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Dáil Éireann debate -
Tuesday, 3 Jul 2012

Vol. 771 No. 1

Leaders’ Questions

Life is extremely difficult for small to medium-size employers and those who create jobs. Domestic demand in particular is both poor and sluggish. People in the sector to which I refer require certainty and clarity. There is a growing sense that the sector is under attack as a result of the VAT increase of 2%, the decrease relating to redundancy rebates from 60% to 15% and the proposals on sick leave pay. Most recently, the Minister for Social Protection, Deputy Burton, hinted at the prospect of PRSI increases for both employers and employees. The issues to which I refer are undermining confidence in small to medium-size businesses. They are also undermining their ability to plan with certainty and clarity to the end of this year and for 2013. The small to medium-size sector is the engine room when it comes to employment creation in this country. It is the sector on which we rely most in this regard.

The Minister for Social Protection was quite clear in the speech she delivered at the weekend which related to PRSI and the Social Insurance Fund. She focused on whether benefits should be cut or PRSI rates increased. Her speech was clearly written with a view towards the latter because, as the Minister pointed out, Ireland has the second lowest such rates in the EU. She said, "It is clear to me that something has to give. We can either make a decision ... to reduce the level of benefits ... or else we can ... properly fund these benefits both now and into the future". Does the Taoiseach accept that, as an anonymous Fine Gael Minister articulated to The Irish Times this morning, an increase in PRSI is the same as an increase in income tax? Is such an increase being considered by the Government? Does the Taoiseach also accept that people who are creating jobs, particularly those in the small to medium-size sector, feel they are under consistent attack from the Government in respect of the various matters to which I refer? Above all, does he agree that all of this is leading to a chronic uncertainty which is damaging confidence and the capacity to plan ahead?

No, I do not get the impression that there is an assumption that small and medium enterprises and employers are under attack from the Government. People throughout the country understand that the difference between what we take in and what we spend is quite significant. The problem will not be dealt with by thinking about it, it requires political action. That is why this Government has made it a priority that jobs and those who create them deserve support and will continue to receive support. With the current crisis and the uncertainty in the banking sector, the Government has introduced the partial loan credit guarantee scheme and introduced the microfinance agency scheme to allow access to credit for small and medium-sized enterprises and for employers who want to take on new employees. That is why the Government negotiated with the troika to rejig the memorandum of understanding to allow for a reduction in VAT in the hospitality sector. That is why the Government rejigged the universal social charge and has clearly set out its emphasis of trying to reduce an unemployment level that is much too high where the indigenous economy has suffered from a serious lack of confidence. That is why the Government appointed a specific Minister of State to deal with small businesses.

The Government will make a decision about the budget for 2013. What is clear is that we have set targets in respect of the ceilings allocated to each Department for the three years ahead. We set out to achieve the reduction of 7.6% by the end of 2013. I have no intention of speculating on comments arising from the matters raised by Deputy Martin. These are matters for the Government to decide as a Cabinet and it is in the people's interest that, when the decisions are made by the Government in respect of the budget, there should be full, open and public debate about how the decisions are arrived at and the reasons behind them. Beyond that, I do not wish to go.

I am not asking the Taoiseach to speculate on any old comment. The Taoiseach did not answer the question I asked, about whether an increase in PRSI is the same as an increase in income tax. Perhaps the Taoiseach can answer that when he responds. This was a considered speech by a senior Minister in the Taoiseach's Government. Last week, we were all briefed to the effect that this would not happen any more and that there would be no more articulation of individual positions. The Minister for Social Protection, Deputy Burton, has produced a very considered, comprehensive and well-argued paper about a range of issues.

Deputy Martin did not get that paper in Cork.

The people in the sector do not know what is happening, have no idea what their costs will be and have no sense of direction. The Government has an obligation to provide clarity to people creating jobs in this country because they are not getting it at the moment. The only clarity on job targets we received from the Government is that the projected increase in employment has been reduced by 40,000 as of the April review of the Government's target. We now acknowledge that the Government cannot create as many jobs as it said it would create a year ago. Does the Taoiseach accept that an increase in PRSI is the same as an increase in income tax? Does the Taoiseach accept that the speech of the Minister for Social Protection was not idle speculation but was putting a core question to the Taoiseach and to the Fine Gael Party that PRSI should be increased, notwithstanding any pre-election commitment or commitment in the programme for Government not to increase income tax?

I have no intention of being dragged into Deputy Martin's little game.

It is called being in the Dáil and answering questions.

Deputies in opposition spent 15 years practising while in government.

