Economic Issues: Motion.

Senator John Paul Phelan

I move:

That Seanad Éireann--

acknowledges the fact that there is a global economic down turn, that Ireland was the first EU country to officially enter recession, and that the EU predicts the Irish economy will have the second worst contraction rate of 5% in 2009;

notes that standardised unemployment rate increased to 8.3% in December last which resulted in 293,500 people being on the live register at the start of 2009;

notes with deep concern that from December 2007 to December 2008 there was a massive increase of 120,987 (+71%) unemployed;

notes the prediction of the Economic and Social Research Institute that unemployment will rise to an average of 9.4% in 2009 with a net emigration of 50,000;

attributes the recent loss of thousands of jobs in companies such as Dell (Limerick), Cigna (Galway), Kostal (Cork and Limerick), and Amann (Kerry), to the inability of Government to maintain economic competitiveness in the Irish economy;

condemns the Government on its handling of the economy by pushing unsustainable economic policies that developed a boom-bust economy and is directly responsible for the current unprecedented crisis in the national finances;

and calls on Government to—

exempt employers from paying PRSI on any additional staff that they take on in 2009;

completely overhaul FÁS to provide better quality and quantity of training and expand the business led Skillsnets programme;

reduce the regulatory burden on small and medium enterprises by introducing a standard costs model approach to regulation and reform the current Regulatory Impact Assessment model to genuinely assess the impact of new legislation on business;

extend and reform the Back to Education Allowance;

switch the research and development tax credit to a volume based approach to allow Ireland to compete with other countries (the UK, Spain) in attractive research intensive mobile foreign investment projects;

give SMEs a PRSI offset to support employee upskilling; and

restore national economic competitiveness by:

freezing increases in utility costs and Government charges;

using the downturn in the construction industry as an opportunity to invest in national infrastructure;

developing next generation broadband access for business and educational facilities; and

reversing the increase in VAT rates.

I welcome the Minister of State, Deputy Mansergh, to the House to discuss this motion on employment. It brings back memories of bygone times when we were both finance spokespersons in the last Seanad. I thank my colleagues in Fine Gael for allowing me to table this motion on employment and more specifically the increasing levels of unemployment which we have seen over the past 18 months. The motion gives ample opportunity for this House to discuss some of the factors surrounding that large increase.

We have all acknowledged the fact that we are in the midst of a global downturn, which cannot be disputed. However, the Government has failed to acknowledge that its actions and policies pursued over the past 11 years have consistently undermined the competitiveness of the economy. Those policies have led us to a position whereby we have dramatically lengthening dole queues across the country.

When Government Senators are voting later on, they should consider the betrayal of voters who supported Fianna Fáil and the Progressive Democrats over the last ten years. Many of them in my own constituency had particular views on the way the economy should be run, but those views were largely ignored by their masters. Over the last ten years we squandered a unique opportunity in our history to create a developing economy with an ongoing employment structure into the future. There was a belief in Government, which was epitomised most clearly and most often by the current Taoiseach when he was Minister for Finance, that we would never see another rainy day. He said our huge increases in current expenditure could be sustained into the future on the back of a property bubble that everybody knew was unsustainable. He and his colleagues refused advice on that issue from all quarters, both inside and outside the Houses of the Oireachtas. Opposition spokespersons warned about the inflationary aspects of various budgets over the past ten years. The European Union intervened after the budgets leading up to the 2002 general election to criticise the former Minister for Finance, Mr. McCreevy, about their inflationary nature. Virtually every economist in the country has expressed a view that construction could not continue to develop at that rate. They said we could not continue to increase current expenditure on the back of such a bubble, yet the Government decided not to take that advice on board. It continued to support its friends in the construction sector and we now find ourselves in a position where we are suffering dramatically due to the lack of decisions taken by the Government in that regard.

In the past 18 months we have seen a huge level of inaction by the Government. Until recent weeks it has done virtually nothing to arrest the decline in the public finances, which is a symptom of the wider illness affecting our economy in the last couple of years. Until a few weeks ago the Taoiseach was not even acknowledging the presence of a recession. The only thing the Government has done in the past 18 months is agree a new national wage agreement with the social partners, which it is now in the process of taking apart. Fine Gael said it was an agreement we could not afford. Our views were ignored at the time, yet it seems the Government has now done a U-turn on the matter.

