Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I do not think that I shall have time to go through individual remarks but I shall try to prioritise them.

The people who have suffered the most over the past number of years are the people who lost their jobs and I think everyone will agree with that. The people who suffered after that were the families who lost their sons and daughters to emigration so the emigrants and their families have suffered. Let us look at both of those categories when considering priorities. That is the reason the Government is putting jobs first and foremost and says that the test is we have to create a lot of jobs because that is where people are hurting the most.

As Senators will know, the situation was very bad, businesses went bust, property prices declined, the banks went bust, hundreds of thousands lost their jobs, and others emigrated so we have a long way back to come. We are out of the bailout but we have a huge amount of work to do yet. I would hate if any kind of feeling emerged that because we were out of the bailout that we had succeeded or that we can fly without a map from now on. We cannot. We published a strategic economic plan immediately after the bailout but it got lost in all of the Christmas festivities.

There is a strategic economic plan for the medium term which the Government is now pursuing that is built on three pillars. First, to control and reduce the debt and continue to make it more sustainable. Making debt more sustainable means that the people who lent to us are sure that they will be paid back. That is all that means but one must get it into that position.

Second, we need credit to drive a growing economy and that means that banks and all of the things that we will do to the banks, including alternative banks, credit unions and so on. We must also go for non-bank credit. Let us look at the fact that 75% of credit used by the United States model comes from sources other than banks. We have started that initiative here now. We have the Silicon Valley Bank and it is giving equity to people. We have the Chinese. We have CIC, the big Chinese investment fund, which works in partnership with our investment and has another €100 million. The European Investment Bank came in last year and invested €1.2 billion. We have a number of private funds who are investing in industry. We have to develop all of that side of things. We must even develop the Irish Stock Exchange so that people can raise money on the stock exchange. We need investment funds and working capital. Some can come through the banks but a lot of the investment funds must come from sources other than the banks. Therefore, we must work on the sector.

The third pillar of the medium term economic strategy is to continue to grow the economy. As I have often said to Senators before, the economy can be very complicated if one looks at it in its totality but if one breaks it down into sectors one can understand it very easily. Let me give some examples. The tourism industry was banjaxed so we reduced the VAT rate from 13.5% to 9%, we are abolishing the travel tax, we are getting the cost base down, we organised The Gathering and suddenly we have one vital sector moving again.

In the agriculture sector there will be no milk quota after 2015. The big tax job that I must do for the sector is to reduce the cost of transferring land to the next generation. Therefore, I cut the stamp duty in order that the next generation of young farmers can take over.

We will never build an industry on the elderly. It is the dynamism, energy and imagination of youth that is going to drive that industry. They are well on their way. Any of the Senators who have a knowledge of rural Ireland knows the way farming is gearing up at present, so that is another sector.

Foreign direct investment is very important, and Members know what attracts people to Ireland. There was a record year in 2012 and another in 2013, and the pipeline for foreign direct investment is going very strongly this year. We have reinforced the financial services aspect of that. Even though there were 12,000 to 15,000 redundancies across the banking system, there are more people employed now in the financial industry in Ireland, particularly in Dublin, than there were before the crisis hit and the redundancies came into the banks.

The strategy in the sectors is simple. It is to repair the damaged sectors of the economy and to build on them. The most damaged one of all was construction and development, as a number of speakers have pointed out. Not only did it get damaged and hundreds of thousands of people lost their jobs, but it became the scapegoat sector, along with the banking sector. It was very hard to do anything for the construction industry initially because the normal comment on the street was to ask, "Why are you helping that crowd of chancers?" It became a scapegoat sector, yet every other OECD country has a very strong, dynamic construction and development sector. We cannot get on without it because we need factories, houses and office blocks. It is now coming back again and property prices are coming back again too.

Very often, the rules of the market are very simple. If the price of something is below the replacement cost, nothing happens. If the price of a house is below the building cost of a house, no houses are built. If the price of an office block is below the cost of replacing it, nothing gets built. For commercial property, if the rental income cannot service the borrowing and give a small profit, nothing gets built. It is now back at a point, particularly in Dublin, where commercial property is moving again. We see the cranes beginning to emerge on the skyline, and we will see a lot more of them between now and the summer.

Of course, the Senators are right that there is now a supply-side problem with housing. If we were talking here a year ago, however, the Senators would all have been telling me about the ghost estates and all the houses that cannot be sold, and they would have asked me what I was doing about the overhang in the market. It is amazing how quickly things switch around.

Youth unemployment is something I would seriously like to address and we need help from abroad for that. There are approximately 12 million young people unemployed in Europe. The statistic does not tell the full story, however, because the way it is calculated is as a percentage of the young people who are available for work. Therefore, it excludes those in universities and third level education, which is a refined way of addressing it. If we take it there is 25% unemployment among young people in Ireland, but that 60% or more are at third level, we are looking at an unemployment rate among the young not of 25% of 100%, but of 25% of 40%. Therefore, we are actually looking at a 10% rate of unemployment among the youth in Ireland, whereas it is the other figure that is used across Europe. The same is true when we see a figure such as that 40% of young people are unemployed in Spain. That is 40% of people who are not in third level education or in schools and colleges, whereas we get a better view if we do it the other way.

