John Paul Phelan (Fine Gael)

I move:

That Seanad Éireann--

acknowledges the fact that there is a global economic down turn, that Ireland was the first EU country to officially enter recession, and that the EU predicts the Irish economy will have the second worst contraction rate of 5% in 2009;

notes that standardised unemployment rate increased to 8.3% in December last which resulted in 293,500 people being on the live register at the start of 2009;

notes with deep concern that from December 2007 to December 2008 there was a massive increase of 120,987 (+71%) unemployed;

notes the prediction of the Economic and Social Research Institute that unemployment will rise to an average of 9.4% in 2009 with a net emigration of 50,000;

attributes the recent loss of thousands of jobs in companies such as Dell (Limerick), Cigna (Galway), Kostal (Cork and Limerick), and Amann (Kerry), to the inability of Government to maintain economic competitiveness in the Irish economy;

condemns the Government on its handling of the economy by pushing unsustainable economic policies that developed a boom-bust economy and is directly responsible for the current unprecedented crisis in the national finances;

and calls on Government to—

exempt employers from paying PRSI on any additional staff that they take on in 2009;

completely overhaul FÁS to provide better quality and quantity of training and expand the business led Skillsnets programme;

reduce the regulatory burden on small and medium enterprises by introducing a standard costs model approach to regulation and reform the current Regulatory Impact Assessment model to genuinely assess the impact of new legislation on business;

extend and reform the Back to Education Allowance;

switch the research and development tax credit to a volume based approach to allow Ireland to compete with other countries (the UK, Spain) in attractive research intensive mobile foreign investment projects;

give SMEs a PRSI offset to support employee upskilling; and

restore national economic competitiveness by:

freezing increases in utility costs and Government charges;

using the downturn in the construction industry as an opportunity to invest in national infrastructure;

developing next generation broadband access for business and educational facilities; and

reversing the increase in VAT rates.

I welcome the Minister of State, Deputy Mansergh, to the House to discuss this motion on employment. It brings back memories of bygone times when we were both finance spokespersons in the last Seanad. I thank my colleagues in Fine Gael for allowing me to table this motion on employment and more specifically the increasing levels of unemployment which we have seen over the past 18 months. The motion gives ample opportunity for this House to discuss some of the factors surrounding that large increase.

We have all acknowledged the fact that we are in the midst of a global downturn, which cannot be disputed. However, the Government has failed to acknowledge that its actions and policies pursued over the past 11 years have consistently undermined the competitiveness of the economy. Those policies have led us to a position whereby we have dramatically lengthening dole queues across the country.

When Government Senators are voting later on, they should consider the betrayal of voters who supported Fianna Fáil and the Progressive Democrats over the last ten years. Many of them in my own constituency had particular views on the way the economy should be run, but those views were largely ignored by their masters. Over the last ten years we squandered a unique opportunity in our history to create a developing economy with an ongoing employment structure into the future. There was a belief in Government, which was epitomised most clearly and most often by the current Taoiseach when he was Minister for Finance, that we would never see another rainy day. He said our huge increases in current expenditure could be sustained into the future on the back of a property bubble that everybody knew was unsustainable. He and his colleagues refused advice on that issue from all quarters, both inside and outside the Houses of the Oireachtas. Opposition spokespersons warned about the inflationary aspects of various budgets over the past ten years. The European Union intervened after the budgets leading up to the 2002 general election to criticise the former Minister for Finance, Mr. McCreevy, about their inflationary nature. Virtually every economist in the country has expressed a view that construction could not continue to develop at that rate. They said we could not continue to increase current expenditure on the back of such a bubble, yet the Government decided not to take that advice on board. It continued to support its friends in the construction sector and we now find ourselves in a position where we are suffering dramatically due to the lack of decisions taken by the Government in that regard.

In the past 18 months we have seen a huge level of inaction by the Government. Until recent weeks it has done virtually nothing to arrest the decline in the public finances, which is a symptom of the wider illness affecting our economy in the last couple of years. Until a few weeks ago the Taoiseach was not even acknowledging the presence of a recession. The only thing the Government has done in the past 18 months is agree a new national wage agreement with the social partners, which it is now in the process of taking apart. Fine Gael said it was an agreement we could not afford. Our views were ignored at the time, yet it seems the Government has now done a U-turn on the matter.

