Dáil Éireann debate -
Tuesday, 16 Jun 2009

Vol. 684 No. 5

Private Members’ Business.

Unemployment Levels: Motion.

Deputy Willie Penrose

I move:

"That Dáil Éireann:

recognises that getting the economy back on track must be the number one priority and that this requires urgent action to retain and create jobs, to assist struggling businesses and those attempting to establish new enterprises and to ensure that those currently unemployed have the skills required to get back into employment;

noting that:

402,100 people are now unemployed;

195,100 people have lost their jobs in the year to the end of April;

viable small and medium enterprises are continuing to close because they cannot access credit;

provisions for retraining and up-skilling of unemployed workers and those in vulnerable sectors of the economy have been totally inadequate;

the lack of urgency with which proposed jobs cuts at key employers such as Dell, Waterford Crystal and SR Technics have been met has resulted in jobs that may have otherwise been saved being lost; and

escalating unemployment has resulted in a sharp fall in revenue from income tax while the social insurance fund is at a risk of running out by the end of the year, in part due to the pressure on it from welfare payments to those out of work;

calls on the Government to take urgent action to stem the jobs haemorrhage and put people back to work through, in particular:

the establishment of a national investment bank to invest in our own future and help create jobs including by ensuring access to credit for small business;

the fast tracking of business start-ups by creating one-stop enterprise business points to bring together funding, expertise and advice for entrepreneurs who want to start new businesses or grow existing ones;

taking Eircom into public ownership to provide a suitable platform for investment in broadband;

measures, including tax breaks, to assist employers to retain workers in employment and to take people off the dole;

providing support for Irish manufacturers and producers to export to markets outside the US and Britain including language and regulation support;

setting up a ‘Bridge the Gap' work experience scheme for graduates and apprentices;

helping people working part-time to train in their time off through an ‘Earn and Learn' scheme; and

launching a skills drive for people who have lost jobs and those in vulnerable sectors of the economy, including tax back for full-time study and measures to get early school leavers back into education.

This motion, in the name of the Labour Party and Sinn Féin Members, recognises that getting the economy back on track must be the number one priority, and that this requires urgent action to retain and create jobs, to assist struggling businesses and those attempting to establish new enterprises, and to ensure those currently unemployed have the skills required to get back into employment.

Some commentators have suggested that the current crisis is not as bad as that in the 1980s. They are wrong, because in the 1980s we had a halt to the modest economic growth of the late 1970s and most people had not experienced prosperity. It was also possible for the unemployed to emigrate, as the UK and the USA were growing rapidly. We had release valves. In its current state of panic, the Government is trying to blame the global economic recession for all our problems, but most people, like those we met while canvassing, understand that the polices pursued by the Fianna Fáil-led Government over the past decade have left us ill-prepared for the current crisis. I do not wish to lecture the House about economic theory, but every first-year student of economics learns that in managing the economy, Government policy should be counter cyclical. This means that in a boom period, the Government dampens the boom by controlling spending and, if necessary, by increasing taxation.

People on the ground could not believe that in two budgets introduced within six months of each other, not one pro-enterprise incentive or initiative was brought forward. Since the time of Charlie McCreevy, the policy of "If I have it, I spend it" meant that the Government fuelled the boom, and now that the boom is over, the cupboard is almost bare. The few bones left must be used to prop up the banks, whose irresponsible lending has contributed so much to the current crisis. At a time when banks should be lending to support existing and new businesses, they are unwilling to do so. Notwithstanding their assurances to the contrary, all the signs are that they are unwilling to do so, as they hoard capital in order to deal with the crisis caused by irresponsible lending.

We should not forget that about 250,000 small businesses across this State provide up to 750,000 jobs. These are often the backbone of the infrastructural fabric of many of our rural villages and towns. Many small businesses that are members of the Small Firms Association or ISME have had varied experiences dealing with the banks, and many are now on the brink of failure due to the lack of credit which is the lifeblood of business. We are all aware that small and medium sized enterprises are the engine room of the economy. Some of the banks are even refusing to pass on the reductions in interest rates. People on the streets outside and Members in here are asking what happened to the billions invested by the Government as part of the recapitalisation plan. Who benefits from this massive injection? It is not filtering down to small businesses that are crucial to the economic well being of the country, and to many places throughout rural Ireland.

In putting down this motion, we are reminding Fianna Fáil of a fact its leaders seem determined to ignore, namely, that there are now 400,000 people on the live register, and the number is rapidly climbing towards 500,000. The pace of deterioration in the number of people signing on is truly frightening. In May 2009, the seasonally adjusted live register reached 402,100, which is up by 195,100 or 97% in only 12 months. The increase in the previous month was 13,500. It is widely expected that the live register will reach 500,000 or more by the end of the year. Behind those figures lie other disturbing statistics. For example, there are some 85,000 people aged under 25 on the live register.

We know that not everyone on the live register is without work, but the fact remains that unemployment is spiralling. The ESRI estimate that the unemployment rate will reach 17% next year. Based on that estimate, it is clear that more than 500,000 people will be on the live register by the end of this year. Quite frankly, that is an appalling vista. To have that many people without work, with all the human cost that goes with it, is an economic and social calamity. There is the loss of income, the threat to the family home, the loss of skills and capacity within the economy, and the sheer frustration for people who simply want to work. Any of us who knocked on a door during the recent election campaign will realise that this is what is annoying people. Be they mothers, brothers, sons or daughters, grandparents or parents, everybody is concerned. Yet in the face of this crisis, we have seen little or no response from the Government. We have seen urgency in dealing with the banking crisis, and we have seen action on the public finances, but we have seen no urgency and no coherence in dealing with the jobs crisis.

What has happened to the so-called jobs summit that was promised for the spring of this year? What has the Government done to either stimulate economic activity, where that can be done, or to provide more work and training options for the unemployed? Where is the beef? The answer is to be found in an annex to the budget. There are a mere 16,000 extra training places. There is a proposal for a pilot "earn and learn" scheme, with a total of 277 places. There is a proposal for a graduate placement scheme, that will have 2,000 places. Yet there are 85,000 people under 25 on the live register. The scale of this response simply does not match the scale of the problem.

What we need is a concerted drive to offer opportunities to people who have no work. This is not just a matter of providing people with something to do, even though that is important. It is a vital part of any viable strategy for recovery. Behind every unemployment statistic is a human being, often with a family, a mortgage and everything else that goes with that.

The motion before the House calls on the Government to treat this issue urgently and seriously. It is not an optional extra. It is vital. The motion calls for a number of measures to be taken to offer opportunities to people on the live register. It also calls for the establishment of a national investment bank that would raise finance to fund investment in infrastructure and to act as a banker to small business. That is absolutely essential to get credit flowing and to sustain viable businesses. We are actually closing down the opportunity for small businesses to expand, due to the lack of credit. This cannot continue. Bank executives are going around pretending they are doing this, that and the other for small businesses. Who do they think they are fooling? Money invested in infrastructure projects will act as a stimulus to the economy and create much needed employment.

Despite all the billions that have been committed to the banks, by far the biggest issue being raised with Deputies by small business is the problem of credit. This is reflected in the Central Bank figures, which show that in the past two months, lending to business has fallen by approximately €1 billion per month. A national investment bank would also have the capacity to lend to businesses and could draw on funds available from the European Investment Bank to do so. We have only drawn a pittance from the huge funds available there. Let us show the people the importance of Europe and the European Investment Bank, and how they can contribute to revitalising industry, to sustaining jobs and businesses, and to giving them an opportunity to expand. After all, the small businesses employing four, five or six people fall off the radar and it is only those losing 50 or 100 jobs that have become the focus of attention. Across the country, small businesses are closing and these are essential. Many of them are family businesses and families will go to the very end to preserve, sustain and retain those businesses. They will literally put their houses on the line, yet the banks will not even remortgage their houses. They are in a triple loop and they cannot get out of it. The Minister has an obligation to unravel this and make sure that credit gets through to those businesses.

