John Perry (Sligo-North Leitrim, Fine Gael)
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On the occasion of my first attendance in the Seanad since my appointment as Minister of State with responsibility for small business, I congratulate the Leas-Chathaoirleach, Senator Denis O'Donovan, on his appointment and wish him well. I congratulate Senator Paddy Burke on his election as Cathaoirleach and wish him well in his very important role. I congratulate Senator Maurice Cummins on his appointment as Leader of the Seanad and Senator Darragh O'Brien on his appointment as Leader of the Opposition.

This is a very important debate on job creation and the role of small businesses. The Government will be concerned about and will have respect for their role. It acknowledges the critical role of the domestic economy in this regard. Job creation is central to our economic recovery and at the core of the programme for Government. That is why the Government regarded the jobs initiative as a key priority within its first 100 days in office.

Small businesses are the backbone of the economy. There are some 250,000 such small businesses, employing approximately 700,000 workers. By appointing a Minister of State with specific responsibility for small business, the Government is clearly signalling to the business community and the public at large that small businesses are and will continue to be central to economic recovery.

The role of my Department is to ensure we have the right policies in place to support and grow our enterprise base to facilitate both job creation and job retention. It is only by creating the right environment for businesses to expand that we will see new jobs coming on stream. We must champion the cause of businesses, particularly small businesses which can create good jobs in sustainable activities.

The jobs initiative is part of a strategy of the Government to kick-start domestic economic activity. We have noted considerable foreign direct investment in Ireland, which is very welcome, and acknowledge the role of Enterprise Ireland. Given that the domestic economy employs 700,000 people, the real job of the Government is to offer encouragement in this sector. The intention of the proposed measures is to target our limited resources at key sectors of the economy that can assist in getting people back to work, provide opportunities for those who have lost their jobs to re-skill and build the confidence that will encourage consumers to spend. In particular, the jobs initiative focuses on measures that offer the greatest potential for expansion and employment creation in the domestic economy. It focuses on labour-intensive areas that will generate jobs quickly.

One of the key issues that impacts on the ability of viable small businesses to create jobs is access to credit. This is a challenge the Government is determined to address. The recently announced plans to restructure and recapitalise the banking system are the principal response to this challenge. The plans are designed to secure an adequate flow of credit into the economy to support economic recovery, even as the banking system is downsized. The banking system must provide for substantial new lending into the economy. The business plans submitted by the pillar banks provide for over €30 billion in new lending in the next three years across their core business areas. Up to €20 billion of this figure will go to small and medium-sized businesses. The financial authorities will be rigorously monitoring the banks' activities to ensure credit is available to borrowers who meet reasonable credit standard requirements. Mr. John Trethowan in the Credit Review Office will have a benchmarking role in this regard. It is very important that viable businesses obtain the necessary working capital to ensure they can sustain jobs.

As part of the jobs initiative and in accordance with the commitment given in the programme for Government, we will be initiating a tendering process for the development of a temporary partial credit guarantee scheme, which I very much welcome.

This will be a targeted scheme aimed at commercially viable businesses that can demonstrate repayment capacity for the additional credit facilities but which cannot secure credit facilities due to insufficient collateral for the additional facilities or because they are growth or expansionary companies which, due to their sectors, markets or business model are failing to get support under the banks current commercial lending decision making. It is important that we deal with those vital emerging markets in the economy.

The design of this scheme will draw on international experience to support new lending that would not otherwise have been extended by the banks. In this way, the scheme will complement, rather than be a substitute for, existing lending activities by the main financial institutions. It will be designed to encourage banks to lend to new or expanding commercially viable SMEs to allow them grow their company, develop new products and expand into new markets.

The Government's commitment will be for an initial period of one year. Specific performance criteria will be set down that will allow for review and revision of the scheme at the end of that initial period before committing to a roll-over of the scheme for subsequent years.

There will be a modest level of exposure to the taxpayer when the scheme is launched, but there will also be a significant positive knock-on benefit to the economy in terms of job creation, welfare savings and returns to the Exchequer by way of tax revenue generated.

Together with my colleague, the Minister for Enterprise, Jobs and Innovation, Deputy Richard Bruton, we will work with the Minister for Finance in developing this proposal further with a view to having a targeted scheme in place by the autumn.

An equally important fund is the micro-finance start-up fund. The Government also recognises the importance of supporting business start-ups if we are to encourage entrepreneurship and create more jobs. We acknowledge the difficulties which can be experienced by micro-enterprises in getting access to finance at such an early stage of business development. That is a critical area of Government to encourage enterprise at the local level. Coming from a business background I am aware that getting working capital is critical for start-up businesses.

The Government is committed, therefore, to developing a suitable micro-finance fund for the micro-enterprise sector. Arrangements for the establishment and operation of such a fund will be developed in consultation with the relevant stakeholders, with a view to formalising proposals for this year's budget. This commitment on a micro-finance fund is the Government's contribution to filling this gap in the area of financing enterprise.

Equally, we are delighted with the 15 day prompt payment across the public sector. Cashflow and working capital requirements have also been an issue of major concern to small businesses in recent times.

To improve the cash flow of businesses, and particularly small businesses trading domestically, the Government now requires the Health Service Executive, the local authorities and all other public sector bodies, excluding commercial semi-State bodies, to pay suppliers within 15 days of receipt of a valid invoice. This measure is applicable from 1 July 2011.

The initiative is an extension of the arrangement that currently applies to payments made to suppliers by Departments. Public sector bodies covered by the new arrangement will be required to publish quarterly reports on their websites outlining their performance in meeting the new requirements.In addition, all Ministers will be responsible for publishing reports on the performance of all bodies for which they have responsibility. This will ensure that any payment difficulties being experienced should be addressed to the bodies concerned.

These new arrangements will directly assist SMEs by improving their cashflow. The State has shown its commitment to helping the SME sector. There is a need now for the private sector to improve its payments record and to respond more quickly in making payments to suppliers. Increased cashflow will help improve our economic recovery.

SME procurement is important also. In Ireland it is worth approximately €15 billion per annum and is an important source of business for SMEs. The Government will build on existing initiatives to promote greater access to procurement opportunities for SMEs, including through identifying and overcoming barriers to their participation in the procurement process.

We will also seek to foster greater SME engagement in developing innovative products and services to meet the needs of public bodies within the framework of EU law and will explore similar schemes in other EU countries in that regard.

Every 1% increase in public procurement contracts won by small and medium-sized firms would deliver €150 million extra in business for this crucial sector. Greater access to procurement opportunities for SMEs, within the parameters of EU public procurement rules, can therefore generate increased business for those companies and help maintain jobs. As well as being an important source of income, winning public sector contracts here can have a very positive impact when companies are looking to win contracts abroad.

The Government has undertaken in the jobs initiative to build on existing initiatives to promote greater access to procurement opportunities for SMEs. Specific actions will include the provision of training to procurement officers in Departments and Government agencies to ensure that their approach to public tendering does not inhibit access by small companies; being open to consortia bids from SMEs; splitting tenders into lots, which might stimulate more involvement by SMEs; and removing any cultural obstacles in the system which prevent SMEs winning tenders, such as dealing with existing large service providers and familiarity with large companies.

Enterprise Ireland will assist its client companies to build capability in responding to tenders, connecting them with public sector buyers, and building an understanding of future needs of purchasers on the one hand and competences within firms on the other.

We will also seek to foster greater SME engagement in developing innovative products and services to meet the needs of public bodies and will explore similar schemes along the lines of the small business innovation research programme in the US, and schemes in other EU countries that help to provide partnering and networking opportunities for small businesses, and provide the impetus to start projects that otherwise would not have got off the ground.

