Seanad debates

Tuesday, 7 February 2006

3:00 pm

Photo of Michael KittMichael Kitt (Fianna Fail)
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I am pleased to have the opportunity this afternoon to address the Seanad on the social partnership process. Senators are particularly well placed to evaluate the role of social partnership and to lead a wider public debate about its place in Irish governance.

I welcome the launch last week in Dublin Castle of talks on a successor to Sustaining Progress. Talks were unavoidably delayed last year so it is good to see that they are now under way.

Social partnership has played an important if not pivotal role in Ireland's dramatic economic and social development since 1987. Over the past 18 years, the six social partnership agreements have reflected the unique challenges and opportunities of their time and injected a substantial measure of stability and confidence for all sectors of the community, including investors.

Bringing together the various key sectors — business and employers, trade unions, the farming sector and the community and voluntary organisations — to work in partnership with Government has served this country well. The facts are there for all to see: since 1987, Ireland's economic growth has averaged over 6% per annum in GDP terms, well ahead of the EU average of 2.3% over the same period. Average industrial earnings have increased by 75% in real terms, taking into account tax changes and inflation. Most striking has been the phenomenal growth in employment, where the number in employment has grown from 1.08 million to about 1.95 million in 2005, an increase of over 80% or 900,000 extra jobs. As a consequence, unemployment has fallen from almost 17% to 4.3%.

The radical turnaround in our unemployment situation, including long-term unemployment, has had a very positive impact in the area of social inclusion. The falling rates of consistent poverty during the 1990s are a further indicator of the success of Government policies and the social partnership framework in this regard. Over the period from 1994 to 2001, the percentage of persons said to be in consistent poverty was more than halved from 8.3% to 4.1%.

In addition, the economic growth and stability fostered by social partnership has provided the Government with the scope to deliver a series of re-distributive budgets from which the poorest in society have gained the most. The ESRI has described the budget for 2006 as one of the most progressive this country has seen in many years. It delivered the largest ever social welfare package worth €1.12 billion, taking the total expenditure on social welfare in 2006 to €13.5 billion, double what was spent in 2000. The increases to social welfare rates, pensions and child benefit in recent budgets have all been well ahead of inflation and demonstrate the Government's commitment to reducing the level of poverty and inequality in our society.

Needless to say, social partnership was not solely responsible for the dramatic turnaround in our economic and social fortunes but it was a key factor because it enabled us — Government, employers, trade unions, farmers and, in due course, the community and voluntary sector — to develop a consensus about the overall direction of our economic and social policy and to work together to achieve our shared vision of the future.

The search for consensus is the key to social partnership. It is difficult to see how we could have arrived where we are at today with the adversarial system that some people seem to favour. There was plenty of adversarialism in the pre-social partnership days, with an annual average of over 317,000 days lost through industrial disputes in the 1980s, compared with under 21,000 days in 2004, the lowest number of days lost on record. That did not do our economy and society any good.

There is no denying that as we enter a new talks process, we face a number of difficult issues, including the issue of employment standards, which has been flagged by congress as a core agenda item for the talks. The Taoiseach has made it clear that the Government does not want to see a race to the bottom in the Irish labour market. We do not want to see people building competitive advantage based on poor wages, casualisation of labour, low health and safety standards or other poor compliance practices. We believe the contrary, that the future of our country depends on quality employment and the development of new products and services. With goodwill and determination on all sides, we can develop an approach to the issue of employment standards that is balanced, effective and fair.

Of course, this is not the only issue for the talks so far as ICTU is concerned. Other issues mentioned by congress last week include health care, caring for children, older people and people with disabilities, upskilling and lifelong learning, pensions and the role of the semi-State companies.

These are just the key items for one of the social partners. IBEC and the other members of the employer and business pillar are coming to the table with their own agenda, focusing on managing the threats and opportunities of increased globalisation and the provision of quality public services. The farming pillar will be focusing on the nitrates directive, the WTO negotiations, the CAP review and agriculture supports. The community and voluntary sector wants the talks to address the issue of effective structures, delivery mechanisms and outcomes, income adequacy, service provision and participation and activation mechanisms.

The Government shares many of the concerns raised by the social partners and we are anxious to address them. As employers, we of course, also have our own agenda based on the continuing need to make progress in modernising the public service. We will be negotiating on a full agenda of improvements in this area, focused on achieving more responsive and better quality customer services, better management of performance, better financial and human resource management and greater flexibility and openness to change.

The recent publication by the NESC of its strategy report, People, Productivity and Purpose, copies of which have been laid before the Houses of the Oireachtas, provides a guiding vision for the coming years for economic and social development in Ireland, and more immediately for the framework within which the negotiations on a new agreement should take place.

For our part, the overall Government strategy is aimed at developing a more dynamic, enterprising and innovation-based economy, which can sustain higher living standards and a better quality of life for all. With the NESC, the Government sees this as embodying the core elements of a vision of Ireland in the future.

The Government is pursuing this vision through a responsive and flexible approach that includes maintaining a supportive taxation regime and prioritising policies in the fields of enhanced consumer and competition policies, human resource development, entrepreneurship, research and innovation, regulatory reform, promotion of equality, major infrastructural development and public sector reform.

Realising our vision of Ireland requires longer-term strategic planning which incorporates a core emphasis on the need for flexibility. Changes such as the anticipated population growth over coming years and the more diverse character of Irish society, make this longer-term planning an absolute necessity. This need, in turn, is reflected in the development by the Government of major policy instruments such as the proposed second national development plan, the national spatial strategy and Transport 21, our ten-year strategy for transport infrastructure.

It is for these reasons that the Taoiseach has proposed that the approach to the negotiations on a new agreement should be based on the shared vision of Ireland proposed by the NESC and should reflect the need for a medium to longer-term policy, planning and reform framework. Specifically, the Taoiseach has asked that the social partners consider agreeing a ten-year framework for the process so that it can be aligned with and contribute to the development and implementation of this longer-term agenda. This longer-term approach would be accompanied by specific pay agreements of a shorter duration. Such a rolling medium to longer-term perspective could be supported over a shorter period by specific policies designed to enhance competitiveness, upskill the labour force, provide sustainable employment opportunities, improve workplace conditions and help build an inclusive society. The approach should aim to build up what the National Economic and Social Council describes as "the developmental welfare state", with policies on incomes, services and innovative measures to ensure activism and full participation.

I turn now to the issue of democratic accountability. Some commentators would have us believe there is a so-called democratic deficit in the relationship between the process of social partnership and the democratic process, which is rooted in the Oireachtas. This assertion does not stand up to close scrutiny. Each of the six social partnership agreements to date has been negotiated by successive Governments on the basis of the primacy of the Government in inviting the social partners to engage in the process, setting the parameters within which negotiations would take place and deciding what terms it would accept for each agreement, based on the respective programme of the Government in question. Implementation of each social partnership agreement has required Governments to take specific policy decisions, allocate resources and initiate legislation, as appropriate. All of this has been subject to parliamentary scrutiny and agreement in line with democratic procedures.

In formally launching the talks on a new agreement at the plenary meeting of the social partners in Dublin Castle on Thursday last, the Taoiseach again asserted the primacy of overall Government strategy in the context of negotiating a new agreement. His ministerial colleagues, the Tánaiste and Minister for Health and Children and the Minister for Finance, who attended the plenary meeting, also set out the Government priorities for a new agreement. They emphasised that if we are to enhance competitiveness, protect jobs and living standards and provide top quality public service, realistic aspirations and openness to change will be essential in the negotiations.

Far from social partnership being undemocratic, it is an asset to parliamentary Government and, in many respects, a school of democracy. It is not divorced from the system of parliamentary democracy. The social partners are important and, in many aspects, powerful actors in civil society. In addition, they would be significant influences on economic and social life in any event.

Participation in the social partnership process is not just about negotiating to achieve sectorial interests but involves active engagement in analysis and reflection on the economy and social trends and, in particular, in the institutions of the National Economic and Social Council, National Economic and Social Forum and National Centre for Partnership and Performance. This means listening to the views and problems of other partners, the views of independent experts and the experience of Departments and other Government agencies. In this process the social partners are encouraged to view their role and interests in the context of the wider national interest. Obviously, they do not abandon their own concerns and priorities but are helped to find solutions which maximise the overall benefit, while meeting their particular concerns. This is true of pay bargaining as well as the wider framework of goals and targets which make up each partnership agreement. Through this process, the many participants in social partnership negotiations are brought to a better understanding of how society works, its problems and how interdependent we all are on this small island. As a result, we have created a social basis for greater consistency in our approach to public policy and the behaviour of the main economic agents. This process has produced stability and confidence in the economy and labour market, from which we have all benefited.

The monitoring and review of the implementation of the social partnership agreements operates at a number of levels within the Oireachtas. The detailed quarterly progress reports on implementation, keynote speeches and other relevant documents are laid before the Oireachtas for closer scrutiny and probing. More than 40 key documents related to the most recent agreement alone have been laid before both Houses. Since 1997, the Taoiseach has taken well in excess of 300 oral questions on the partnership process in Dáil Éireann. He also referred to it this afternoon in the Lower House when he agreed to speak on it tomorrow. Ministerial colleagues have also engaged in extensive debate on social partnership related issues, whether in the form of specific policy initiatives or legislative proposals.

As Senators will be aware, the Oireachtas strand of the National Economic and Social Forum, a key social partnership institution, comprises Members of the Dáil and Seanad. I welcome this opportunity to make a statement on social partnership to the Seanad and I would like this type of engagement to become a more regular feature of the social partnership process in future. I am delighted to be present in my role as Minister of State at the Department of the Taoiseach. My colleague, the Minister of State with responsibility for labour, Deputy Killeen, will be present for the remainder of the debate.

Critics of the social partnership process offer little by way of an alternative and appear to believe that free-for-all negotiations will somehow serve the country better. It has never been clear to me what alternative they propose and perhaps they do not have one. The Government is in no doubt about the value of social partnership agreements from the overall national perspective and is intent on engaging purposefully in the current talks. We live in a complex, interdependent society and social partnership is the best approach yet found to manage such complexities and interdependencies. The extent of international interest in our approach is proof of that. Now, as in the past, partnership offers the best way forward and its record of success in underpinning our economic and social transformation constitutes the best argument for its continuation.

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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I welcome the Minister of State and thank him for his overview. While I welcome the opportunity to discuss social partnership, I would prefer if the House was discussing worthwhile legislation, although other Senators might respond to that comment with harsh words. As the Minister of State indicated, this is a useful discussion. I would welcome further discussion of social partnership in the House in due course, perhaps when an agreement is concluded, as I hope will be the case.

Social partnership has served this country well since the Programme for National Recovery was signed in 1987. On foot of gross economic mismanagement in the late 1970s and early 1980s——

Photo of Martin ManserghMartin Mansergh (Fianna Fail)
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The Senator omitted the mid-1980s.

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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I did not write this speech and certainly did not type it. That comment should be read as a moment of light relief. As a result of economic mismanagement, Ireland had become an economic basket case, "the poorest of the rich", as The Economist famously put it. We have since become the envy of Europe thanks to the hard work of the Irish people and the sacrifices they made. One of these sacrifices was the astonishing restraint shown by employees and employers who swallowed hard and signed up to agreement after agreement, each of which secured industrial peace and eventually prosperity.

I and my party are, however, firmly of the belief that it is time for a new era in partnership as the need for reform has become extremely important. This is the reason the Fine Gael Party and its allies in the Labour Party recently published a joint policy on this issue, from which I draw many of my comments.

The forthcoming round of negotiations on a successor to Sustaining Progress will test the agility and strategic capacity of the social partners and the process itself. Significant outstanding challenges remain to be addressed and significant fragilities in the economy cannot be ignored. Equally, important failings in the partnership model must be tackled. A reformed partnership must include a strong voice for consumers and become more democratically accountable, transparent and focused if the process is to continue to thrive, as it must.