Earlier, during the debate on industrial development, Senator Quinn spoke eloquently about what the role of a government should be in any economy concerning job creation. He spoke about a government's role being to create and promote an environment for the entrepreneurial spirit and the attraction of foreign direct investment. There is no doubt that Governments, particularly in the early 1990s, fostered that role by supporting foreign direct investment and the entrepreneurial spirit. Over the course of the last ten years, however, that has been completely eroded. The Government has failed miserably and by its actions over the past decade has undermined that function. The reality is that one person is losing a job every three minutes. Since Deputy Cowen became Taoiseach last year, 101,000 people have become unemployed, which is an astonishing statistic.

Fine Gael has called for a suspension of the national pay deal and now the Government has finally come round to that realisation itself. Fine Gael also called for a reversal of the €1 billion cut in the capital programme announced in the last budget. In that budget the Government succeeded in increasing the top rate of VAT, which has a direct impact on the maintenance of employment. Fine Gael has proposed that employers should be exempt this year from paying PRSI on any additional staff hired.

The role of FÁS has also come to light over the past 18 months. For six months prior to the recent controversial revelations, Fine Gael was arguing that FÁS represented bad value for taxpayers' money as things currently stood. We are seeking to redirect a large proportion of FÁS's €1 billion annual budget to offer new, high-quality training to the tens of thousands who have lost their jobs in the past year. We also want the Skillnets programme to be expanded, which was mentioned by the Tánaiste in the previous debate.

Fianna Fáil in government has sabotaged the economy by implementing policies that reduced our economic competitiveness. It is only in the last few weeks that we have heard any mention by the Government of the need to do something about restoring our competitiveness. Fine Gael has continually raised the need to examine energy prices. For the first time earlier I heard a Minister acknowledge that something needs to be done about them. Senator MacSharry and other Members on the Government side have continually raised this. I welcome the Tánaiste and Minister for Enterprise, Trade and Employment's acknowledgement, although I have no evidence that anything will be done. Fine Gael will continue to oppose increases in government charges, which have led to deterioration in our competitiveness.

The standardised rate of unemployment at the beginning of the year was 8.3%. The number of people unemployed increased by more than 70% in 12 months. The ESRI projects this will increase to 9.4% by the end of the year. Most people acknowledge, including the Minister for Enterprise, Trade and Employment, that is an optimistic projection. The ESRI also predicts that up to 50,000 people will emigrate but that is optimistically low. That is a vista most people thought and hoped they had seen the last of but everyone acknowledges it will become a reality once more.

The Government has repeatedly ignored warnings from various groups, including the Opposition parties, and it failed to prepare properly for a surge in the numbers of people losing their jobs. This is best represented by the insufficient number of staff available in social welfare offices and the consequent significant delays experienced by those trying to secure their entitlements when they lose their jobs, which is unacceptable. The Government parties have failed to meet their targets in the programme for Government. They announced they were committing themselves to a co-ordinated series of steps to support the creation of 250,000 jobs over the next five years. However, when they took office, 163,400 people were on the live register and at the beginning of this year the number was 293,500, an increase of 130,100. That number is even out of date because people are losing jobs daily.

There are some guiding principles. One of the questions often thrown at Fine Gael concerns what it proposes as an alternative. I outlined a number of measures earlier. We are fortunate to have Deputy Bruton who outlined in his document, Recovery Through Reform, a comprehensive list of proposals as to how the Government can reverse the position in which we find ourselves. The introduction of the Lenihan levy was a regressive tax on workers. Increases in taxation are being discussed with the social partners but that is not a route I would like to go down. It is imperative that as much as money as possible is retained in the economy and taking money out of the economy through direct or indirect taxation would be a backward step.

Investment in research and technology continues to lag behind international best practice, contrary to what various Ministers have said. There is little evidence to support the Government's stated efforts to significantly upskill those in the workforce. The small and medium enterprise sector has been badly hit in recent months. Such businesses are overburdened by regulation and fantasy pay deals and they face spiralling costs while suffering as a consequence of our poorly regulated banks. I urge Government Senators to support the motion, in which we have made a genuine effort to acknowledge the external factors at play. However, significant policy decisions need to be made to ensure the Government takes the correct measures to increase employment and to end the dramatic increase in dole queues we have witnessed in recent months.