Employers' PRSI is important also.One way to help job creation and improve our labour cost competitiveness is to ease the costs on employers of taking on new employees. Accordingly, and in line with the commitment given in the programme for Government, there will be a halving of the lower rate of PRSI until 2013 on jobs that pay up to €356 per week. This measure will take effect from 1 July next and will reduce employers' costs by 4% and offset the restoration of the national minimum wage committed to in the programme for Government.

The existing employer job PRSI incentive scheme will remain in place until the end of this year to ensure that enterprises and businesses that had planned to take on staff under this scheme in that period may continue to do so.

On reducing business costs, which is important also, the Government is committed to keeping all costs which impact on business as low as possible to enable them to benefit fully from the stimulus provided by the jobs initiative. This will require a joined-up effort across all Departments. In this context, I will work with my ministerial colleagues to explore options for further reducing costs to business, particularly those that are set by Government or at local authority level. Work to further reduce the administrative burden on business and to tackle costs in sheltered sectors will also continue across Departments.

In addition, my Department has measured administrative burdens arising for business in three key areas of regulation: company law, employment law and health and safety law. It was found that the burdens across these three areas amounted to €831 million per annum for business. The Government's target to reduce these burdens by 25% dictates that €208 million must be cut from these costs for business.

At this stage, 90% of the €208 million has already been targeted, and this amounts to almost €187 million in savings this year. The savings can be realised by, for example, submitting returns to the Companies Registration Office electronically, taking up the available audit exemptions, using the Health and Safety Authority's on-line tools to assist with risk assessment and safety statements, and using the simplified on-line procedures and forms for redundancy rebates. Details of the practical areas in which savings can be realised by companies are available on the business regulation section of my Department's website.

Regarding improvements in cost competitiveness, the loss of competitiveness in the Irish economy during the boom years, coupled with the global economic downturn, has had a profound impact on the bottom line for many Irish companies. This has had a drastic knock-on effect for employment, with many employers having to lay off staff, and reduce hours for those employees remaining.

Addressing the issue of competitiveness in the economy has been one of our top priorities since taking office. There have been some recent improvements where the Irish economy has regained some of its cost competitiveness. This has included, for example, reductions in electricity and gas prices for businesses, and the reduction or freezing of local authority rates.

The cost of water services to business also compares favourably with that in our main trading partners, while the cost of broadband services compares favourably with the EU average.

Measured by the harmonised index of consumer prices, the rate of inflation fell continuously in Ireland between March 2009 and December 2010. Even with the moderate growth in prices for the first four months of 2011, we continue to have the lowest growth rate in inflation across the European Union. As a result, our prices have continued to come closer to those of our main trading partners. Despite this progress, the National Competitiveness Council cautions that further improvement in cost competitiveness is essential.

The Government is committed to doing more to reduce the cost base for business. The programme for Government centres strongly on enabling growth in the domestic economy, while continuing to maintain a strategic focus on exports and investment. As part of these efforts aimed at economic recovery, we will explore initiatives that will assist Irish business, as well as tackling costs in the so-called sheltered sectors for professional services.

There has been an overall decrease in labour costs in the economy, coupled with improvements in productivity. EUROSTAT data for unit labour costs across the European Union show that costs in Ireland fell by over 7.6% between the fourth quarter of 2009 and the fourth quarter of 2010, compared with an EU average rise of 1% in the same period. The recently published report on the independent review of employment regulation orders and registered employment agreement wage setting mechanisms examines how to implement meaningful and overdue reforms in wage-setting mechanisms which affect key sectors of the economy in order to protect existing jobs and encourage employment growth. The review of employment regulation orders and joint labour committees will be crucial to the bottom line of many small and medium businesses. The Minister for Jobs, Enterprise and Innovation intends to finalise consultations with relevant stakeholders this week, ahead of submitting a final action plan to the Cabinet before the end of June. The review of employment regulation orders and joint labour committees, together with the job creation initiatives and incentives announced last month, will facilitate both job creation and job retention.

Rental costs are an important factor for the competitiveness of businesses in the economy. In recent years upward-only rent reviews kept rents for many businesses at an artificially high level, despite the fall in property values and open market rental trends. While upward-only rent reviews have been banned in new leases signed since 28 February 2010, the programme for Government expresses our intention to legislate to end upward-only rent reviews in existing leases. The Minister for Justice and Equality and the Attorney General are exploring the legal options in this area.

Other areas of the jobs initiative I want to highlight include the following. An additional 20,900 places are being made available on specific education and skills training courses, including places on back to education initiative, post-leaving certificate courses, under the third level springboard programme and the new national internship scheme. Approximately 1,000 jobs will be created by the rehabilitation of local and national roads, with the implementation of smarter travel and management schemes. An additional €19 million in Exchequer funding has been allocated to the retrofit scheme which will create approximately 850 direct and almost 400 indirect jobs.

It is likely that the impact of the jobs initiative on employment will be most visible from 2012, as economic activity picks up in response to the initiative and other Government measures. The stability programme update, published on 29 April, foresees net creation of 100,000 jobs between 2012 and 2015. As signalled at the launch of the jobs initiative, there will be further announcements which will lead to additional job creation in areas where the economy can gain a competitive advantage such as health care, the life sciences, cloud computing and the green economy. Only yesterday Dell announced the creation of 150 new jobs in Limerick and in its first cloud research and development centre in Dublin. That is very welcome news.

As Minister of State with responsibility for small business, I will ensure the concerns of small business will continue to be at the forefront of Government initiatives in order to harness the growth and job creation potential of this critical sector. Next week, with the Taoiseach, I will be launching the small business advisory group which I will chair. The group will be made up of small business representatives and will focus on issues of immediate concern to the sector. Arising from its work, I will bring appropriate proposals to the Government for action on an ongoing basis.

In accordance with the further implementation of the recommendations in the EU Small Business Act, I have been appointed as Ireland's SME envoy. I will be ensuring the interests of SMEs continue to be given priority in the European Union and that the principles in the Act are more fully embedded across the Administration.

The jobs initiative represents the first steps of the new Government on the road to improving the economy's international competitiveness and promoting job creation. More initiatives will be implemented in the coming months. For my part, I will ensure SMEs have a voice in this Administration and that pro-business policies are followed. I am delighted to speak on this very important issue.

An Leas-Chathaoirleach:

I thank the Minister of State for his kind remarks. I wish him a long tenure and the best of luck.

Mary White (Fianna Fail)
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I welcome the Minister of State, Deputy John Perry, to the Seanad and congratulate him on his appointment as Minister of State with responsibility for small business. He is well qualified for the position, given his first-hand experience of running a number of enterprises in Sligo and Ballymote. He is a politician who is not just given to rhetoric. Like me and a small number of other Members, he has proven experience of the day-to-day realities facing any business, particularly small businesses. I wish him well in his new post.

I was elected to the Seanad as the nominated representative of the Irish Exporters Association, based on my experience as the co-founder of a successful exporting company - Lir Chocolates - which today employs up to 250 people. I have the experience of co-founding a business in a kitchen, progressing it step by step to create a sustainable business. We started Lir Chocolates during the last recession in the 1980s and there was a great thrill in seeing an unemployed person get a job, his or her confidence and physique restored and enjoying the social intercourse that came with it. People forget that somebody who is unemployed misses the company of others. We have to challenge more people to start up businesses in order that we prevent growth in the number of long-term unemployed. I cannot think of anything worse to befall a person than long-term unemployment.

I welcome, as does the Irish Exporters Association, the many positive measures included in the jobs initiative announced in May to boost job creation and economic activity. I will focus on two topics covered by the plan, namely, tourism development and finance for small business.