Earlier, during the debate on industrial development, Senator Quinn spoke eloquently about what the role of a government should be in any economy concerning job creation. He spoke about a government's role being to create and promote an environment for the entrepreneurial spirit and the attraction of foreign direct investment. There is no doubt that Governments, particularly in the early 1990s, fostered that role by supporting foreign direct investment and the entrepreneurial spirit. Over the course of the last ten years, however, that has been completely eroded. The Government has failed miserably and by its actions over the past decade has undermined that function. The reality is that one person is losing a job every three minutes. Since Deputy Cowen became Taoiseach last year, 101,000 people have become unemployed, which is an astonishing statistic.

Fine Gael has called for a suspension of the national pay deal and now the Government has finally come round to that realisation itself. Fine Gael also called for a reversal of the €1 billion cut in the capital programme announced in the last budget. In that budget the Government succeeded in increasing the top rate of VAT, which has a direct impact on the maintenance of employment. Fine Gael has proposed that employers should be exempt this year from paying PRSI on any additional staff hired.

The role of FÁS has also come to light over the past 18 months. For six months prior to the recent controversial revelations, Fine Gael was arguing that FÁS represented bad value for taxpayers' money as things currently stood. We are seeking to redirect a large proportion of FÁS's €1 billion annual budget to offer new, high-quality training to the tens of thousands who have lost their jobs in the past year. We also want the Skillnets programme to be expanded, which was mentioned by the Tánaiste in the previous debate.

Fianna Fáil in government has sabotaged the economy by implementing policies that reduced our economic competitiveness. It is only in the last few weeks that we have heard any mention by the Government of the need to do something about restoring our competitiveness. Fine Gael has continually raised the need to examine energy prices. For the first time earlier I heard a Minister acknowledge that something needs to be done about them. Senator MacSharry and other Members on the Government side have continually raised this. I welcome the Tánaiste and Minister for Enterprise, Trade and Employment's acknowledgement, although I have no evidence that anything will be done. Fine Gael will continue to oppose increases in government charges, which have led to deterioration in our competitiveness.

The standardised rate of unemployment at the beginning of the year was 8.3%. The number of people unemployed increased by more than 70% in 12 months. The ESRI projects this will increase to 9.4% by the end of the year. Most people acknowledge, including the Minister for Enterprise, Trade and Employment, that is an optimistic projection. The ESRI also predicts that up to 50,000 people will emigrate but that is optimistically low. That is a vista most people thought and hoped they had seen the last of but everyone acknowledges it will become a reality once more.

The Government has repeatedly ignored warnings from various groups, including the Opposition parties, and it failed to prepare properly for a surge in the numbers of people losing their jobs. This is best represented by the insufficient number of staff available in social welfare offices and the consequent significant delays experienced by those trying to secure their entitlements when they lose their jobs, which is unacceptable. The Government parties have failed to meet their targets in the programme for Government. They announced they were committing themselves to a co-ordinated series of steps to support the creation of 250,000 jobs over the next five years. However, when they took office, 163,400 people were on the live register and at the beginning of this year the number was 293,500, an increase of 130,100. That number is even out of date because people are losing jobs daily.

There are some guiding principles. One of the questions often thrown at Fine Gael concerns what it proposes as an alternative. I outlined a number of measures earlier. We are fortunate to have Deputy Bruton who outlined in his document, Recovery Through Reform, a comprehensive list of proposals as to how the Government can reverse the position in which we find ourselves. The introduction of the Lenihan levy was a regressive tax on workers. Increases in taxation are being discussed with the social partners but that is not a route I would like to go down. It is imperative that as much as money as possible is retained in the economy and taking money out of the economy through direct or indirect taxation would be a backward step.

Investment in research and technology continues to lag behind international best practice, contrary to what various Ministers have said. There is little evidence to support the Government's stated efforts to significantly upskill those in the workforce. The small and medium enterprise sector has been badly hit in recent months. Such businesses are overburdened by regulation and fantasy pay deals and they face spiralling costs while suffering as a consequence of our poorly regulated banks. I urge Government Senators to support the motion, in which we have made a genuine effort to acknowledge the external factors at play. However, significant policy decisions need to be made to ensure the Government takes the correct measures to increase employment and to end the dramatic increase in dole queues we have witnessed in recent months.