The Economic Review and Outlook published by the Department of Finance in August 2005 indicates that the economy is more fragile than it has been for many years. Beneath the healthy projection of economic growth in 2005 lie worrying indications of vulnerability. Exports have declined sharply, industrial productivity is faltering, a stream of job losses has been announced in traditional manufacturing and the economy relies heavily on the construction industry and consumerism to maintain growth. This is in sharp contrast to the strong performance over the past decade in export led growth, which was a key basis for Ireland's economic success. Additionally, employment in companies supported by industrial development agencies has fallen consistently for four years in a row. Even in a modern economy where there is strong growth in the professions we cannot afford to ignore internationally traded goods and services.

The economy also faces significant uncertainties. Record oil prices pose problems both for the buoyancy of our export markets and for domestic inflation. Nor has there been any rigorous official analysis of the possible inflationary implications of the maturation of SSIAs in 2006 and particularly in 2007. In a monetary union, with a non-accommodating interest rate policy, domestically induced inflationary pressures will ultimately result in lower employment and income growth.

While there has been a welcome return to growth following the slowdown in the early part of this decade, important competitiveness issues have not been addressed. Future competitiveness must be built on a combination of skills, innovation and infrastructure. There has been some progress in these areas but the Government has not addressed these competitiveness challenges in a convincing fashion.

Similarly, be it the alarming deficit in broadband roll-out, delays in transport projects, continued under-investment in primary education, or sheer dithering on matters such as Dublin Airport, the Government has simply failed to address in any timely or forward-looking manner our medium-term competitiveness challenges. I welcome the Minister of State, Deputy Killeen, to the House and when he responds to this debate I would like him to enlighten us on the position regarding the Dublin Airport Authority, especially in regard to the inclusion therein of the Great Southern Hotel Group, which is a pet subject of mine. We are well aware that the board of the DAA has served notice on the Government because it does not want to be found guilty of reckless trading. While I would not like to see hotels in Kerry being sold, whether in Killarney or Parknasilla, the Government will have to address the more serious loss-making components in the group. It cannot continue to postpone decisions. There are also more serious issues at Dublin Airport regarding terminals and runways. I ask the Minister of State to outline any information on these matters.

Greater prosperity has not led to improvements in the quality of our lives in the manner that was thought possible. This poses a major challenge for social partnership. While the social partners can agree improvements in wages and Government can give commitments on personal taxation, quality of life also depends on sustained and sustainable improvements in the basket of goods and services provided by Government. This means real advances in areas such as child care, social and affordable housing and transport. Where Government fails to deliver such services, wage demands will accelerate as families seek to compensate in income terms for the expense and pressures resulting from Government failures.

Child care is a particularly important example. While the economy has greatly benefited from enhanced female labour force participation, society has not engaged with the child care issues which this has thrown up. Parents face major problems in accessing affordable child care and in managing the conflicting obligations of family and work. Government failure in this area has left many families to seek solutions which are far from their preferred outcome, and there has been a complete failure to develop an integrated policy which puts children first. An end to the lip-service on child care must result in the expansion of paid parental leave, improved pre-school education and fiscal support for families with children. However, more than this is needed.

While Ireland's economic success in the last decade is beyond dispute, we cannot say the same about the way in which resources for the delivery of public services have been managed. The constantly unfolding litany of waste after eight years of this Government has undermined the capacity of the State to address central quality of life issues. There is a substantial price to be paid both in terms of short-term wage pressures and medium to long-term competitiveness. Waste and inefficiency also have a serious social impact, since they lessen the impact of social programmes. I need not mention the multifarious waste of taxpayers money of which this Government is guilty, including electronic voting, the Dublin Port tunnel, Punchestown, the overspend on the Luas, the NDP national roads programme, PPARS; and idle new health facilities.

We need to carve out an ambitious agenda for public service reform. The social partners will play a huge role in its implementation. This process will affect the livelihoods and working conditions of the members of trade unions. It will also shape the capacity to deliver key objectives in economic and social policy. Social partnership negotiation must be based on a challenging agenda of public service reform. That agenda must include setting meaningful delivery targets for public agencies, creating genuine accountability in units delivering public services, increasing the influence of the users of public services and facilitating diversity in delivery. We owe it to the people to get social partnership right. Although I doubt very many people in Dublin Castle will be listening closely to this debate today, I hope they share our ideas.

Photo of Martin ManserghMartin Mansergh (Fianna Fail)
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I welcome the Minister of State, Deputy Killeen, and his officials and I also welcome the speech by the Minister of State, Deputy Tom Kitt. If my good friend Senator Coghlan will forgive me——

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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Do I not always forgive the Senator?

Photo of Martin ManserghMartin Mansergh (Fianna Fail)
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He must wait until he hears what I have to say.

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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Is Senator Mansergh going to shock me?

Photo of Martin ManserghMartin Mansergh (Fianna Fail)
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When I worked in a party research office I liked to write a speech that could be delivered with vigour and conviction by the speaker. Senator Coghlan's speech was lacking in conviction. He came to life when he spoke on his favourite subjects, the Great Southern Hotels and Killarney.

As a political person I take pride in two achievements over the last 20 years, namely, the peace process and social partnership, in which I was less directly involved. I remember sitting in Charles Haughey's office in October 1986 when he received Bill Attlee's proposal that the next Government should begin a programme of social partnership. A positive response to that was formulated. Tribute is owed to successive taoisigh and Ministers in the key Departments involved and to the civil servants in the Taoiseach's office and the Departments of Finance and Enterprise, Trade and Employment, formerly the Department of Labour, which have helped to carry this process forward by negotiating and staying in day-to-day contact with the social partners.

I also congratulate the social partners. The farmers, employers and trade unions were key to it at the outset. A former ICTU president is a Member of this House and we will hear his views shortly.

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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Please God. He is one of the most fluent critics.

4:00 pm

Photo of Martin ManserghMartin Mansergh (Fianna Fail)
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Social partnership was conceived of as an alternative to Thatcherism, neoliberalism and the concept that there was no such thing as society. Well-developed models existed in Austria, Germany and Sweden. Although we are often accused of being close to the Anglo-American model in this case we adopted and in some respects led the European model. Of course, no one should pretend social partnership is the sole cause of the tremendous burst of prosperity in the past 20 years. Its origin in 1987 was based on two crucial initiatives, namely, to get the fiscal situation under control and, allied to that, social partnership, which got the key groups in society to buy into a collective strategy.

The critics of social partnership say it is just a wage deal, which is nonsense. While wage determination is important, social partnership has put it into a much broader context. This has allowed for the making of palatable decisions which, if taken in isolation, would not have been palatable. In 1987, I remember reading an article written by, I believe Patrick Honohan, outlining why the economic policies of the Fine Gael and Labour Party coalition Government of the 1980s had failed. It was mainly because they had failed to get public service wages under control. Relationships with the trade unions were very bad, despite the Labour Party being in Government during that period. This was a new and better formula, not just for wage determination, but also for agreeing not only broad economic and social strategy, but also specific development initiatives also.

We can often forget that social partnership is a very important conflict and problem-resolution mechanism. When an agreement is made for two or three years, as has been the case, or even for ten years it is not possible to foresee every issue that might crop up even within six months. Issues may arise for which no provision is made in the programme. With social partnership, the social partners have immediate access to Government and can discuss a problem that may arise. How often have we seen in industrial disputes that could have been seriously damaging to the economy, the spirit of social partnership applied and the use of mechanisms, some of which go back to the late 1940s? The basic machinery works.

Francis Fukuyama is most famous for The End of History, which brings a smile to people's faces. He also wrote a very important book and article outlining that the success of societies and economies has a great deal to do with the degree of cohesion and consensus within the society, rather than continual painful stand-offs and confrontations. Social partnership has enabled this country to achieve a very high degree of social cohesion and consensus, probably to a greater extent than exists in most countries, which gives us a very important economic advantage.

While I will not dwell on the matter, it was right for the Minister of State to report some of the principal achievements of the past 20 years of which while social partnership is not the sole cause, it is nonetheless a key ingredient. The near doubling of employment is obviously one such achievement. We have been able to reduce taxation so that instead of being a highly-taxed country we have, overall, a fairly competitive system of taxation. We have managed to improve our public finances radically. In 1987, as it was then measured, our debt to GNP ratio was such that the debt represented 127% of GNP. Today depending on the measure used — I accept it is not comparing like with like — the general Government deficit is between 25% and 30% and heading downwards.

We have also managed to increase the level of social and infrastructural expenditure enormously. By comparison with today, we had, when social partnership was first advocated, no money to spend on infrastructure. There was no money to put into the rail or roads networks. We were barely ticking over. I accept we had put money into telecommunications and we had built the DART. However, at that time matters were progressing very slowly.

Very few countries are in our present fortunate situation where the public finances are improving, employment is growing, social spending is increasing substantially in advance of the rate of inflation, and we have a competitive taxation system. As can be read in the financial pages of the newspapers, many finance ministers around Europe state, as their predecessors in the 1980s had said, that this could not be done. Their belief was that it was necessary to increase taxation in order to increase expenditure. However, this is not true. If an economy is run properly, as we have done in the past 20 years and particularly in the past ten years when we have collected the fruits of it, it is not necessary to increase taxation.

Social partnership is sometimes challenged on the grounds that it is anti-democratic. However, I disagree. Democracy is not an exclusive monopoly of Senators and Deputies. It involves the broadest possible participation of society at large. Clearly, democratic institutions have prime importance. However, there is no monopoly on it. I do not agree that it is inappropriate for employers, farmers and unions to be involved in these decisions. Social partnership is a very healthy addition to the democratic process rather than a detraction from it. I am glad that Senator Coghlan had a broadly positive view of it.

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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I lack the Senator's vigour.

Photo of Martin ManserghMartin Mansergh (Fianna Fail)
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In 1994, Fine Gael voted against the then social partnership agreement. However, I have never seen a political leader execute a faster U-turn on coming into office than former Deputy John Bruton did on that occasion.

Photo of Joe O'TooleJoe O'Toole (Independent)
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It is to his credit.

Photo of Martin ManserghMartin Mansergh (Fianna Fail)
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In the late 1980s the Labour Party thought particular social partnership agreements represented a sell-out. I remember former Deputy Barry Desmond making such arguments. While it would be possible to check the record, as far as I can recall in 1987 the only party to join the minority Fianna Fáil party in voting for the PNR was the Workers Party. I accept that the Workers Party is now incorporated, in its successor form, in the Labour Party.

Photo of Mary O'RourkeMary O'Rourke (Fianna Fail)
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They have all the top jobs.

Photo of Martin ManserghMartin Mansergh (Fianna Fail)
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Some people would argue they have taken it over.

Photo of Shane RossShane Ross (Independent)
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Hear, hear. Not in the Seanad though.

Photo of Martin ManserghMartin Mansergh (Fianna Fail)
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I agree with the trade union emphasis that we must tighten up on employment standards and inspections. To afford confidence in the system we must have better enforcement.

Opposition research offices often give the impression that nothing is happening on infrastructure. There has never been so much improvement with the investment that is taking place. I hope they will find ways to give new wind to the social and affordable housing initiative. While it was a good initiative, I am afraid the builders succeeded in heading it off at the pass. I do not believe it should be let rest there.

I welcome the more egalitarian tax system that we will get. It is discussed in the three-volume report that has just been circulated.

I do not approve of the sort of public service bashing that takes place at regular intervals, particularly by those who are not in any way a part of it. Public service is as high a value as competition. It is not always the case that more competition results in more public welfare. I have grave doubts, for example, about the so-called attempts to bring competition into electricity generation. I am not at all sure that we would not be better off with the ESB because if we are introducing competition, prices have to be raised to allow people to make profits and so on. Competition can lead to higher rather than lower prices.