The measures to boost tourism are most timely, namely, the reduction in the VAT rate from 13% to 9%, the offer to suspend the air travel tax - I do not know why a Fianna Fáil Minister could not have done this - and the innovative acceptance of UK visas for visitors from 14 countries. In 2007 there were 8 million overseas visitors to Ireland. Last year the number was just over 6 million, a catastrophic drop of almost 2 million visitors. Visitors bring new spending to every county. A recovery in tourism numbers is probably the fastest way of injecting much needed spending into all parts of Ireland via shops, restaurants, bed and breakfast establishments and hotels. I commend the Government for the joined up thinking shown in the package of tourism related measures. There is no doubt that the visits of Queen Elizabeth and President Obama will further encourage people from the United Kingdom and the United States to visit Ireland. I regard the recognition of UK visas by visitors from 14 countries as particularly significant and innovative. The new scheme will benefit visitors from the immensely important countries of Russia, India and China. Until now, visitors from these 14 countries had to file for separate visas for Ireland and the UK, await the decision and pay a fee of €60 per person. Recently, the Minister for Justice and Equality, Deputy Alan Shatter, cited the example of an Indian family of four who wanted to travel to Ireland as part of a trip to London who would have had to have paid €240, or €60 per person, to come here. Now, that family will not pay visa fees for their visit to Ireland. I looked at the list when the announcement was made, and it is a miracle that last year 30,000 people came from the 14 countries. If the new visa waiver scheme is properly marketed and publicised, I suspect there will be a dramatic increase in the number of visitors from these countries.

The visa waiver will also bring additional benefits to Irish exporters, who have struggled to get business clients from the key new markets of Russia, India and China to visit their premises in Ireland. Now, when such clients are in the UK they can be encouraged to hop across. It is a tourism initiative which will have collateral benefits for business and for Irish producers.

It is also encouraging to note a report in The Irish Times yesterday on a recent Fáilte Ireland survey, which points to much greater optimism by tourism operators in Ireland, with more than 50% believing that conditions for the industry will be better this year, compared with only 7% expressing such a belief at the same time in 2009.

Many of us in the Fianna Fáil parliamentary party encouraged our Ministers to abolish the travel tax but we did not achieve it which was a pity. I support the measure and I commend it. I understand from media reports that Ryanair has submitted proposals to Government which would deliver up to 5 million additional passengers at Dublin, Cork and Shannon Airports over a five year period.

It is important that the Minister of State keeps us updated on how this initiative is delivering. Sometimes in the past after Ministers and Ministers of State have come before the House they forget what they have said and we do not hear from them for another year. Everybody in Ireland grasped that the travel tax was preventing people from coming. As Senator Barrett stated in the Chamber, people on the continent can go from one country to another. This is the only European country where a travel tax had to be paid.

An Leas-Chathaoirleach:

I advise the Senator she has one minute remaining.

Mary White (Fianna Fail)
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I hope the Leas-Chathaoirleach will bear with me because I wish to speak about finance for small businesses, which is most important.

As bank credit has plummeted from an annual expansion of 30% in the boom years to zero in recent times, cash and liquidity have dried up. Businesses, particularly larger firms, are increasingly stretching out the days' credit they expect from suppliers, especially SME companies. Many firms are caught in this pincer movement as banks restrict or will not increase overdraft facilities, while at the same time big customers expect more days' credit from SMEs. The net result is that many firms have collapsed or are in jeopardy.

The jobs initiative makes a commitment that €20 billion of new lending will be available from AIB and Bank of Ireland over the next three years to the SME sector, that is, €10 billion per bank or just over €3 billion each year. So far, the business sector has seen little evidence of the commitment made by the banks to the Government to increase lending being reflected in their dealings with their local branch. The plan commits the Department to working out in a transparent way how this new lending will work and I ask the Minister of State to ensure a true picture emerges which is credible to the business community.

The Minister of State is not just given to rhetoric and has first-hand experience of being an entrepreneur. He knows what it is like to keep customers happy every day. I believe 95% of Oireachtas Members do not understand that a business person must keep customers happy and ensure margins to keep the business going. Very few people who speak about business in the Houses have the experience which the Minister of State has. I wish him the best of luck and I look forward to continued dialogue with him.

Imelda Henry (Fine Gael)
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I welcome my constituency colleague, the Minister of State, Deputy Perry, to the Seanad.

We all agree that job creation is essential for our economic recovery and we are very fortunate that the Taoiseach, Deputy Enda Kenny, has appointed a Minister of State with specific responsibility for small businesses. This shows the Government is aware of just how important small businesses are to our economic recovery.

The objectives of the jobs initiative are to get people back to work, kick start economic activity and provide opportunities for those who have lost their jobs to reskill and rebuild confidence, which will encourage consumers to start to spend again. I welcome these measures, as a person with a business background who has run a small business and because time and time again I hear stories from people trying to keep their heads above water in these very difficult and economically challenging times.

I welcome the fact that the Government is tackling the issue of access to credit. The lack of credit and the attitude of the banks are causing serious problems for small businesses and have forced many businesses to close. I am pleased the Department is working closely with the Department of Finance to flesh out the lending targets of the two pillar banks. I sincerely hope this will address failures in the provision of credit for viable businesses.

The Government has shown it is committed to keeping low the costs which impact on businesses, and while I accept this will take a joined-up effort across all Departments I am confident the Minister of State, Deputy Perry, will work with his ministerial colleagues to explore options to reduce costs and, above all, reduce red tape for businesses.

I welcome the fact that from 1 July the Government will require the HSE, local authorities and all other public sector bodies, excluding commercial semi-State bodies, to pay suppliers within 15 days of receipt of invoice. This will greatly assist businesses which are finding it so difficult to get paid and should improve their cash flow. We have limited resources and we must focus them on the measures that offer the greatest potential for expansion and employment creation in our domestic economy. The jobs initiative does so. It focuses on labour intensive areas which will generate jobs quickly.

The jobs initiative will help to support renewed economic growth. It will do so by boosting morale and helping to inject confidence back into the economy by encouraging people, particularly those with savings, to start spending again. I am confident that all the measures in this package , particularly the reduction of PRSI and of VAT on services, will, when taken together, play their part in addressing the problems facing our economy.

As a publican, I was honoured to get the VFI nomination for the Seanad and I am aware of the many difficulties and potential in our trade. I support the proposals of the Minister, Deputy Bruton to deal with JLCs. Several thousand jobs were lost in 2010 in the pub sector alone and many of the remaining 50,000 jobs in our sector are under threat. There will be no reduction in pay, unless by agreement, for those currently employed as they already have contracts of employment. Any changes made now would affect people entering the sector rather that those already in it. A sizeable number of pubs and restaurants have stopped serving food on Sundays, which means there are fewer options for consumers and tourists. Part-time work, particularly for students and those whom it suits to work on Sunday, has disappeared. As somebody living in a Border county, I know that hospitality trade staff are paid a higher rate of between 25% and 50%. It is easier to preserve jobs than create them so we need help to preserve jobs in the pub, catering and hospitality sectors.

Rónán Mullen (Independent)
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Cuirim fáilte roimh an Aire Stáit. I echo the words of welcome to the Minister of State and wish him well in his appointment. He is a very good fit for the job and very approachable. He will work in a very important area. I was not in the Chamber when he made his speech but I have read through it. We must acknowledge that many different initiatives are being taken. They are welcome. They include the partial credit guarantee scheme, the initiatives to try to ensure-micro finance for small start-up enterprises to encourage entrepreneurship, easing access to public procurement for small and medium-sized enterprises and trying to minimise costs for business, all of which are essential.

Central Statistics Office figures show that the unemployment rate rose from 14.7% to 14.8% last month. The number of people signing on has increased to 443,400, the largest monthly increase since August. This debate is being held against a backdrop where our unemployment rate continues to edge towards 15%. While recent initiatives focusing on improving job creation, such as those I described, are welcome, they must not create an illusion that Ireland's unemployment crisis will be resolved in the near future. The continued deflation of the domestic economy is starkly reflected in the figures. When one considers that the number of housing starts last year was around 10,000, down from close to 80,000 at the height of the Celtic tiger, one can see how the knock-on effect in construction and related industries has inflated the total number on the live register.

