I move:
"That Dáil Éireann, appalled that in each of the last two months in succession new all-time records were reached in the Register of Unemployment, despite the fact that emigration in the latest four years of 136,000 was almost double the 71,000 who emigrated in the preceding four years; noting that unemployment, now standing at 19.7 per cent of the workforce is the highest by far in the EC and more than double the EC average, calls for the establishment of an all-party committee on job creation with responsibility to:—
(1) carry out as speedily as possible an audit of all Government activity to identify and propose changes to any schemes which discourage, or fail adequately to encourage, the creation or seeking of employment and to recommend such steps as it considers appropriate to improve the climate for the creation and maintenance of jobs;
(2) propose specific initiatives that can be taken to promote the creation of viable jobs."
Last month unemployment was at its highest level in history. To put this in context, the wife of the former United States Ambassador to Ireland, Mrs. Elizabeth Shannon, once said that the Irish totally lack any sense of outrage. That lack of any sense of outrage could not be better illustrated than by the bored disinterest which everybody, the media, politicians and businessmen, greeted the publication of the worst ever unemployment statistics, under British or Irish rule.
In March 1991, 246,500 people were registered as unemployed; to ensure comparability with figures for earlier years one must add 5,554 people on a pre-retirement allowance and 2,992 people claiming pre-retirement credits. In earlier years these two categories would have been included in the overall figure of registered unemployed. If you include them it gives a total of 254,966 people unemployed here last month, 19.54 per cent of the workforce. Unemployment never before reached this level, the highest level was 19 per cent in March 1987. The figure of 19.54 per cent is all the worse when you consider how many people have left Ireland since March 1987; 136,000 people have left Ireland since Deputy Haughey became Taoiseach; the rate of emigration in the last four years under the Taoiseach has been double that of the preceding four years.
If the emigrants who left Ireland, unable to find work here since Deputy Haughey became Taoiseach, were included with the unemployed to whom I have already referred, there would be a total number of 391,000 — 30 per cent of the workforce — who could not find work here under his Administration. I contend that in judging any economic policy, the criterion is not the rate of inflation, the balance of payments or any of those abstractions so beloved of the number crunching profession, the judgment of the success of any economic policy is to be found in the number of people who find work — or who fail to find work — in the country in question.
We seem to have very contradictory views about these matters. In a recent poll 54 per cent of the people said they were satisfied with the Government yet, in research commissioned in 1988, when the question was asked in relation to what politicians could do to make things better, solving unemployment came out top of the list; it had twice as much support as any other matter, including reforming the tax system. Yet, for some obscure reason, people seem to be satisfied with a Government whose record of unemployment I have just described. Support in that poll for the concept that politicians could and should do something about unemployment was particularly high among Fianna Fáil supporters, twice as high among Fianna Fáil supporters as opposed to the Progressive Democrats. It was particularly high under the age of 25. The contradiction of the failure to link dissatisfaction with the level of unemployment with the satisfaction with the Government represents schizophrenia in our society. However, I — and the party I am honoured to lead — intend to put employment and emigration back at the top of the political agenda. We will do it by demonstrating that there are things politicians can do about jobs and by demonstrating that voters are not wrong in demanding action on jobs from their politicians.
Part of the job of the Opposition is to create that sense of outrage, so lacking here, about matters that can be changed but which are not being changed. I believe there is a consensus among opinion-formers, unfortunately including the Government, that nothing can be done about unemployment and jobs. This consensus expresses itself in all sorts of different ways; economic commentators congratulate the Government on their success in bringing in a balance of payments surplus and having minimal inflation but they ignore the fact that these two phenomena are accompanied by record unemployment, that is just a detail in their minds. Yet, a combination of low inflation, a balance of payments surplus and record unemployment would have been summarised in one word — deflation — in the economic textbooks I read 25 years ago when I was in college. We have a deflated economy yet no one among our educated élite seems to care. Times have changed a lot in 25 years.
As I said, unemployment now stands at 254,000 and emigration outlets have now been closed or are closing, yet the labour force continues to grow at 25,000 per year. If present trends continue unemployment will reach 300,000 in two years' time. Perhaps by then someone will begin to worry, not perhaps because of the plight of the people concerned but because it will have upset the Government's borrowing targets.
Lack of a job is the biggest source of inequality in society; the key social issue facing our society today is not the redistribution of income or wealth — we have reached a limit on redistribution in those areas in the light of free outward movement of capital and labour which will exist after 1992 — but the redistribution of opportunities to work.