People talked about more targets for the public service. New Labour in Britain got into those targets right across the public service but if we do that we will need many bureaucrats to administer and monitor it. We also get artificial statistics. I was across the water yesterday and somebody said to me that Government statistics cannot be believed because they have to be manipulated to produce particular results.

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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The Senator is good at that.

Photo of Martin ManserghMartin Mansergh (Fianna Fail)
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The final point relates to the National Economic and Social Forum report, which is more a concern of the Minister of State, Deputy Killeen, and what it states about community employment, a particular bugbear of mine. It states that it ought to be reviewed and that more of the activities should be mainstream. That is fine but there are immediate, urgent problems, including people being let go and not replaced.

Community employment is vital to community organisations and to people who are among the least advantaged in our workforce. I hope the social partners, the trade unions, the community and voluntary pillar and the Government will look again at that whole area because it is resulting in some very undesirable consequences. This is not just a problem for cities but it is a problem throughout provincial Ireland and I hope the Minister of State will use his influence to address it because the decisions taken some years ago are not working out well.

Photo of Joe O'TooleJoe O'Toole (Independent)
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I wish to share my time with the right-wing Senator Ross.

Photo of Pat MoylanPat Moylan (Fianna Fail)
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Is that agreed? Agreed.

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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A fluent critic.

Photo of Joe O'TooleJoe O'Toole (Independent)
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The most important aspect of social partnership is that it has delivered. I agree with the points made by speakers about how much it has delivered and that questions arise. However, it is worthwhile reminding ourselves, particularly at a time when people criticise society and what we have achieved, of where we were in 1987 before this process began. In 1987, we had a debt to GNP ratio of 150%, emigration was running at 40,000 a year, there were no jobs for people here and approximately 18% were unemployed. We talk now about the cost of houses. People were struggling with mortgage interest rates of between 14% and 15% at a time when inflation figures were astronomical, sometimes in the high single figures, and strikes were running at something like one day per year for every three workers, which is now one day per year for one in every 20 workers. There is no comparison.

We can argue the rights and wrongs. Senator Ross will stand up to speak shortly and rant about how bad social partnership is but he will not answer the question as to how we should share the wealth in this country. It is the one common denominator between the hard right and the hard left. We can ask them how we should share the profit or the wealth we have created but we will not get an answer.

Senator Ross will tell us all that is wrong with social partnership. However, he will not tell us how we should share the wealth because he comes from the time before social partnership. At that time we had all the bad news I have just outlined. We have now discovered that the people for whom those opposed to social partnership will speak had their offshore accounts and were moving money in all directions. We were being screwed left, right and centre by the people who were supposed to be the models in our society at the time. We should remind ourselves of that fact.

Within an economy there must be a beginning and an end. The beginning is the creation of wealth and the end is the sharing of the wealth. How can we do that in a fair way? What is the rule or the formula? How do we move it forward? That is what social partnership is about. When we create the wealth, for whom is it created? Who gets the money we create in the economy? If we get richer, how do we share the wealth? Should it stay with the entrepreneurs, the marketeers, the bankers, the builders and all those important people whom we could not trust all those years ago or do we look to the common good?

We must look to the common good where the entrepreneur, the banker and the marketeer will get their share, as will the people in our society who are dependent and in poverty and who need support. Finding that balance is what social partnership is about; it is not rocket science. It is a question of looking at people who cannot get houses or jobs and looking at those who have houses and jobs and marrying them together in a fair and equitable fashion. That is what social partnership is about and it is no more than that.

In terms of how we deliver on that objective, the Government is elected to govern. One of the great conundrums in the area of social partnership has been the so-called democratic deficit. There is no democratic deficit. What happens in social partnership is a model people talk about time and again, namely, real consultation.

I will tell the House what happens in social partnership. We were all brought into a room last Thursday in which there is a big, wide, square table. Along one side of it sit the industrialists and the business people. Along another side sit the members of the farming community. The labour and trade union representatives sit along another side and the voluntary and community groups sit on another side. They are the people who work for nothing in many cases and who support those who need help. They do everything from dealing with people with disability or special needs to problems of poverty, housing, unemployment, etc.

All those people sit around the table and the Government representatives listen to them but the crucial point that is always missed is that the others have to listen to each other also. The hardline trade unionist must listen to the industrialist or the small shopkeeper. The small shopkeeper must listen to the views of regulation from the other side. The farming community has to listen to comments about pollution from the trade union side or the voluntary and community sector. All three have to listen to the farmers talking about their plight in these hard times. They are forced to listen.

The Minister of State should know — I should have welcomed him at the outset — that what is important about this approach is that those four groups are used to being in their own meeting rooms talking to their own crowd about their own issues and getting wild applause for saying what everyone in the room agrees with. This is the first time they have had to listen to the rest of the people. That is what is good about social partnership. It is a civic forum where people are forced to listen and engage in argument with those who have a completely different point of view. That is what we need to do. It is then about fairness and how we move that on.

In terms of doing that, how do we approach the process? We have to examine the economic indicators. We have to convince people on the labour side who have a strong view that anybody who creates wealth is not to be trusted. We have to convince such people that unless wealth is created, there will be nothing to share out and to do that the economic indicators have to be right. To do that we have to take certain measures and examine issues like inflation, the creation of employment, regulation, taxation, etc.

Somebody like me, therefore, would make the argument, as I have done across the table to the Government side, that corporation tax is too low in terms of what we need to deliver for education and health. I have to listen to the other side telling me that since it was reduced, the tax take has been increased and we have managed to invest it here, there and elsewhere, and we argue out the point. That engagement must take place because it is crucial.

In terms of what we are looking for, what will we pay people out of this process? It is not rocket science. Let us say annual inflation will run at approximately 3% and growth at approximately 5.5%. Eventually, the figure for a salary increase will be somewhere between 3% and 5% and that figure will determine the share out. Inflation erodes the gain in wealth, so that it is how one determines the share-out and what is helpful, good and useful. This can only be achieved if people talk to and engage with each other in terms of ensuring there is fairness. I just want to put matters into context to allow Senator Ross to have his injection of negativity.

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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The Senator does not want to give him too much time to get back at him.

Photo of Joe O'TooleJoe O'Toole (Independent)
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It is also a process about forcing people to sign in blood on the bottom line and to stick with the agreement. Every time I hear politicians talking about not being involved in the social partnership discussions I reflect on how lucky they are. The day one engages is the day one has to stick with what is agreed and that would not suit too many politicians who would have signed up to defend the downsides as well as the upsides to an agreement. If one has not signed up to something, it is much easier to come into this House as my colleague, Senator Ross, did previously to express his total opposition to benchmarking. Nonetheless, he was quite happy to accept it.

Photo of Shane RossShane Ross (Independent)
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I thank Senator O'Toole for sharing his time with me and I want to congratulate him. I notice that sometimes in this House people make strange conversions from one position to another. When Senator O'Toole was negotiating the benchmarking deal, I did not hear him crying about the interests of the poor or the voluntary pillar. When Senator O'Toole was negotiating the deal for the teachers, I did not hear him worrying about the poor, the underprivileged or those who need charity or help. He was a master of negotiating exclusively for a very small number of people and I congratulate him on his conversion to the worries of the poor and the underprivileged. A little Tory like Senator O'Toole, as one of the most conservative Members of this House, ought to be on the other side of the House, such is his capacity to do a deal with anybody. He has suddenly found this ideology in his heart and his great yearning for the poor. That will benefit him, no doubt, but——

Photo of Joe O'TooleJoe O'Toole (Independent)
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The House will notice Senator Ross has said nothing about social partnership so far.

Photo of Shane RossShane Ross (Independent)
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——let him not forget from whence he came.

John Dardis (Progressive Democrats)
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Senator Ross has spent too much time in the past.

Photo of Shane RossShane Ross (Independent)
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I congratulate Senator O'Toole on the deals he did in the past in terms of benchmarking. They were brilliant, but the did nothing for the poor or underprivileged. They did a great deal for the public service, and that was his job at the time.

I come to the main issue, to which Senator O'Toole is not party, because he is a Member of this House and not a member of a union. His words today are falling on deaf ears, but when he was head of ICTU and the INTO he was negotiating a magnificent deal and exerting enormous influence in Government Buildings. That is what I call the democratic deficit. Senator O'Toole is the democratic deficit now — powerless and weak, a political eunuch who some time ago was a great feudal baron in Government Buildings.

Photo of Mary O'RourkeMary O'Rourke (Fianna Fail)
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A eunuch he is not.

Photo of Shane RossShane Ross (Independent)
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I said a political eunuch, not a eunuch. I want to get to the main issue before my time runs out. Senator O'Toole was not too generous, incidentally, in sharing his time.

Photo of Joe O'TooleJoe O'Toole (Independent)
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On a point of order, as well as a point of honour, I gave the Senator exactly eight minutes. Is that correct?

Photo of Pat MoylanPat Moylan (Fianna Fail)
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That is correct.

Photo of Shane RossShane Ross (Independent)
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I want to refer to one or two of the issues addressed by the Minister of State today, because it is a very serious subject. I have not much time to quote from the Minister of State's speech, but he made a cardinal mistake. Both he and Senator O'Toole advocated social partnership and then cited the great benefits the economy has reaped in the last few years. They go straight to quod est demonstrandum, QED — therefore, this is what has happened. They do not make the connection. The connection is never made by anybody, except that two things happened in parallel. Just because two things happened in parallel does not mean they are responsible for each other or even have any link. They happened at the same time. There is a case for saying industrial disputes were undoubtedly reduced as a result of the talks that went on over the past 20 years. Let us not argue about that. The statistics are absolutely compelling on that particular issue.

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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We accept that.

Photo of Shane RossShane Ross (Independent)
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However, let us look at the overall economy and who participates in social partnership because I suggest this is a very convenient confidence trick for which a great many people are falling. I have pointed out here before that the trades unions as portrayed in these social partnerships are supposedly representing the entire workforce. They do not although they give this impression and are built up by the Government, as are the employers. Mr. Begg, when he begins the talks, will probably carry in his pocket, to be charitable to him, about 20% of the support of the Irish workforce. He represents approximately 30% of the workforce in a very vague way, or he can claim to, but that is even in dispute. How many of those support social partnership?

Senator O'Toole fought a valiant battle within the INTO when he managed to carry it by just 51% to 49% in favour of a former deal. He should be congratulated on that as well. He is a great exponent of these particular deals. Social partnership at the time was only carried by a narrow margin. Let us not pretend that somehow the trades union leaders represent the entire workforce of this country. They represent a small portion of those who are actually affiliated to ICTU.

What about all those people who are not affiliated to ICTU? Where do the multinationals stand on this particular issue? Virtually none of their workforce is a member of a trade union. On top of that none of them, as an employer, is represented at the talks. IBEC enters the talks, purporting to represent the employers. It does not. It does not represent the most vibrant part of this economy, which has undoubtedly played an extraordinarily impressive role in the resuscitation of the economy. Nobody will dispute that. They may not like it, but that is the truth. Who does IBEC represent? We know who the trades unions represent — a very small number of workers. IBEC's paymasters are the big banks, AIB, Bank of Ireland and Ulster Bank, the big monopoly, CRH, and who else?

John Dardis (Progressive Democrats)
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Independent Newspapers.

Photo of Shane RossShane Ross (Independent)
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That is right, Independent Newspapers, as well, and the semi-States——

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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Is that a good score?

Photo of Shane RossShane Ross (Independent)
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The big paymasters of IBEC are the semi-States, Aer Rianta, Aer Lingus, the ESB, RTE, which all pay well over €100,000 a year into IBEC's coffers. Can anyone tell me that these people somehow represent small business, the backbone of this economy, or the enterprise economy? Whatever one's personal feelings what can anybody say about the most successful company in this country in the past ten years? I challenge anyone to nominate a more successful, more profitable company than Ryanair. It will have no truck with IBEC. It is not a member and regards it as a complete waste of time, because it stifles enterprise. I consider it a pity that Ryanair does not deal with unions. I support the right of anyone to a member of a trade union if he or she can. However, Ryanair is the beacon of enterprise and success in this country, whose workers will not be represented at these talks.