Senator Paschal Donohoe

I second the motion and I thank Senator Phelan for tabling it. I welcome the Minister of State to the House.

I take this opportunity to highlight not what Fine Gael says about the state of the economy, but what the National Competitiveness Council says about the state of the economy and the conclusions drawn by the Government in a publication it submitted to Brussels at the beginning of January. The National Competitiveness Council says about our economy and job creation prospects that between January 2000 and December 2008, Ireland has experienced a 32% loss in international price competitiveness. With regard to education, the council states that, "Despite progress, older cohorts of Ireland's labour force remain less qualified than the OECD average and a relatively large share of the working age population has no more than lower secondary education."

It refers to productivity which is vital to our competitiveness and employment creation prospects. The NCC states, "Productivity levels in GNP terms are below the OECD average" and it referred to the factors influencing that, including pricing. The report said, "In terms of general consumer price levels, Ireland is amongst the most expensive locations benchmarked and has experienced inflation rates that are amongst the highest in the EU-15 countries". The report looks at the factors that influence our infrastructure which is vital if the country is to get out of difficulty. The council comments that, "Despite tangible improvements in Ireland's infrastructure, key bottlenecks remain and quality rankings are relatively poor across a number of infrastructure types". On transport, the council say that Ireland's road networks rank poorly internationally, with peak speeds in Dublin well below most other countries surveyed. On information and communications technology infrastructure it says "Ireland's investment in both information and communications technologies is below the EU average and lags leading countries by some distance."

One of the many merits of Senator Phelan's motion is that he takes the trouble to acknowledge that there are factors that are beyond the control of this country but asks the Government to take responsibility for the factors within its control. A body created by the Government to provide an overview of progress and of where we stand competitively has provided nothing more than a damning indictment of where our country stands.

The second document to which I refer is the Government's publication at the start of January, which was forwarded to Brussels to provide confidence to European bureaucrats regarding its ability to get our finances under control. It was entitled An Addendum to the Government's Stability Programme. The document should have been circulated to every Oireachtas Member but it was difficult for any Member to get his or her hands on it. The document draws two conclusions. The first is that if we do nothing, our debt as a percentage of national income will be a minimum of more than 10% annually for the next five years and the second is that the Government needs to find €20 billion in spending cuts or tax increases in each of those years. These are based on two assumptions, which are that the economy will return to growth in two years and there will be no increases in social spending.

When we discussed the budget in December, I offered a challenge to the Minister, which I reiterate. Can he find an economist who will come into the House and say he confidently expects the economy to return to growth in 18 to 24 months' time and that it would be feasible for the Government not to increase spending on social welfare and social services, which are vital during a downturn? If so, I will be stunned. None the less, these are the assumptions on which our fiscal recovery plan has been predicated. These are matters directly under Government control and within Government competence. They are not attributable to the economic circumstances in which the world finds itself. Our motion specifies what Fine Gael wants to do differently. The thrust of our policy approach is that we believe that wage moderation is preferable to cutting jobs or services. If we pare jobs and services ruthlessly as is happening at the moment, it will be very difficult to get them back. We would much prefer to moderate or in many cases reduce wage levels to allow us to hang on to what we have at the moment and to enjoy more of it in the future.

The Government amendment goes to the core of the difficulty we face. It points out what needs to be done to get the national finances under control and the contribution it must make in tackling the situation in which we find ourselves. We need to pause and think about it for a moment. It is not the state of the national finances that is causing the employment difficulties and horrible challenges we face in the economy at the moment, and which could cause major social difficulty in the future. Employment is not falling because we have major budget deficits on the vista. It is the other way around. We are facing such challenges in our national finances because our competitiveness has declined. Many of the things we can influence, including our infrastructure and education, have not been in the right place to generate the employment and growth necessary to get our finances under control.

Our motion proposes what we believe should be done differently. It acknowledges the difficulties that are under the control of the Government. It appropriately castigates the Government for its horrific failures on infrastructure, education and keeping our tax and spending at appropriate levels to ensure prosperity for the years to come.

