of jobs. We must now try to ensure that Ireland will be seen as a bridge into Europe and north America among the emerging economies of the Far East. In terms of the workforce, taxation and Government policy, we must be an attractive location for inward investment. Every year, tens of millions of jobs are being created by the economies of the Far East. We must try to get a slice of that market.

Senator Boyle referred to flexible working patterns. They will not solve all problems and will not create jobs on their own, but the Minister of State should try to encourage them. We must move away from the one size fits all system in which people leave for work at 8 a.m. and return home at 6 p.m. Working hours and workplaces must be as flexible as possible. As something that would be good for society and not just economics, flexible working hours must be encouraged.

The House will revert to this debate during this afternoon's discussion on the budget. We must examine the Minister's Budget Statement in more detail to determine how it will impact on job creation. With growing unemployment almost back at the bad old days of the 1980s, serious political attention must be given to this emerging crisis.