We have heard from the Taoiseach in the recent days that he wants to see ten more years of this.

Photo of Joe O'TooleJoe O'Toole (Independent)
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Hear, hear.

Photo of Shane RossShane Ross (Independent)
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What does he mean by ten more years of this?

Photo of Mary O'RourkeMary O'Rourke (Fianna Fail)
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He means ten more years of social partnership.

Photo of Shane RossShane Ross (Independent)
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He means ten more years of tying people up to a lack of democracy. We see from the Minister of State's speech that within that, somehow, there will be some confusing types of wage deals from time to time. The Taoiseach, for some reason, wants to tie people up to ten more years in this straitjacket. What will happen is that more and more employers, unions and workers will secede from it because it is not what it appears to be. This does not represent the new Ireland. It is the old-style Ireland, represented by Senator O'Toole and his old Tories in the unions and by IBEC which has nobody on its staff who ever turned a penny in the enterprise economy.

John Dardis (Progressive Democrats)
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Senator Ross, however, has not provided an alternative. Nor did he answer Senator O'Toole's central point——

Photo of Joe O'TooleJoe O'Toole (Independent)
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He certainly did not.

John Dardis (Progressive Democrats)
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I welcome the Minister of State, Deputy Killeen, to the House and I welcome the fact that the Leader of the House has organised time for these statements, which I believe are important. The argument, made both here and elsewhere, that the social partnership agreements diminish the powers of the Oireachtas and thus contain a certain undemocratic aspect have been dealt with effectively by Minister of State, Deputy Tom Kitt, and Senators Mansergh and O'Toole. They pointed out that such agreements are of their nature democratic because they incorporate the wider society. The valuable point about today's debate is that it is taking place when the talks are at an early stage rather than when they are over. It has been common practice for the Oireachtas to comment on the outcome of the deal rather than to consider the nature of what that deal should be. It is good that we should consider these matters now. In so far as these statements afford us an opportunity to put on record our view of agreements past and future, they are a valuable exercise.

Like others, including Senator Mansergh, I want to differentiate between the terms "social partnership" and "pay agreement". Although agreements on pay are an integral element of the partnership process, they by no means represent its totality. The Government, employers' organisations, the unions and the farmers all play a crucial role in the social partnership agreement, as does the previously mentioned fourth pillar — the social and voluntary pillar — which I will discuss later. The point is that we should not speak of the social partnership process in terms of pay deals alone. It is evident from the participation of the various partners in the talks on all previous deals that the social partnership agreements are much more than that.

Since its foundation in 1987, social partnership has formalised interaction between the Government and the social partners. Its fundamental objectives of implementing agreed change and providing a process for resolving difficulties have played no small part in bringing Ireland to where we are today. Although some people speak of social partnership as the only critical and necessary element in Ireland's economic transformation in recent decades, I agree with Senator Ross that social partnership is just one element. However, under social partnership we have not only consistently offered some of the world's lowest corporation tax rates but benefited from the reduced levels of personal taxation, with the State profiting from the resultant increased employment and economic activity and people benefiting from lower taxes. That we have adopted and met the Maastricht criteria should also not be underestimated.

All those developments have been of consequence, but social partnership has also provided a great social impetus. There was a realisation by the people of this country that things had to change. As others have mentioned, some of us recall vividly what life was like in the Ireland of the 1980s, 1970s and 1960s and how far we have travelled since then. People growing up today have no knowledge or recollection of those times but anyone who went to university in the 1960s, as I did, can recall that it was unusual for people to be able to stay in the country after they qualified. Thankfully, we have come an immensely long way since then and social partnership has contributed to that. Our levels of unemployment and emigration were previously so massive that we were described as an economic basket case and at one stage the World Bank was about to come in and take over the shop. The depth of depression and despair Irish people faced led them to realise that there must be a better way. The poorly-defined and poorly-structured environment for sustainable economic and social development was altered under social partnership so that development, although not created automatically, was made possible. Senator Ross is wrong to suggest that social partnership was not part of the ingredients for success.

I mention the social impetus for a specific reason, which is that we should not underestimate the power of the desire for change at that time. When the Progressive Democrats were formed in 1985, the party's purpose was to break the mould of Irish politics by giving Irish voters a new and real alternative and to give political expression to the deep desire for change that existed at that time. The party's formation coincided with the frustration at the country's dismal plight and poor economic performance. The move toward social partnership and pursuit of its objectives married well with the views espoused by the Progressive Democrats — that is still the case today — that people were sick of unemployment, poverty and immigration.

The Progressive Democrats view is that the best defender against poverty is a job — we are not unique in holding that view — and that the responsibility of Government is to provide a climate in which economic progress is made and people are given the opportunity to create their own wealth. We have seen what has happened as a result of that. As the Minister of State explained, employment has increased from just over 1 million to nearly 2 million. The more jobs we create, the more revenue is generated to develop public services, to assist the vulnerable in our society and to fulfil the social obligations that should apply in any caring society. That is our idea of social justice. Social partnership provided the environment in which that idea could become a reality.

However, the engine that keeps the process moving is competitiveness, as the Taoiseach mentioned in his opening address to the forum in Dublin Castle. Making Ireland a competitive place to do business as a small and open island economy became an objective as far back as the 1950s, when the then Secretary General at the Department of Finance, Dr. T.K. Whitaker, introduced new thinking and national planning. Although those of us who attended university in the 1960s remember painfully the examination questions we were required to answer about the first and second programmes for economic expansion, those programmes were seminal in creating an impetus in society to bring us forward to a wider and more embracing vision of Irish national economic life. We continue to pursue those objectives. For example, when the Tánaiste addressed the plenary session of the social forum last week, she wisely stated:

The central core around which partnership was built was the belief that a strong, growing, and dynamic economy was the key to providing job opportunities, rising living standards and improved social provision for our people. It recognised that as a small country our prosperity depended on our ability, as a people, to embrace change and openness rather than seek to shut it out.

Staying competitive means we must be ready to change and be flexible. Although the issue was not highlighted in the media, a key element in the latest budget is the fact that the Government is pursuing an essential strategy to provide for Ireland's future competitiveness by creating a third level innovation fund and by providing additional capital investment in third level education to underpin the development of a knowledge economy. The Government is playing its part to ensure we stay competitive and stay prosperous; it is reasonable to expect the social partners to play their part as well. Ireland's economy is changing. The make-up of our labour force is changing rapidly, as we all know. Not only do we have new people from other countries working here who are helping us to sustain our progress, but the workforce is changing in other ways. Although some people, including previous speakers, estimate that trade union membership accounts for some 30% of the workforce outside the public sector, leading commentators have suggested in the past week that the figure may be closer to 10% or 15% and it is falling. Claims that unions have attracted 15,000 new members in the last year seem impressive, but the context is that some 96,000 people have joined the paid workforce in that time. We have 2 million people in work in this country and their views are represented by unions to a much lesser degree than, say, back in 1987. The views of workers in the large multinationals such as Intel, Wyeth and Hewlett Packard, to which Senator Ross referred, cannot be assumed to be represented by union groups. This changes the dynamic of social partnership somewhat.

There are concerns about what we can expect from the social partnership process going forward. There are fears that pay agreements will provide, as was famously stated on one occasion, something akin to an automated teller machine for certain workers. Just as flexibility is a key element in remaining competitive, so is restraint. As the Taoiseach has stated "we have to price ourselves and position ourselves in a very challenging market". That market is increasingly challenging, particularly with regard to China and the Far East.

However, the crucial point is that we are involved in a race to the top, not to the bottom. Yes, we pursue competitiveness but not on the basis of poor wages, more casual labour, lower health and safety standards and poor work practices. None of those can be tolerated and a policy that is at odds with this view cannot be countenanced.

Before I conclude on the changing nature of social partnership, I will return to a point to which I alluded earlier, namely, the role of the social and voluntary pillar. Regretfully, discussions on the partnership process often neglect to mention the role and view of this grouping. Members of the House are acutely aware of the invaluable work undertaken by the groups in this pillar. They represent the aged, carers, children, the unemployed, the disabled, youth groups, charities and many other admirable organisations. The problem is their lack of effective sanction. If this pillar believes a proposal is unacceptable, there is no rush to Government Buildings in the middle of the night for crisis talks. The media do not camp outside awaiting announcements.

These groups cannot threaten strike action. They are not so organised and mobilised to use protest effectively, representing, as they do, the marginalised in our society. We must not equate social partnership with simply a pay agreement. To do so only serves to further exclude the social and voluntary groups and that would make everyone all the poorer.

I and the Progressive Democrats approach the upcoming partnership talks with confidence. Successful outcomes have been achieved in more difficult circumstances than those confronting us now. However, the concerns I have raised force us to consider how the process is to be approached. There must not be social partnership at all costs. The value of agreement must be based on an objective and clear assessment of the repercussions of not having that agreement. Agreement should be based on progress, not habit; on innovation, not routine and on what we strive to achieve, not what we fear to lose. I would be sanguine about not reaching a deal if those criteria are not met. It would not be the end of society and economic progress as we know it if we failed to reach a deal on this occasion. It would have been far more significant 20 years ago when the process began.

The National Economic and Social Council states:

Since negotiated policy is likely to continue. . . the quality of policy depends critically on the nature and outcome of . . . negotiations. Will they produce deadlock? Will the outcome be the lowest common denominator . . . with limited care for the public good? Or will negotiation involve the open-minded search for better solutions with a sharing of gains and costs?

It is infinitely preferable to have a deal but we want a deal whereby we can continue to make progress as we did in the past. I hope the open-minded approach I have explained will be part of the forthcoming social partnership process.

A key point is made in the NESC report on the strategy highlights for 2006 and it is worthwhile putting it on record. It is in a column entitled "Key observations" and under the heading "New understanding implies modified goals". It is a response to the changing nature of Irish society over the past several years. It states:

A modified picture of Ireland's situation demands that we state our goals in new ways. It suggests that our goals should be modified:

To focus more on GNP per head than the growth of total GNP;

To focus more on the overall employment rate and the employability of individuals than the absolute level of job creation;

To encompass not only export growth but also competitive advantage in a networked world economy;

To build on successful adoption and operation of advanced technologies to achieve much wider innovation in products, processes and organisation;

To aim less for targeted programmes for disadvantaged groups and more for the responsiveness and flexibility of publicly-funded services, securing adequate income and improving participation;

To build on successful control of a small number of large scale polluters and an improving waste management infrastructure, to achieve widespread adoption of environmental quality through more effective conflict resolution and governance.

That succinctly summarises what the talks should be about and how they should adjust to the changed circumstances of modern Ireland. I wish all the participants in the talks, especially the members of the Government, every success. I hope there will be a new agreement and that we will continue to build on the success we have enjoyed over the past 20 years.

Derek McDowell (Labour)
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I will start on a positive note as most of my contribution will be critical, although not negative. I believe social partnership has had a vital role in the past 20 years in, first, getting us through the fiscal crisis of the late 1980s and, second, in doing a great deal to get us through the unemployment crisis of the late 1980s and early 1990s.

However, at some stage in the mid-1990s it started to become unstuck. While for a long time it was easy simply to trade off wage restraint against tax deductions, when we began to become more successful in dealing with the endemic and chronic problems of the late 1980s and when our problems became, as Charlie McCreevy once described them, problems of success, social partnership ran into difficulty. It is still in that difficulty. Social partnership has problems dealing with issues such as infrastructure improvements, innovation, upskilling, lifelong learning and so forth. Even though the social partners have little difficulty agreeing on these issues in Merrion Street, as happened with regard to housing on the last occasion, following through in terms of delivery and accountability is enormously difficult. Social partnership has been slow and generally unsuccessful in developing a process to do that in the past six or seven years.

