Maurice Cummins (Fine Gael)

I welcome the Minister of State, Deputy Perry, to the House. Job creation is central to Ireland's economic recovery. The programme for Government has job creation at its core. Small businesses are the backbone of our economy, as we have heard on many occasions. There are currently some 250,000 small businesses, employing approximately 700,000 workers. The appointment of Deputy Perry as Minister of State with specific responsibility for small business is a clear signal to the business community that small businesses are and will continue to be central to economic recovery. This is a very positive step on the Government's part.

Governments do not create jobs; entrepreneurs and risk-takers do and it is the businesspeople and exporters throughout the country who create wealth. Governments, however, can, through their decisions, have a positive influence on the environment in which wealth and job creators operate. The current Government is working hard to find ways to help, and not hinder, the efforts of those businesspeople and workers who will lift our economy out of the gloom.

The foundation stones that made our economy strong nearly two decades ago were controlled costs, a flexible and well-trained workforce, innovative new products and services, and access to export markets. Today we need to focus on getting new lines of credit flowing, reducing business costs and supporting new technology and innovation. The Government's jobs initiative addresses all these issues and more. It represents a very positive intervention to support entrepreneurs and businesspeople to create vitally needed jobs and rebuild our economy.

One of the key factors that impacts upon the viability of small businesses and their sector's ability to create jobs is access to credit. The Government's plans to restructure and recapitalise the banking system comprise the principal response to this challenge. These plans are designed to secure an adequate flow of credit into the economy to support economic recovery, even as the banking system is downsized. The banking system must provide substantial new lending to the economy. The business plan submitted by the pillar banks to provide over €30 billion in new lending over the next three years across core business areas is very important. Up to €20 billion of this sum will go to small and medium-sized business.

The financial authorities will be rigorously monitoring the banks' activities to ensure credit is available for borrowers who meet reasonable credit standard requirements. It is proposed that a partial loan guarantee scheme will be in operation by the autumn. This measure will be of particular help to the innovative companies we are trying to encourage as part of our growth strategy. For every €400 million guaranteed by the State, an additional 4,500 companies can obtain further credit that will, in turn, create over 8,000 jobs. A micro-finance fund will provide funding for small loans for start-up companies. Many start-up companies lack the small amounts of finance that can make the difference between success and failure. The commitment on a micro-finance fund is the Government's contribution to filling the enterprise finance gap in the market.

From 1 July next, all Government bodies, excluding commercial and semi-State bodies, will be required to pay suppliers within 15 days of receipt of a valid invoice. Given that the public sector enters contracts with suppliers worth €15 billion each year, the importance of such a policy for all companies that do business with the State is very clear. The Government is committed to keeping all costs that have an impact on business as low as possible to enable them to benefit fully from the stimulus provided by the jobs initiative. Work in this area is ongoing across all Departments.

One way to help job creation and improve labour cost competitiveness is to ease the cost of taking on new employees. Accordingly, in line with the commitment given in the programme for Government, there will be a halving of the lower rate of PRSI until the end of 2013 on jobs that pay up to €356 per week. This measure will take effect from 1 July next and will reduce employers' costs by 4%, which will offset the restoration of the national minimum wage committed to in the programme for Government. The existing employer job PRSI incentive scheme will remain in place until the end of the year so enterprises and businesses that have planned to take on staff under the scheme in the qualifying period may continue to do so.

The loss of competitiveness in the economy during the boom years, coupled with the global economic downturn, has had a profound impact on the bottom line for many Irish companies. This has led to a drastic knock-on effect for employment, with many employers having to lay off staff and reduce hours for those remaining. Addressing this loss of competitiveness has been one of the Government's top priorities since taking office. There have been recent improvements, for example, reductions in electricity and gas prices for businesses and the reduction and freezing of local authority rates. The cost to business of water services compares favourably with that of our main trading partners. The cost of broadband services compares favourably with the EU average.

The changes the Government has announced regarding the research and development tax credit will make Ireland a more competitive location for research and development activities. Thus, it will have a substantial impact on job creation in this vital sector. This revenue-neutral change will allow companies to choose whether to account for the credit against corporation tax or against the cost of employing researchers, and would greatly improve Ireland's attractiveness to multinational companies when comparing costs with those in alternative locations.

Other areas of the jobs initiative worthy of mention include the making available of an additional 20,900 places in specific education and skills training courses, including the back-to-education innovation places, post-leaving certificate courses, the third level Springboard programme and the new national internship scheme, which the Minister for Social Protection, Deputy Burton, will be discussing in this House at a later stage. Approximately 1,000 jobs will be created through the rehabilitation of the local and national roads along with the implementation of smarter travel and management systems. The additional €19 million in Exchequer funding being allocated for the retrofit scheme will create approximately 850 direct and 400 indirect jobs. It is likely that the impact of the jobs initiative on employment will be most visible from 2012, as economic activity picks up in response to the initiative and other Government measures. The stability programme update, published on 29 April, foresees net employment creation of 100,000 over the period 2012 to 2015.

The jobs initiative represents the first steps of the new Government on the road to improving the economy's international competitiveness and promoting job creation. The intention of the measures contained therein is to target the limited resources available at key sectors of the economy that can build the confidence that will encourage consumers to spend again, provide opportunities for those who have lost their jobs to re-skill and, more important, assist in getting people back to work.