We believe that appropriate and worthwhile start-up grants should be made available to people who are unemployed and wish to start up new businesses. A small business rates relief scheme, which would be based either on floor size or turnover, or a combination of both, should now be introduced and thereby enable many of our small businesses to survive this very challenging economic environment. That is Labour Party policy and was passed at the Labour Party conference.

Thousands of jobs have been lost in the construction industry, yet the schools building programme — for which money has been already allocated — is incredibly slow, with more than 40,000 pupils languishing in prefabs. The Department of Education and Science seems to take years even to approve a new school, not to mind build one. I welcome the commencement of the insulation scheme, which was first proposed by the Labour Party, but which is too limited in its scope, in so far as a key component of any such scheme for our elderly would be the inclusion of the replacement of windows and doors as they contribute to the preservation of heat in much of the housing stock. More than 40% of our houses were built prior to 1963 and there is not a hint of insulation in any of them. The Labour Party would encourage renovation and improving energy efficiency for older houses and this could be done by reducing the level of VAT for improvement works and reducing or removing VAT on insulating materials if the Government was really committed to this. We have offered a significant number of new ideas to tackle the current crisis, and I repeat them here.

I am sick of reading right-wing commentators every week. The latest to join the chorus is Mr. David Quinn. He is obviously nettled by the fact that the Labour Party and other left-wing candidates made substantial gains in the local elections. He came out with the usual claptrap, attacking the Labour Party, but saying nothing about the right-wing philosophy he espouses and articulated for the past number of years. Where has that left us? He does not pay much attention to the human cost of such economic policies. We have articulated policy at party conferences and in the House, as have other parties. We are not afraid to demonstrate that they are workable policies.

We have a sorry tradition of allowing the unemployed to languish on the dole queue, with little hope of further training or work experience. We still have a Victorian poor law attitude to the unemployed, and more effort is made to prove that the unemployed person is idle rather than try to get the person back into the labour force. We must learn from schemes in other EU countries where efforts are made to ensure unemployed workers, particularly young workers, do not become detached from the labour force. We must immediately set about fundamentally reforming the back to work supports, such as the back to work enterprise allowance, and all lead-in times for the determination of eligibility should be eliminated.

The welfare system should be about preventing, rather than promoting, long-term unemployment. We have had some tokenism in the budget. There are now 242,871 more people on the live register than in May 2007, when this Government came to power, representing a cost of €4.8 billion to the Exchequer. Would we not be better off redirecting the money to ensure the misery visited upon homes throughout the State is alleviated? There is a precedent in place whereby people who have received statutory redundancy are already permitted to avail of these schemes immediately, so the principle is already accepted.

We must formulate the use of career breaks and flexible working arrangements. Career breaks are rarely offered to employees outside the public service. We need to devise a scheme that provides incentives to employers to offer career breaks or flexible working arrangements, while providing employees with legal entitlements to their jobs back and security on other issues when that leave ends.

We must significantly increase training places via FÁS, VECs and the institutes of technology. Colleges of further education are losing teachers and have to turn away young people who are going straight from school into unemployment. VECs and ITs are ready and willing to provide many more training places if they are given funding. The last area in which cutbacks should be considered is education and training.

Regarding social welfare, why not allow employers who are in a position to provide a worthwhile job, but whose financial position prevents them from doing so, to top up the rate of the jobseeker's benefit or jobseeker's allowance of those who wish to be in employment and ensure the top up would bring the individual's income up to a good wage? We must be innovative and show flexibility in the new circumstances.

It is time to increase the VAT exemption level for those who supply services from its current threshold of €37,500 up to €65,000. Similarly, the exemption figure for the supply of goods must be increased from its current low threshold of €70,000 to €125,000. The complexities of VAT would require a small business to employ a bookkeeper for a half day each week, which is another burden on small businesses. The Government has strangled companies and small businesses with unbelievable levels of regulation. It is time to simplify the process by ensuring a unitary style form is made available which satisfies all the criteria for submission to the various governmental bodies and agencies.

The role of the county enterprise boards, and their contribution to employment creation at the micro level, is very important and needs to be recognised. We are committed to expanding the functions and job creation capacity of county enterprise boards and to giving them greater flexibility and more discretion to enable them to contribute to employment creation. The stricture whereby they can only grant aid a business with up to ten jobs will be removed under a Government with Labour Party participation. We would also allow a wide range of start-up grants and a loosening of eligibility criteria.

In the Forfás report of 2007, Towards Developing an Entrepreneurship Policy for Ireland, a major problem in the area of entrepreneurship policy was identified. While one cannot deny that the Government is investing in programmes that aim to develop and encourage small businesses and entrepreneurship, too many agencies, bodies and Departments are involved in this area. The Department of Enterprise, Trade and Employment supports entrepreneurs and start-up businesses. The Department of Education and Science is responsible for the delivery of entrepreneurship education and training. The Department of Community, Rural and Gaeltacht Affairs is responsible for Údarás na Gaeltachta, the Leader programme and area partnerships. The Department of Arts, Sport and Tourism is responsible for the development of tourism enterprises through Fáilte Ireland. The Department of Justice, Equality and Law Reform is responsible for regulating residence and work visas for third country citizens and issuing business permissions. The Department of Finance is responsible for overseeing the fiscal incentives for enterprise establishment and equity investment such as the seed capital and business expansion schemes. The Labour Party commits to bringing all the above responsibilities under the remit of one Minister, who will have control of a single Department and will perform the activities carried out by a variety of Departments. The Department with responsibility for entrepreneurship policy would be responsible for delivering various initiatives that have an impact on entrepreneurs and the environment in which they operate in a cogent and cohesive manner.

Deputy Seán Sherlock

I refer to the taking into public ownership of Eircom. It was reported in the newspapers at the weekend that yet another private equity firm, Permira, has expressed an interest in taking over Eircom. The others are CVC Capital Partners Limited and STT. The asking price for Eircom is approximately €100 million but the debt mountain is in the region of €3.8 billion. If a private equity firm takes over Eircom lock, stock and barrel, I am not convinced we will see an increased rate of broadband penetration in this country. I am not convinced this would be the most effective way of ensuring the broadband provision and capacity required in order to make this country competitive with regard to rates available in Japan. A private equity firm will not ensure the rate of penetration will allow us to compete with other countries. They would concentrate on the most profitable areas and would not ensure the rural economy or society would be served in such a scenario.

The Labour Party sought to take Eircom into public ownership to ensure there is another suitable platform for investment in broadband. If we are to bail out banks, I do not see why we will not enter the fray and take Eircom in charge to ensure all rural exchanges that need to be upgraded are upgraded. There would be a multiplier effect and a positive net benefit to the rural economy. It would ensure some income is derived from other users through the unbundling of the local loop. It is important to debate this. It is not right to hand it over to private equity firms.

The current taxation regime has included increases to taxation and some will argue they were necessary. As a short, sharp solution we are increasing taxation on income and that is also stifling the economy because people are not spending. Are we not concentrating on ensuring greater efficiencies in public expenditure? Today I received the reply to a parliamentary question I tabled on the amount spent by the HSE on legal fees between 2006 and 2009, inclusive. The response was that, between barrister and solicitor bills, approximately €8.6 million has been spent in legal fees by the HSE to date.

The reason I was prompted to put down the question was because of a young couple who had to send a child to hospital and thought they were covered under private health insurance. It transpired that they were not covered and they were pursued vigorously for €5,000. I would hazard a guess that it probably cost the State a multiple of that €5,000 to pursue the family for those costs.