The main problem with the process is not that it is undemocratic, although I will return to that point shortly, but that it is a top down process. It is all very well for Senator O'Toole, IBEC, the farmers and the fourth pillar to have their debate but it is still a private debate. It is still a debate between the 20 to 40 leaders of our community. It is crucial that they have this debate and we would be far worse off if they did not have it, but it is still a debate between the elites. There is a major hiatus in trying to translate the results of any agreement onto the shop floor of a factory or workplace. Individual employers who are not represented at the talks do not feel they have a particular obligation to deal in a different way or in a spirit of partnership with their workforce.

While we should point out that it is not a wage agreement, most workers continue to see it as such. If there is no decent wage increase built into the agreement, it is not passed and does not get through trade union conferences called to approve the agreement. Frankly, I do not have a solution to this. It would be great to be able to wave a magic wand so every workplace in the country is run according to partnership practices and values but that is not possible. The National Implementation Body is supposed to have some influence in this regard and we must also rely on the trade unions and IBEC.

There is a problem about democracy. Senator O'Toole was strongly of the opinion that the process does not marginalise politicians but it does. There is no question about that. I was the Labour Party spokesperson on finance in the Lower House and one finds oneself in a curious situation in one's relationship with the trade union movement. On the one hand, one is in the Dáil criticising what the Government is doing while, on the other, the other branch of our movement is in Merrion Street agreeing with what it is doing. One finds himself criticising while the other is agreeing so we meet afterwards over a pint and say: "What was that all about?" Generally, we agree and tell nobody.

However, this causes a problem. It particularly marginalises Opposition politicians but to some extent it also marginalises Government politicians. One is simply not part of the process. It is probably fair to ask whether one would want to be part of the process. Does the Opposition want to be bound into agreeing to certain things along with the Government? It probably does not but there is no question that one is on the margins.

I worry a little to hear the Taoiseach proposing that we have ten-year perspective on this. That only further marginalises politics. One is saying, in essence, that not only is the Government seeking to bind itself into something for the rest of its term, it is also seeking to bind its successors. It is agreeing to something on behalf of itself and the Government that succeeds it. That is another way of saying, effectively, that the view of the electorate does not matter because the Government will stitch everything up for the next ten years.

On the one hand, it is very easy to acclaim this level of consensus as a positive development. It is healthy and a good selling point if one can go to, for example, those contemplating foreign direct investment in Ireland and tell them what the arrangements will be for the next ten years. On the other hand, it marginalises both politicians and politics. It effectively means that the decision of the electorate in the next general election cannot affect most of the social and economic decisions of the next ten years, if we are to take the decisions being made in Merrion Street seriously. This is extremely worrying.

I can see the advantages of the process. Some issues, for example, housing, must be examined on a medium and long-term basis. However, the process is an easy way out for Government in that it allows it to claim that its performance cannot be judged after two or three years because there are another seven years to go. There must be some sense of perspective and I believe ten years is too long.

I will address the question of a race to the bottom because attention has rightly focused on it in recent weeks. It is a hybrid rather than an infrastructural, soft or specifically workplace issue. Many workers are becoming very worried about the race to the bottom. Undoubtedly, this concern influenced many of the people who came out to demonstrate during the Irish Ferries dispute. It is interlinked with the issue of migration. We should acknowledge the fact that an influx of workers, many of whom are prepared to work for low wages even though their skills, in some cases, would justify much higher wages, will affect the labour market. The entry of 60,000 to 80,000 such workers into the Irish labour market constitutes a major change in the market, which we should also acknowledge. We must monitor developments carefully.

There is some evidence in the tourism and construction sectors of casualisation, of people working as subcontractors where they might previously have secured full-time jobs and of more people working on the minimum wage than would previously have been the case. There is straightforward evidence of exploitation. In many cases, this involves illegal exploitation with a lack of adherence to industry norms and the minimum wage. On one level, the easy solution is more enforcement. The lack of unionisation in some sectors is a genuine problem. The responsibility ultimately falls to the Government to provide the labour inspectorate. This is the responsibility of the Minister of State at the Department of Enterprise, Trade and Employment. I understand that there are between 20 and 21 labour inspectors within the system, although I understand that at any given time, there are likely be fewer inspectors available and that the turnover of inspectors is high. As a first measure, we must increase the level of inspection so that, at least, we know what is happening. The Taoiseach's recent pronouncements lead me to assume that the Government is well-disposed towards this idea.

A few weeks ago the leader of my party, Deputy Rabbitte, made some comments in an interview with The Irish Times about measures that we might consider in respect of people from the new EU member states in central and eastern Europe. Nobody in the Labour Party is stating or has stated that we need to introduce work permits for these people, a measure I would never advocate. We must ensure that standards are maintained within our labour market, that Irish workers and standards of employment are protected and that we do not end up with a race to the bottom, which is typified by the Irish Ferries case. If this requires introducing further restrictions in two to four years' time, I will not shirk from doing so. It is important that parties such as mine, which has a proud stance on racism and immigration, state this. If we do not we do not properly represent the interests of workers who look to us for a lead on these matters. If we do not give a lead on these matters, others will.

We must clearly state that people from other EU states, who are clearly needed by the labour market, are very welcome to come here and that we will do everything in our power to ensure they are not exploited and that standards of employment and employment conditions are maintained. This problem will probably resolve itself over time. One would expect that workers from eastern Europe will eventually unionise and realise that through co-operating and joining Irish trade unions, they can do something to ensure they are not exploited. They will find their voice and eventually be granted access to the labour markets of other EU states. This is a crucial point and we do ourselves and immigrant workers no service by ignoring it. I hope this issue is tackled head-on in the weeks to come.

The issue of pensions, which is surely a long-term one, should be part of the review. A third-tier pension will be needed because simple private pension provision and the provision of the State pension as it currently stands will not be sufficient. It is very likely that we will need some type of mandatory provision. The level of public debate about pensions so far has been fairly miserable. We are all aware of the dangers, the demographic changes which are taking place and the fact that coverage is approximately 50%, but we have still not reached a consensus on what should be done in the future. A measure of consensus is important due to the long term nature of the issue. The social partnership process would do everyone a favour by at least taking up the pensions debate and running with it.

In his speech, the Minister of State mentioned how wonderfully the economy is performing, as Ministers invariably do in respect of these issues. I do not wish to detract from this because the economy is in a very positive state and no Opposition politician would say otherwise. It is also worth noting the report by the National Economic and Social Forum, which was published in the last few days and which was read by the Minister of State. It points out, in a succinct fashion, some serious vulnerabilities in the labour market, which are worth noting. It points out that Ireland is now a far more unequal society where the richest 20% of the working-age population earns 12 times as much as the poorest 20%. The report then points out that there is less equality of opportunity in Ireland than in any other European country. I understand that Ireland ranks 51 out of 56 countries in terms of equality of opportunity for women and accessibility to the labour market. There are considerable issues and vulnerabilities within the labour market which must be addressed and which are properly the business of social partnership.

I am generally supportive of the social partnership process. Unfortunately, it can, at times, lead to a fairly stultifying consensus but, as Senator Dardis observed, there is no credible alternative. I wish the current talks well.

5:00 pm

Photo of Mary O'RourkeMary O'Rourke (Fianna Fail)
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I welcome the Minister of State to the House and pay tribute to the Secretary General of the Department of the Taoiseach. The non-review of social partnership was one of the issues that arose when we conducted a review of the Seanad last year. Many other speakers have noted, and my experience in Government has shown me, that those responsible for social partnership agreements negotiate in isolation while we await their decisions. The process involves ambushes and both mock and genuine battles but finally a decision is reached. I spoke with the Secretary General of the Department of the Taoiseach, who thought my idea was a very good one. He then communicated the idea to the Taoiseach, which led to today's debate.

It is better to have such a debate than not at all. This House is a worthy forum for our contributions on the matter. Earlier I welcomed the Minister of State at the Department of the Taoiseach, Deputy Tom Kitt. I am unique in having lived through all the social partnership agreements, mostly in the Dáil. I remember the Programme for National Recovery, which was the first agreement and genuinely concerned with national recovery because we were very near the edge and the situation was dire. We were in danger of toppling over the edge. It was a particularly fraught time for the Departments of Education and Health, although health was not my brief.

Looking back on those years, I feel I escaped because the cutbacks in the health service were so bad. How could one talk about cuts in class sizes when the situation in the health service, which does not appear to have improved, was so bad? I remember speaking briefly, as a new member of the Government, to the then Taoiseach, Charles Haughey. I had been the shop steward for the ASTI in my school so I was, and have remained, that way inclined. When everybody was searching for the second socialist, it was me.

Photo of Ulick BurkeUlick Burke (Fine Gael)
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That is another declaration.

Photo of Mary O'RourkeMary O'Rourke (Fianna Fail)
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It is the truth. I once looked up an answer to an oral parliamentary question from Deputy Stagg to which I replied in the Dáil and I stated I was a socialist, and was proud to be one.

Photo of Ulick BurkeUlick Burke (Fine Gael)
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There was a search for the third socialist and we did not know until now.

Photo of Paddy BurkePaddy Burke (Fine Gael)
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Were you the third socialist?

Photo of Mary O'RourkeMary O'Rourke (Fianna Fail)
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I am the second one. When I was involved in the teaching union, it was quite strong as many difficult cases were arising for teachers' unions.

I remember talking to former Taoiseach Charles Haughey about the matter of social partnership. He stated that if it worked it would be beneficial but if it did not at least an attempt would have been made at it. There were many unpalatable issues. In the beginning it was a matter of placing restraints on people and hoping that we could turn the corner, which we did. However, the regime was difficult at the time. We are all forgetting that this type of social justice and social partnership goes back to the encyclical Rerum Novarum by Pope Leo XIII, which dealt in the 19th century with social justice throughout the world.

I had forgotten how the names of the agreements were put into acronyms over the years. The Programme for National Recovery, the PNR, was the first in 1987. We gradually moved from recovery to having a better time all around. The people who spoke here today all came to the same conclusion, except perhaps for Senator O'Toole, although he may have done so also by wondering if a better way was possible of sorting out the country's situation.

Despite Senator Ross's undoubted ability to speak, which has been honed in L & Hs, etc. over the years, particularly his years in Trinity College, he still did not convince me of his argument. We know that many of the multinational companies and others are not represented by trade unions. What is he trying to tell us? I do not know. Senator Ross also discussed other issues. It was good to have a dissenting voice and another viewpoint. We cannot all be nodding our heads up and down as if a penny was being placed in a box. We all have different ways of considering these matters.

Senator McDowell is correct in stating there was a period in the mid-1990s when the social partnership process appeared to become stagnant. There was seemingly no fresh thinking in the national process of social inclusion, and it appeared that people were thinking about who could get the most from the pot over the three-year period. The inclusion of the fourth pillar was crucial.

In the beginning the process was about plain survival. The PNR was about survival as a country in economic terms and social justice did not really come into it. Interleaved in the Programme for National Recovery was the concept of whether the country survived as a sovereign nation, making up our own rules and regulations and having a full democracy. The country survived. The process progressed from this and the fourth pillar, a social pillar, was later included, after initially comprising the employers and employees, as well as the agricultural sector. The social element is not waited on breathlessly for its contribution or to see if its participation is detrimental, but it is good to have the element included. As a result, issues are considered that we would never discuss otherwise.

I agree with the idea of a ten-year programme, although I take Senator McDowell's point that it would tie the hands of future Governments, whatever their nature. I cannot foresee a Government that would not wish to continue along the path of social inclusion and social justice. A ten-year agreement may loosely tie the hands of such a Government. There would need to be a wage agreement every three years between employers and employees, and I strongly endorse such an idea.