The nature and scale of our economic collapse and the resulting unemployment increases, which have disproportionately affected the construction sector, give rise to concerns that Ireland will see, and is already seeing, a long-term structural unemployment problem. This structural unemployment occurs when a labour market is unable to provide jobs for everyone who wants one because there is a mismatch between the skills of the unemployed workers and the skills needed for the available jobs.

The demand-side stimulus proposed by the Minister in these so-called "job activation" measures may not work to easily abolish this type of unemployment. The key problem with the sort of structural unemployment we see in the figures is the number of persons who are long-term unemployed. Some 43% of those who are unemployed are now classified in that category compared with 21.7% a year earlier.

This long-term structural unemployment is encouraged to rise by persistent cyclical unemployment. If an economy suffers from long-lasting low aggregate demand in certain sectors, for example, construction, it means that many of the unemployed become disheartened while their skills, including job-searching skills, become rusty and obsolete.

When we begin to see economic recovery, we risk entering so-called "jobless recovery" where an economy experiences growth while maintaining or decreasing its level of employment. Depressions and jobless recoveries were common in many economies after the Great Depression where unemployment remained high for years after GDP had returned to growth. We can see this in the latest figures for job creation in the United States. Persistently high unemployment - 10% or more for decades - occurred in many countries throughout the 20th century with devastating social consequences. Unemployment is now at a level comparable with that recorded in 1994 when the unemployment rate was 14.7%.

I now turn to some of the key measures. I refer to the levy on private pension funds, intended to raise €470 million a year. The Minister announced that this levy will apply to the capital value of assets under management in pension funds established in the State. It appears that the market value will be determined on 1 January 2011, suggesting that the same absolute amount will be paid in each of the four years. In justifying the levy, it was stated that alternatives for increases in taxation elsewhere in the economy would be more damaging.

Practical difficulties will arise as to how this new levy will be paid and, in many instances, questions will arise as to who will bear the cost of the levy. For example, in a defined benefit scheme, will the cost of the levy be a cost for the employer or will it be passed on, in some way, to the employee through reduced benefits? This is unclear. While it is clear the new levy will apply to occupational pension schemes, for example, defined benefit and defined contribution schemes, and personal pension plans, it is unclear whether people in receipt of pensions or holding approved retirement funds will also be affected. The Minister has committed to consulting the pensions industry in regard to the introduction of this levy but it is important that clarity is brought to this area as soon as possible in order that people can assess the impact and appropriately plan for their retirement.

I refer to tourism-related measures. There is the proposal to reduce the air travel tax to zero. This is conditional on airlines opening new routes and boosting passenger numbers. There is also a cut in the lower rate of VAT. Our tourism product has been widely praised and there is much talk about the Irish brand. I heard one aspirant for the presidency talk a great deal about the Irish brand and what he might do to strengthen it abroad by bringing large numbers of people to Ireland. I thought it a novel, although not unwelcome, initiative to be taken by the presidency.

This brand is widely praised even at a time when there are so many negative international headlines about the country. Yesterday, Ireland was voted the holiday destination with the highest satisfaction rate among US travellers. The Wave awards, run by US travel magazine TravelAge West, asked travel operators and readers to vote for the winners. Ireland came out on top in the highest client satisfaction category in Europe.

This is in conjunction with new CSO figures which show a 12% increase in tourist numbers from North America. The Minister is clearly aware of the importance of the tourism sector and the large reduction in VAT to 9% for certain goods and services, mainly related to tourism, will apply primarily to restaurant and catering services, hotel and holiday accommodation and various entertainment services, such as admissions to cinemas, theatres, museums, fairgrounds, amusement parks and the use of sporting facilities. In addition, hairdressing and printed matter, such as newspapers, maps and programmes, will be charged at the new rate. This is a welcome development which I hope will stimulate the sector further.

I am glad the Minister and the Government have seen fit to reverse the cut in the minimum wage and that they have committed to restoring the minimum wage to €8.65 per hour from 1 July 2011. The last Government's supply side economic rationale for the minimum wage cut was that any measure which kept minimum wages from falling prevented real job creation. It argued that too many people want to sell their labour at the going price but cannot thus a fall in the minimum wage would stimulate job creation growth. This assumes perfect competition exists in the labour market. Advocates of wage cut policies believe these policies can solve the supply problem by making the labour market more flexible.

However, the predicted negative impact on the live register figures is based on incoherent and simplistic logic that ignores mitigating factors, such as non-minimum wage labour markets, registered employment agreements, sectoral agreements and so on. That is not even to mention the real social cost of condemning individual workers to attempt to support themselves on an hourly rate which, considering that the cost of living has not fallen that significantly, is derisory. I am glad the Government has taken the step to reverse that cut.

Leis an méid sin ráite agam, ba bhreá liom mo chuid dea ghuí a chur in iúl don Aire Stáit. Tá súil agam go n-éireoidh leis san obair íontach tábhachtach atá ar siúl aige. Tá sé tábhachtach dúinn uilig go n-éireoidh leis ina chuid dualgas.

Jimmy Harte (Labour)
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I wish share my time with Senator John Kelly.

An Leas-Chathaoirleach:

Is that agreed? Agreed.

Jimmy Harte (Labour)
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I welcome the Minister of State, Deputy Perry, who comes from a business background so he is an ideal person to speak about small business. Like Senator Mary White, I have been in business since my early 20s when in setting up a business one did not have the support structures in place today. Many people went into business fairly blind. We just got into the water, kept swimming, got to the other side and perhaps had to start to swim back again.

Currently, it is difficult for any small business to survive and I am aware of the difficulties. A large number of people, approximately 250,000, work in the retail and services sectors. They are the people who drive the economy and keep it ticking over but currently they are being hammered on all fronts.

I am delighted to learn that upward only rent reviews will be scrapped because many of these rents are paid to institutional investors who are getting considerable rents on high streets throughout the country. Upward only rent reviews must be abolished because they are strangling the people who are expected to invest these companies. Access to credit is a burning issue for small businesses. I welcomed the establishment of the Credit Review Office, but perhaps the Minister of State might consider the idea of small businesses approaching the office before they approach their bank. When a small business goes to its bank and is refused finance, its head goes to the ground. It just does not have the energy or confidence to go to the Credit Review Office and back again to the bank. The office has already stated it is not very busy; perhaps, therefore, some businesses could talk to it in advance of approaching a bank. They could perhaps have their plans approved by it and then approach their bank. It would give them confidence going to the bank to have a plan that has been given the thumbs up by the Credit Review Office. That would be an important development.

I welcome the partial credit guarantee scheme. It will be important for small businesses to even get overdraft facilities to maintain their businesses and retain employees. In addition, the internship programme will be an important asset. It is a well thought out strategy because when somebody starts a job, he or she can make the job his or her own. The problem for an employer is taking the risk of investing in a new employee; therefore, the internship programme will be a boost for many small businesses and even larger ones.

I welcome the establishment of the small business advisory group which the Minister of State said will meet next week. I urge him to include substantial representation from the Border areas on the group. Anybody who manages to maintain a business in a Border area should receive an award. If one has a business in Cork, Galway or Dublin, one does not realise how the swings in the value of sterling can affect one's business. A business in a Border area can approach a bank with a good business plan, but the bank can query how it will be affected by the value of sterling rising or dropping, which can knock the plan out of kilter. The small business advisory group must place great emphasis on trade along the Border from Dundalk to Donegal and Derry. I hope that will be part of its brief.

