Terence Flanagan (Dublin North East, Fine Gael)
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To ask the Minister for Finance the way the money collected from the pension levy is being spent; and if he will make a statement on the matter. [17125/13]

Michael Noonan (Limerick City, Fine Gael)
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The implementation of a jobs and growth strategy is a key priority of the Government. The moneys raised from the pension fund levy are being used to pay for the Government’s Jobs Initiative introduced in May 2011. The Jobs Initiative contains a range of measures aimed at assisting in employment generation – providing opportunities for those who are out of work, to restore public morale and confidence in the economy and encourage spending by consumers. Amounts received from the pension fund levy are paid into the Exchequer central fund. Central fund is made up of tax revenue, non-tax revenue and borrowing. These funds are used in the day-to-day running of the State and it is therefore extremely difficult to quantify which specific funds are used for which purpose. That said, it is possible to cost the measures contained in the Jobs Initiative and examine their effect on the relevant sectors.

As part of the Jobs Initiative, a new reduced rate of VAT at 9%, with effect from 1st of July 2011 until 31st December 2013, was introduced. This reduced rate targeted services and goods relating to the employment intensive tourism sector. This measure was estimated to cost the Exchequer €470 million in reduced VAT receipts by end 2012.

Upon assessment of this measure in late 2012, contained in the Medium Term Fiscal Statement, it was shown that there was significant pass through of the VAT reduction to tourism related goods and services. It can reasonably be inferred that this policy measure has contributed to the employment growth evident in the food and accommodations services sector since the measure was introduced.

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, the Jobs Initiative announced the lowering of employers PRSI for lower paid employment until end 2013. PRSI initiatives were estimated to cost over €303m in the two years to 2012.

In line with the Government’s priority of fostering growth and creating jobs, the Finance Bill 2012 gave effect to measures supporting employment for both the FDI and SME sectors. These measures included a special assignee relief programme to encourage foreign companies to invest in Ireland, a foreign earnings deduction to assist the expansion into emerging markets and changes to the R&D tax credit scheme to aid the SME sector. These measures are estimated to cost the Exchequer €16 million on a yearly basis.

As the Deputy is aware, a significant portion of the policies contained in the Jobs Initiative are related to labour market activation and capital projects. The Governments strategy on labour market activation – Pathways to Work – strives to ensure that, as employments opportunities materialize through the Jobs Initiative, as many of these jobs as possible are filled from the live register – with a particular focus on those who are long term unemployed or at risk of long term unemployment. In addition, the Job Bridge internship programme gives employers the opportunity to provide valuable work experience to the unemployed and as an added benefit gives employers the ability to assess the suitability of individuals for future employment.

As noted, the Jobs Initiative will also allow for various capital projects to take place, creating further employment opportunities. For example, capital funding was made available for 374 primary and post primary school building projects. As stated at the launch of the Jobs Initiative, this investment alone will create approximately 2400 direct and 480 indirect jobs in the construction sector over the life of the initiative.

Finally, I would like to emphasise the point that the impact of the Jobs Initiative, as specified on announcement day, will be budgetary neutral.