With regard to longer-term issues, Senator Dardis spoke of pollution and environmental controls. Such matters will require a longer timespan to work through because one would work with EU legislation as well as Irish legislation and other directives. The transport issue is similar, as Transport 21 is a ten-year plan. It will take a number of years to work through. Many issues will require time for the progress of talks.

I hope these issues do not get marginalised or put on the back burner. The participants will not stand for this. We need to know this process involves more than just wages and salaries. Senator O'Toole used a potent image of an ATM machine in attempting to get the teachers' unions to participate in the partnership process, which was difficult. There was a mental image of people queuing at the ATM machine, putting in the card and money pouring out. It was not quite like that, but it was a potent image which worked eventually.

In my five years at the Department of Public Enterprise, I found in my dealings with unions that if an agreement was reached between the Government and trade unionists, everybody stuck to their word. I had many dealings with CIE, taking in agreements and negotiations. Order almost always came from chaos. We all speak of our own experiences, as it gives a flavour and texture to what we say. At that time, a person would have had to work overtime to earn a decent wage in Bus Éireann, Iarnród Éireann or Bus Átha Cliath, which was wrong. People had to work six and seven days a week to get a decent wage. We aimed to find a way by which an employee could get a decent wage within a normal week's work. After negotiating through a particular strike, decent wage structures were achieved for CIE. It is one of the good memories I have of the Department and working with registered trade unionists, who went about their business of making agreements and getting better terms for their fellow workers.

There was no reason this should not have come about. Why should a person work seven days a week to get a decent wage? These were the conditions in the company nonetheless. I have good memories of the achievement, as the agreements reached were adhered to. One could go home from the Department at the end of the process and say that the agreement would be followed up.

There were similar conditions in Iarnród Éireann, and its employees had to work almost every day to get a decent wage. By the time I left the Department we had corrected this situation. The employees were on proper wages, neither too low nor too high, and had proper terms of employment. The terms of employment were of great importance. These were my main experiences of dealing with unions, and I found management to be similar within the same company. With regard to trade unions and management, people stick to their word and a bargain made is adhered to.

Many issues such as those surrounding wages will continue throughout the three-year duration of the talks. We will hear angry, abrasive words but will cope with that. Microphones will be thrust under people's noses outside Government Buildings on Merrion Street and there will be long faces among those who are exercised by the issues but we will continue. The process provides a mechanism, however, whereby any embryonic breakdown in a particular area can be referred to Mr. McCarthy's implementation body in the Department of the Taoiseach to adjudicate, as was the case when it seemed there would be a dispute at An Post prior to Christmas, threatening to throw the entire Christmas arrangements for post into disarray. The implementation body, a mini-version of what will be set up in Dublin Castle, intervened and the parties worked through the problem.

I wish the talks well and I am pleased they are under way. I again proclaim myself a socialist.

Photo of Ulick BurkeUlick Burke (Fine Gael)
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I am delighted to be present to hear the declaration of the missing socialist of recent months.

Photo of Mary O'RourkeMary O'Rourke (Fianna Fail)
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I believe Senator Burke is also a socialist.

Photo of Ulick BurkeUlick Burke (Fine Gael)
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I welcome the Minister of State to the House. I wish the talks well and hope they succeed in putting in place the seventh successive social partnership talks. If any of us asked a member of the public what he or she understood by social partnership I am not sure what the answer would be. It would depend on the individual, but the majority of people would understand it to be a process to secure a wage agreement. Over the years the core negotiations took place around wage agreements and the increases to be agreed by the social partners. Were it not for these agreements we would not have had the industrial peace we have enjoyed, one of the greatest things the process has produced apart from the wage increases that have accrued to various groups.

This peace has been particularly valuable in the major service areas. In the days when various providers of services to industry or the public at large — particularly power, communications or transport services — threatened to strike everybody feared the consequences. Efforts were made by various bodies on behalf of industrialists or the Government to stave off ensuing crises. We have thankfully moved away from that situation, at least in some respects.

Senator O'Toole described the location and set-up of the talks, the employers and business representatives on one side and trade unions on the other. On the sidelines are the farmers and the voluntary groups but, while they are well represented, the powerhouse always has been and will remain the first two groups. Initially, as many speakers have said, the aim was to keep the State solvent. Then the focus progressed to discussions about jobs and employment which were also very successful. Whether people acknowledge it, however, we have an impending jobs crisis. We no longer seem to be able to compete in certain areas, such as ordinary manufacturing, in which we have done so well over the years, producing goods for export and creating jobs. Employers and business people will raise that and use it to intimidate other groups in the talks.

Many towns have lost flagship employers which had been there for decades. For example, Ballinasloe, where I worked for 25 years, lost AT Cross. A task force promised that all the local and State agencies would combine to redress it but nothing has happened. Then Square D shut down with the loss of another 400 to 500 jobs in the town. Subsequently, Dubarry shoemakers, a long-established, traditional industry in Ballinasloe shed jobs owing, we were told, to a lack of competitiveness. In total 1,100 jobs were lost in one town over five or six years and all we have received is a promise of 125 high-tech manufacturing jobs in a medicare company from Japan. They are a different type of job but very welcome nonetheless as a new beginning for Ballinasloe.

Farming groups at the talks will highlight many issues concerning rural Ireland. Since their involvement as partners in these talks there has been a major decline in the numbers involved in farming and in the value and quantity of exports from this country. Until approximately ten years ago agriculture was our primary industry and export earner. Nowadays full-time commercial farming is practically dying on its feet and there has been no Government response to it whatever. I do not know why representatives of farming, until recently our primary industry, do not demand that we retain it. They seem no longer to be the strong voice of a powerful lobby group that could demand a response from Government and hold a relevant Minister accountable. Successive Ministers for Agriculture and Food in this Administration over the past ten years have outrageously failed to protect farming in Ireland. They failed to halt the decline in farm incomes, which are below the average industrial wage and falling further behind.

The value of our exports is declining because the numbers leaving agriculture have caused volumes to decrease. I wish the Government would acknowledge the numbers turning their backs on agriculture and who seek steady jobs in manufacturing or in construction, our only major growth industry in terms of employment. In the interest of the many people who depend on agriculture for their livelihoods, I hope the sector will continue to prosper, although some would doubt its capacity to grow or retain current levels of employment.

Why, despite the undertakings given in the last agreement to voluntary and social groups, has the issue of affordable housing fallen flat? The Government made repeated commitments but the sad reality is that practicalities have not been delivered. Affordable housing is a wonderful scheme because it represents a tangible hope for young people that they can own houses of their own. However, it is not materialising because the Government has balked at its responsibilities in that area.

If voluntary and social groups have been successful in their negotiations, why are increasing numbers of homeless people staying in cardboard boxes outside the gates of Leinster House at night? How many of those have died over the past couple of months? The statistics speak for themselves and if anybody tells me that social partnership is working as it should I would ask him or her to look at the areas of failure.

Homlessness affects towns and cities throughout the country. If the social partners can focus on one area, I hope it will be this problem. We are told that poverty is being eliminated but the gap between rich and poor is increasing. Business people and trade unionists can fight the mock wars referred to earlier but, while homelessness continues, what will be the response of the partners?

Photo of John Gerard HanafinJohn Gerard Hanafin (Fianna Fail)
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In the 1970s and 1980s, we heard of the German economic miracle, which was due in part to partnership. I welcome the fact that we have developed partnership arrangements to an advanced art whereby, every few years, the Government can, with the social partners, comprehensively address areas of concern. I anticipate that the difficulties which have arisen in recent years will be so addressed in this round.

Social partnership has played an important if not pivotal role in Ireland's dramatic economic and social development since 1987. Each of the six agreements reflected the unique challenges and opportunities of its time and injected a greater measure of stability, certainty and consistency into policy making. Each agreement had unique priorities and achievements, which, in all cases, were the products of rigorous analysis, quality debates and sensible compromises under the guidance of the NESC. There has been an incremental shift over the course of the agreements from macro-economic issues to structural and supply side policies, a trend which will undoubtedly deepen given the remarkable recent improvement in Ireland's absolute and relative growth rates, as well as general prosperity levels.

I find it strange that some commentators continue to take the view that all or most of the progress made since 1987 would have happened anyway and that evolving national policies were overwhelmingly driven by external influences, especially at EU level, which would of themselves have generated growth, employment and wealth over the period since the first social partnership agreement. If that is the case, why do most of our EU partners admire our economic success and why does it contrast with their own high unemployment and low growth rates?

Today, Irish people have cause for pride in their country's achievements and for optimism on their future. Our economy has been transformed and significant inroads have been made on social disadvantage. Ireland's population recently passed the 4 million mark for the first time since 1871 and major growth is predicted over the next few years. In fact, the population of the island, which currently stands at over 5.7 million, will reach 7 million by 2021. Apart from 100,000 people, the growth will have occurred entirely within this jurisdiction.

With the appropriate and, in many cases, well tested frameworks in place, including, social partnerships, Government programmes, national spatial and anti-poverty strategies and multi-annual capital envelopes, we are well poised to maximise our potential. We can take heart that many of the policies contributing to and flowing from such frameworks were the products of discussion and agreement between Governments and social partners. The younger generation can look forward to a bright future. Educational attainment, public finances, the labour market situation the industrial relations scenes and many of the other contexts for economic growth and societal contentment are positive and are overwhelmingly the product of informed decisions. However, nothing is given in terms of the future and we must be diligent, imaginative and agile in responding to new challenges and creating opportunities.

Since 1987, Ireland's economic growth has averaged over 6% per annum in GDP terms. If we use the economic formula of the 72 rule, dividing 72 by six means that our economy doubles every 12 years. If we consistently attain 6% until the end of 2011, we will have quadrupled the value of Ireland's gross national product in 24 years. That would be a remarkable achievement.

Average industrial earnings have increased by 75% in real terms, taking into account tax changes and inflation. Employment growth has been striking, with almost 900,000 extra jobs created in the period from 1987 to 2005. As a consequence, unemployment has fallen from almost 17% to 4.3%. However, social partnership is about more than jobs and pay, important though they are. For example, public spending on health is almost 700% of the 1987 level, while the corresponding figures for education and social welfare provision are almost 400% and 317%, respectively.

The prosperity secured through partnership has the purpose of improving the quality of life for our people. The record of success of social partnership in underpinning our economic and social transformation represents the best argument for its continuation. Some commentators are opposed to this, presumably because it is not enough for them that partnership works in practice and that those with experience of it want its continuation. It should not work, according to the commentators' theories but fortunately, they are not the people who make policies.

While today's challenges differ from those of 1987, they are no less complex and it is no less important that they are met. Now, as then, partnership offers the best way forward. The recent publication by the NESC of its strategic report, People, Productivity and Purpose, provides the guiding vision for economic and social development in Ireland over the coming years and, more immediately, the framework within which the negotiations for a new agreement should take place.

Ireland needs to put in place the policies and delivery systems which will allow us to realise our full potential. Experience teaches us that this is best achieved when there is a reasonable consensus about the choices we face as a country. The best hope of developing a realistic consensus is through adopting a shared vision of an Ireland of the future. As a small and very open economy, we have learned that competitiveness and flexibility are key components of our economic development. This is a simple reality that must guide us in the talks, not least when it comes to matters of pay. We have to price and position ourselves in a very challenging market and must do so sensibly. At the same time, we do not want to see growth in competitive advantage based on poor wages, casualisation of labour, low health and safety standards or other poor compliance practices. The issue of employment standards has been flagged by the Irish Congress of Trade Unions as a core agenda item for these talks and is of vital importance for the country.

The Government does not wish to see a race to the bottom in the Irish labour market and its progressive record on employment, real take-home pay and working conditions shows that it means what it says in this regard. The Government wishes to ensure that we keep up in the race for greater productivity and enhanced competitiveness by developing new products and services, upskilling staff and embracing new work practices and technological innovation. The lowering of employment standards forms no part of the Government's vision and, in fact, runs contrary to it.