The point is that there must be a greater analysis of how we can achieve greater savings without adversely affecting people on lower incomes. It can be achieved with a little lateral thinking.

Deputy Arthur Morgan

I welcome the opportunity to bring forward once again a joint motion with Deputy Willie Penrose and the Labour Party on the issue of unemployment, the most important matter facing us today. We have been compelled to put down a motion because the Government's response to the crisis has been totally inadequate and it appears it needs to be forced to act on the matter.

The motion demands action from the Government to halt growing unemployment and get Ireland back to work. It highlights the extent of the crisis we are facing and its implications for the public finances, and sets out a number of straightforward steps which must be taken to get the economy back on track.

Figures released by the CSO at the start of this month reveal unemployment has surpassed 400,000, which represents 402,000 families with all the social, family and financial commitments that we understand. This is, without doubt, the biggest challenge facing the State and tackling it must be the Government's primary priority. Those who have lost their jobs over the past 18 months are waiting for a Government response but losing all hope that it is capable, or willing, to act to retain and create jobs.

Almost 200,000 people have lost their jobs since the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Mary Coughlan, took up her position. She should be ashamed of this but she seems almost oblivious to the depth of the jobs crisis we face. Does she even realise that in her own county of Donegal 18,000 people are now unemployed? Where is the job creation strategy and supports for struggling small and medium-sized enterprises, SMEs? With all the money poured into the banks, why are small businesses still denied access to credit?

Not surprisingly, the public does not have confidence that the Minister has a grasp of her brief or the resolve required to address the jobs crisis. The public sees a Minister and Government bereft of proposals to get this country back to work. The Government has been compared to a rabbit caught in headlights; the worse things get, the fewer moves it makes to address the problems. The Minister must explain to the House exactly what she has been doing in the year since she took up her position.

I come from a small business background and understand the pressures facing small family enterprises, which are good employers that want to create employment in the local community but whose backs are against the wall due to the lack of access to credit and the high cost of doing business. I understand the frustration at the Government's response to the current economic crisis. Like them, I know that if we are to stem the rising tide of unemployment, it is crucial that Government supports existing enterprises which provide employment.

We all know people who have lost their jobs in construction, retail, manufacturing and other sectors. The growth in unemployment over the past year has been astounding, hitting the 400,000 mark for the first time at the start of this month. Even those of us who repeatedly warned of the dangers inherent in the over-dependence on the construction sector and the need to protect workers in vulnerable sectors of the economy have been shocked at the speed at which unemployment has risen.

We are facing an economic crisis of unparalleled proportions caused by Government mismanagement and made worse by Government inaction. Other countries are also facing severe economic difficulties, but none are to the same extent as here. Economic mismanagement by the Government has meant we were the least prepared among our EU counterparts to deal with a global economic downturn.

Contrary to what Fianna Fáil argued, particularly in the run-up to the 2007 general election, the economy was not based on solid foundations. Policies pursued by Fianna Fáil-led Governments have undermined our ability to ride out an economic downturn. We can take as an example the privatisation which led to Eircom and its effect on the roll-out of broadband, or how the dependence on fair weather taxes has resulted in an unprecedented collapse in Exchequer revenue.

Every day, more people are losing their jobs, and even when they do the Government is not ready to help them. People are forced to queue for hours on the streets to sign on the dole and waiting times for the processing of unemployment assistance applications are unacceptably long for people struggling to pay bills and mortgages. Why can more staff not be transferred from other sections within the Department or from other Departments to ensure that people are treated in a dignified manner? Why has there been no action to address the plight of the thousands of construction workers denied benefits because they were coerced into describing themselves as self-employed by unscrupulous subcontractors?

Getting the economy back on track must be the main priority. No SME should be shutting down because it cannot access credit and no business should be failing to increase its exports because of a lack of knowledge of regulations or language in the country to which it seeks to export. No potential entrepreneur should be sitting on his or her hands because the funding expertise or advice is not there to bring their idea to fruition and no worker should be prevented from accessing alternative employment because he or she has been unable to access retraining or up-skilling.

Action is required to retain and create jobs and assist struggling businesses and those attempting to establish new enterprises. It is vital that Government intervention ensures that those who are currently unemployed will have the required skills to get back into employment. It is possible to do this. The Government often accuses Opposition parties of not putting forward constructive proposals but that is not the case with this issue.

Earlier this year, Sinn Féin brought forward an 80-point job creation plan entitled Getting Ireland Back to Work: Time for Action, which we believe has the potential to help retain and create jobs. Did the Minister read that proposal or any of the ideas put forward by any of the other Opposition parties? The plan included the establishment of a jobs retention fund to subsidise workers and SMEs struggling to keep their employees. We propose that this fund should be time-limited and be implemented in conjunction with an increased revenue and labour inspectorate. The subsidy should apply to each individual job and be no greater than €200 per week or 20% of the wage, and it should be reviewed after six months.

We are also calling for a body to be set up to actively pre-empt job losses by going into companies where jobs are in jeopardy to troubleshoot and offer advice, similar to the functions carried out by the Industrial Credit Corporation in the 1980s. The ICC was a publicly funded source of credit for Irish companies. There is a generation of people who have never managed a business during a recession but there is a generation which has done so. New businesses could do with advice and expertise to get through the period.

It has become clear that a change in the law regarding the leasing of commercial property is needed to allow tenants seek a rent review in order to reduce rent paid as economic circumstances change. Viable retail outlets are being put out of business due to the excess rents they are forced to pay.

We must ensure access to high-speed and low cost broadband. This should be effected, as proposed in the motion, through the renationalisation of Eircom. I agree entirely with the earlier sentiments of Deputy Sherlock in that we must renationalise Eircom to ensure all parts of this State have efficient broadband rather than just those parts which are profitable to a particular private company. There should be a particular focus on the agrifood sector, which can and should be boosted with the immediate introduction of improved country of origin requirements. Anomalies relating to sell-by dates for imported produce must also be addressed.

There is a strong case for using the public sector and direct public employment to kick-start the economy. This makes sense now in the same way as the US works progress administration did in the 1930s. That programme stimulated the US private sector during the Great Depression by focusing on tangible improvements to roads, highways, streets, bridges, public buildings, parks, reviving forestry and rural electrification. Areas that could be focused on now would include energy efficiency measures, infrastructure, including tourism infrastructure, and the roll-out of high-speed broadband.

The current economic crisis offers an opportunity to reshape the State. We need to be coming out of this crisis with the infrastructure, skills and public services that will put us at the top of competitiveness rankings and that will deliver improved quality of life for all our citizens. They are entitled to nothing less. We should be focusing on using this time to invest in the delivery of essential labour-intensive infrastructure and prioritising investment in key areas in which we have a competitive advantage on the international stage such as renewable energy.

Priority must also be given to our education system, a key to our future economic recovery. School buildings, in which there was disgraceful under-investment during the Celtic tiger years, should be made a priority. A minimum of 150 schools building projects should enter the architectural and planning stage each year, to allow them proceed as quickly as possible to construction phases. In 2007, €119.5 million was allocated to the summer works programme. This should be repeated in 2009 and maintained until 2013. The national insulation programme should be expanded to cover 100,000 homes by the end of February 2010 and 150,000 in subsequent years, creating the potential for 12,000 jobs by the end of 2010.

Sinn Féin proposes local authority and public sector construction service and procurement contracts be adjusted to create a level pitch for small businesses to tender. Breaking tenders into smaller pieces allows contractors with less significant turnover to tender for work. By not doing so, procurement contracts are going overseas to those with the capacity for tendering for larger jobs. Many Members know of local school extension projects not going to contractors in their constituencies because they do not have the turnover threshold to compete with outside contractors.

