Seanad debates

Wednesday, 1 April 2009

Economic and Recovery Authority: Motion

 

6:00 pm

Photo of Michael McCarthyMichael McCarthy (Labour)

I welcome the Minister of State, Deputy Martin Mansergh, a former Member of this House, to this very important debate. More frightening figures were released this morning by the Central Statistics Office, CSO, with another 20,000 people having lost their jobs. In February it was 1,000 jobs a day. The Taoiseach has said that the trend appears to indicate that the rate of unemployment is slowing down, but either way this is terrifying. It is terrifying for the people who have lost their jobs as they turn to social welfare after a period of unprecedented economic growth when they were gainfully employed, earning money and had become accustomed to a certain standard of living. Now, all of a sudden, they find themselves without work and must face unacceptable delays in obtaining social welfare. That process is very dispiriting for the persons concerned. It happened to me in the past, where I lost a job because of a decision taken by a company. It is enormously traumatic for any individual. The current figures, when seasonally adjusted, come to 372,800, the biggest live register statistic on record, following the February figures, since records began in 1965.

Much has been said about taking money out of the economy and we have debated the economy continually in the Seanad for the past six months. A point that has been put forward by the deputy leader and economic spokesperson of my party, Deputy Joan Burton, is that there is too much emphasis on restoring the public finances. Obviously, it is a critical mechanism by which we may recuperate and it is to be hoped the economy can recover. None the less, we have not discussed sufficiently or meaningfully the issue of job protection and creation. These are every bit as important as restoring the public finances.

That brings me to a point I have raised several times in this House. I know from experience in my area — and I am sure no Member is indifferent to this — that the Department of Education and Science is spending hundreds of thousands of euro renting prefabricated buildings which are de facto schools in my constituency in west Cork. It is quite appalling given that the money spent on rent could have been better used had the Department decided to build the extensions and the schools. This rent is dead money. That point has been made on several occasions to the Minister for Education and Science.

It is time for the Government to show action in this particular regard as an initiative. Not only would it put in place a decent education infrastructure, people who have lost their jobs because of the downturn in construction would be taken off the dole queue and put back into the workplace. Each job lost to the economy costs the State around €20,000 in terms of the social welfare bill and lost taxation revenue. Taking people off the dole queues and putting them back into the economy serves to stimulate and reboot that economy. The Government must look seriously at this proposal. It is just not good enough to waste resources while giving money to the unemployed in the form of social welfare. It ignores the underlying issue. We do not want a return to the levels of long-term unemployment that obtained throughout the 1980s and into the early 1990s. We need to ensure those who lose their jobs are adequately retrained and upskilled so that when the upturn comes, they can go back into the workforce more qualified and better able to contribute in terms of employment. That would be very worthwhile and I would like to see a lead being taken in that area.

Figures released to Deputy Shortall on waiting times for jobseeker's allowance are not good enough. The social welfare office in my town of Dunmanway was closed in July 2007 because the branch manager unfortunately passed away at a rather young age. We tend to concentrate on urban areas but people in my town of Dunmanway must commute to other towns in west Cork to have their applications for jobseeker's allowance processed. That is not good enough. Two years ago when this office was closed, there was a strong hope it would reopen but that has not happened. I accept the point the Government may have made at the time. The demand for the service then was nowhere near what it is today. We must be very mindful of that and that in rural areas, there is not the same level of transportation. That is making an already difficult situation more difficult for those concerned.

Bandon has one of the longest waiting times to process a social welfare claim. That is simply unacceptable. The people in those queues are feeling the brunt of the mismanagement of this economy over the past ten years. It is bad enough that they must face unemployment without having to experience unnecessary delays.

Much has been said about consumer confidence. I agree with the point made by a Deputy recently that some people may be better off than they were last year or the year before. However, they are afraid to spend. The issue of consumer confidence is important and the Government needs to be very cognisant of that when trying to address the current situation.

Much has been said about Opposition co-operation, which amuses me politically. We have been told the Opposition can have access to the Department of Finance. I am not entirely convinced it has the same access as Ministers, although I would not expect it to. However, let us be clear about Opposition co-operation. The Government is trying to share the blame with the other side of the House. The spokespersons on finance need full access to all the up-to-date information, figures and statistics readily available to the Minister for Finance and the Minister of State. If that information is not made available, it is pointless discussing Opposition co-operation in a meaningful way.

The pension and income levies are making an already difficult situation worse for those on low incomes and we have debated at length the repercussions of that.

I raise the issue of mortgages about which I have written to the Minister for Finance. I will continue to make the following point until action is taken. Over the past two or three years, the mortgage advice available to most young couples and young single people in the fortunate position to obtain a mortgage was to fix their rate because the rate was going up. That was good advice at the time and pertinent if one was cognisant of economic trends. The ECB is as close to zero as it ever has been and those on tracker mortgages, because they are tracked to the ECB rate, benefit immediately. However, those with variable mortgages, like myself, are left to the discretion of the banks. The banks have been allowed to get away with too much. I do not want to give them anything else, never mind discretion in passing on interest rate cuts for variable mortgages.

Thousands of young people are on fixed rate mortgages and the reduction in the ECB rate is of absolutely no benefit to them. The Government guaranteed the banks and bailed them out but we saw the shenanigans and the blackguarding that went on in regard to chief executive officers and boards of directors. They literally creamed off the system on the backs of those who were less fortunate than them. It was appalling to find out lately that Mr. Fingleton's pension is a €27 million or a €28 million deal and that he was paid a €1 million bonus.

When the legislation was discussed in the other House, Deputy Burton tabled an amendment to cap the salaries and bonuses of bankers. An assurance was given that they would not get away with this but it was quite a hollow assurance when we saw what happened. We found out through the media that man got a €1 million bonus. That is adding insult to injury and it is quite an expensive lesson.

Will the Government consider the position of those on fixed rate mortgages and try to do something for them? That is my question to the Minister of State, Deputy Mansergh. It is not good enough to say the variable rate is at the discretion of the banks and that they are fixed. If we can recapitalise banks, we can expect some quid pro quo in regard to young people whose rates are fixed. The Minister of State, Deputy Mansergh, is a decent individual, a constituency politician and has experience of this. He is in a position to do something about it and I urge him to do so.

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