Tourism has been mentioned by other Members. Donegal, like other counties in the west, is highly dependent on tourism. It has a product to sell; I doubt that anybody would dispute the fact that it is probably the most beautiful county in Ireland. It gets its fair share of tourists, but it could attract more if it marketed its economy and attractions through better promotion by the tourism bodies, better marketing and with better infrastructure such as Internet access. This is important for people travelling in the west. They might be on a leisure holiday, but they still tend to do business in the evenings from their holiday home or hotel. It is important that we provide good broadband infrastructure to attract such people.

The country got a good bounce from the visits of Queen Elizabeth and President Obama. Between the two visits we hosted the Europa Cup final in the Aviva Stadium. It was unfortunate for the soccer fraternity that the Europa Cup did not get the stage it deserved. Perhaps FIFA or UEFA will return to Dublin to host a Champions League final. There were two Portuguese teams in the Europa Cup final and they brought 15,000 fans with them. Perhaps if it had been Manchester City, Liverpool or Chelsea-----

Paul Bradford (Fine Gael)
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Finn Harps.

Jimmy Harte (Labour)
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-----or Finn Harps, there might have been a few hundred more. It would have been nice if a big European club had appeared in Dublin. What happened was unfortunate, but I commend the FAI for its initiative in securing a European football final for Dublin. It was a fantastic event, even if it was sandwiched between two bigger events which will generate a massive tourism boost for the country for many years to come.

I again welcome the Minister of State who has been involved in the small business sector for many years. I urge him to bear in mind that small business is the lifeblood of the economy. If it is not doing well, nobody else will.

John Kelly (Labour)
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I also welcome the Minister of State, Deputy John Perry, who knows my native Ballaghaderreen in County Roscommon very well. On behalf of the people and small businesses of Ballaghaderreen, elsewhere in County Roscommon and County Leitrim, we must focus on sustaining existing jobs.

Commercial rates are a big stumbling block to many businesses remaining in business. They are putting many people on the dole. There is no reality in the way we are conducting our business because we are pulling from the same pot of money in this regard. Where a business cannot afford to pay €3,000 or €4,000 per year in commercial rates it will put people on the dole, each of whom costs the taxpayer €21,000 per year. Some mechanism must be put in place to alleviate that difficulty. I am aware of businesses in my native town which are considering putting up partitions in their shops in order they can cram everything into a smaller space. At the same time, their turnover and profit are gone.

Some years ago a new hotel opened in Ballaghaderreen and employed approximately 60 people. Its rates bill each year was €40,000, while its water rates bill every week was €600. It could not sustain these figures and closed down. I am aware that county councils need commercial rates to maintain their viability, but would they not be better off with no rates and a business running and employing people instead of squeezing the lifeblood out of a business and shutting it down? A pilot scheme to review commercial rates was carried out in three areas in Dublin in the last two years. It resulted in a 35% reduction in commercial rates in the three council areas. This scheme should be rolled out throughout the country as soon as possible because this problem is shutting down businesses.

The way commercial rates are assessed must be examined. It should not be just about the size of the business premises concerned. Consideration should also be given to the turnover in the business and certainly its profits. Otherwise, many more businesses will be shut down.

Darragh O'Brien (Fianna Fail)
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I welcome the Minister of State and congratulate him on his appointment. I thank him for his kind words. This is an extremely important portfolio and I am glad the Government established a separate portfolio for the SME sector to facilitate a specific focus on it.

Many elements of the jobs initiative are welcome. I will not cover all of them as some of my colleagues have mentioned them. I would like to get more details about the partial loan guarantee scheme, although I am aware it has not been finalised. The Minister of State said it would involve minimum exposure for the taxpayer. Obviously, we will have to be careful about how it will be structured. The 15-day prompt payment plan is crucial and I wish the Minister well with it. I know how difficult it will be to attain that objective. There will probably have to be a diktat from the Minister and the Cabinet that it must happen because it is not happening at present. The previous Government endeavoured to attain it but without much success. I wish the Minister well with it.

With regard to public procurement and the SME sector, a report on public procurement was produced in late 2010 by me, former Deputy Bernard Allen and other members of the then Committee of Public Accounts. The Minister of State has correctly pointed out that public procurement is worth €15 billion per year. A minimum of 17% of our public procurement occurs outside the Republic. As the European average is 2%, we are way out of kilter. I welcome the Minister's initiative in this regard. However, the matter will have to be watched very closely because there is resistance within Departments to it. The unbundling of tenders is also crucial. I welcome that initiative because it could create many jobs and support the SME sector.

The strategic investment bank was not mentioned, although it was a cornerstone of Fine Gael's policy prior to the general election. The Government has decided to take the two pillar banks approach. I will offer a word of caution about this from experience. The Government is allocating €10 billion per year to Bank of Ireland and AIB in the next three years to lend to the business sector, with €20 billion of this sum to go to the SME sector. Targets were set for these banks previously and while they showed us how they had met them, one could not see or feel it on the ground. Perhaps I could receive an update from Mr. John Trethowan of the Credit Review Office through the Minister's office. Has there been an increase in the number going to that office? We will have to watch the two banks very closely to ensure they are lending money and that it is new lending.

I turn to how the scheme is being funded. I have a fundamental issue with the levy on private pension plans. The average growth in private pension schemes over ten years has been 1.5% in total because returns in the past four years have been very negative, particularly in equity and bond markets. To fund this programme we will take half of that growth from pension funds. The major problem with this is that it is only happening to private pension funds. I am fundamentally opposed to it being funded in this way. We are penalising those who are doing what all previous Governments have asked them to do - make provision for their own retirement. In a situation where only the private sector is picking up the tab, and when the longest serving members of pension schemes will be penalised more, we are saying that those who decided in their early 20s to provide for retirement who are now in their 50s will have significant funds taken from them. A medium-sized company pension scheme with 100 employers will have average assets in the fund of €50 million. The pension fund trustees, because the schemes are not owned by the company, will have to come with an average of €250,000. These funds are under ferocious pressure as it is.

The Government is also under pressure to find funding for many of the welcome measures in this strategy but if we are to levy pension schemes, approved retirement funds and annuities cannot be left out. The idea that these funds are not pension products, as the Taoiseach claimed, is simply splitting hairs. The funds are derived from pension funds. If the Government must levy pensions, a levy should be applied to the tax-free lump sums of both private and public pensions, regardless of the fund being from self-employment and an approved retirement fund, public sector or private sector. That would be a much more equitable way to do this because this singles out private sector pensions but not proprietary directors, who are the only people who will be able to save for large approved retirement funds. The PAYE worker can only fund a small amount for approved retirement funds.

We are going after the wrong people and I would like to see more equity. I welcome much that is in the jobs initiative and I wish the Minister of State the best of luck in his portfolio but the Government did not consult the Pensions Board, the statutory body for pension funds, prior to the announcement of the decision. The Government must go back and talk to the industry because this could have catastrophic effects. Companies might not be able to employ people because they might have to increase pension fund contributions to pay the levy.

Paul Bradford (Fine Gael)
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I also welcome the Minister of State to the House. His background and expertise in business has been mentioned and I am sure he will bring his experience to his position. It is welcome that more and more people with a business background are becoming actively involved in public life and being elected to Dáil Éireann. We had a brief discussion on the Order of Business this morning on the electoral system. If we look at the background of most Members of the Dáil and Seanad over the past 50 years, business people have been at the lower end of the percentage scale. That is maybe one of the reasons certain political and economic decisions were taken in the Oireachtas; there was not sufficient business experience or understanding of the impact of regulation on business and job creation. I hope the arrival in Government of people like the Minister will help redress the balance because more business people are needed in politics, with more business thinking and more support for enterprise.