Crucially we need to fast-track business start-ups and create one-stop enterprise business points to bring together funding, expertise and advice for entrepreneurs who want to start new businesses or grow existing ones. We need to create a sales Ireland strategy to help Irish firms access export markets outside the US and Britain and to help Irish firms looking to set up manufacturing businesses with the potential to compete with our largest imports, including research and development funding.

Almost 90% of exports from the State come from foreign-owned multinationals. Foreign-owned firms import over 86% of the materials they use, bypassing Irish firms. Sinn Féin's job creation plan includes proposed supports for Irish manufacturers and producers to reach economy of scale, including on an all-Ireland basis, enabling them to compete with cheaper products both abroad and domestically through investment in new technology and production methods. We need supports for Irish manufacturers and producers to access export markets outside the US and Britain, including language and local regulation support with the increased use of Irish embassies to access local market knowledge and management personnel. It would also make good economic sense to give tax credits to companies which source Irish raw materials as opposed to importing them. Again, this matter has been flagged to the Tánaiste and Minister for Enterprise, Trade and Employment but she has ignored it.

Each sector of the economy needs to be examined with those with the potential for expanding employment identified and targeted. The requirements of businesses need to be identified to ensure they make it through the current economic crisis. We need a plan to expand jobs in sectors such as agrifood, tourism, green technologies and the knowledge economy. We must never return to a dependence on unsuitable economic activity such as was the case with the building boom of recent years. The Government must take responsibility for the wasted potential of those years as young people left school without completing their education to take up jobs in the construction sector. It must ensure these people get back into the education they will need if they are to get back to work.

The potential exists to get the economy back on track. We have skilled, energetic workers, innovative would-be entrepreneurs eager to establish new businesses that will create employment in their communities and unmatched renewable energy resources. A job creation strategy that can harness that potential is needed. We must do what we did not do during the Celtic tiger era. We cannot afford to lose a generation of young people to emigration as was the case in previous times of recession. Generational emigration was part responsible for holding back the economic development of this State by decades. This will happen again if the Government continues to fail to act. Skilled educated young people will not be prepared to accept a future on the dole queue.

Backbench Deputies in both Government parties should consider their positions carefully before voting for the Government amendment to this motion. Voting with the Government is effectively telling the 402,000 unemployed that its response to their plight is adequate. Such a vote, however, condemns them to a future on the dole queues with no hope of getting back into employment.

The economy can be got back on track. Jobs can be saved and created. Ireland can be got back to work. There are 402,000 good reasons for doing so. If we do not start solving the employment crisis, we will not be able to address the black hole in the public finances. Having 402,000 people out of work means less tax receipts going to the Exchequer and more payments out of the social insurance fund.

Will the Tánaiste and Minister for Enterprise, Trade and Employment act on the proposals put forward by Sinn Féin and the Labour Party during the course of this debate? If she, in particular, and the Government are not up to this challenge, they should step aside.

Tánaiste and Minister for Enterprise, Trade and Employment (Deputy Mary Coughlan)

I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

"commends the Government for its management of the economy and the public finances by implementing policies which will lay the foundation for a return to prosperity and which are aimed at stabilising and revitalising the banking system, restoring sustainability to the public finances, underpinning employment creation, assisting those in search of work or in need of training and further developing a green, clean, higher technological economy;

notes in particular:

the approval of the European Commission and support from the European Central Bank for our recovery strategy;

our underlying economic strengths which include world-class modern export industries, a pro-business environment and a flexible labour market; and

our significant international competitive advantage ranking Ireland as:

1st for real corporate taxes;

1st for investment incentives;

1st for foreign investor freedom;

1st for skilled labour;

3rd for flexibility and adaptability of people; and

4th for labour productivity;

acknowledges Government actions in support of activation and training through:

its €1 billion funding for a range of labour force measures which will assist those who have lost their jobs;

the doubling of capacity in job search support, training and work experience programmes;

the Work Place Programme which includes special provision for graduate placement;

and

special arrangements for over 3,600 redundant apprentices;

re-affirms its support for Government actions aimed at the enterprise sector through:

the creation of a €100 million Enterprise Stabilisation Fund;

the establishment of a Credit Supply Clearing Group to address the credit supply issue;

implementation of the Smart Economy Strategy;

the roll-out of the National Broadband Scheme; and

policies aimed at reducing energy costs in the economy."

I wish to share time with the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Conor Lenihan.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Deputy Mary Coughlan

I apologise that I may disappoint Deputy Morgan in not adhering to his final request.

Deputy Arthur Morgan

Unfortunately, the Tánaiste has already disappointed me by her inaction.

Deputy Mary Coughlan

The global economy is facing a sustained and unprecedented economic challenge. Every economy in the developed world is struggling to cope with the global economic storm, exacerbated by credit constraints and prolonged by a decline in consumer and investor confidence.

Ireland is not immune to those challenges, which are impacting negatively on growth and employment. Domestically, as the recession which commenced during 2008 deepens further, GNP is projected to experience its sharpest decline on record, contracting by 8%. As a result, a cumulative loss in national income of around 13% is expected between 2008 and 2010. However. as the expected international recovery gains momentum and the sharp shock in residential housing output passes through, Ireland's economic growth rate is expected to turn positive by 2011.

In the interim, we must continue to pursue appropriate policies to position the economy to benefit from the global recovery when it eventually emerges. Our labour force continues to be highly skilled and flexible. We continue to invest in education at all levels to ensure the skills demanded by our increasingly knowledge-intensive economy are available. We are also demonstrating wage flexibility in both the public and private sectors, a significant achievement which many countries wish to emulate. There are also adjustments in work practices and other labour market costs are changing in order to safeguard employment.

Our economy remains flexible and resilient and this will facilitate an adjustment to reflect the prevailing environment. For its part, the Government remains committed to providing a pro-enterprise environment and to maintaining our relatively low tax burden on business. It also is maintaining capital spending at a high level by international standards. This will allow it to continue its investment in productive infrastructure, which will help enhance our competitiveness. Through implementing the correct policies now, our recent progress will be safeguarded and our future prospects will be secured. The European Commission has endorsed the measures the Government has taken in its recovery strategy and it also has the support of the European Central Bank. These non-partisan bodies recognise the extent and appropriateness of the measures the Government has taken to bring the public finances under control.

The Government has a proven track record of managing a successful and vibrant economy. The measures it has taken in recent months are designed to address our present difficulties and to ensure a return to sustainable economic growth and the creation of more employment. The Government is committed to continuing to take the necessary difficult decisions to achieve this goal. However, one must not forget that the economy still retains many of its underlying economic strengths. These strengths are borne out by the recently published World Competitiveness Yearbook of 2009. It is encouraging to note from this report that Ireland's strengths lie in its continuing attractiveness for investment. It is first for real corporate taxes, investment incentives, foreign investor freedom and skilled labour, third for flexibility and adaptability of people and fourth for labour productivity.

In spite of the difficult economic environment in which we currently operate, the underlying strength of the Irish economy is clearly evident when one considers its trade performance and the continued impressive success of its exporters. Last year, Ireland's trade surplus was a very healthy €21.4 billion. This was a very impressive performance, especially when one takes account of the deep global recession and the adverse exchange rate between the euro and the currencies of our two largest export markets, namely, the United States and Britain. If the experience of recent years has taught us anything, it is that trade is the cornerstone of Ireland's economic success and trade undoubtedly will be the instrument by which Ireland positions itself to benefit from the future global upturn. Even in these difficult times, many of our export-orientated companies continue to excel. It therefore is clear that we must build on these strengths and use them to our advantage to ensure the Irish economy is well positioned to benefit when an improvement in the global economy takes place.