I referred earlier to the official consensus that still seems to reign that nothing can be done about unemployment. There is no better expression of this official consensus than the areas the Fianna Fáil Government have decided should be given tax relief over the last four years. No new tax incentives have been introduced by Fianna Fáil during the last four years to create jobs. In fact, there have been disincentives in the form of higher PRSI payments for part-time work. On the other hand, many tax incentives have been introduced to encourage property development, such as the development of hotels, inner city properties, the Temple Bar and the Custom House Docks site. These have cost huge sums of money. However, few extra jobs have been created. Instead, jobs have been shifted from one part of town to another.
Our tax system seems to have been deliberately designed to discourage small businesses from creating jobs. The comparative cost of the paper work involved in employing somebody is far higher for a small employer than for a big employer, yet no one sees the need to do anything about this. All international studies suggest that it is small, not big, employers who will create most jobs in the future. The era of the big organisation as a job creator is over. The fax machine and the personal computer have ended the reign of the big organisation as a job creator, yet Ireland's tax system is deliberately biased against the new job creator of the future, the small company. Let me illustrate this bias. The Commission on Taxation at paragraph 8.8 of their fifth report estimate that the tax compliance costs per job were almost twice as high under our present system among small companies than big companies. The commission also showed that tax compliance costs in the private sector were more than three times those in the public sector, yet nothing has been done about this since the Commission on Taxation reported. Those are the companies with the greatest potential to create jobs.
Small employers cannot afford to have a big personnel and legal department to advise them on the maze of industrial relations law which has been created supposedly to protect existing jobs but it is actually discouraging the creation of new jobs. In a dynamic world where new jobs naturally replace old ones the effect of our tax and regulatory system, with its high protection of existing jobs and disincentives to the creation of new ones, is inevitably to steadily reduce year after year the total number of jobs in the economy. That is the way we have structured our tax, regulatory and industrial relations systems to discourage the creation of new jobs in order to increase the property value in existing jobs.
Our policy on company taxation is also biased against jobs. It was most unwise for the Fianna Fáil Government to guarantee a tax rate of only 10 per cent for manufacturing companies up to the year 2010, in other words, for the next 20 years. That very unwise decision is at the very core of our industrial policy which is inherently unsuitable to a country like Ireland which has a surplus of well educated labour. If we want foreign firms to create permanent jobs in Ireland we must get them to set up their research and marketing operations here. It is only the brain based part of a business, research and marketing, which creates significant numbers of jobs in the country in which they are located, but a low company tax rate policy, 10 per cent, which we have guaranteed to keep for the next 20 years, actually keeps research and development and marketing operations out of the country simply because research and marketing — think about this — cost money and they do not produce profits in the country in which they operate. Things which cost money are expenses against tax. Therefore, the lower the tax rate the less chance there is that a multinational will locate, they will locate in an area where they can set off expenses for tax purposes. In fact, the use of the guarantee of a low tax rate of 10 per cent for the next 20 years as the main means of attracting foreign industry reduces the tax incentive to establish research and development and marketing operations in Ireland. It reduces the incentive to establish employment intensive manufacturing in Ireland and encourages instead the establishment of mechanised manufacturing operations which generate large amounts of profits which are repatriated and which, with the onset of automation which is increasingly affecting manufacturing, involve little or no employment. If we continue with this policy, where the human hand is replaced by the machine in the manufacturing operation, we will soon have large numbers of factories producing large profits with very few people employed. That will be the direct result of the political decision to go for a 10 per cent tax rate for the next 20 years when we could and should have gone for a system of taxation which gave the same number of incentives to industry but in a form which encouraged the multinationals to locate their research and development, marketing and other costs generating activities rather than profit generating activities here. It is a simple mistake.
The Government's personal income tax policy is equally anti-job creation. Concentrating all resources, as the Programme for Economic and Social Progress says, and reducing tax rates to 25p and 40p in the pound while leaving tax bands and allowances unchanged will give considerable benefits to those already at work with a good income but it will do little or nothing to help create new jobs or help people starting work for the first time. Those starting work for the first time will face a crippling PRSI burden on the first pound they earn and will find that they will reach the higher rate of tax very quickly, far more quickly than they would in any other European country. We have a system which imposes a high tax rate on income from work but which gives tax free status to payments which encourage people to give up work voluntarily in the form of redundancy payments. The effect of this bias in our tax system has been to encourage the sale of jobs and a net reduction in total employment.
I also believe there is a fundamental anti-job creation bias in the Irish social system and there is an unspoken conspiracy, most recently expressed in the Programme for Economic and Social Progress, that no one should speak about it. Fine Gael intend to speak about it, and that is the reason we put down this motion. We want an audit of all Government activity to identify and propose changes to any schemes, such as those I have referred to, which discourage or fail adequately to encourage the creation of or seeking of employment and to recommend such steps as they consider necessary to improve the climate for the creation and maintenance of jobs. We want such an all-party committee to propose specific initiatives which can be taken to promote the creation of viable jobs. The committee should, if necessary, recommend hard and unpopular decisions which will help to create jobs.
