Ciarán Cannon (Fine Gael)

I thank the Tánaiste and Minister for Enterprise, Trade and Employment for her comprehensive address. We could not have chosen a more opportune time to discuss the issues of employment and competitiveness. We have just begun the second decade of the 21st century with our unemployment figure heading towards 500,000 from 180,000 in January 2008. At the same time tax revenues have dropped by over €6 billion. The effect of the deep wound to our society inflicted by such high levels of unemployment is not just social and financial; there is also the loss of skills and entrepreneurial acumen.

Over Christmas most Members will have had opportunities to speak with local businesspeople to hear what was really happening in the trenches. Some of us involved in businesses have spent time in those same trenches during the past few weeks. We have seen nothing but grim despair and a real sense that things may get much worse before they get better. We have also had time to fully digest the implications of the recent budget. One can only conclude that it offers no real hope to businesspeople or the thousands lining up in the dole queues every week. I do not know how we would have expected better from a Government which had created an unemployment task force which itself was unemployed for the first ten months of its existence. The Government is now bereft of ideas and vision, while Ireland, sadly, returns to the old safety valve of emigration in an effort to lower the unemployment figure. Against a background of having almost 90,000 people under the age of 25 years unemployed, budget 2010 simply ignored the issue of youth unemployment, made little or no effort to stimulate job creation and slashed jobseeker's payments to those aged under 25. The message to our young people was loud and clear - "Leave Ireland". If they want a future, they should go abroad because there is no future here for them.

One cannot blame anyone for being disillusioned, yet we must rise above the despair to offer vision and hope to our young people and the nation. In offering this hope the Government must be convinced to make a fundamental change in its mindset. To date, all of its focus has been on cuts in expenditure, not job creation to boost revenue. Every job lost costs the Government €20,000 extra per annum. It is perfectly obvious that the unprecedented rise in unemployment, delivering with it the twin evils of higher welfare payments and lower tax revenues, has been the main reason for the deterioration in the public finances. We urgently need a total refocusing on job creation to restart the economy, a challenge which has been the focal point of Fine Gael policy development in the past 12 months. To kick-start the process of job creation, we need, first, to immediately restore the flow of credit to small and medium businesses. Despite numerous assurances before and after the establishment of NAMA, this financial lifeline to businesses is still not in place. Second, we need to examine how competitive Ireland is globally. Our success in attracting foreign direct investment will soon dwindle if this issue is not addressed. Third, we need to invest in our national infrastructure. It requires much work to be done on it. While many want to work, we need to be innovative in linking the two together in an efficient and cost-effective manner.

Last weekend Dr. Alan Ahearne, chief financial adviser to the Minister for Finance, in a lecture at NUI Galway indicated approximately €19 billion of loans would be transferred to NAMA next month, with the remainder to be transferred by the end of September. He said that when the risky loans were taken off the banks' balance sheets and they were recapitalised, the banking sector would be well able to meet the needs of the economy. At a conservative estimate, this means it will be early 2011 before the banks get around to lending again to small businesses, assuming that they will begin to lend again, as there is nothing in the NAMA legislation to oblige them to do so. Unfortunately, early 2011 will be far too late for hundreds of businesses. Every employers' group, from the Small Firms Association to ISME to the Restaurants Association of Ireland, continues to point to the crisis in business lending. The Government immediately needs to take a firm hand with the banks to ensure credit lines are restored immediately, not in 12 months. If this requires some kind of Government-backed working capital guarantee scheme, it should be seriously considered. Such a scheme is already working in other countries and could work here. The recapitalisation that has occurred should have led to some money finding its way to small businesses but this has not happened. If further recapitalisation is to take place, the Government must seek far more binding assurances that lending will begin immediately.

The issue of competitiveness should form a central plank of any recovery plan. The Government needs to be more proactive in this regard and be the main driver in lowering our cost base. Efforts with regard to banking and the public finances would collapse without the keystone of improved competitiveness to form the bridge to recovery. Far from being a constraint on competitiveness, the Government can be one of its key drivers.