That is Dáil reform and transparency.

It is important that there is certainty for every business, which is what has been wrong for so long. There was no sense of certainty, no plan and no strategy to deal with the problem we faced. That is partly why the Government reduced PRSI for employers and those with particular wage categories, which created substantial employment and made it easier for employers to hold onto employees.

Is an increase in PRSI the same as an increase in income tax?

It is just as well members of Fianna Fáil were not negotiating, they would not have turned up.

I will not get sucked into that attempt by Deputy Martin to have the Taoiseach involve himself in budgetary arguments.

I am not asking the Taoiseach to get sucked into anything.

This is not the budget.

Deputy Martin does not know what happened last weekend.

We have been very clear about this and we have set out our stall to have our deficit reduced to 7.5% next year. We have already made it clear that, in respect of the programme for Government, which is clear about these matters, ceilings have been set and Ministers will argue for their Departments around the Cabinet table.

Where are the senior Labour Ministers? Are they in conclave?

This is July and the budget will be in the first or second week of December. A great deal of activity must be gotten through between now and then. Regrettably, it is not that I cannot answer Deputy Martin's question-----

It is that the Taoiseach will not.

-----but that I have no intention of answering it.

The Taoiseach cannot answer it.

I will not get into an argument about budgetary policy here.

The problem is about Joan and the Taoiseach cannot answer it.

When Deputy Martin was over here, many questions were never answered.

I thank the Taoiseach for his frankness that he will just not answer the question. I refer to the spectre of Ministers publicly bickering about the budget. Let us consider what EUROSTAT revealed yesterday about unemployment.

Is Deputy Adams pro-Europe now?

This State has the fifth highest unemployment rate in the eurozone. We now have 30% youth unemployment, which does not include those in education or training. It goes higher and the statistics would be even higher if we included the 70,000 young people who emigrated. Tá a fhios ag an Taoiseach, mar is fear áitiúil é, go bhfuil a lán cruachás á fhulaingt ag teaghlaigh ó d'imigh a ndaoine óga, agus is léir nach mbeidh cuid mhaith de óige na tíre ag filleadh ar ais.

Is there a peace offering on the way?

Tá a fhios ag an Taoiseach, fosta, go bhfuil daoine óga riachtanach do ath-fhás agus do fhorbairt shoisialta na tíre seo. The social consequences of this include the widening divide across the State, the absence of equality and a steady increase in poverty, which the Government should be alarmed about. What specific proposals will the Taoiseach bring forward to tackle youth unemployment? Does he agree these figures are alarming? What incentives will the Government provide to companies to take on young people for real jobs on a long-term basis? Will the Government produce, as we have advocated, an investment strategy aimed at areas such as green energy, agrifood, the ICT sector and tourism, based on equality and putting young people at the heart of rebuilding the economy?

I am very unhappy at the level of unemployment generally and particularly youth unemployment. This is a problem that is not that easy to rectify. As we know, young people leave the country for other lands to find work. That is why the Government focused on the JobBridge scheme, which has 6,000 people employed, and the Springboard and Tús schemes, which make particular reference to young people. In identifying unemployment generally as a real challenge, the Government published a report with 270 propositions for businesses to open doors, to ensure that credit is available to businesses. The second quarterly report of the action plan is due for publication very shortly. I hope the measures being taken will add to the first report and make it more beneficial and effective for employers. The conclusions of the European Council meeting last week raised these issues as a follow-up to the previous meeting, where I was involved in discussions. The point at index (d) in the conclusions, which I am sure the Deputy has read, dealing with unemployment and addressing the social consequences of unemployment for young people in particular - 50% in Spain and Greece, and rising in other countries - recommended stepping up efforts to increase youth employment, notably to improve young people's first experience with work and their participation within the labour market, with the objective that within a few months of leaving school, young people either receive a good quality offer of employment, continued education, an apprenticeship or traineeship that can be supported by the ESF, and developing and implementing effective policies to combat poverty and support vulnerable groups.

The recommendation was for member states to implement their national jobs plans swiftly and effectively, to develop more ambitious and precise plans for national jobs for the next European semester, to avail of the opportunities that are now going to become available under the enhanced leverage from the European Investment Bank, resulting from the fact the Council agreed the project bonds, which had only applied on the intercontinental infrastructure projects but which can now apply to all countries, and for creative use of unused structural funds, with particular reference to young people. These are opportunities on which Government will reflect following the decisions of the European Council meeting last week with specific reference to youth unemployment. Through our own action plans for jobs and opportunities the Minister of State with responsibility for small business will continue to present, we will give more young people the opportunity to work and avail of opportunities in Ireland rather than having to leave.