Senator Marc MacSharry

I move amendment No. 1:

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

commends the Government on its management of the economy and public finances, which means that Ireland faces the current global economic crisis from a position of strength, given the strong growth of recent years and very low levels of public debt;

acknowledges that through the policies now being pursued to restore credibility and sustainability to the public finances, these will help Ireland to take full advantage of the global upswing when it emerges, thus ensuring growth returns to its potential growth rate;

notes that:

whilst the labour market has deteriorated significantly recently, over 2 million people are still employed, which is 600,000 more than 1998;

the Government through its ongoing management will continue to address the economic and fiscal issues facing the country over the coming years in a responsible and sustainable manner;

the external factors impacting upon the economy and the recent publication of economic forecasts by the European Commission which have downgraded the growth outlook for the eurozone and the wider European Union;

furthermore, in the light of the changed economic realities recognise that the recent publication of the Addendum to the Stability and Growth Pact sets out a framework for the restoration of sustainability in the public finances over the medium term, commencing with immediate action to secure a further adjustment in the public finances of up to €2 billion in 2009;

welcomes the recent publication by the Government of—Building Ireland's Smart Economy: A Framework for Sustainable Economic Renewal', which provides a blueprint for how the Government proposes to re-orientate and reprioritise its business over the next few years so as to weather the global economic storm in a realistic and sustainable way;

notes that Ireland continues to be well positioned to attract investment and to re-establish export led growth; and

welcomes the Government's commitment to providing a competitive operating environment for our enterprise base.''

As I did yesterday, I again welcome the Minister of State to the House. I again welcome what have become our many opportunities to speak about the economy and rightly so. I commend the Fine Gael group on using its Private Members' time for discussions on how we can best meet the current economic challenges. I acknowledge that its motion makes some suggestions. I am sure that in the context of supporting the amendment, I have just moved, the Minister of State will take those into account and will consider implementing any which are appropriate in terms of policy.

I had been looking forward to another exchange with Senator Twomey, but I see the team has changed for tonight's event. I will need to wait for another day until Senator Twomey returns.

Senator John Paul Phelan

He is in Brussels.

Senator Marc MacSharry

It would be possible to focus on the many reasons we are in the difficulties in which we find ourselves. I can see that the Fine Gael focus is again to say: "You blew the boom. We told you that you were going to do it. You did it and now it has all happened." During the debate on the budget I remember Senator Donohoe saying that if we could find him an economist at the time who would say that this time next year we would be in a better position we should tell him that economist's name. The World Economic Forum is meeting in Switzerland at the moment. None of those attending that forum last year predicted accurately the world's position today.

Yesterday I referred to the Fine Gael general election manifesto. It qualified its proposals by stating that they were predicated on 4% growth. None of that has materialised and circumstances have changed.

Senator John Paul Phelan

That was based on Department of Finance figures.

Senator Marc MacSharry

I never interrupt anybody as the Senator knows. I always listen attentively and respectfully. I would appreciate if he did the same.

Senator John Paul Phelan

I was not interrupting. I was just correcting.

Senator Marc MacSharry

When circumstances change, the Government changes its mind as does Fine Gael, which is appropriate. The business of government operates in a real-time environment. It does not operate with the benefit of hindsight and 20/20 vision. We must react and act appropriately as circumstances demand.

Senator John Paul Phelan

React.

Senator Marc MacSharry

We need to react and also pro-act, which is what has been happening in recent times. All Western democracies are experiencing the same level of difficulties, fiscally and economically, in terms of the banking system and levels of imports and exports. All over the world every economy is in the same boat. As I said last night, the IMF has stated that the advanced economies will experience lower levels of economic activity than have been experienced in the post-war era.

These are challenges that have happened internationally. The banking crisis is unprecedented internationally. We are effectively in a great depression. The World Bank projects that global export volumes will decrease for the first time since 1982. These are facts. Ireland, accounting for 1.8% of the euro zone output, is particularly exposed to these international forces. Exports of goods and services amount to four fifths of our national output, which is more than double the EU average and means that our nation's economic health is inextricably linked with that of the global economy and, in particular, UK and EU markets.

