I might refer at the outset to the amendment to the motion appearing in my name and those of Deputies De Rossa, Gilmore and McManus, although I accept that the Government amendment will be reached first. My party will be voting against the Government amendment this evening tabled in the name of the Minister for Finance because, ultimately, it reflects the complacency at the heart of this Government in tackling the jobs crisis.
We will support the priority which the motion in Deputy Harney's name affords the unemployment question, although we would prefer to have the facility in the House to substitute our framework for how precisely that should be done. For that purpose I should like to read the text of our amendment into the record of the House. Essentially, we concur with the priority Deputy Harney seeks to give this issue. However, our amendment reads:
To delete all words after "Dáil Éireann" and substitute the following:
"calls on the Government to give job creation the absolute priority it merits and to facilitate job creation in both the public and private sectors through
—the introduction of an EC common industrial policy to stimulate job creation in the peripheral regions such as Ireland;
—greater emphasis on the protection of jobs in existing enterprises, especially in view of the substantial increase in redundancies this year;
—measures to tackle the haemorrhage of capital out of Ireland and to ensure the reinvestment of at least some multinational profits in Ireland;
—reform of the tax system to end poverty traps and stimulate employment;
—the implementation of the Culliton report;
—a major community jobs programme designed to reallocate a proportion of the social welfare budget to the cost of creating 50,000 full and part-time jobs at the going rate in the public and voluntary sectors; and
—an end to job shedding by State companies and an examination of the potential of the public sector for an expansion in productive employment."
It seems to me that any fundamental change of policy towards the job crisis is not possible without hurting vested interests. The share-out of the supposed available resources in the National Development Plan avoided hard choices. The powerful vested interests which hector the Government got their allocations on the basis of lobbying power rather than on the basis of job creation potential. Now that it has emerged that the Government has been deluding itself and fooling the electorate about the extent of EC funding, it is very probable that it will be the most vulnerable and weakest sectors of our society who will pay the price for the Government's mismanagement and suffer the impact of the shortfall.
We believe that if there is to be a serious drive to increase job creation then virtually everybody in our society will have to make major changes and most people will have to make sacrifices. Those who will not have to make sacrifices will be the lower paid, but even they will have to change in the way they work and the way they think about work.
In essence, our comprehensive employment policy requires changes in European industrial policy, in Irish industrial policy, a massive overhaul of the taxation system, the creation of a basic minimum income and a substantial adoption of new ways of working which are flexible, competitive and which liberate workers from drudgery.
The creation of a Single Market, where the most competitive firms are also the largest, severely disadvantages peripheral areas like Ireland. Of all the political parties in this House Democratic Left has argued long and hard that, in the absence of a European-wide industrial policy which encourages large firms to locate their manufacturing plants in the periphery, there will be continued concentration of wealth in the rich heartland of Europe. Thus, Democratic Left calls for an active, intelligent, interventionist industrial policy which will discourage overinvestment and overcrowding in the centre of Europe and stimulate job creation in the peripheral areas. The European policy of the Government here is merely to have a begging bowl for more Structural and Cohesion Funds. We have had several examples recently that in the absence of such a policy at European level this country and Government, not to mention trade unions and workers here, are helpless in the face of the flight of capital and the decision by any major transnational company to pull out stocks in this economy and locate elsewhere. Most recently we saw it very dramatically in the case of the Digital plant, where there was really nothing that the trade union movement, or indeed the international trade union movement, could do about it — there was really nothing that the Government could do about it. We went through the exercise and seemed to be doing what we could in terms of the cosmetics of it, but the facts of the matter are that the decision was irrevocable and that we did not have any clout in the matter.
I do not understand if the Common Market initially — the European Community since then — can have as its cornerstone a common agricultural policy, why it is not possible to begin the process of constructing a common industrial policy to cope with the present extent of our unemployment problem. In the absence of the substantial transfer of Structural Funds from Europe it would have meant even higher unemployment here, but that is only part of the solution. Again, looking at the terms of the National Development Plan, it would appear that the Government does not view it as part of the solution but rather as its job creation policy — all of the eggs seem to be put in that basket.
It was interesting to hear the Minister of State at the Office of the Tánaiste say that it would strike into the heart of poverty and deprivation in our society, that a number of new programmes are being devised and a very substantial allocation of funding. I wonder how these will survive the present crisis that has finally hauled the Government back to reality. A sum of £500 million is a substantial amount and a very big discrepancy. As somebody remarked this morning, a three and an eight can look alike in the dark but £500 million is three times the rescue cost of Aer Lingus. I sincerely hope that whatever the shortfall — I hope it is not more than £1 million — it will not affect some of the programmes which the Minister of State at the Department of Finance, Deputy Eithne Fitzgerald, promised.
I still believe that the key to strong employment growth in the modern economy is the creation of service jobs as a spin-off from wealth generated in the manufacturing sector. That is going out of fashion to some extent in the sense that in all modern economies the service sector has become progressively more important and the manufacturing sector less so. Nonetheless, you cannot have the spin-off of service jobs to imitate the more advanced economies if you do not have a strong manufacturing sector. Our problem is that we have relied almost exclusively on the multinationals to provide that manufacturing base here. We have not managed to develop any significant indigenous base in our manufacturing sector. It is interesting to note that Ireland's growth in manufacturing was second only to Japan during the past decade — because we come from such a low base — yet the growth in service employment has been only half the average of rich economies. This is because the industrial structure created in Ireland in the past 30 years has been based on foreign companies which buy most of the materials and services abroad and which repatriate their substantial profits, largely untaxed, abroad.