Our country is an economic wasteland. That did not happen overnight but there is no point going on and on about the faults of the previous Government, it is up to this Government to tackle the problem and there must be new thinking brought to bear. If we believe we will solve our problems by simply repeating the politics and thinking of the past 20 years, we will fail. Dynamic and radical new thinking is required.

I am glad, therefore, that the Minister of State works alongside the Minister for Enterprise, Jobs and Innovation because any student of Irish politics over the past 20 years who reads the records of the debates in the Dáil would recognise that Deputy Richard Bruton is second to none when it comes to the idea of reform, be it in politics or business. Such reform is now urgently required. There was a great deal of debate recently when the Minister brought the terms of the programme for Government into the public arena and his thinking on the employment regulations orders and wages agreements has been the cause of debate. We would all prefer if this proposal was not required but we must live in the real world, not in cloud cuckoo land, recognising that 450,000 are out of work and that it is now virtually impossible for employers to create jobs but to keep those they have already provided. We must put maintenance of existing jobs and creation of new jobs at the top of our list, taking whatever steps, no matter how difficult, to ensure that happens. We cannot afford to see the 450,000 become 500,000.

More than 14% of the workforce is now idle. This is a huge economic drain on the State and is unsustainable. We talk about the banking crisis and the national debt but we cannot sustain 450,000 being out of work. We have arrived at a situation where there are no more sacred cows, where every decision must be questioned and every option must be debated. We are now spending in excess of €20 billion per year on social welfare. A significant proportion of that goes on old age pensions and disability services but a huge amount is paid on a weekly basis, and rightly so, to those who are unemployed. We must look at this budget of billions of euro and ask how some of it could be used to assist in job creation. Perhaps people could work for five or ten hours per week, changing the culture of their lives and giving them an incentive to go back to work. There is a fine balance we must strike to give people an incentive to go back to work. It is wrong that for many being out of work is as financially secure as being at work and the Minister of State and his Government colleagues must address that.

I support the remarks of my colleagues on the tourism industry. These are not dramatic new ideas but tourism can genuinely create jobs in the short-term. We have had the recent visits of Queen Elizabeth and President Obama and Ireland's international reputation has been enhanced by those visits. We must build on that.

I agree with the remarks made this morning on the regional airports. I hope I do not fall out politically with my friend and colleague, the Minister for Transport, Tourism and Sport, but we must look at airports with a medium and long-term focus. We must give all possible assistance to the airports in Galway, Sligo and Waterford. These airports generate and keep jobs and raise a region's profile. We must do all that is possible to keep these airports open.

Sean Barrett (Independent)
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I thank the Minister of State for his speech. There are many fine items in it, as noted by Members on all sides. From 1 July we need to create a completely different kind of banking system than the one we had to rescue. The data show that between 1996 and September 2008, when the banking system had to be rescued, total lending went from €42 billion to €391 billion. Of the extra €350 billion, only €9 billion was spent on agriculture or manufacturing. The banking system was designed for construction, financial intermediation and real estate. No wonder the average house price increased fourfold in that period. We cannot have a banking system that ignores the productive sectors of the economy, as the Minister of State seeks to remedy in his speech. It cannot be entirely based on property development. I wonder whether banks have sufficient expertise to recognise good projects, given that they neglected manufacturing and agriculture for so long while focusing on the property sector. Do the banks have directors alert to this?

I recall a Bloxham report on banking in Ireland, which showed that banks outside the State were much more inclined to lend to manufacturing businesses than the banks we rescued. We must have a completely different kind of bank when restructured on 1 July.

My second point concerns procurement. The point made by the Minister of State is important but sometimes the watchdogs who look after the interests of small business do not bark. A notable case was the Public Transport Regulation Act two years ago, where the screening regulatory impact analysis says that all Departments had either approved or did not reply to the request from the Department of Transport for their observations. As 79% of buses are owned by people in the small business sector someone should have replied on their behalf because the purpose of the legislation was to guarantee every penny of subsidy to one company and to guarantee its entire network against new entrants. That is a small business up and down the country that could do much in terms of rural transport and in competitive tendering for the large subsidies we give to public transport. On that occasion, the vigilance to promote small business was not in operation. It must be at least as good as the vigilance of those who promote monopolies when they bring legislation to this House.

John Gilroy (Labour)
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I welcome the Minister of State to the Chamber. I have noticed that many of the Opposition speakers in this House and virtually all of them in the other House begin their contributions by quoting long lists of negative statistics about the country. While we do not want to delude ourselves about the difficulties facing small and medium-sized enterprises and we want to recognise that these difficulties are substantial, it is important that the House tries to project some form of confidence in the economy. Some €110 billion of Irish people's money is in the Irish retail banks and the only way we can start creating jobs in small and medium-sized enterprises, which are the lifeblood of this economy, is to start generating confidence so that people spend their money in the local economy.

My main point concerns competition law. It is important to prioritise the enforcement of competition law in the State. Competition law in the State is 20 years old yet enforcement is not always as we would like it to be. There are well-established rules, particularly against cartels and concerted practices but actions are few and infrequent. Taking a case through the criminal process is complex and not enough resources are provided to ensure the correct enforcement of competition law. It is said that collusive behaviour is widespread in Ireland and there is some evidence of it. It concerns not only price-fixing but also bid rigging. For far too long, cosy cartels have not been challenged at enormous cost to the economy. Anti-competitive behaviour costs the retail sector and business in Ireland more than it should, making their costs higher. We also lose in other ways because anti-competitive behaviour deters would-be entrants to the market. This was highlighted in the IMF memorandum of understanding.

I call for a radical overhaul of competition prioritisation and competition in Ireland. I welcome the decision to advertise for four full-time posts in the Competition Authority last week. The Competition Authority had previously been staffed by temporary appointees. We live in interesting times and we find ourselves cutting budgets across all headings. Cutting funding to the Competition Authority is not an option we can afford. I want to see increased resources made available to the authority and these should be targeted at hard-core cartels. In a recent court case concerning cartel activity in car dealerships, DPP v Duffy, Mr. Justice McKechnie was hard-hitting in his assessment, describing cartels as odious practice and as offensive and abhorrent. It is hoped that this may signal a change in how we view this activity.

If the Government is serious about our need to address this area, it would be no harm to see resources made available and those involved in cartels taken before the criminal courts and spending a few months in jail. That would send a strong message and it would encourage individuals with knowledge of cartel activity to seek immunity under the leniency programme operated by the Competition Authority. In other jurisdictions, leniency programmes are successful in providing this evidence, which is hard to obtain, so that it results in successful prosecutions.

I cannot overstate the importance of taking on those who operate cartels. We must provide resources to the Competition Authority and we must amend existing legislation to provide for more punitive civil remedies. We must also send out the message that if one fixes prices, divides up markets or rigs bid for contracts, one will be caught and will suffer the consequences.

Brian Ó Domhnaill (Fianna Fail)
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I propose to share time with Senator Marc MacSharry. I welcome the Minister of State and I am delighted the Government has taken the initiative to appoint a Minister of State with responsibility for the small business sector. The Minister of State outlined that there are 250,000 small businesses here, employing approximately 700,000 people. It is vitally important to the Irish economy and is the lifeblood of the economy. Senator Kelly referred to a number of issues that affect small businesses. I agree with him on the point about commercial rates. This must be tackled.

The other matter is the business finance available to small businesses in each of the sectors of the economy. This includes farming. The farming section of one of the national newspapers suggests that farming business loans will increase by 2%, which will have a draconian effect on the farming sector and on small businesses in the agri-food sector.

Another anomaly concerns the social welfare code and its prohibitive effect on people entering or setting up small businesses. Someone who wants to start a small business may decide not to go down that road because if the business fails, the person is not entitled to social welfare payments as a self-employed person. Employees who worked for the person are entitled to social welfare benefits and this is an anomaly that must be tackled. Otherwise, people will not take the initiative to establish small businesses.

