Vol. 440 No. 8
1 Mr. R. Bruton asked the Taoiseach whether he endorses the approach outlined in the paper on growth, competitiveness and employment by the President of the EU Commission; and the initiatives, if any, he will take at head of Government level to implement its recommendations.
When I reported to the Dáil on 16 December last on the meeting of the European Council in Brussels on 10 and 11 December 1993, I stated that the European Commission's White Paper on Growth, Competitiveness and Employment received a unanimous welcome from the Council. This endorsement of the White Paper by the Council, which I obviously share, was reflected in the adoption by the Council of an action plan based on the prescriptions set out in the White Paper. As stated in the Council conclusions the action plan includes specific measures at the levels of the EU and of the member states directed at, in the short-term, reversing the rising unemployment trend and then, by the end of the century, significantly reducing the number of unemployed, at present standing at the unacceptable level of 17 million.
At EU level the emphasis in both the White Paper and the action plan is primarily on the full use of the potential of the single market with particular reference to small and medium sized enterprises and development of trans-European networks and of the new information and communication technologies. In regard to the trans-European networks and the new technologies two expert groups representative of the 12 member states have been established to chart the way in which the full potential of these can be realised throughout Europe. In addition implementation at Community level is being followed up by the various responsible ministerial councils. Ireland is participating fully in the follow-up at EU level.
Measures to be adopted domestically by member states as recommended by the White Paper and the action plan include the following: improving education and training systems for young people and the unemployed: better use of public funds set aside for combating unemployment and targeted reductions in the indirect cost of labour particularly in regard to less-skilled work.
Those national measures are all to be undertaken within a stable and coherent economic and monetary framework while ensuring a continued high level of social protection.
Government policy is and will remain fully consistent with the recommendations for domestic action set out in the White Paper. The National Development Plan 1994-1999 and the Programme for Competitiveness and Work both have employment as their key aim. They include significant provision for measures targeted at unemployment, in particular long-term unemployment and for action aimed at improving education and training for the unemployed.
At a more specific level the recent budget and the forthcoming Finance Bill have action on employment and on education and training as key objectives. The 1994 budget specifically targeted lower paid employment through tax concessions, relief in the burden of employers' social security contributions and exemption from the health and employment training levies. The budget also contained a number of other incentives aimed at promoting investment and job creation especially in small and medium sized enterprises.
Regarding the chapters dealing with employment, does the Taoiseach accept the Commission's recommendation that we should cut taxes and social insurance on labour to achieve a target of 1 per cent to 2 per cent of GDP which would be equivalent to 2 per cent to 4 per cent of wage costs?
The Government has a consistent policy of continuing to reduce income tax in so far as resources allow and it will continue that policy.
Has the Taoiseach noted the conclusion in the Commission's document that models show that if employers' social security contributions were cut by 1 per cent of GDP unemployment rates would fall by 2.5 per cent over four years which in Irish terms would be equivalent to a decrease in unemployment of 33,000 over four years? Would he agree that figure is far higher than the projected reduction in unemployment under the national plan? Would he also agree it is a critical target set by the EU which should be implemented as a matter of urgency?
The Deputy will be aware that the ESRI predicts the impact of the plan at the end of its term, which is the end of the decade, will result in a reduction in unemployment of 262,000. That would be a big step forward. World economic conditions will have a big impact on the number of jobs that can be created as 70 per cent of our output is sold on foreign markets. Demand within the Irish economy has a limited effect on job creation and we rely to a large extent on world economic conditions. Now that the GATT negotiations have been completed and the graph in respect of world trade moving upwards it is expected that there will be significant economic activity in the years ahead. The growth rate this year will be between 4 to 5 per cent and the Central Bank, normally conservative in its forecasts, predicts a growth rate of 4 per cent, a big increase on our growth rate some years ago.
Does the Taoiseach recognise that the ESRI's projection of a decrease in unemployment of 26,000 does not result from the plan but will occur during the period of the plan? In contrast the EU Commmission's proposal that a restructuring of our tax code would reduce unemployment by 33,000 is evidence that this should be the subject of specific Government policy initiative. It would yield rich returns in terms of a reduction in unemployment. Will he reconsider prioritising it? Does the Taoiseach recall the finding in relation to Ireland in the chapter which shows that Ireland had the highest growth in taxes on labour of all EU countries, excluding Spain, and that in contrast to the UK our burden of taxes on labour has grown by 150 per cent at a time when there was no growth in such taxes in the UK?
The Deputy's question is over long and he is tending to debate.
I pointed out how we have fallen behind the UK, our closest competitor. Would the Taoiseach agree that the Government should set as its target the EU's target for those taxes?
When the Deputy considers the true comparison between social costs of unemployment here and other EU member states he will agree that we are near the bottom of the scale. There is a big gap between Ireland and other member states. Regarding restructuring our tax code, the opposition by Fine Gael to the residential property tax would indicate that that party is not in favour of the policy propagated by the Deputy.
May I ask——
Sorry, Deputy Jim Higgins has been offering for some time and I will hear him now.
I would like to return to an important point.
I have given the Deputy some latitude on this matter and I hope he appreciates it.
Does the Taoiseach agree that, rather than chipping away at individual aspects of what is a very important, elaborate and detailed document — a document which will be the central plank of Community policy for the next few years — and in view of the forthcoming European elections and particularly as the document interfaces with the National Development Plan, we should have a full scale debate on it?
The document which is an extensive one, consisting of 150 pages, has been discussed here on various occasions. The proposals in the National Plan are at the very late stages of negotiation and are almost completed to the satisfaction not only of the European Commission but of the Irish Government, which is in stark contrast to the statements that emanated from that side of the House in recent months about the national disaster and scrapping the plan.
Is the Taoiseach so ashamed of the Government's record that he is reluctant to have a fullscale debate on the issues raised by the President of the EU Commission on the National Plan?
We are having repetition.
Extensive debates have taken place on this matter and if Deputy O'Keeffe does not remember them perhaps we should go back to the record and point out when they took place. A debate at this stage may suit the Deputy considering he is speaking from the back-benches, but it may not suit his party when they see the result of the discussions between the Irish Government and the European Commission.
We will bring in the ESRI report.
Does the Taoiseach not recall Table 2 which shows that Ireland's social insurance and taxes on labour are higher than those of many countries, particularly the United Kingdom? Contrary to his suggestion that the Commission advocated property taxes, does he not recall that its conclusions on restructuring——
The Deputy is not advocating them.
——of taxes to reduce PRSI did not refer to property taxes? That was not one of the options recommended.
This is tending towards debate.
The Taoiseach raised this matter. Would we not get a much richer harvest from concerted restructuring of our tax code along the lines suggested by the Commission than by continually bleating about the success of the National Plan, which is seriously under question at this stage?
It may be seriously under question in the Deputy's mind but it is not so in the mind of the Commission. Fine Gael has pushed out the boat so far that it cannot get back in.
Climb down again.
The Deputy should not try to twist the statistics. Everyone knows that PRSI rates are much lower here than they are in ten, if not 11 of the 12 member states.
It is total costs that matter.
I am talking about PRSI costs.
