I am glad to have the opportunity to contribute on this important motion. I am speaking on behalf of the Labour Party. I wish to focus on employment and the need to devise an integrated employment strategy, which necessitates fresh thinking, and to avoid adherence to a policy that advocates or is a slave to traditional economic orthodoxy. By adhering to traditional economic orthodoxy, the Government believes pursuing pro-cyclical solutions such as the policies that got us into the current economic difficulty are the best way of getting us out it. The let-rip view of the McCreevy years is now to be countered by a focused austerity programme of reduction that ensures massive expenditure cuts and withdrawals of funding from infrastructural areas that could serve as significant areas of employment generation and thereby give hope to the 452,000 people who are currently on the live register. That is 13.4% unemployment, with men outnumbering women by a ratio of 2:1. Four firms go bust every day. The predicted number of business closures is from 1,800 to 2,000.
In June 2010, some 91,600 people under 25 were on the live register, approximately 38,000 of whom have been unemployed for one or more years. One in three young men is unemployed. When people experience long-term unemployment, they find it much more difficult to secure employment thereafter. The fear of long-term unemployment persisting is causing great angst.
Thus far, the Government has concentrated its attention on the banking and fiscal crises while doing little to address the jobs crisis. It is the firm view of the Labour Party that these issues cannot be dealt with in isolation. Clearly, therefore, a coherent and integrated approach is necessary that encompasses all these areas. Enterprise strategy must have a dual foundation that includes attracting foreign investment.
The road map for the period to 2020, Horizon 2020, launched by IDA Ireland in March, is very instructive and illuminating. It points the way forward in terms of foreign direct investment. The agency hopes to attract 105,000 new jobs over the next five years and to promote balanced regional development whereby 50% of jobs would be located outside the major cities of Cork and Dublin. It is important to establish and achieve targets. The blueprint is important.
It is important that we develop a strong indigenous enterprise sector with a sustained focus on the development of indigenous firms in high-value-added activities. Enterprise supports provided through State agencies have a vital role in helping firms to start up and grow and in providing assistance and knowledge at critical phases in the life of a firm.
Enterprise strategy should be focused not on the withdrawal of supports but on the development of new forms of supports. These should include support for import substituting firms, for example, in addition to those with an immediate export focus.
Greater emphasis should be placed on county enterprise boards' role in supporting small businesses starting up. Further resources should be provided. The eligibility criteria for support from county enterprise boards should be re-examined to promote activity. Given that the weakness of the economy reduces the risk of dead weight or displacement loss in the short term, this should be achievable.
In addition to developing economy-wide enterprise strategies, it is important to develop sectoral strategies, to be pursued by relevant agents. The Labour Party has proposed a €1.1 billion jobs fund with three essential components, but the media never seem to recognise this. There would be funding for sectoral jobs strategies that focus on building upon our natural and clear comparative advantages in green technology, food, tourism and the cultural and creative industries, all to be driven by relevant enterprise agencies.
I salute Bord Bia, which I would give a greater role. Under Mr. Aidan Cotter, it has been very progressive. It should be given a greater role in developing and promoting branded food products. We have only had one success, that of Kerrygold. We should try to ape that and succeed where we can generate added value and jobs in the agriculture industries.
Consider the issue of funding for shovel-ready projects. This involves a fundamental review of the national development plan. Flood relief schemes, major school building programmes and urban regeneration projects are required. Up to 1,100 school projects remain on the waiting list. In 2009, 790 schools rented prefabs. A good example in my constituency is that of Curraghmore national school outside Mullingar, where everyone agrees a new school is urgently required. The local authority has been positive and a site has been identified, so it is only bureaucracy and the usual foot-dragging that stand in the way of progress for the 200 or so students, teachers, board of management and parents, who are actively pursuing the project.
We need funding for at least 60,000 new educational training places across the system. The back to education allowance or a tax return scheme to fund one's full-time study would make returning to third level easier. The Government should lift the cap on PLC colleges, the staff of which are ready to offer good retraining options. The initiative would also include 30,000 graduate and apprentice internships. We need to establish a strategic investment bank to invest in essential infrastructure. While the Minister disagrees in this regard, he should consider this week's announcement on the number of projects that have been sidelined. The NRA maintains there is no money, but these projects are important. We cannot even progress the nine rest areas, but they are important in terms of road safety, given the long distances that lorry drivers must travel. We pontificate on all of these projects, but we withdraw them at the first opportunity. Therefore, the work of the Minister for Transport, Deputy Dempsey, on the road traffic and transport areas has been set at naught.
The strategic investment bank could provide credit for start-ups and growing businesses. It could also have a venture capital role. An initial State investment of €2 billion from the National Pensions Reserve Fund before all of its money is gone could be used to raise €20 billion on the financial markets. This could be a vehicle for growing successful indigenous industries irrespective of anyone's opinion. We have had our idea tested by international financiers, bankers and lawyers. During the last recession, ICC, ACC and Foir Teoranta — State banks — put assistance in place for companies and small businesses, but there is nothing similar today. This is the reason there is so great a problem.
I am asking the Minister to do something new, namely, to put in place an SME working capital guarantee scheme. This would ease credit finance issues for SMEs. Yesterday, my committee was told by the Irish Banking Federation and Mazars that 35% of SMEs now have distressed loans and capital. They need help. A credit famine is affecting small businesses. The SME working capital guarantee scheme would operate along the line of similar successful schemes found in the UK and elsewhere. It would target the sector of the market experiencing the greatest difficulty in accessing credit. It would allow the banks, which we know are under-capitalised, to extend more loans than would otherwise be possible. With a State guarantee of up to 50% of the loan amount, the banks' capital can be stretched while ensuring an appropriate alignment of interest between lender and guarantor. A similar scheme operates successfully in the UK. Indeed, Alastair Darling extended it in his March budget. Singapore also has such a scheme.
We are all aware that job losses, wherever they arise, put a significant dent in income tax receipts. Every person on the dole costs the State €20,000 between welfare payments and lost tax revenue. With 450,000 people unemployed, we are losing €9 billion in this regard. This must be factored into our expenditure figures.
An SME loan guarantee scheme would see the Government acting as guarantor of individual SMEs to facilitate them in securing loans from participating lending institutions for acquiring business installations, equipment and working capital loans. Under this scheme, 50% of the approved loans or a maximum amount, whichever is the lesser, would be guaranteed for a period of up to five years. Associated working capital loans could be used for financing operational expenses arising from the acquisition of business installations and equipment under the scheme. The guarantee period in this respect would be a maximum of two to three years.
Another option that could be examined is that of accounts receivable loans, which could be used for meeting the working capital needs of SMEs arising from providing credit terms to their customers. Without this type of one-to-the-other credit, business cannot survive. The maximum amount of the approved accounts receivable loan guaranteed in this way could be €1 million or 50% of the loan, whichever is lesser. The guaranteed period would be for a maximum of two years or so.
The manufacturing and service industries have experienced significant employment losses. These capital guarantee schemes would provide greater flexibility to companies in managing their cash flow and make an important contribution to their survival.