That is not to say it is not a big problem. Of course, it also then tends to be a problem of the less well educated and the less skilled. That is why the Senators' experience of young people is quite correct, because the cohort and the individuals they are talking about tend not to be the people who were lucky enough to get third level education. There is no doubt there are many very down and out young people who are depressed. On the other hand, that is not the full picture. If Senators leave the House this evening and walk a mile in any direction, even though it is early in the week, when they go into their favourite pub, they will find a lot of young people inside quite optimistic and quite happy, and this is even more the case on Thursday, Friday and Saturday nights.

There are still 1.9 million people at work in Ireland. I remember that when the recession came during the 1980s, employment went below 1 million and approximately 960,000 people were at work. It is double that now, which makes a huge difference. That is another theme I would like to develop. Nonetheless, we certainly need to have a European scheme as well as national schemes to put young people back to work. The scheme that says everybody is entitled to either a job, training or education, which is enunciated in Europe, is a great scheme, but they never put the budget under it to deliver it, so that is one of the priorities we would have in Europe.

Senator Darragh O'Brien asked about capital gains tax, which has increased very significantly. The reason I put it up last was that there is hardly any capital gains coming into the Exchequer now but I want to position it so that, when the economy grows again, we will get a return on capital gains. I want to quickly erode the accumulated losses of the tax code because, if there is a low rate, no one will pay capital gains tax for the next generation. However, by raising the rate, that cuts into the carried forward losses, and we can work our way down through that. However, none of these rates and taxes are fixed. We have to review everything constantly. I take the Senator's point that nobody would invest in property in recent years because it was a declining asset but many people now want to invest in property again. Investment is risk all the time.

I would agree with Senator Gilroy about the connection between the recession and suicide. It is not particularly a case of unemployment and suicide and is more a case of the recession and suicide. We have all heard of people whose business went bust who committed suicide. They had enough but it was the whole sense of failure, and was not directly due to being unemployed.

Senator Barrett referred to youth unemployment and Senator D'Arcy raised the issue of IBRC mortgage holders and so on. The IBRC problem is straightforward enough. The loan books are being sold to people who have given a commitment that they will honour the protocols from the Central Bank. I believe they will because it is in their interest to do so. The courts will not give them repossession orders, if that was what they were looking for, unless they have honoured the protocols. We have seen that with the people who have already acquired mortgage books in this jurisdiction, namely, when they went to court, they could not get anywhere.

In any case, the people who buy mortgage books are trying to make money; they do not want repossess houses. They are in a much better position to do deals with people who hold mortgages than the original holders of the books. Typically, if one buys a mortgage book at a 30% discount, one has that 30% to restructure loans and to clean up the book. That is what they do. They clean up the book by using part of the discount to get people back paying again and then they resell the book. It is not as dire as it looks and it is one way of solving the problem.

If I have to legislate, I will legislate, but I could not legislate while the sales were going on because the risk was that I would take down the value of the mortgage books by adding additional conditions, and I would be subject to legal challenge by other creditors, particularly unsecured creditors. However, it changes when they go into new hands, and if I need to do so, I will do so.

Senator Byrne referred to the reform of the professions. The justice Bill on the legal profession is winding its way through. It has gone through Committee Stage in the Dáil and it should be coming to the Seanad very shortly. The Senator spoke about the sale of State assets. In my speech, I was talking particularly about bank shares. As the bank shares are sold, the proceeds will be put back into the investment fund and will be there either for further investment or reducing the debt.

Senator Hayden referred to a general reform of the tax code, which is very important.

Protection of the self-employed and pension reform are other priority issues, and the Minister for Social Protection, Deputy Joan Burton, is doing a great deal of work in those areas. Mortgage arrears were also mentioned.

Senator Sean D. Barrett talked about youth unemployment and referred to a very low-growth economy generating a large number of jobs. There is something wrong in the statistics in that the patent cliff has artificially reduced GDP figures, which makes life more difficult for me. The pharmaceuticals sector accounts for some 5% of GDP and employs 25,000 people. Several medicines went off patent in 2013 - Lipitor was one of the most prominent - which had an impact for the companies that manufacture them. Nevertheless, output remains the same from these companies and there are still 25,000 people employed in the sector. The issue has, however, affected GDP and growth figures. In other words, GDP does not reflect the growth that is taking place in the economy. We are not dealing with growthless job creation here; it is just that the growth is disguised. I hope that situation will right itself as we work through 2014 and 2015, although there are more well known drugs due to come off patent this year and next.

I thank Senator Marc MacSharry for his complimentary remarks. I also thank Senator Deirdre Clune, who set out a whole agenda. The House will forgive me for wishing Senator Clune every success in the European elections. It is a shameless political plug.