The majority of employers are decent, responsible people who play by the rules. Our prosperity depends on them but it also depends on the labour movement. Employers have played a positive, constructive role in our social partnership system thus far and in our economic and social development.

Ultimately, social partnership is based on a consensus that short-term goals and the narrow pursuit of self interest are harmful to the long-term interests of each of the social partners and society as a whole. That is why, with goodwill and determination on all sides, we can develop an approach to the issue of employment standards that will be balanced, effective and fair. The Government is committed to playing its part in this process to the full. As further evidence of its concern to maintain standards, the Government has decided to intervene in the Laval case at the European Court of Justice. Its aim is to protect Ireland's long-standing traditions in the areas of social partnership and industrial relations from any adverse consequences arising from this case.

Our competitiveness is closely linked to pay, flexibility and the development of quality employment but is also linked to public service modernisation. The Government will seek to build on the measures agreed in Sustaining Progress in this area and will be negotiating for further improvements so that we can achieve more responsive and better quality customer service, improved management of performance, enhanced finance and human resources management and greater flexibility and openness to change. As a strong proponent of public service workers, I recognise the commitment and dedication of our civil and public servants, whether they are in the frontline in our communities or in the important areas of support of frontline delivery. In the interests of transparency, open government and value for money, it is crucial that civil and public servants are given an opportunity to demonstrate to the public their commitment to ongoing improvement of services and to having those improvements verified in an objective way.

The overall Government strategy is aimed at developing a more dynamic, enterprising and innovation-based economy which can sustain higher living standards and ensure a better quality of life for all. The Government, with the NESC, sees this as embodying the core elements of a vision for the Ireland of the future. Social partnership has worked well for this country and will continue to do so. It is something we should develop and fine tune as it has been a vital part of our progress, both socially and economically. I want to see social partnership continuing and look forward to a successful outcome to the current negotiations.

Photo of Feargal QuinnFeargal Quinn (Independent)
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I welcome the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Killeen, and am grateful for the opportunity to debate the issue of social partnership. This debate is perfectly timed although in previous years, the issue was not debated in this House until it was too late. As has been said many times in this House, decisions have been made in the past without advice and input from both Houses of the Oireachtas.

I want to focus mainly on the non-pay element of the current negotiations, but first I wish to make one or two points about pay. It goes without saying that the vital consideration with regard to pay is competitiveness, particularly international competitiveness. That point has been made many times but I am not sure people are really paying it sufficient attention. Over the past five years or more we have been steadily chipping away at our competitiveness, with the result that we are now much less competitive than we once were. We will not really feel the impact of this slide down the slippery slope until it is too late. One day soon we will wake up and discover that we have priced ourselves out of the market, particularly the markets in which we want to compete. We will discover that it no longer makes sense for multinational firms to invest in this country because the returns simply do not add up. My fear is that by the time this really hits us, it will be far too late to do anything about it. The time to realise the danger, and to take whatever corrective action is required, is now. That is why any pay agreement that further undermines our competitiveness would sow the seeds for future disaster.

The only other point I want to make about pay is that we should all recognise the difficulties arising from public sector pay. Public sector pay levels, particularly when one takes into account pension benefits, are now way ahead of pay levels in the private sector. The "Marian Finucane" radio programme last weekend featured an interview with the chief executive of one of the larger pensions companies, who claimed that pensions in the public sector add approximately 45% to workers' salaries, when compared with private sector workers with no pensions. We have not taken into account the enormous impact of the pension schemes in the public sector, particularly the benchmark linked schemes. As a result, we now have private sector unions, like the banks officials association, clamouring for an adjustment that will close the gap between the public and private sectors. However, if we go down that route, we can throw any pretence at staying competitive out the window. The only sensible way forward is for private sector pay to be related to competitive considerations and for public sector pay to be approached on the basis of comparability with what is paid in the private sector. What we need is a kind of benchmarking in reverse.

The big lie about the benchmarking process was that there was a gap between private sector pay and public sector pay. We now know that gap simply did not exist and that, as a result of benchmarking, a gap has been opened up in the opposite direction. If we try to close that gap by increasing private sector pay to match that in the public sector, we are setting out on the road to disaster. We must address the situation from a realistic standpoint, recognising that public sector pay is already too high.

Vital as it is that we get the pay elements of these negotiations right, the non-pay elements of social partnership are of even greater importance. We should use the new agreement to firmly commit the Government to making a raft of necessary, long-term investments and to convince the general public to support the spending of resources on those investments. There are three investments in particular that I have in mind, the first of which would aim to eradicate educational disadvantage. I have spoken on this issue a number of times in this House and am well aware that the Minister for Education and Science has new plans in this area, which I welcome, but with one reservation. Ambitious as her plans are, they do not go far enough to address the problem and as such, they run the risk that the investment will fail for being too timid. As I have said before, solving educational disadvantage will take an enormous amount of money and it will involve effort by far more players than just the Department of Education and Science. Disadvantage is not purely an educational problem, it is also a social problem and we must tackle it in an holistic way.

I hope the social partnership process will embrace the reality that we will never solve educational disadvantage by playing around at the edges of the problem, we must attack it head-on, with all the resources the problem demands. If the social partners recognise this reality and act on it, this agreement would represent a major step forward in the development of our country. I cannot stress that point strongly enough. I have some experience of the education area and I was astounded how the same people are left behind all the time. Even if we solve the other problems, those who are educationally disadvantaged do not get the benefits and stay at the bottom of the pile.

The second area of investment is in the integration of immigrants. It is an incredible fact, which emerged recently in the Joint Committee on European Affairs, that no agency of Government is responsible for ensuring that our new immigrants are integrated in our society. This is another time-bomb. If we do not encourage immigrants to integrate, we are laying the seeds for the kind of trouble that happened in France in recent months. We should take what happened there as a grim warning of the consequences we will certainly suffer if we refuse to address this issue while we still have time. I employ a number of immigrants and it was a joy to see them succeeding, growing and blossoming, integrating with others, as their language became ours and they were able to mix, benefiting our country. There were others, however, at the bottom of the pile doing the washing and cleaning, who tended not to learn our language. They would go home to a ghetto-type environment, where they would meet only their own people and would not learn our language or integrate. When we ask what Government agency is responsible for addressing this, it turns out there is none.

The third area where we must invest in is preparing the country for the information society. I wrote an article in The Irish Times last week drawing attention to the mismatch between our declared ambitions in this area and our performance on the ground. We have made the right diagnosis, that the information society is the world of the future. We have declared the right ambition, that Ireland, if we play our cards right, can not only do well in that new society but can take on a leadership position. Despite making the right diagnosis and formulating the right ambition, however, we have done nothing to act on what we know and what we have decided. This is madness.

I hope the social partnership process is a rallying ground on which the country can dedicate itself to doing what is necessary to succeed in the information society. If we do not do that, we will discover that we have missed out on what will very soon be the only show in town. We have seen other countries, particularly places like Singapore, make a success of it. We can do the same but it requires Government commitment and action now.

Michael Finucane (Fine Gael)
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The principle of social partnership goes back to 1987 and I hope the current round of partnership talks is a success. I note with interest that the farming pillar made the nitrates directive an issue and stated that unless there was movement on it, the farming community would not participate. This is a critical issue. Teagasc and the Departments of the Environment, Heritage and Local Government and Agriculture of Food have made a total mess of the process. The pig and poultry industries illustrate this. I attended a meeting last night of the producers in my country and they expressed their concerns about the directive and the way it will finish that segment of the business. The pig industry is extremely concerned and it now appears that poultry producers can no longer offer litter to tillage farmers because there is nowhere now that chicken litter can be spread. The agricultural sector should seek movement on the directive in the talks.

While the economy is booming and we need immigrants, much of our success is built on shifting sand, particularly construction. The construction industry is booming at present but many people ask how long this can continue. A major proportion employment is concentrated in the industry and a high percentage of our gross national product is derived from it.

We used to point to our success in exports but a displacement factor has evolved, with traditional jobs being lost in this economy because we are uncompetitive. Competition will be important in the partnership discussions.

While most of us want public servants to be rewarded, there was criticism of the last round of benchmarking. I understood Senator O'Toole's remarks earlier but benchmarking lacked transparency. The relativities and reports that framed the process were subsequently destroyed and no one knows how comparisons were made. If another round of benchmarking takes place, it is important that it is transparent and that real productivity linkage is associated with it. That linkage was not involved in the previous process. Many reports were produced internally as a form of justification. We did well out of benchmarking as Oireachtas Members, but people who see us as being in a more sheltered environment should be able to see how the process works.

I am concerned that the homeless problem remains. Fr. Seán Healy, a major voice speaking on behalf of the homeless, is involved in the talks and we should make a determined effort to end homelessness. It is not rocket science to identify the homeless in Dublin. I watched an awards ceremony last night and Fr. Peter McVerry received an award from the record industry for helping the homeless. It was interesting to hear those he had helped speak of how he had given them a chance. I was pleased that a person of his stature received such an award. Departments can dovetail their work with such people and resolve these problems. We must not have a situation where, within a short distance of this House, we encounter people who are homeless in doorways. I hope that issue will be addressed.

It is a matter of concern that those who raise the issue of immigration, even in a constructive manner, are accused of xenophobia or racism. I know many immigrants from eastern Europe who have taken up jobs and make a valuable contribution in my local community and long may that continue. It would be wrong, however, not to express concern about the prospect of free movement for citizens of the states set to join the European Union in 2007, namely, Bulgaria and Romania. We may need to take a different approach when that enlargement takes place.

It is interesting to note that while Ireland, Sweden and the United Kingdom agreed to accept immigrants from the ten accession states immediately — these immigrants have enriched our communities and are valuable assets in the marketplace — France, Germany and the larger EU economies have still not given their imprimatur to allowing immigration from the ten new member states. We need to develop a comprehensive immigration policy based on an objective examination of the forthcoming enlargement in 2007. We must ask whether we can have an open door policy towards immigration from Bulgaria and Romania and, at a later date, Turkey.

While the economy is developing well and full employment has been achieved, three reports published today on construction activity, tax shelters and so forth make for interesting reading. They show that the petrol was poured on the fire, particularly with regard to the construction industry, even though it was already well lit. People are galled by the fact that a condition of participation in many of the tax incentive schemes and shelters was an income in excess of €250,000.

In other cases, wealthy individuals were able to build up a pension of €100 million. In contrast, ordinary people have been offered €2,500 to top up their pension by €7,500, provided the money is drawn from their SSIA scheme. This welcome initiative, which applies specifically to those who pay income tax at the 20% rate, is progressive but minuscule when compared with the type of tax incentives offered to those who did not need them but availed of them to avoid paying tax.

Research undertaken by the Department of Finance found that a significant number of those earning in excess of €1 million pay no tax. It is difficult to explain the contrast between the tax incentives available to high-income earners and those available to low-income earners. I am glad many schemes have ceased because serious question marks hang over them in terms of the return to the State from the projects carried out under them vis-À-vis the level of tax foregone.

I wish participants in the social partnership talks well. On the Minister of State's brief, I hope the number of labour market inspectors increases to a level which will ensure fair play in the workplace. I also hope we will not continue to read about the exploitation of immigrants who came here to work for the minimum wage. The newspapers have highlighted many such cases, including one involving a subcontractor working for a reputable member of the Construction Industry Federation which paid a derisory amount per hour, and others in the area of horticulture, particularly the mushroom industry. Having welcomed immigrants to Ireland, let us treat them with respect. It is incumbent on the Department of Enterprise, Trade and Employment to expand the number of labour inspectors in order that they are in a position to keep tabs on the employment market and ensure abuses do not take place in the system.