Let me give some examples of some of the things the committee might recommend which would create more jobs. I put these forward simply as illustrations to show that there are large numbers of things which can be done and which are not being done because in this country we have talked ourselves into a state of mind which believes that nothing can be done about jobs, that jobs do not matter and that so long as I have my job it does not matter if the other man does not. We have created a conspiracy of silence about jobs. I recognise that, even speaking here today on this subject, to some degree I am going against the majority consensus which has been created with the aid of the Government and all their admirers who believe that inflation, the balance of payments and matters of that kind are more important than jobs. A society which fails to create jobs is a failure. By that standard Irish society, not just the Government represented by one single individual sitting in front of me, but society as a whole, is a failure.
We have a mental attitude which has created a condition of acceptance of failure in this and many other areas. We can pride ourselves on the fact that this year Dublin is the European city of culture and no doubt we will have numerous public relations events celebrating this magnificent achievement. Dublin is also Europe's city of unemployment, Europe's city of joblessness. I wonder if that fact will get the same public relations attention from the Government, the Taoiseach and their media advisers. It is because it will not that we have tabled this motion. I wish to illustrate some of the things that could be recommended by a courageous Government who want to make decisions, unlike the present Government who simply want to stay in office. I will outline the measures that should be put forward to deal with this massive social crisis that we face.
I wish to put forward eight proposals. First, we should scrap IDA grants for machines and buildings and give the same amount of money to the same people in a form of credits against PRSI. In other words, they would only get the grant when they had employed somebody and they would only get as much grant as PRSI that they had paid on people employed. We should also, as I have already indicated, change the company tax system to encourage job creation through research and development rather than profit repatriation, which is the objective of our current corporate tax system. Secondly, we must encourage redundant workers to retrain. Most redundant workers of any age will never work again unless they retrain. Employers wanting to lay off employees should be required to give them not only a redundancy lump sum but also a retraining voucher, a sum of money that could be used to upgrade skills. Unfortunately, at present the only body providing training to those who are redundant are FÁS and they only give priority to people who either are long term unemployed or who would probably become re-employed anyway because FÁS have the objective of having good statistics to show. They have a monopoly, they are virtually the only organisation engaged in providing training for the unemployed. Monopolies are not the most productive means of bringing forward new ideas. Instead of FÁS having a monopoly on training, if each individual who became redundant was given a voucher that could buy £1,000 or £2,000 worth of training that would actually create an active market in retraining for the unemployed. Firms would compete with ideas for forms of training that would lead to work because they would want to be the beneficiaries of the money the redundant workers had available. Instead of people having to remain on the dole and on a waiting list for a year or two for a FÁS course by which time they would become demoralised, people becoming redundant would immediately find themselves sought after by a variety of firms who would be willing to offer them a choice of various retraining opportunities. In my view that system would be better than the present system where retraining the unemployed is monopolised by FÁS.
Thirdly, we can and must get rid of the poverty traps which presently prevent people from taking up work or, indeed, from working more or harder. The way to do this is to introduce a single graduated means test for all benefits, including benefits like differential rent and others that are currently means tested. This test would cover graduated entitlements to medical services, higher education grants, free fuel, council rent rebates, family income supplements and also movement to higher rates of tax and PRSI. One could structure such a single means test in such a way that, for instance, if one's money increased to over £110 a week, instead of losing the medical card altogether and having 100 per cent of one's medical bills paid one would have 90 per cent of them paid and if one moved beyond that to say £130 a week one would have only 80 per cent of one's medical bills paid. If there was a single unified means test under which the Department of Education, the county council and all State bodies would unify their means test in one national means test we could so design that means test — it would require a lot of administrative effort certainly — so that nobody in any part of the country or in any social situation would be worse off, working harder on taking up a job than they would staying in his or her present situation.
This proposal would not include insurance-based benefits which are not means-tested at the moment and I would not propose that a means test be extended to include them. It would, however, cover all the existing benefits which are means-tested. The only obstacle to such a scheme which would make it worthwhile for everybody to work is administrative inertia. It is the Government's job to deal with that. The Minister may forget that the Fianna Fáil Party in 1987 promised to simplify and unify means tests. They promised that four years ago. It was a good idea at the time but they have not followed through with it. The reason is that the civil servants in the individual Government Departments will not let them. The Departments will not co-operate one with the other in designing such a scheme and the Government have not got the will or the wish to get the civil servants to do what they know and recognised in 1987 as necessary to remove poverty traps.