The National Competitiveness Council produced its most recent report last September and it does not make pretty reading. It produced 130 indicators of competitiveness, colour-coding them green, amber and red. On 40% of the indicators, Ireland is in the red zone. If one adds the amber ratings, the figure rises to 75% in need of attention. This is red alert territory but it has not triggered a serious response from the Government. Our competitiveness in international markets has deteriorated by 35% during the past eight years and our export share in the markets in which we trade has fallen each year of the past six years. In terms of goods, we have lost almost 40% of our market share.

Many policy weaknesses identified in the report have now come home to roost in an alarming performance, in particular in regard to non-pay business costs. More than three quarters of these costs are flashing red and the remainder are amber. Many of the chronic areas, including electricity, telephone, broadband, waste disposal and health insurance are directly in the control of Government. Excessive professional fees also figure prominently, with accountancy, legal and IT fees all way out of line with our international competitors. The report also concludes that wage levels in Ireland are among the most expensive in the world, substantially ahead of competitors like the US, the UK, Italy and France. In key skills areas such as engineering, finance and IT, Ireland ranks among the most expensive in Europe.

How are we to confront the challenge of competitiveness? A focus on wage cuts alone is simply not fair. A serious assault on competitiveness must also confront boardroom pay, monopoly profits, rents, professional fees, State charges and utility prices. I welcome the recent change in rent policy. We urgently need an action plan on competitiveness. This is a real challenge where social partnership could show its worth. The argument can be validly made that cutting earnings is in itself deflationary. However, this is not an argument for refusing to confront our excessive costs. Indeed, it points to another necessary element of a pact on competitiveness. As the savings in the cost base are achieved and the cost of delivering public services is reduced we will then be able to afford to set aside more money for investment in the infrastructures which are so clearly failing us. This allows us to attack our competitiveness problems, high costs and productivity impaired by poor infrastructure, from two sides.

It is worrying to learn that in the run up to the recent budget almost every party, except Fianna Fáil, included some sort of State funded stimulus package in its plans for recovery. Even the Green Party proposed a €3 billion stimulus for the green economy. However, what should be another central plank of our recovery was omitted completely from the budget. As I mentioned earlier, Ireland is a country in which much work remains to be done and we have a lot of people who want to work. One can only imagine the jobs that could have been created had we decided to invest €4 billion in our national infrastructure rather than investing it in the zombie bank that is Anglo Irish Bank. This morning, we hear that the same bank, which is little more than a private investment club for the elite of this country, might require another €10 billion of taxpayers' money to survive. The argument for Anglo Irish Bank's supposed systemic importance rests entirely on a belief, frequently voiced by Government, that depositors and other creditors would have abandoned all Irish banks if even the worst of them, Anglo Irish Bank, went under, an argument which I do not believe is credible. We have given €7 billion to the banks, including Allied Irish Bank and Bank of Ireland, €4 billion to Anglo Irish Bank and €50 billion to NAMA. Why can the Government not pump a miserly €3 billion to €4 billion a year into our national infrastructure over the next two years? It remains wedded to the idea that it must sit and wait with its hands tied behind its back for the banks to lend, which is a huge fallacy.

There are many areas in which thousands of jobs could be created and which are still in global demand. There is a huge need to improve public infrastructure. I agree with the Green Party that there are thousands of "green" jobs that could be created. The Government is pouring billions of euro into research clusters yet very few of the innovative projects produced by these clusters are being selected by Government for mainstream investment and job creation simply because there is no investment capital to be had. Fine Gael's NewEra plan proposes to address this problem and to immediately kick-start our economy. That plan has been described by Mr. Jim Power and many others as detailed, costed and relatively easy to implement.

What we must demand of our Government is a complete change in mindset. It must quickly realise that it is not our economic collapse that is causing unemployment and must acknowledge that unemployment is the root cause of our problems. If the Government persists in prioritising cuts which will depress the economy further and destroy more jobs then this time next year the public finances will still be in tatters and unemployment will have hit 500,000. We cannot allow this to happen.