While Ireland still retains many areas of competitive advantage, one also must acknowledge that the global economic downturn has had significant implications for its economy as a whole. This is most evident in the sharp rise in unemployment which has been experienced. Although the live register figures continue to rise, the monthly rate of increase has been abating since February. In addition, despite the major downturn in the economy, last month more than 16,500 people left the live register because they found work. In the past year, almost 145,000 people left the live register because they secured employment. This is a positive trend that shows there still are jobs available and that the Government activation measures are assisting the unemployed to develop their skills and to secure employment.

In response to the increasing numbers of people on the live register, I am working closely with my colleagues, the Minister for Social and Family Affairs, Deputy Hanafin, and the Minister for Education and Science, Deputy Batt O'Keeffe, to ensure that appropriate responses are developed and put in place to meet the up-skilling needs of those who are losing their jobs or facing uncertain employment prospects. My Department alone is investing €1 billion in the provision of a range of labour force measures that will provide training and work experience opportunities to assist those who have lost their jobs. FÁS employment services, together with the local employment services, have put in place measures to double the capacity to cater for the rise in referrals from the Department of Social and Family Affairs. The implementation of such measures has increased the annual referral capacity to 147,000 persons in 2009. These measures and others represent a significant step in meeting the huge challenge of supporting the unemployed.

In a difficult employment climate such as that which we face at present, the importance of training and education is vital for everyone within the workforce. The impact such opportunities can have for those who are out of work and who seek to rejoin the labour market cannot be overstated. I have almost doubled the number of activation training and work experience places provided by FÁS to 128,000 to assist individuals through the provision of education and training opportunities. This is a substantial increase from the 66,000 places that were available at the end of last year. Specifically, there are additional training places on short courses available to the unemployed. The courses are designed to be flexible in responding to individual training needs in the development of new skills and competencies. These places are specifically tailored to individuals who wish to add to their existing skills level and improve their prospects of re-entering the labour market.

In addition, in the supplementary budget the Government announced its intention to establish a programme that will provide valuable work experience to individuals who are unemployed and who have had limited experience to date. My colleague, the Minister for Social and Family Affairs, Deputy Hanafin and I jointly launched the work placement programme on 2 June last. This programme will provide 2,000 individuals who have been unemployed with a six-month work experience placement. Under this programme there are two streams, each consisting of 1,000 places. The first stream is for graduates who before this year have attained a full award at level 7 or above on the national framework of qualifications and who have been receiving jobseeker's allowance for the last six months. The second stream is open to all other individuals who have been receiving jobseeker's allowance for the past six months. Under this stream, 250 places are being ring-fenced for those under 25 years of age. As a result of the co-operation and dialogue between the Departments of Enterprise, Trade and Employment and Social and Family Affairs, the scheme has been innovatively designed to allow participants on both streams of the programme to continue to receive their existing social welfare entitlements from the Department of Social and Family Affairs for their duration on the programme. I believe this scheme will work and there is great enthusiasm to participate in it. Assuming it works, neither Deputy Hanafin nor I will be found wanting in respect of increasing the availability of places. We will learn from the first 2,000 individuals to ensure the outcomes will be beneficial to the clients.

In a further initiative, on 2 June my colleague the Minister, Deputy Hanafin, and I launched the short-time working training programme. This new initiative offers individuals the opportunity to receive training that suits their specific requirements. In respect of individuals who are on short-time working, this programme will provide two days training a week for 277 workers over a 52-week period. Again, this is a pilot programme to ascertain how this will work and whether it will do the job as it should. This issue was raised in a previous debate in this House and the Government will be forthcoming in analysing the outcome of this training programme on its completion. Support for jobs and for those who have unfortunately lost their jobs, remains at the centre of our collective efforts. This is the reason we must be imaginative and must break new ground in intervening to sustain jobs. At present, the Government is examining possible new approaches regarding the retention in employment of people who are in danger of becoming unemployed. This is currently being discussed with the social partners.

Since the beginning of 2008, there has been a significant contraction in activity in the construction sector. This contraction has been accompanied by a substantial reduction in the numbers of people employed in that sector. This has had a severe impact on individuals who are currently undertaking an apprenticeship. The Government is fully aware of the difficult situation in which such redundant apprentices find themselves. This is the reason the Government is committed to assisting redundant apprentices to gain employment as soon as possible in Ireland or abroad in order that they may complete their apprenticeships. I have introduced a wide range of measures designed to help alleviate the present situation by enabling 3,600 redundant apprentices to further their apprenticeships this year. The measures include the putting in place by FÁS of a measure whereby apprentices who are made redundant can progress to the next off-the-job training phase in the education sector. This means they do not need to do their on-the-job phase and can go directly to the next off-the-job phase. Moreover, FÁS has introduced an employer-based redundant apprentice rotation scheme to provide support for employers to provide on-the-job training to 500 redundant apprentices when they have released their employed apprentice to a scheduled phase 4 and phase 6 off-the-job training phase in the institutes of technology. In addition, ESB Networks has agreed a programme with FÁS to provide on-the-job training to eligible redundant electrical apprentices at phases 5 and 7. This programme will provide 400 places over a period of 18 months. The institutes of technology are providing an 11-week certified training programme to 350 redundant apprentices who have completed their phase 4 training but to whom another training opportunity is not available.

The key to overcoming our rising unemployment levels is to provide the necessary support to the enterprise sector to create employment. This Government has always displayed a strong commitment towards assisting the continued development of our enterprise sector. In the supplementary budget, the Government made provision for capital investment in enterprise of more than €500 million, through IDA Ireland, Enterprise Ireland, the county and city enterprise boards and Science Foundation Ireland. In doing so, the Government prioritised investment in the most productive sectors of our economy and invested in the creation of jobs by cementing the foundations of export-led recovery and growth. As part of this investment, the Government has established a €100 million enterprise stabilisation fund. The fund, which is administered by Enterprise Ireland, aims to help viable but vulnerable internationally trading companies to survive the current global downturn by supporting their efforts to reduce costs and gain sales in overseas markets and to sustain employment. Sustainable economic recovery will be driven by enterprises that are focused on increasing their exports of innovative products and services in global markets. Companies from all sectors are seeking support. The main issues of concern are the sterling exchange rate, the loss of sales, funding from the banking sector, competitiveness, construction industry and energy prices.

Enterprise Ireland has been engaging with various companies under the enterprise stabilisation fund. It is working intensively with 60 companies to develop definitive project applications to the fund with a view to releasing such funding as soon as practicable. I have met representatives of a number of companies that have expressed an interest in the stabilisation fund. Some of the companies have made successful applications under the fund. I am encouraged by the interaction between Enterprise Ireland and the companies in question. I advise the House that the fund can also be used to assist Údarás na Gaeltachta companies.

The silo approach of the development agencies has definitely gone. There is now a great deal of interaction between them all. I told the House some time ago that we are involved in an economic war. We need to work together, rather than having a silo approach. The development agencies have a role in achieving traction within the economy. The work of those who are involved in the enterprise stabilisation fund will contribute to the stabilisation of vulnerable companies. That will be determined on the basis of market failure only. I am aware that access to finance is a concern for small and medium sized enterprises at start-up and development phases. The key message being transmitted by everyone involved in business and enterprise is that access to working capital is an abject frustration. That message has been articulated on the floor of this House and at today's meeting of the Select Committee on Enterprise, Trade and Employment. I accept that we need to stabilise the public finances and put in place a viable and functioning banking sector. We have articulated that frustration. We appreciate that difficulties exist. It is expected that NAMA, if it fulfils its role in a fundamental way, will allow the banking system to lend to businesses and facilitate the taking of risks once more.