I share the Deputy's view about this. It is a source of disappointment that because of the lack of confidence in the indigenous economy, this figure is much too high. The Government's focus will continue to deal with young people and opportunities for them.

I am raising the issue in an attempt to be constructive because the 30% youth unemployment figure is alarming. We can take it for granted those young people will come from socially disadvantaged areas, not exclusively so but particularly so, and the social divide I mentioned earlier will widen and deepen.

The Taoiseach cited the jobs action plan but that plan is 126 pages long.

Tá mé ag caint leis an Taoiseach. Leo, any chance?

The plan mentions young people twice in 126 pages. The Taoiseach recited some of the detail from the last European summit but there is only €10 billion in new money, the rest is money that already exists in structural funds and so on. It is reckoned we will get €1.25 billion of that for this State.

I keep coming back to this, and I know the Taoiseach dismisses what I say in this regard, but the Government has given €20 billion to the banks in the same period; that is the rub. The sum total of the spend of all the enterprise agencies in this State amounts to €450 million, compared to €20 billion going into banks, while one third of our young people are unemployed with no prospects. This will come back to haunt us. Will the Taoiseach not consider putting forward a specific stimulus package for youth jobs and if he does, when will he bring it forward?

The Deputy should note that the European Council meeting last week discussed, agreed and decided on breaking a principle which applied for a long time in Europe which was to the detriment of our families, communities and people.

Sinn Féin has been saying that since day one.

Just last week, Deputy Adams remarked that we should tell the EU to get lost and to keep its money. The first line of the communiqué states that we affirm it is imperative to break the vicious circle between banks and sovereigns. That is a principle that was not accepted when this country got into trouble a number of years ago. I am glad that decision has now been made and agreed.

I also want the Deputy to understand this is not just €10 billion. The conclusions state that the EIB's paid-in capital is to increase by €10 billion with the aim of strengthening its capital basis, allowing it to increase its lending capacity by €60 billion and, thus, to unlock €180 billion of additional investment, spread across the European Union, including in the most vulnerable countries.

That is there for a specific reason. Countries with a higher than average European rate of youth unemployment will be able to draw down more of this depending on the creativity and the range of what they offer. It is not a case of the Government producing a specific proposal for youth unemployment, we have that across a range of areas and will continue to drive that with our colleagues in Europe based on the recognition of the decisions made last week that countries that are vulnerable deserve to have access to greater funds that are now available. From that point of view I will be happy to have any constructive suggestions he has beyond what we have on the table in respect of young people and the opportunities for them to have work here.

I note what the Taoiseach said to Deputy Adams about the achievements in Europe last week and it would be appropriate if someone on this side of the House congratulated the Government on a seriously successful diplomatic mission.

He is back in Dublin South, with its 78% "Yes" vote.

It is right we should do that and we should acknowledge the fact that was put into the communiqué by the other parties.

Is Deputy Adams away to meet the Queen?

What the Taoiseach called a "seismic shift" certainly happened in Europe last week, not necessarily on the banking question, but there appears to have been a change in the balance of power in Europe because of an ambush of Mrs. Merkel by France, Italy and Spain late in the night. I hope the Taoiseach was part of that ambush. I do not expect him to take the credit for it but he was part of that mission to achieve the end of the Franco-German leadership and domination of Europe and I welcome that.

I have a question, however, about the headline change that was made. The headline change, which is dramatic, is that there was a breakthrough on the distinction between the sovereign and the banking debt. It is important, however, to address the difference getting the banking monkey off our backs will make to the ordinary citizens of Ireland. The Minister for Finance has already said it will make no difference to the next budget. Will it make any difference and is there any comfort in this great diplomatic triumph, which it is, for the average person on the street, the small businessman mentioned by Deputy Martin or the unemployed about whom Deputy Adams spoke? The Taoiseach can talk about the projects and project bonds, which are part of a different package, but can he explain to us how this big separation of the sovereign and the banking debt will make a difference to those who suffering under the current austerity?

This is good news for people in the sense that those who spoke about the European Union and hope for people got a response from the European Council meeting last week. It is not a case of anyone looking for credit. I give great credit to the Irish people for their decision on the referendum, which was accepted and understood by all of the leaders of the 27 member states, not just the 17 members of the eurozone. That was credit in the bank, to use a pun, for use at an opportune time. The decision made by the Council through the process of the jobs and growth agenda, which crystallised around the election of President Hollande, the discussions on the EMU, and those arising on the conclusion of the Presidency of Denmark, set out a strategy and plan which offers consistency for people. The discussion that took place in respect of the decision, which will lead to a permanent supervisory responsibility for the European Central Bank, was brought to light by the difficulties of a number of the bigger economies in Europe.