As we know, the economy contracted by 2% in 2008 and as the Taoiseach said in the other House earlier today, it is expected to contract by up to 10% between now and 2011. There have been a number of factors involved. We have had the building boom and bust. We have had the global financial and banking crisis, the sharp appreciation in the euro and, in particular, the exchange rate with sterling. There has been a decline in demand for our exports based on the international downturn. As has been outlined by other speakers and again by the Taoiseach in the other House, there will potentially be a 12% deficit up to 2013, which is absolutely unsustainable. The Government has outlined a number of actions in response to that situation.

It is easy to call for quick action and a quick response. We need to be measured and ensure we take the right decisions that are most appropriate to position us properly to benefit from the upturn when it comes and above all get the public finances into a position where they are sustainable. As we know that will require a saving of €2 billion almost immediately. I welcome that we seem to have agreement with the social partners on the basis on which we can design that process. The framework outlines the challenge facing the country and the rationale for urgent and radical action. It takes in the potential contribution of a shared approach to partnership in the need to stabilise the public finances over five years through an appropriate combination of tax and expenditure measures resulting in an adjustment in the order of €2 billion.

Areas that require short-term stabilisation measures include maximising economic activity and employment, stabilising the financial and banking sector while maximising employment and helping those who lose their jobs. These are the bases under which the social partners have proceeded in their discussions with Government. I wish them well. As we said in this House last night and the Taoiseach alluded to it in the Dáil today, if we can conclude with the social partners how best to save this €2 billion, it will send an extremely powerful message internationally as to the competence and determination with which the country is implementing a correction in our public finances and making the necessary adjustments based on the difficulties with the slowdown in the building sector, the international crisis and obviously the decline in demand for our exports, the exchange rate with sterling, etc.

There are a number of issues we can address, such as the following, which we addressed briefly last night. There has always been a focus on marketing Ireland in respect of foreign direct investment and the importation of intellectual property. While it is important to maintain a level of that, there should be a greater focus on breeding our own intellectual property and on the level of entrepreneurial flair exists among our young people. We should come up with measures for appropriate lessons on the primary school syllabus to nurture and extract the entrepreneurial flair that exists. There is a famous quote that says they are not just empty vessels but great engines of creativity to be ignited.

These are difficult times but we must face them with confidence and determination. The world has not ended and it is not going to end. If we work together in a coherent and determined fashion, we can come out the other end. I attended a function of the Sligo Chamber of Commerce where the president referred to the local outlook in his concluding remarks. It is true nationally and internationally. He told the anecdote of the American company that sent two sales representatives to the Australian outback many years ago to try to drum up some business. A couple of weeks later, telegrams from the two sales representatives arrived. One said that the sales representative had very bad news, that the locals did not wear shoes. The second sales representative said he had fantastic news and that there were great opportunities because the locals did not wear shoes. We must focus on the attitude of the second sales representative in that analogy. We must look forward with confidence and maintain a level of agility to meet the ever-changing challenges of these times. I am confident the Government can and will do so in partnership with the social partners. I hope the talks under way will be fruitful over the coming days.

Senator Maurice Cummins

Senator MacSharry referred at the end of his speech to being positive but earlier he mentioned entering a great depression. In the Great Depression in the United States, 25% of people were unemployed. Is he suggesting that this is what the people of Ireland can expect from this Government's policies? It does not give much hope to people.

I commend the motion so ably proposed and seconded by my colleagues, Senators Phelan and Donohoe. It concerns a subject that many people will face and are already facing, namely unemployment. It is a dreadful indictment of this Government that, in just 18 months, it has managed to double the level of unemployment and double our national debt. This is the legacy of the Government, which lacks leadership, courage and the necessary vision to guide the ship of state out of the stormy waters in which it finds itself. Without the leadership of a good captain and first mate the ship of state is rudderless and at risk of foundering on the rocks.