My Department's agencies have met the relevant banks in recent times. As a result, some people have been seconded from Enterprise Ireland into the banks. That has been mutually beneficial. I will have a key focus on ensuring that small and medium sized enterprises can access the money that has been made available through the European Investment Bank. Such enterprises should be able to use the seed capital mechanisms that were agreed under the recapitalisation scheme. The relevant agencies, those representing business and tourism interests and the banks should be able to work together through the clearing house that is being chaired by my Department and supported by the Department of Finance. Additional resources will become available when the Department of Finance's investigation into the availability of credit has been completed. We will see some traction on this issue at that stage. That is a key consideration for everyone in business.

When we investigated the substantial concerns that have been expressed about export credit insurance, it was clear that the issue at stake was not necessarily export credit insurance, although that is important in itself. We discovered that the fundamental difficulty being encountered by businesses in this area related to credit insurance. Over recent months, we have seen a considerable contraction in the availability of credit insurance. It was on that basis that we decided to work with Forfás. I am aware that the Chairman of the Joint Committee on Enterprise, Trade and Employment believes that Forfás does a good job, and rightly so. Forfás has been able to put a number of options together to allow us to further develop the availability of credit insurance. We have been able to reduce the time it takes to go to tender, luckily, as a result of the extraordinary nature of this situation. That is allowing us to work through the risk analysis that is needed if we are to have a functioning credit insurance scheme and to minimise the exposure and risk of the taxpayer, which is incumbent on everyone in this House in light of the lessons that were learned 20 years ago.

I do not suggest that export credit insurance is not important, it is very important. I hope lessons can be learnt from the previous incarnations of this scheme. The approach taken at this time should be targeted and focused. Contrary to what has been said in this debate, over recent months we have examined what other EU member states are providing in this area. They are finding it very difficult and expensive, unfortunately. That will not deter me from making progress on the issue of the availability of credit, finance and credit insurance.

These are difficult times. We could choose to deal with this in an adversarial way. More importantly, we can adopt good ideas and initiatives. A number of the proposals that were made by Opposition Deputies during the Private Members' debate on the issue of activation have been taken on board, some of them on a pilot basis. We are trying to ensure we do not have a difficulty with dead weight. In particular, we are trying to ensure that what does work will work well. I commend the amendment to the House.

Minister of State at the Department of Enterprise, Trade and Employment (Deputy Conor Lenihan)

It is clear that the future of the Irish economy lies in the continued development of the high value-added sectors of our economy. Sectors such as information and communications technology, biopharmaceuticals and the green economy, which are characterised by cutting-edge innovative developments, will be the key drivers of our future economic growth. The Government is committed to developing one of the world's leading knowledge-based economies. It introduced its framework for sustainable economic renewal, Building Ireland's Smart Economy, last December in response to the much more challenging economic environment. This document sets out a clear roadmap for Ireland's move back to economic growth and prosperity. Investment will focus on areas in which we can build on our existing strengths, address our weaknesses and make ourselves ready to grasp the opportunities that will be presented when the upturn in the global economy begins. The action areas and points within this framework are a combination of existing policies, on which the Government will build, and new actions that will drive the restructuring of the economy. This combination is important because a principal objective of the framework is to reprioritise the business of Government and refocus resources in a manner that will hasten economic renewal. The Cabinet economic renewal committee, which is chaired by the Taoiseach, is responsible for driving the implementation of the framework. We should be aware that the successful implementation of the framework will not merely result from the policy measures and investments that are put in place by the Government — a national effort will be required to meet crucial short-term challenges. The Government is working with the social partners on the implementation of this framework, which is consistent with the principles and visions that underpin Towards 2016 and uses the well established mechanisms of the social partnership process.

In view of the huge potential for the green economy to help Ireland to meet its economic and environmental challenges, the Government gave a commitment in the framework strategy to establish a high level group on green enterprise. I am glad this commitment has been achieved. The high level group that has been established is chaired by Mr. Joe Harford, who has a strong track record at the highest level in multinational and indigenous cutting-edge enterprises. The many opportunities for Ireland in the green enterprise sector are continuing to grow and develop. Therefore, it is essential that Ireland adopts a proactive approach to developing its expertise and realising its full potential in this area. The establishment of the high level group, which will map our Ireland's potential in this area and produce an urgent action plan, will greatly assist Ireland in accessing this lucrative market.

As Minister of State with responsibility for science and technology, I am particularly pleased that the rate of the research and development tax credit was increased from 20% to 25% in budget 2009. This tax credit provides an effective incentive to companies to increase research and development and complements the various direct research and development grant supports, which are also available through various agencies of the State. It is a signal success of recent years that in the past ten years the amount of money spent in this economy and society on research and development has tripled and represents 1.66% of our GDP. The hope and intention, notwithstanding the downturn, is to increase this figure to 2.5% of GDP by 2013. This will not be an easy target to achieve but it is one that is well worth striving for because it is only through research and development and growing the spend and the collaboration between the universities, industry and the State, through its various agencies, that we will provide secure and highly qualified employment for our citizens in the future.

The increase in the research and development tax credit means that Ireland is now an even more attractive location for research and development. This will encourage more firms to establish a presence here and it will also lead to the expansion of companies that have already located here. There is a direct substantial linkage between what we spend on research and development and what we get by way of inward investment. This year alone, 40% of the new IDA gains were research and development related or technology related. Last year, the figure was 43%. There is a clear demonstrable link between what we do and what we spend in terms of taxpayers' money but also private sector money. There is direct substantial link between that spend in research and development and our ability to leverage and gain more investment from overseas into Ireland.

Broadband is a key piece of infrastructure for the smart economy and is critical to the development of digitally traded services. At present, almost 90% of the small and medium-sized enterprise sector has broadband, but we need to increase this take up rate. The Government is committed to ensuring that Ireland has a comprehensive and high quality broadband network. We will shortly publish a policy paper which will set out the strategic framework for the development of high bandwidth networks. To date, the Government has taken several actions to further develop Ireland's broadband. These include the launch of the national broadband scheme which aims to provide broadband to areas not currently served by the end September 2010; Project Kelvin, which will bring international telecoms connectivity at competitive prices to the north west and Border counties by 2010; and the establishment of a working group to progress the requirement that new buildings install fibre connections at the construction stage, as fibre is currently the most future proofed way to provide high bandwidth networks and installation at the new build stage is much cheaper than retrofitting.

As Eircom is a private company which is currently undergoing a sales process, the Government has no direct involvement in this process but it recognises the continued strategic importance of Eircom to the telecoms sector in Ireland. My colleague, the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan, has stated that public ownership of Eircom is not on the agenda. In developing our telecoms infrastructure and transitioning to high band width services, investment in Eircom infrastructure will be key and any potential purchasers of the company should recognise the requirement for a long-term strategic approach to ownership with a focus on the high band width services required to support the digital economy.

Another central pillar of any modern economy is the availability of competitively priced energy. The Government is committed to exploring the cost of energy in Ireland and to reducing its cost where possible. However, it is important to acknowledge that significant progress has already been made in reducing the cost of energy in Ireland. For example, the Commission for Energy Regulation lowered electricity prices for all customers by 10% on 1 May and gas tariffs by an average of 12% for domestic and small and medium-sized enterprise gas customers from 1 May. All electricity users are currently benefiting from direct subsidies totalling €567 million. These direct subsidies were being used to prevent major increases in electricity prices in 2008 as international fossil fuel prices soared and to accelerate the delivery of the benefits of falling gas prices to consumers, ahead of the normal tariff decision due in October 2009.

The Government took a major step forward in increasing competition within our energy markets through the introduction of the single electricity market. This reform has led to a significant expansion of generating capacity by major international utilities. As a result of the single electricity market, we have witnessed the introduction of enhanced competition with the entry of two new suppliers, which has led to discounts ranging from 10% to 20% for companies in the small and medium-sized enterprise market who choose to switch suppliers.