The Minister for Finance is correct in the sense that the decision will not have an appreciable difference on one's contribution on a week-to-week basis to the budget for 2013. We still have to deal with our public financial problem at home. However, it is clear there is an opportunity for a beneficial impact on future budgets. It is also accepted the markets are now factoring in what that means in their analysis of the euro and the yields for different countries. I note the National Treasury Management Agency, NTMA, is to hold an auction for short-term money on Thursday, which will be an indication in its own way. Although we are in a programme, it will be putting a toe in the water, as it were.

The troika is in this country for its seventh analysis and this country is again expected to measure up. That is all part of the acceptance of this country as being a serious player, albeit with a serious problem. In the conclusions of the Council meeting, the fact that this country was named specifically in the context of equality of treatment, breaks and reverses what applied previously, to which I referred last week, in terms of the principle of European direction. The Council has accepted that European liability applied in the past whereby this country - the people, communities, taxpayers, workers and families - was required, as a consequence of that decision, to shoulder the entire burden. The decision brings clarity and a degree of certainty, not for the forthcoming budget but for the future.

I hope the economies of Europe will start to grow. For an exporting nation such as this it would mean more jobs but also that Europe as a unit would be able to continue to buy on the global market, which impacts on the global economy. The negotiations that will now be entered into are important, not for this budget but for the future. People ask me what figure I am talking about. I do not have any bottom line. What I have is a top line. The top line is the maximum benefit and the best result for the country and the people. The process will start next Monday with the meeting of ECOFIN Ministers where this country will be represented by the Minister for Finance.

Could I take it from what the Taoiseach said that although there will not be any effects in this budget, there will be tangible effects in the next budget and the following one? If that is the case, perhaps the Taoiseach could tell us where he will target those particular benefits and what area of the economy will take priority in the benefits which will come from this particular separation of the banks and the sovereign debt?

The Taoiseach did not address the issue I raised about the change in the balance of power in Europe. That is vital. Could he comment on the fact that there was undoubtedly a change when France confronted Germany, eyeballed Mrs. Merkel and won? Could he tell us what part he and this country played in that particular new division of power in Europe?

It is wonderful to observe the commentators who comment and the speculation that goes on. Clearly, those who might have had a different view a number of weeks and months ago now reflect because of the decision made by the European Council. I note that Mr. Colm McCarthy said that this is not a diplomatic win, it is a financial win. I agree with him on that. I accept there is a different reflection around the table. President Hollande made it perfectly clear before the election that, if elected, he would require a growth agenda. The process of a European Council meeting is that nothing is agreed until all is agreed, and those segments of the discussion took place between 2.30 a.m. and 5 a.m. the following morning. The concluding hours of the meeting were taken up with a meeting of the 17 eurozone countries. From that perspective, the interest and understanding of France for what this country has done, both in terms of the decisions made and in the context of our people having given a clear verdict on the fiscal stability referendum, speaks for itself. In my conversations with President Hollande both by telephone from Government Buildings and at the meetings we have attended, France has expressed a genuine interest in seeing this country make its way steadily through difficult economic circumstances to be the first to emerge from the bailout programme.

I say to Deputy Ross, as someone who has a genuine interest in the matter, what we are doing, having opened a door of opportunity and potential, is to use it now in the best interests of the country. Frankly, I am not interested in attempted point scoring or in those who say I should be looking for credit. The people know. Psychologically, there has been an important boost for this country and also for Portugal, Spain and Italy. We should build on those opportunities because much of the information in respect of the troika and the assessment of the banks has already been factored in. Ministers are dealing with the troika this week. The Minister for Finance, Deputy Noonan, will start the process of making arrangements to implement the decision next Monday. I hope that will follow through as quickly as possible, although the logistics will be detailed. I hope clarity and decisiveness will be brought to the decision of the European Council before the end of the year.

We are interested in hearing from any Member of the House who genuinely has a constructive suggestion to make about how we build on what has been achieved to reduce the burden on families, communities, workers and taxpayers. The Government has a number of options open to it. The process will begin on Monday and it will feed into the system. The best result is the top line - the maximum result we can get for the country and the people. I am sure Deputy Ross shares that view.