The lack of confidence in the Government's stewardship is adding to the already chronic unemployment rate. It seems to have no plan, no course to chart to give hope to employers, small businesses and workers. My colleagues have outlined several measures that could help address the problems we have. These include exempting employers from paying PRSI on any additional staff they take on in 2009; overhauling FÁS to provide better quality and quantity of training and expanding the business-led Skillnets programme; reducing the regulatory burden on small and medium-sized enterprises by introducing a standards cost model approach to regulation and reforming the regulatory impact assessment model to genuinely assess the impact of new legislation on business; to extend and reform the back to education allowance; to restore our national competitiveness by freezing increases in utility costs and Government charges; using the downturn in the construction industry as an opportunity to invest in our national infrastructure; developing next generation broadband access for business and educational facilities; and reversing the increases in VAT.

Another area that must be addressed is enterprise boards. A number of items are inhibiting enterprise boards in assisting the start-up of micro-enterprises and those who have lost or will lose their jobs due to the current economic downturn. The County and City Enterprise Boards network submitted a financial instruments report to the Tánaiste in December. It outlined changes in the financial instruments that will make enterprise boards much more relevant to micro-businesses, bearing in mind that the current instruments were devised in 1993. The report also highlights the necessity of offering soft loans to small businesses starved of cash owing to the recession and current bank loan policies.

Since 2000 the enterprise boards may only grant aid manufacturing, internationally traded services and those with the potential to become internationally-traded services. This was apt for the buoyant economy we had at that time but the current economic climate has totally changed, with many people being made redundant. For those interested in setting up a small business who do not comply with these criteria, the enterprise boards are unable to offer grant aid to get jobs started. The policy does not make sense. A jobseeker will be paid approximately €10,500 per annum compared with a maximum employment grant of €7,500.

This must be changed and it will involve no extra cost to the Exchequer. The enterprise boards need to be given the flexibility to respond to local situations. They are comprised of a wide spectrum of locals who are committed and have their fingers on the pulse of what is needed locally. As a former member of the Waterford City Enterprise Board, I can testify to the significant contribution enterprise boards have made to local developments. I appeal to the Minister of State to ask the Tánaiste to act urgently on the report submitted by the County and City Enterprise Boards network. Failure to act will prevent people from gaining employment or creating employment when it is so badly needed.

It is unbelievable that the Government has set out no strategy to deal with the massive increase in joblessness. The news since the turn of the year continues to be bleak, with more than 750 job losses announced this week by Ulster Bank. In the constituency in which I live, 35 job losses were announced by Glanbia.

Fine Gael proposed waiving PRSI payments in 2009 for companies taking on new employees. I referred to the tax breaks proposed for research and development and training. Competition and competitiveness are the keys to creating employment. Our proposals go some way and show a marked contrast to the lack of vision of the Government. As mentioned by Senator John Paul Phelan, it is sad to see so many young educated people being forced to emigrate. We are returning to the bad old days when we exporting our young people. Many villages have seen them emigrating to find employment. It is a damning indictment of the Government that after 18 months in office it has seen a doubling of unemployment and the national debt. What a legacy.

Senator Mary M. White

I welcome the Minister of State. I was honoured to be nominated to Seanad Éireann by the Irish Exporters Association. The company I co-founded with Connie Doody exports 75% of its product to the United Kingdom and now employs 200 people in Navan, County Meath. I draw the attention of the House to an innovative proposal made recently to the Government by Mr. John Whelan, chief executive officer of the association, and Mr. Padraig Walshe of the IFA on behalf of the Irish agriculture and food companies exporting to the United Kingdom. Companies which traditionally have exported to the United Kingdom, including in the agriculture and food industries, are being undermined by the 30% depreciation in the value of sterling since January 2008. The innovative proposal made by the Irish Exporters Association and the IFA is that the Government should introduce a sterling equalisation fund. It is estimated that 13,500 jobs in companies exporting to the United Kingdom will be lost and that the recession will be more protracted if action is not taken to support such companies. The aim of the Irish Exporters Association and IFA's proposal is to give exporters an opportunity to smooth out the current cycle of weakness in the value of the currency until it reverts to a more normal and acceptable level.