The Government is currently exploring a variety of other measures to tackle the cost of energy in Ireland. For example, the North-South Single Electricity Market Committee, which governs the operation of the all-island wholesale electricity market, will soon publish for consultation a fundamental review of tariff methodologies. This review will present a number of options for discussion, which include modifying the tariff year to allow for more frequent price reviews and to allow energy suppliers greater flexibility in pricing. The annual review of regulated tariffs for the period 2009-2010 will commence in the summer, with the publication by the end of July of the Commission for Energy Regulation's proposed electricity and gas tariffs that will apply from 1 October 2009. The Commission for Energy Regulation is also about to commence work on a five-year review of network expenditure. This review will take account of prevailing economic circumstances and projections for electricity demand in assessing the capital investment programmes of ESB and EirGrid from 2011. The review will also drive ESB and EirGrid to make greater efficiencies in operational and capital expenditure, thus driving down costs to all consumers.

The Government has been proactive in ensuring that Ireland undergoes the necessary remedial measures so that we will be in a robust position to benefit from an upturn in the global economy. We have put in place the building Ireland's smart economy framework, which provides us with the necessary roadmap to guide our development over this turbulent period. Ireland continues to possess a pro-business environment, which is characterised by a highly skilled and flexible labour force.

The Government has put in place several measures to promote the development of the green sector of our economy, the continued roll-out of high-speed quality broadband and we are continuing to address our energy costs. I am confident that the measures highlighted by the Tánaiste and I this evening will ensure Ireland overcomes our current difficulties and that we emerge a stronger and more resilient economy in the future. Nothing more starkly demonstrates our ability to react and adapt to the new international circumstances than the figure which was pointed to recently by some economic commentators that we had experienced a 4% drop in wages and salaries in this economy. That indicates we have a flexible pro-market workforce and that we can adapt to the competitive challenge that lies ahead.

Deputy Leo Varadkar

I wish to share time with Deputy Clune.

An Leas-Cheann Comhairle

Some 20 minutes are available in this time slot tonight but 22 minutes are available in total in this slot.

Deputy Leo Varadkar

Deputy English will resume tomorrow.

An Leas-Cheann Comhairle

That is agreed.

Deputy Leo Varadkar

I compliment Deputies Penrose, the Labour Party and Sinn Féin on allowing us to discuss this most important issue to the public at present. The live register stands at 400,000 and includes people who are unemployed and underemployed, which is just more than 12% of the workforce. It puts us in a different position from what we were in even two years ago. Ireland is now a high unemployment country. Within the eurozone only Spain and perhaps Belgium, although that is questionable, have a higher level of unemployment. That is a turnaround for a country that had low unemployment not that long ago. Other states, including the United States, Canada, Australia, New Zealand, Israel and Singapore, have a lower rate of unemployment than us. While all countries in the western world at least are facing the impact of the global downturn, it is clear few countries are suffering as badly as Ireland.

The worse aspect of unemployment is its social consequences. They must last longer and well beyond the end of a statistical recession. They particularly relate to exclusion from society and from the labour market. That is why it is important during this period that we do everything we can to keep as many people in employment as possible. Once people enter the cycle of unemployment and welfare dependency, it is almost impossible to get them out of it and it can take generations to break that cycle.

To get the economy moving again and to restore employment, there are a few things we need to do. Essentially, there are five key pillars to the policies Fine Gael puts forward. The first is the repair of the financial system. We have different views from those of the other parties on how that should be done. The second is fixing the budget, which we believe should be primarily done through reducing spending, although some tax increases will also be necessary. We do not believe that relying predominantly on taxes will get us out of recession; in fact, it may even make it worse. Neither do we agree that we can borrow our way out of recession. Borrowing is just the deferral of tax increases and spending cuts, probably much worse ones. Essentially, it sends the bill for this economic crisis to our children, which is something we cannot support.

We also need to reduce costs and support businesses. This means targeting the key costs: labour, energy, regulation and taxation, the latter mostly in the form of VAT and travel taxes. We must also continue to invest in the future, which is what the Government has not done. Capital spending has been cut back hard. We understand why this had to be done, but there were alternatives, including the use of the National Pensions Reserve Fund to create new State enterprises and using that money to invest in infrastructure. We will not become competitive again if we do not continue to invest in the infrastructure we need for the future.

We need Government action to protect people — not to protect jobs but to protect people from unemployment. Some of the ideas that have been put forward in this Chamber include the establishment of a graduate internship programme and a change in the training system so that FÁS, instead of being a provider of training, becomes a buyer of training, giving people training vouchers which they can use to buy training from whomever they want, whether it is FÁS, the VEC sector, the institutes of technology or universities.

Another suggestion was something we should have done a long time ago but did not, which is to reform the social welfare system. We spend €20 billion per year on social welfare in Ireland, much more than other European countries, even though we have far fewer pensioners. We now have more people unemployed but we cannot deliver social justice or social protection with that money. We need to consider remodelling our welfare system by merging it with the tax system to end all disincentives to engage in work, and by moving towards a system of flexicurity, similar to those in the Netherlands and Denmark, in which people who lose their jobs retain a portion of their income in unemployment benefit provided they participate in either training or community service. This would mean enhancing protection for people but ending the system in which the State pays people more than €5 per hour to do nothing at all. This is something we cannot continue to do.

I am broadly supportive of the motion, although with one or two caveats, which I will come to in a minute. There is a strong case for a national investment bank — which we call a national recovery bank — capitalised by the State and funded by the ECB. It is largely the same concept. That is needed because it will take NAMA a long time to sort out the balance sheets and credit will not flow to business until that happens. Nationalisation will not sort out the balance sheets; nationalisation plus NAMA will be required to do that. In the interim we need some mechanism to extend credit to business and this can best be done through a national recovery bank of this type.

I support the ideas put forward by the Labour Party and Sinn Féin about one-stop enterprise business points. That is the kind of thing our local authorities should be doing. We should merge all the different local structures — county enterprise boards, city enterprise boards and development boards — into enterprise units within local authorities. It is a great shame we have left enterprise out of local authorities. We need to have a new focus on enterprise at local authority level.

Fine Gael does not agree with taking Eircom into public ownership, largely because this would mean nationalisation of Eircom's massive debt of €3.8 billion. We have had enough nationalisation of debt in this country. We have seen how much Anglo Irish Bank has cost us since its nationalisation, and we would be entering into the same territory by nationalising Eircom. There is an alternative which has been proposed many times, including by Eircom itself: that it be split into retail and wholesale arms, with the wholesale arm carrying Eircom's infrastructure. That could be combined with the Government MANs and the existing networks that are in Government control, such as those of Iarnród Éireann, ESB and Bord na Móna. The State could then take a significant equity share in that company and thus provide the new wholesale company with funds to invest in broadband. This is the idea of Broadband 21 from our NewERA document, and it is achievable. I do not think any of us honestly believe that Eircom will be re-nationalised, but the proposal we are putting forward could be carried out.

I agree with the measures proposed to retain workers in employment and to support Irish manufacturers and producers in exporting to markets outside the USA and the UK through language support. Such measures could be useful. In addition, the "Bridge the Gap" work experience idea could work very well. We need to make a commitment to apprentices that they will be able to finish their apprenticeships no matter what. What is missing from the motion — this lessens it somewhat, although I do not think it is deliberate — is competitiveness. The key to restoring employment growth in Ireland is to make it competitive again. The recession of the 1980s ended in 1983 — from 1983 onwards we had growth, although we did not have jobs. We did not start creating jobs again until 1994, for a number of different reasons. I fear we are heading that way again. I believe the recession will end next year and that by the second or third quarter we will be back in growth, but we will not have jobs. Until we have jobs the public finances will not be improved and we will continue to pay higher taxes, take pay cuts and see people lose their jobs, even though the recession will be over. People will not understand this, but the reason is obvious, we need to become competitive before we can have employment growth, and that means reducing the cost of doing business, improving Government bureaucracy and continuing to invest in infrastructure.