We do not want to compete with Third World countries and labour intensive industries but to develop sectors where we can gain competitive advantage. We want to see the development of clusters or local industrial districts where such co-operative competition will help Irish firms to succeed in the international marketplace. Irish industrial policy must move from its preoccupation with physical infrastructure, financial incentives and low costs. The immense natural and human resource base of Ireland, with our strong scientific base, excellent education system and computer literacy are the basis of our industrial policy.
Irish State owned enterprises must be developed rather than privatised because they are some of the key companies here. In that regard I take issue with that clause of the Progressive Democrats' motion. Although the motion is carefully drafted to bring most of us on side in terms of supporting it, I do not think the engine of job expansion in this economy will necessarily come from privatisation of the remaining State enterprises, whose numbers we tend to exaggerate. The best have already been privatised: Irish Life in the financial sector and the former Irish Sugar Company, Greencore, in the manufacturing sector. That is also the pattern elsewhere where only the very successful companies are privatised. For example, an analysis in Britain shows that the outcome has not been more jobs but a tremendous benefit in terms of salaries to senior management who worked in those companies, tremendous gains to those who could afford to buy shares and tremendous job losses for the workers. I am not necessarily opposed to the point in the Progressive Democrats' motion which refers to competition in this area. I suspect that Telecom is the company referred to and that is a story in its own right, one that will break in this House before long in the context of the extent of the technological revolution in telecommunications. If the unfortunate consumers think the situation is bad they have seen nothing yet.
The Government, in its very smug and complacent amendment to the Progressive Democrats' motion is putting a lot of eggs in the basket of the Programme for a Partnership Government and the Programme for Economic and Social Progress. It is very difficult to accept an amendment from the Government which says we ought to “commend the strategy of the Government for tackling the problem of unemployment” when 300,000 people are unemployed. I look every day for something to commend in terms of reducing the numbers on the dole queue but the situation is getting worse. It reduces this House to the level of humbug and hypocrisy when the Government does not even take time to do a serious rebuttal of the Progressive Democrats' motion for debate in the House. This is no more than going through the motions. The Government amendment reflects the complacent, cosy approach of the Government parties who boast that there is no longer any tension in Government — and that seems to be the case but how it is claimed it is a good idea escapes me. I would have thought that if the Labour Party had anything distinctive to offer there would be tension in Government. The fact that they have so conveniently slipped into bed with Fianna Fáil and that everything is harmony and light should outrage the unemployed, the over-taxed and those in poverty traps.
The Progressive Democrats' motion also refers to the urgency of tax reform. It is drafted in such a way it does not say what is intended here but, clearly, there ought to be substantial and major reform of the tax system. However, I should clarify, in case there is any doubt about it, that I do not necessarily mean cutting the top rate of tax for a minority but a comprehensive shift from the massive array of tax allowances that have existed up to now. The policy of successive Governments has been to give more incentives, mainly through the tax system, and to create more tax shelters but it has not produced the jobs we were promised.
The policy has patently failed and it is time to consider the American idea of the alternative minimum tax. I heard Deputy Richard Bruton recently — I am not sure whether it was on an Adjournment debate or on a policy document he has published — referring to the tax regime on the service sector. Of course, it is a farce to pretend we have a special tax regime for the manufacturing sector who contrive, through various methods, to pay no tax and the service sector, where there is a national 40 per cent rate. Anybody who knows anything about creative accounting and who can afford expert tax advice does not end up paying 40 per cent tax on profits. Therefore, it would be much more effective if we had an alternative minimum rate of tax — a rate of tax that would be implemented so that the payment of tax could not be avoided as at present by the exploitation of loopholes. I think such an alternative minimum rate of tax is 20 per cent in most states and that seems to be a great deal more effective than the system where we have a notional rate of twice that — it was a good deal more than twice that until recently — which in effect, as the figures show for the corporate sector, has never made any major contribution.
I overheard Deputy O'Donnell argue in favour of the proposal by the Conferences of Major Religious Superiors for the creation of jobs for people currently on the dole. There is a reference in the Progressive Democrats' motion to "the introduction of a national community employment scheme to afford part-time work to the long term unemployed". Unfortunately, I missed Deputy Harney's submission on this point but I think it is out of desperation that this idea has caught hold. I am not sure what the Progressive Democrats approach to it is but I have reservations for a number of reasons about the Conference of Major Religious Superiors' approach to it. To expect people to work for their dole seems to be a straightforward workfare proposal — I am not suggesting that is what is being advanced, but I would like it clarified. I think an element of additionality has to be provided and if one does not provide for an element of additionality, the concept will not work.
It makes sense to reallocate a proportion of the huge social welfare budget, which amounts to more than £3 billion, to take a large number off the dole. Quite clearly it will not work if, for example, as has been the case in the social employment schemes, participants effectively lost their supplemental entitlements such as fuel vouchers, eligibility for a medical card or advantage under the differential rent scheme. If people lose those additional benefits the concept will not work.