I will describe how the scheme works. Exporters to the United Kingdom have sterling goods to sell each month. At the same time, Government agencies have sterling assets to purchase throughout the year. It is proposed that an option be underwritten by banks with two counter parties, one being the approved exporting company and the other a Government agency such as the National Treasury Management Agency. The proposal would give the exporter the right to sell sterling goods at 80 cent for a set amount of sterling at set dates for the lifetime of the scheme which would be for a limited period. For example, if the rate at the end of March is 90 cent, the exporter would exercise the option and sell an approved amount at 80 cent to the bank. The National Treasury Management Agency would buy sterling at 80 cent from the bank. If the rate at the end of April is 75 cent, the option would simply not be exercised and the exporter would sell sterling at the prevailing market rate. The National Treasury Management Agency would buy sterling at the rate of 80 cent rather than 90 cent. This is an opportunity cost but the agency would have the ability to spread it in the long term. This opportunity cost has to be weighed against the potential cost to the Exchequer of doing nothing. Mr. Padraig Walshe quoted the Government's own figure that for every 1,000 people made redundant, the cost to the Exchequer was €11 million. Therefore, the loss of 13,500 jobs in companies exporting to the United Kingdom would result in a cost to the Exchequer of almost €150 million.

We should support this innovative proposal. This is a time of national crisis and we must be innovative and imaginative. These are challenging times but there are also opportunities.

Senator David Norris

I welcome the Minister of State to the House, with which he is not entirely unfamiliar, as his elevation is comparatively recent. He is also somebody who has considerable distinguished expertise from within the bureaucratic branch of government. I have no doubt that his view on this matter will be of interest to all Members of the House.

While I have mixed feelings about the motion, I will probably vote with Fine Gael Members, although my inclination is to remain neutral. The first number of sections are unarguable, as they are matters of fact. I refer to the increase in unemployment and the fact that this is among the first countries in Europe to enter officially into the category of recessionary economy. The blame game is also applied, which in a way is unfortunate because the situation is so critical that we have to pull together.

The Minister of State is a churchgoer; he is a member of the same Anglican denomination as I am. Perhaps he was in church on Sunday and heard the lesson from the Old Testament to which I referred on the Order of Business — Jonah, chapter three — in which Jonah was instructed by God to go to the citizens of Nineveh, not just to rebuke them but to tell them that their city would be flattened and razed to the ground because of their luxurious way of life, greed, selfishness and neglect of spiritual and ethical values. They were so terrified by the imminent catastrophe that they instantly — all of them, high and low, rich and poor, aristocrat and commoner — put on their sackcloth and ashes and made obeisance and acknowledged their fault. As a result, God withdrew the interdiction against them. There is a lesson for us. We have to put the country on a war footing. I am horrified when I hear people say, "We are not going to give up our wage increase." For God's sake, it is an obscenity when people are losing their jobs all over the country that anybody should start to say, "I am not giving up my wage increase." We should be thinking in terms of cuts, particularly those of us who, like myself and many of my colleagues in the House, are fortunate. I have paid my mortgage, which is partly a function of my age because I am nearly 65 years, and have very little in the way of debt. I even have a couple of thousand euro in prize bonds. We should be helping others out.

Deputy Martin Mansergh

The best of luck.

Senator David Norris

I win once every three weeks on average but it is always the same amount, €75, which is not worth a damn. It is just a provocation and a tease. I would prefer to get nothing until I win the big one. The serious point I am making is that we must all pull together and that those of us who are in a better position must not be looking to see what others have got; we must all try to get something done.

I wish to read some heartbreaking letters which I received today and to which I replied immediately. One is from a decent young man living in a provincial town who writes:

I am one of the many people who after being involved in construction is in dire financial straits. However, I am not a big developer. The company I had has ceased trading and I have gone back since to work as a PAYE worker although I do not know how long I will be able to hold onto my job. The situation I am in has left me paralysed with anxiety, not knowing if I will ever get out of the mess I am in. MABS is a big help. [Thank God for the Money Advice and Budgeting Service but it is very limited in what it can do.] Unfortunately, I did not conduct all my business through my limited company and, thus, am liable for personal debt as well. I have had to get the help of the Society of St. Vincent de Paul on two occasions but when you have young kids, you have to do what you have to do. I am owed money and, in turn, I owe money. Hard work always got me places and I worked for other people. I felt if I worked hard enough for myself everything would come right but sometimes work is not enough.