Photo of Terry LeydenTerry Leyden (Fianna Fail)
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I welcome the Minister of State, Deputy Killeen, and commend his colleague, the Minister of State, Deputy Tom Kitt, for his excellent contribution to the debate. Social partnership is one of the great legacies of former Taoiseach, Charles Haughey. In 1986, while Fianna Fáil was in opposition, the party's Front Bench was approached by members of the trade union movement who proposed the introduction of a social partnership type framework for national understanding. On its return to Government in 1987, the party implemented this proposal. The lesson Fine Gael and the Labour Party should learn from this is that if they intend to form a Government, it would be worthwhile to formulate policies rather than engage in personal attacks on individual Ministers or projects.

Michael Finucane (Fine Gael)
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We act as the Senator's party does when in opposition.

Photo of Terry LeydenTerry Leyden (Fianna Fail)
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My colleague, Senator O'Rourke, and I were members of the highly-innovative Front Bench in question.

Rory Kiely (Fianna Fail)
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I ask the Senator to confine his remarks to discussion of the current partnership talks.

Photo of Terry LeydenTerry Leyden (Fianna Fail)
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I am providing an historical background to show how the talks came about. During the period in question, which was also part of the Celtic tiger era, the Fianna Fáil Front Bench decided, in opposition, to create the financial services centre and implemented this idea when it was returned to office. My advice to the Opposition is to examine its approach.

Michael Finucane (Fine Gael)
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We also heard promises of free road tax at the time.

Photo of Terry LeydenTerry Leyden (Fianna Fail)
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All the parties promised free road tax during the 1977 election campaign when I ran for a seat in the Dáil. It was Garret FitzGerald who later promised to introduce a stay-at-home allowance for housewives.

Rory Kiely (Fianna Fail)
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I ask the Senator to confine his comments to social partnership.

Photo of Terry LeydenTerry Leyden (Fianna Fail)
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I am sorry I am being dragged into this debate.

Michael Finucane (Fine Gael)
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The Senator initiated it.

Photo of Terry LeydenTerry Leyden (Fianna Fail)
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Many Senators discussed the reasons for the emergence of the Celtic tiger. Our unique model of social partnership is one of the most important reasons for our recent economic progress and the newer member states of the European Union would be well advised to emulate it.

As my colleague, Senator O'Rourke, has stated on many occasions, education is the foundation on which the Celtic tiger was built. Innovative investment in this sector, particularly by Fianna Fáil Governments, notably the introduction by Donogh O'Malley of the free education scheme, laid the foundation for the economy's current strength. Social partnership is vital if we are to maintain this strength.

I am pleased partnership talks are under way and certain they will have a successful outcome. Several organisations, including a group representing a section of the farming community involved in dry stock, have made submissions to be considered for inclusion in the talks. Thus far, however, these requests have been rejected. Given the success of the partnership model, it is plausible to argue that if it is not broken, why fix it. Moreover, the Irish Farmers Association may have reservations about other farm organisations joining the talks. As the matter has been drawn to my attention, will the Minister of State indicate whether submissions to join the talks have been considered? If so, on what grounds have other organisations been excluded?

The Minister of State, Deputy Tom Kitt, adequately addressed the concerns raised about social partnership being the cause of a democratic deficit. One of the points to emerge from the proposals on reforming the Seanad was that the House would be an excellent forum for a detailed debate on social partnership. This debate is part of that process and provides Senators with an opportunity to put forward ideas and suggestions on the partnership process.

Photo of Mary O'RourkeMary O'Rourke (Fianna Fail)
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It is a beginning.

6:00 pm

Photo of Terry LeydenTerry Leyden (Fianna Fail)
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The areas to be discussed at the partnership talks include increases in take home pay, changes to the taxation regime and the extension of tax shelters, many of which have been beneficial. The report on tax incentives published yesterday, for example, pointed out that the cost of the Shannon corridor was approximately €1 billion in tax foregone. Without the scheme, the money would not have been available in the first instance.

This negative approach to the extension of the Shannon corridor to other areas in the lower Shannon region has been pointed out. It is worthwhile considering, there is a case for it and it should not be shot down. It has been brought forward by people such as my former colleague, the late Sean Doherty. Senator O'Rourke was brought in on the discussions on this approach at an early stage. It has been successful and the Minister knows that Carrick-on-Shannon is an example of the success of the investment by individuals because of the incentives offered in that area. When the Minister of State was Opposition spokesperson on tourism he was in the Forest Park Hotel with me and Mr. Doherty and took it on board at the time. Deputy Killeen was Opposition spokesperson for that short time of reflection during which we were out of Government. He took an interest in it and proposed it in a policy document which he published before an election in the 1990s. We brought back the Shannon corridor scheme when we went into Government. Senator O'Rourke was there. It should be recorded that it was part of the progress of the economy that now results in the continuation of partnership talks.

Social partnership is vital. I recently visited Belfast as a substitute on the British-Irish Interparliamentary Body and it is extraordinary to see the North in such a poor economic state. The deprivation in east Belfast is particularly extraordinary. They admire the number of jobs created in the Republic of Ireland. Co-operation with the Republic is more attractive now than ever before and it is encouraging that our separated brethren in the North recognise that the economy here is strong. The number of people from the North of Ireland working in the Republic has grown. They are welcome and it is right that they should be given first priority in employment here.

I welcome this debate and thank the Leader for the opportunity. I commend the talks and hope they will be resolved quickly. There is great commitment on all sides and we are fortunate in having the leadership of congress and the major unions, SIPTU in particular. I want to declare an interest. I am pleased to be a member of SIPTU as the nominee of the Irish Professional Association in the Seanad.

Photo of Mary O'RourkeMary O'Rourke (Fianna Fail)
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We must watch our Ps and Qs.

Photo of Terry LeydenTerry Leyden (Fianna Fail)
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I am pleased that after so many years I became a member of a progressive union.

Michael Finucane (Fine Gael)
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The Senator can join the Labour panel. He will take down insurance for next time.

Photo of Terry LeydenTerry Leyden (Fianna Fail)
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The unions have played an important part in pushing forward these talks and will play an important role in the process. One could say people in the talks have as much or more influence than the people in both Houses of the Oireachtas, but so be it if it continues to bring about the economic success it has already done with practically full employment. When I was in the Department of Post, Telegraphs and Transport in 1982 I went to the Netherlands on behalf of the IDA and tried to explain how inflation here was 20%, rising to 22%.

Photo of Mary O'RourkeMary O'Rourke (Fianna Fail)
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It is difficult to explain it.

Photo of Terry LeydenTerry Leyden (Fianna Fail)
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I tried to explain how difficult it was to attract inward investment. Now inflation at about 3.5% and interest rates at the current level have pushed the economy forward. The only difficulty on the horizon is energy. The Government must carefully examine the continuation of the need for oil. Yesterday I heard a report that the level of oil reserves has peaked and will decline from now on. By 2025 there will be a major world shortage of oil. In the meantime it is vital that alternatives are devised.

I commend the Government and Deputy Killeen, on promoting fourth-level education, which is innovative. Research and development are vital to the economy and are recognised as an integral part of the social partnership plan for the future.

I thank the Leas-Chathaoirleach for allowing me to speak and commend the Minister of State for his work in the Department of Enterprise, Trade and Employment and for his innovative work on labour affairs. I commend him for increasing the minimum wage last year. Despite much opposition from employers he was right to do so as it has given people security in their employment and recognition for the work they do in the economy in the form of proper payment.

Photo of Tony KilleenTony Killeen (Clare, Fianna Fail)
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I welcome the thoughtful contribution by so many Members, not that I agree with all of them. I commend the Leader and the House for this opportunity to debate social partnership.

Social partnership is a process of deliberation involving a search for consensus in addressing trade-offs both between and within interest groups in addressing joint problems. It has played a pivotal role in Ireland's dramatic development on economic and social fronts since its introduction in 1987 when national morale was sapped and business confidence was low. The part of the negotiation that resulted in the Programme for National Recovery has been followed in each of the successive agreements with the preceding report by the National Economic and Social Council providing a focus for subsequent negotiations.

The recently published NESC Strategy 2006: People, Productivity and Purpose, provides a guiding vision for economic and social development in the coming years and the framework within which the negotiations should take place. The Government's approach to the negotiations will be guided by the shared vision and medium to long-term perspective proposed by the NESC report.

Our strong commitment to pursuing economic and social prosperity through social partnership and dialogue has brought us far. It is appropriate as negotiations on a new agreement begin, to remind ourselves of the benefits since 1987. Unemployment has fallen from approximately 17% in 1987 to 4.3% in 2005, the lowest in the EU. Long-term unemployment stands at just 1.4%. A single person on average industrial earnings has seen his or her take home pay increase by 75% in real terms. The enormous turnaround in our employment situation has had a favourable impact on social inclusion. The falling rates of consistent poverty during the 1990s are a further indicator of the success of Government policy on social partnership. Before social partnership, an annual average of over 317,000 days were lost through industrial disputes in the 1980s compared with a record low of less than 21,000 days in 2004.

The negotiations to agree a successor agreement to Sustaining Progress have commenced. Addressing last Thursday's plenary meeting of the social partners in Dublin Castle, the Taoiseach outlined the challenges which face Ireland and which must be recognised in the negotiations. As a small, open economy, Ireland has learned that competitiveness and flexibility are key to economic development, a fact that must also guide the negotiations. The Taoiseach stressed that we want to see greater productivity and enhanced competitiveness based on new products and services, upskilling of staff, new work practices and technological innovation. Building competitive advantage must not be based on poor wages, casualisation of labour, low health and safety standards or other poor compliance practices. Not only is it wrong, it is unsustainable.

The consensus on economic and social policy issues in Ireland through successive national partnership programmes could not have been achieved without the agreement on social standards. This consensus approach involving employers, employees and Government has been a major contributor to Ireland's recent economic success and has been backed up by balanced employment rights legislation which, together with measures designed to stimulate employment, provide an appropriate framework for achieving a competitive and efficient business environment.

The protection of employment standards is an important goal of public policy. In particular, we do not want to foster social division by having jobs transformed from decent employment for Irish citizens to low-paid positions targeted at migrant workers. This country has invested significantly in tackling poverty and inequality. The Government is not prepared to see it replaced by short-sighted and exploitative decisions. Ultimately the State has to subsidise unsustainable, low-paid employment through the family income supplement, social services, etc. This is why I am satisfied we have good employment standards. I recognise that commercial reality and competitive pressures will impact on any employment that may not be sustainable. Outsourcing can be a necessary and legitimate response to such pressures. It generally involves the reorganisation of work processes and production systems. The best defence for all of us against these pressures is to ensure that our approach to wage bargaining is responsible and reflects competitive realities, that our workers are encouraged to update their skills in line with technical progress, that our industrial relations practices foster flexibility and change in order to boost productivity, and that our support for workers affected by change is timely and effective.

The Government has already communicated its intention to engage fully and effectively in the process of devising policies and measures, which would protect employment standards and ensure appropriate compliance. I am confident that a successful response to these issues can be found. They are best found in the context of a social partnership agreement that continues the stability and progressive modernisation of our labour force and employment practices in order to sustain jobs and living standards.

To remain a competitive growing economy with the capacity to improve our social provision, we must continue to build on what it has achieved for us. If we have learned anything in the past 18 years, it is that a shared analysis of the issues coupled with a problem-solving approach has worked. However, social partnership is not a recipe for perfection. Not everything works as planned. It will fail the test without an open and honest engagement now and in the future. There is no place for free riders in social partnership. There is no place for those who take the benefits without contributing. Imperfect as it is, however, it has delivered far more for each of the participants — all of us — than could possibly have been achieved in the bad old days of confrontation and conflict. As rapid economic and social change continues, Irish society needs the stability provided by the partnership approach. Everyone has benefited.

Photo of Paddy BurkePaddy Burke (Fine Gael)
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When is it proposed to sit again?

Photo of Mary O'RourkeMary O'Rourke (Fianna Fail)
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Tomorrow at 10.30 a.m.