The jobs initiative programme was announced by the Government recently. It was a departure from the pre-election hype surrounding the NewERA document and the announcement by the Taoiseach in the Dáil on 9 March of a jobs budget within 100 days in office. There appears to be no target on the number of jobs to be created under the jobs initiative. There was reference to 20,900 places in the training aspect of the initiative, so perhaps the Minister of State could clarify the number of jobs we are looking at. The Taoiseach outlined in the Dáil last week that the jobs initiative may have a limited impact on the live register. What impact will the jobs initiative have in tackling the problem of 440,000 remaining unemployed?

Some aspects of the jobs initiative seem to rehash the capital side of funding for the 2011 budget from the previous Government. Approximately 70% of the €135 million in capital funding allocated in the jobs initiative was already allocated to Departments by the previous Government. On the training scheme side, although there are 20,900 additional training places, only 10,000 are new. The Government internship programme for unemployed graduates was announced in the last budget and the jobs initiative has made the same announcement while cutting the allocation available to graduates from €100 in addition to social welfare entitlements to €50 in addition to the social welfare entitlement. I know many graduates who are annoyed with that cut.

Marc MacSharry (Fianna Fail)
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I join others in welcoming the Minister of State to the House. As a constituency colleague it would be remiss of me not to congratulate him wholeheartedly and say that the people from all parties in our region are very proud that we have a Minister of State responsible for the very important portfolio of dealing with small business. I wish him and his good offices every success on all our behalf in the years ahead.

I am pleased that he has alluded to the possibility of a guarantee scheme for business and I look forward to getting more detail on that important issue. Even with the office of Mr. John Trethowan and the Credit Review Office, significant problems remain. There are viable businesses with good ideas and if it were not for the draconian criteria currently being adopted by certain financial institutions, they could be up and running and creating employment. Public procurement in this country does not box as clever as in Germany, for example. There, a public servant drives no car other than a Volkswagen or Mercedes, so although we are bound under EU rules, we could be more targeted and clever about how we award contracts while adhering to rules.

I am not sure whether the Minister of State mentioned a strategic investment bank, which is in the programme for Government. The Government should consider using funds from the National Pensions Reserve Fund or elsewhere and making €1 billion or €2 billion or a similarly large sum of money available, not so much as a grant scheme to support industry but for the State to take equity in the small and medium-sized enterprise sector. That would produce dividends for the State in the form of a good return on investment and it would also give a real and quick bounce to that sector.

Paul Coghlan (Fine Gael)
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The Senator's time is up.

Marc MacSharry (Fianna Fail)
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I know the Acting Chairman will indulge me. When he sat where I am now, he often had to break the rules. I will need just a brief moment or two.

Paul Coghlan (Fine Gael)
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I never broke the rules in my life.

Marc MacSharry (Fianna Fail)
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My colleague, Senator Paul Bradford, mentioned the airport issue and I know it is a topic close to the Minister of State's heart. I appreciate funding is finite but following the Minister for Transport, Tourism and Sport's short-sighted announcement yesterday on funding, especially relating to Galway and Sligo airports, I called in the press for the establishment of a task force. I am sure the Minister of State agrees with me and could manage the task force from his Department and take in the Departments linked to transport and enterprise, Fáilte Ireland, IDA Ireland and Enterprise Ireland. The full mechanisms within all those agencies could come to bear in helping both Galway and Sligo airports ensure a continuity of commuter services that will help enterprise, the market ability of the region and tourism.

Paul Coghlan (Fine Gael)
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The Senator must wind up now.

Marc MacSharry (Fianna Fail)
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Such action would guarantee their viability and I call on the Minister of State to pursue that goal. I wish him every success in his good offices and I am sure we will look forward to other exchanges in the future.

Martin Conway (Fine Gael)
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I congratulate the Minister of State wholeheartedly on his appointment. I have worked with him before and his contributions were most impressive. If ever a portfolio was tailor-made for an individual, this one seems to be it for the Minister of State, Deputy Perry. People in Opposition should take note of the way he performed when in Opposition as he has transformed his home town of Ballymote as a result of his business initiatives and has built up significant links with Taiwan through international work. He has merely moved the work he did in opposition into his Government position. As a businessman he knows the red tape involved and how difficult and overly regulated business in this country can be.

I will begin on a positive note. The announcement of 150 jobs in Dell will have an impact on my part of the country and is a significant move. The confidence provided by the jobs initiative will be realised by people and although some see it as a drop in the ocean, it will have a significant ripple effect throughout the country. If there are enough drops in ocean, we will create significant waves.

There was another jobs announcement in Clare today with a SuperValu store in Miltown Malbay getting the green light from An Bord Pleanála. There will be 40 or 50 jobs in construction in the short term and the bones of 100 permanent jobs in future. It took five years for the project to get to that stage in a classic example of what is wrong in the promotion of business in this country. The project was approved by the local authority approximately three years ago and that decision was appealed to An Bord Pleanála by an individual who delayed it for six to 12 months. An Bord Pleanála overturned the council's decision and the matter reverted to the council, which took another year. The same individual appealed the decision to An Bord Pleanála again, although I am thankful the board saw the error of its ways and granted permission for the project.

It is a symptom of what is wrong that a project that would provide much needed employment can be delayed by up to five years. We are looking to review all kinds of processes and procedures but there should be a root and branch review of projects which could create benefits and employment. They should be fast tracked. This country is open for business but it is not business as usual. We must prioritise any projects with the potential to create employment, and people with such plans must be given a VIP pass in getting projects through planning and tendering processes.

I am glad to see facets within the jobs initiative dealing with tendering, which can be onerous and most difficult. The Minister of State is sending out the right signals in that regard, and he mentioned the notion of a 15 day turnaround. People have often said that a Government project or selling products to a Government agency is like money in the bank, but in this day and age the money is no good unless it is physically in the bank. Many businesses have been very frustrated with the long delays in securing payments from Departments, so this is a welcome initiative generated by logic and common sense. Having experience in the outside world and seeing how State and private business interacts has been of benefit to the Minister of State in putting structures in place to make a difference in eliminating red tape.

The hazards and critical control points issue in food safety in the hospitality industry is above and beyond what is required. We are all good Europeans. What is the difference between a restaurant in Killarney and one in Italy? We are all members of the European Union but even though Italy is completely unregulated it has some of the best food in the world. In Ireland the best people prepare the best food in the world but they are over-regulated.

The debate on the JLC structure is most welcome. Coming from a business background and having employed people, I am aware there are thousands of people who would love to work for reasonable rates of pay. Nobody is suggesting that people should work for nothing but there will be a meeting of minds by the parties concerned and the deliberations in which the Minister, Deputy Bruton, and the Minister of State, Deputy Perry, are engaged will bear fruit by making it attractive for small businesses to employ people. The critical objective for this Government is job creation and nothing else.

Paschal Mooney (Fianna Fail)
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I welcome the Minister of State as a friend and constituency colleague from Sligo-North Leitrim and congratulate him on his appointment. Senator Conway is absolutely correct. Despite the perception that we are a regulation free and liberal economy which is conducive to starting businesses, the evidence is mounting to indicate that the opposite is the case. Anybody who listened to yesterday's "Liveline" would have learned about a gentleman in Dublin who has been thwarted by regulation. I was astonished to learn that Dublin City Council, which sees itself as a development agency, is so hidebound that a gentleman who turned a business that had previously failed into a café near Liffey Street could not put out the al fresco chairs and tables that are commonplace across Europe because of regulations. He also made a point which will resonate with those of us who have experience of local government and officials, although it should not be construed as blanket criticism. When he tried to contact the relevant official in Dublin City Council he found the individual was on sick leave. The gentleman - I presume it was a gentleman - was perfectly entitled to sick leave and I hope he has fully recovered but the problem is that there was no plan B and nobody else in the section was able to deal with this simple issue. I presume that one of the Minister of State's priorities will be to investigate the red tape that surrounds business in this country. Like empire building, any bureaucracy which is allowed to continue unregulated and unwatched builds itself to the point where everybody justifies his or her position but nobody takes a decision.

