Joe O'Toole (Independent)

I welcome the Minister of State to the House. I see the Government side is losing its appetite for debates on unemployment and the budget. However, I hope there is a full attendance at the debate on the budget later so that Members can do their duty.

In terms of unemployment, the budget is regressive. There are a number of points that will create difficulty. In fairness, Senator Hanafin pointed out one of the few good points, dealing with the question of research and development, and I agree with him. That is enormously important and it is something I have asked for many times in this House. I wish the initiative well and hope it is successful. However, it must be said that other countries, equally, are engaged in similar initiatives to try to promote research and development.

The Minister of State is too young to remember, but the Cathaoirleach and I can recall the same situation, in 1987, when we ran into difficult times. The first thing the Government decided to do was to increase class sizes, and there was an unholy war about it at the time, because people felt that was not the way to go. The new initiative will create unemployed teachers. If there was a surplus of teachers, they could take their falls like everybody else. However, young students went into teaching because they were assured that a supply of teachers was needed. We have the largest class sizes in Europe. Ireland is the country in Europe most in need of teachers and reductions in class sizes, yet the Government takes the opposite route. I understand the Government's reasons, and I am not quibbling with that. I would not have whinged if it had increased income tax by 2.5% but would have conceded that it needed to be done, perhaps with one codicil, that it must exclude the minimum wage. The Minister of State, in his section of the Department that deals with labour affairs, must have some sympathy with my viewpoint in this regard, because again, it is as if we have forgotten history.

One of the reasons we brought in the minimum wage and why every Government tried to bring those at the bottom of the range in terms of wages and salaries out of the tax net was to soften the bridge between unemployment and employment. We had reached the point at one stage where people might have been better off on the dole, as there was no incentive to get work. However, what we have started to do now is reduce the incentive for people to get on the first rung of the ladder. People are for the first time querying whether it is worth their while to get themselves into the tax net. It is a disincentive, at a time when we are trying to create employment.

The other extraordinarily bad decision, which will also impact on employment, is the increase in the VAT rate. It is was already extraordinarily high and was brought in as an emergency measure, as I recall. To increase it to 21.5% will have a very negative impact. With all of this we are creating further disadvantages within society.

The Minister said yesterday — it has been echoed today by many — that the Government forecasts unemployment will exceed 7%, which is extraordinary. However, these things happen and I do not join the general chorus in blaming the Government for all that has gone wrong. That is not my style. All governments make mistakes, the global impact is a fact and I believe the regulator is more right than wrong in terms of what he has said about the safety of our banks and their capitalisation. Those who say otherwise should offer us the proof. I do not come from the stable of having a go just for the sake of it. Mistakes have been made, but the reality is that we have now created an enormous number of angry people, including those over 70 years of age, parents and teachers, whose fury is aimed in the wrong direction. It does not help the unemployment issue or create the employment opportunities or support structures that we need.

The Centre for Early Childhood Development and Education, CECDE, had originated from the view that the blackspots of unemployment coincided with the underprivileged areas. In order to break the cycle of underprivilege, it was felt that early intervention was necessary. It was felt that my children, say, and those of the Minister of State, coming from homes which were not dysfunctional, and with space etc., did not need the same start, but that early childhood intervention for the disadvantaged was enormously important in order to get people into a position of readiness to learn. CECDE was set up to break the cycle of underprivilege and get children into education, which was the bridge to employment. The proposal to abolish it is a very regressive initiative, although I recognise that politics is politics and we cannot always do things that we want. However, these are issues which are taking us backwards.

There might be a case for an increase in the size of classes if we had extraordinarily low class sizes. We now have the largest class sizes in Europe. It is a regressive measure at a time when we are trying to sell ourselves internationally on the basis of a solid, progressive, successful educational system and structures. I guarantee the Minister of State that if The Economist passes a comment on the educational aspect of the budget next week, it will not support it and will say this is the wrong way to go. We must think about the long term. The Government said we must think about the long term, that this would not happen in a year, that this was a plan for a number of years and that we must defer certain things, which I understood. However, this is going backwards and it will take us years to pick up. The Minister of State's Department will be at the forefront of dealing with unemployment and this will be of no help to it.