The Government amendment deserves comment. It commends the Government on its management of the economy. That is a difficult one to swallow for almost anyone with a thinking brain. It also commends the Government on its management of the public finances. This is a Government that has borrowed €10 billion this year already, three times as much as it borrowed in the first half of last year. We may, after the UK, have the biggest Exchequer borrowing requirement in the western world — it may even be larger than that of the UK. There is not much to be proud of there in terms of the public finances. The Minister of State opposite me is Deputy Conor Lenihan, whose brother doubled the national debt in one year alone. It took a previous Government led by this party five years to do that. By the time Deputy Brian Lenihan is finished in office I expect he will have tripled the national debt. For the Government to commend itself on such management of the public finances is hard for us to take. The Government also commends itself on stabilising and revitalising the banking system, which is a little premature.

Our significant international competitive advantage is mentioned in the amendment and was also mentioned by the Tánaiste in her speech. She also mentioned that Ireland is ranked first in terms of real corporation tax, investment incentives and foreign investor freedom. This comes from the IMD World Competitiveness Yearbook 2009, which was published some weeks ago. The Tánaiste was being very selective in what she quoted from the report and I wonder whether she actually read it, because the yearbook actually reduced our competitiveness ranking from 12th in the world to 19th. It is one thing to pick out the good bits, but it is more than a little disingenuous to ignore the overall figure. It is a little like failing one's leaving certificate but saying one got a C in art and a D in pass Irish.

Our competitiveness is continuing to decline, although the fall in wages means that this will turn quite soon. However, much more needs to happen before we can become competitive again. Another disappointing aspect of the Government amendment is the mention of the enterprise stabilisation fund. It is not yet clear how much money is even being disbursed and it will be interesting to see how much is disbursed and when.

I thank the Labour Party and Sinn Féin for tabling this motion. There is no question that unemployment is the most important economic and social problem facing the State in the coming years. Our priority as politicians must be to find solutions by agreeing on a strategy to bring the country out of recession and back to employment growth. In the meantime, we need to introduce a mechanism to protect people who lose their jobs, which will continue to be the case for the next year or two. The likelihood is that there will be a prolonged period of high unemployment, for which I do not think we are prepared.

Deputy Deirdre Clune

This important motion focuses on job creation and protection and the importance of positioning this State for the recovery that will undoubtedly happen. We must ensure we have a workforce that is fit and able to match that recovery. As Deputy Varadkar argued, our economy must be returned to the high level of competitiveness we previously enjoyed.

The most important concern for people at this time is retaining their jobs. For those who have lost their jobs, the concern is where they will find new employment. The public is looking to this House for leadership in this area but is finding little evidence of it. The reaction of the Government to the deficit in the public finances has been to increase taxes, particularly those applying to low and middle-income earners. There was no mention in the April budget of prioritising job protection and creation. Nor was there support for small business, the lifeblood of our economy. This increased taxation has resulted in reduced consumer spending, which puts further pressure on small and medium enterprises throughout the State.

Every day we hear of further job losses. Many of those affected have been in their jobs for a considerable time. Many of the businesses obliged to reduce staff numbers have a strong record of trading and providing services. Now, however, they are unable to access funding from the banks to allow them to continue in business. This is a theme that arises consistently. We have all had representations from local businesses which have been refused requests for credit, whether for small or relatively large amounts. I have received representations from Cork Chamber of Commerce, for example, and from the owners of small and medium enterprises in my constituency outlining the difficulties they face in accessing credit. The Tánaiste has outlined this evening and previously how she intends to ensure capital is made available to small businesses. The reality, however, is that there has been no progress in this regard and many such businesses are obliged to let employers go. This, in turn, adds to the Government's woes in terms of the public finances.

Unfortunately, we seem on target to reach an unemployment level of 17% by the end of the year. This is a frightening statistic, equivalent to one in five out of work. A significant aspect of this is youth unemployment, with the rate of unemployment of under 25s doubling in 12 months, from 43,000 at the end of May 2008 to some 85,000 at the end of May 2009. This week students in third level institutions throughout the State are receiving their examination results. Those who have qualified with degrees and diplomas are wondering what the future will hold for them. The 55,000 leaving certificate students who are completing their examinations are similarly concerned, as are their parents, as to the best way to target their energy and resources in the coming years.

Many of those who have lost their jobs in recent months have finished school or college in the last ten or 15 years. Many have substantial financial commitments, including large mortgages and the cost of caring for young children. For those who lose their jobs, their world is falling apart. Many commentators have compared the current downturn to the situation in the 1980s. In reality, however, an aggravating factor now is that the level of personal debt is much higher than it was the past. This is an important issue to bear in mind.

I agree with Deputy Varadkar that proposals for retraining and up-skilling those who are unemployed are vital. I met recently with representatives of the FÁS regional office in Cork. That office is working closely with young people who have completed their apprenticeship training programme in order to ensure they secure a position, some in the United Kingdom and some in Germany. Impressive work is being done in this regard. However, FÁS officials say it is a major concern that there are no employment prospects for many of those who have completed their training.

Small and medium-sized enterprises employ some 800,000 people in the State. Aside from ensuring access to credit, there are many ways in which they can be assisted and supported. My party has completely different proposals from the Government on how we should move forward in this regard. The notion of a national recovery bank which can be established immediately to ensure the flow of funding to small businesses is something I entirely support. I hope that proposal will be implemented sooner rather than later. It is a positive initiative which has support from Members on this side of the House and from outside the House.

The Minister for Finance has admitted that the decision to increase the VAT rate in the last budget from 21% to 21.5% was a mistake. Yet he has not taken the opportunity to correct it. Fine Gael has put forward proposals to reduce VAT in order to provide a stimulus to economic activity and to encourage spending. The statistics show there is a significant lack of confidence on the part of consumers, with spending substantially reduced. We must increase consumer confidence and thus assist businesses in the services sector by reducing the VAT rate without delay.

The travel tax introduced in the October budget has been shown to have reduced confidence among the travelling public. Last week we learned that Aer Lingus is to reduce the frequency of its transatlantic flights from Shannon and Dublin. The chief executive officer, Mr. Dermot Mannion, revealed he had written to the Government on three occasions requesting the abolition of this tax. As a small island nation, we depend on a comprehensive air transport service. This is equally important in attracting tourists and in facilitating those in this State who depend on air travel to conduct their business. In The Netherlands, a similar tax was abolished as quickly as it was introduced because it immediately improved to be a disincentive to travel.

The Tánaiste referred earlier today at the meeting of the Select Committee on Enterprise, Trade and Employment to the importance of the reports from the National Competitiveness Council, and explained how she channels those reports through her Department and through the Government. The press release from the council last January focused on the issues that must be addressed. The importance of improving our cost competitiveness cannot be overestimated. High energy costs will continue to be a major concern for businesses, as referred to by previous speakers.

The report of the National Competitiveness Council also referred to education, which is of vital importance if we are to position the State for economic recovery. This is of relevance to the remit of the Minister of State, Deputy Conor Lenihan. The council's report called for a strong focus on improving performance in mathematics, science and information technology skills, with a recommendation that action be taken to encourage the take-up of higher level mathematics at leaving certificate level. However, having questioned the Minister for Education and Science, Deputy Batt O'Keeffe, on this issue, it is clear he has no intention of taking action in this regard. It will be important to encourage students to take up the subjects of mathematics, science and information technology skills, particularly if the Government's smart economy strategy is to be implemented. I hope the Minister of State will take that point on board and ensure that action is taken in respect of this matter across a range of Departments.

Debate adjourned.