As chairman of the Ireland-Taiwan Parliamentary Friendship Society, the Minister of State highlighted the importance of the Asian market and used the Taiwanese context to bring on board suggestions that were of benefit to this country. I look forward to the establishment of an industry in his home town which will be sourced from Taiwan as a direct result of the wonderful efforts he made as chairman of the society. He also discussed the establishment of a bank which would be similar to an institution that operates in Taiwan. It would not necessarily be a lender of last resort but would guarantee loans to businesses. Members on all sides of the House have noted that the problem businesses face in Ireland is the near impossibility of getting credit. Banks are now scared to issue loans unless the risks are minimal. The need exists for some sort of financial institution that will act as a venture capital bank. Perhaps the Minister of State will elaborate on that issue in his conclusion.

I share the views expressed by Senator Conway and others in regard to a rates burden which is becoming increasingly difficult to sustain. I understand a re-evaluation of the rates base commenced several years ago in a number of counties. However, the process still has a long way to go before it is complete. It appears the rates applied in Dublin are more relevant to the valuations that have been reassessed than is the case for local authorities elsewhere in the country. Senator Harte will probably attest to the fact that Donegal's hotels and well developed tourism sector are being crippled by high rates which are not in keeping with the current level of rateable valuations. I understand the re-evaluation process is not yet complete but I suggest the rates burden will be reduced as a result of it. Coming from a business background, the Minister of State will be aware of this issue.

To end on a positive note, the decision by the Government to reduce VAT to 9% across certain services related to the tourism industry is going to yield good results. During our debate on tourism, I spoke about a small local business in Carrick-on-Shannon in County Leitrim which was started by a group of young guys who I do not want to embarrass by identifying directly. This business employs five or six people and it expects that the VAT reduction, combined with the initiative on PRSI reduction, will allow it to save €60,000 per year. That is the beginning of a direct intervention in the market which will bring significant benefits in terms of maintaining and increasing jobs.

I wish the Minister of State well. He is the right person in the right place and he has the full support of all sides of this House.

Deirdre Clune (Fine Gael)
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I welcome the opportunity to speak on the jobs initiative and I am aware that small business is a subject close to the heart of the Minister of State. The initiative focuses on tangible areas where improvements can be measured, with an emphasis on the tourism sector. I welcome the reductions in VAT and employer's PRSI and the discussion over the reform of JLC and REA structures. The reduced VAT rate will be implemented from 1 July but I ask the Minister of State to be conscious of the need for the services and tourism sectors to pass the reduction on to consumers because there may be a temptation to absorb the savings among the numerous businesses that are experiencing difficulties in terms of their ability to bring in cash.

The value of tourism has been highlighted over the past two weeks. Initiatives such as the one we are currently discussing will facilitate employers in taking on additional employees and protect existing jobs, which is needed if we are to address the current unemployment rate of almost 15%.

I refer to the proposals for the construction sector. For every €1 million spent in this sector, it is estimated that between eight and 12 jobs will be created directly. This year the Government plans to spend €4.6 billion on capital projects. Investment in the retrofit scheme and the roads programme are tangible measures that will create employment. For every individual taken off the live register and placed in employment, the State saves €20,000, which is important, not to mention the social implications for the individual concerned and his or her family. These areas have been targeted in the initiative.

We will have a separate debate on the reform of the JLCs and registered employment agreements. The issue of Sunday pay needs to be addressed. Those who work on Sundays will not be targeted. They will still be protected by the Working Time Act 1997 which provides for premium pay on Sunday or time off in lieu. The national minimum wage has been restored to €8.65 a hour. There has been a great deal of hysteria about the proposed reforms, but they are important because the current terms and conditions are costing jobs in many sectors. Bars, restaurants and hotels are closed on Sundays because it is not viable to operate. I welcome these changes which I am sure we will debate again.

The jobs initiative refers to encouraging entrepreneurs and recognising they have a role to play and can contribute to economic recovery. They had not received the attention they deserved and the Minister for Finance and the Minister of State have stated they will focus on microfinance. SMEs encounter barriers in procurement which the Minister is committed to addressing.

I welcome the initiative and look forward to the implementation of its measures, many of which will be in place from 1 July. A short, sharp and targeted approach will provide the stimulus the economy needs.

Terry Leyden (Fianna Fail)
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I welcome the Minister of State and wish him well in his Ministry. He has great experience as a businessman who has created jobs in his own county. He is aware of the difficulties in small business and his experience will be of benefit to small businesses. I am delighted he is establishing a committee of business people and hope small businesses in the regions will be well represented on it.

A total of 700,000 workers are employed by small businesses which comprise an important sector of the economy. It is being given the right focus. I recall being a member of an Oireachtas committee on small business chaired by Ivan Yates many years ago and subsequently being a member of a sub-committee of that committee which investigated the impact of insurance costs on small business chaired by former Senator Donie Cassidy. The sub-committee's report resulted in major changes in insurance costs for small businesses. At the time the most significant issue was the inability to obtain insurance, but we changed the concept by setting up the Personal Injuries Assessment Board. Therefore, initiatives were taken by Members of this House in conjunction with civil servants.

The issues addressed by the jobs initiative are relevant. Rates are becoming a major issue. I accept local authorities are under pressure and finding it difficult to raise funds and collect rates. As a result, they are laying off workers. A balance must be struck between fair rates and the need to support local authorities through the collection process .

The decision regarding Galway and Sligo regional airports is a source of grave concern for the Minister of State. Now that he is in government, he is realising the responsibilities that land on one's shoulders when one is in office. It was probably a bombshell for him that State funding for Sligo Airport would be withdrawn from 2012, while Galway Airport is under pressure also. Fortunately, the airport at Knock will escape the cutbacks. It will have to survive because it is vital. The fact that Galway, for example, has an airport means that not only is employment provided by it but inward investment is also attracted. Multinational companies provide significant employment in Galway and they require air access to the area. It is the most convenient way to get to their plants. The same applies to Sligo Airport, although I acknowledge regular flights are not scheduled to and from there. At one stage, there were scheduled flights and the airport was used by jets, but perhaps some of them belonged to business people who visited Sligo. I have been in the vicinity. It is a nice small airport and I hope the Government will review its decision.

As a former Minister of State with responsibility for trade and marketing, I stress that it is vital that the Government increases the number of trade missions abroad and the number of inward buying missions which were a feature in the past. Enterprise Ireland officials should utilise the talent available in both Houses of the Oireachtas. Senators with expertise in a particular field should be asked to take part on trade missions and assist the Minister for Foreign Affairs and Trade because there are numerous people to meet and events to attend on these trips. Some of the expertise available in both Houses could be used with no additional cost to the State because Members would not charge for their services. There is a role in this regard for them. Every Senator has a speciality. I accompanied the former Minister of State, Michael Ahern, to Milan a number of years ago on a trade mission. I met Italian business people and worked the room with the Minister of State. I welcomed such support when I served as Minister of State because when one travels abroad, one must attend many meetings and events.

On the banking issue, the Foir Teoranta model would be useful. It was an agency of last resort to support small business and retain jobs throughout the country. For some unknown reason, it was disbanded, a move with which I disagreed strongly at the time. ACCBank was also established by the State. Alternative banking models were used in the past and should be examined again. I wish the Minister of State every success.