His letter continues to state he is starting a law course and has already passed four of its elements. It takes some of the strain and anxiety off him but he does not know where to turn. He is a young man with a young family who has worked hard. These are the kind of people we cannot, for shame, abandon. Those of us who have something must be prepared to make sacrifices. I will support the Government if it proposes 10%, 15% or 20% cuts in our wages and for everyone else in the country. We must give decent hard-working people the opportunity to get back to work.

A young builder I know, one of the finest men I have ever encountered, with a lovely young family put all his money into Bank of Ireland shares. Everything he worked for is now all gone. How disillusioning is such a removal of incentive? This is what we must address and not for any mean-minded party advantage, although I do not accuse Fine Gael of that.

Will Senator John Paul Phelan explain the clause in the motion which calls for the Government to exempt employers from paying PRSI on any additional staff that they take on in 2009? I would not like to disadvantage workers. If this clause removes their entitlements or diminishes them in any way, I will be against the motion.

Senator John Paul Phelan

It does not.

Senator David Norris

In that case I will be voting for the motion. We cannot take on yellow pack workers at whatever level we reach.

I agree with overhauling FÁS. Yes, it always did wonderful work. It got mired in scandal and people jumped on the bandwagon looking for heads. I must add that they cost the Exchequer a hell of a lot of money in doing so. From €500,000 to €50,000 a year was not much of a saving. FÁS has done wonderful work but it needs to be overhauled. Today, I received correspondence from an individual telling me how helpful FÁS was to them in the back to education allowance. This scheme, along with ones such as the research and design one, are excellent.

Why can we not introduce for one year a quarantine period from rules and regulations for start-up companies? The quagmire of red tape already in place stops innovative people from setting up businesses. I heard an individual the other day on the wireless explaining how it only takes seven hours to set up a company in some South American countries. It takes a hell of a lot longer in Ireland. I understand the difficulties because of the phoenix syndrome that have to be addressed. However, we must give initiative a kick-start. Let us relax regulations to get innovative people into setting up businesses. Lateral thinking is needed.

Every Adjournment debate in the Seanad is taken up with unbuilt schools throughout the country and students in portakabins. It is not just this side of the House that raises these matters but the Government side too. Recently, a person on the wireless pointed out we are paying more on the rent of the portakabins than we would pay on mortgages to build the schools. Give the schools the mortgages and get the builders back to work. Cut their wages but get the people working. We need to get the metro and the interconnector built. In The Irish Times today the Dublin city manager said this is a moment in which our courage must not falter. We must invest.

I will support the Government in any action it takes on the economy that is decent. I am not going to rake up all the stuff about the past. There was squandering and so forth but we must face into the future on behalf of those young people I referred to earlier. My heart bleeds for the second, a builder whom I know personally and a finer man I have never met in my life, to think of him losing all his savings. The other fellow I referred to, who has two young children, does not know what to do. He was earning money and was at the top of his youth and profession, yet he had to go to the Society of St. Vincent de Paul. He did it all the same, for his children's welfare, and that took balls. These are the children of our nation about which they were bleating in the Mansion House last week. We must get something done for these people.

Senator John Paul Phelan

That was a stirring contribution.

Senator Ann Ormonde

Senator Norris's contribution was a breath of fresh air and has put me off my own contribution.

Senator John Paul Phelan

That was its purpose.

Senator Ann Ormonde

I welcome the Minister of State, Deputy Mansergh, to the House. We have been provided with another opportunity to debate the economic downturn and increase in unemployment. The main question is where we go from here. I want to address the two areas of overhauling FÁS and the back to education schemes. I know many who have lost their jobs. While we are having this debate, many families are discussing how they will find information on back to education schemes.

We must examine the areas where the largest job losses have occurred. The retail sector has been the hardest hit. Many of the young girls and men who worked in the retail sector may have dropped out of school because the money was more attractive. Now they realise that with no job, they also have no qualifications. We must look at the positives in this and create opportunities in the second-chance and third-chance education sector to help those who find themselves in this position. We need front-line staff in FÁS such as placement officers to reach out to these young people and give them the information on back to education schemes. The vocational education committees know the pulses of their local communities and should also be involved. These and the county and city managers must put their heads together to decide how best they can help locally. We are not into the larger global analysis yet. We need to help people with the opportunities in their localities.

We cannot allow people to become gloomy and depressed. Confidence must be motivated. We must examine how best we can integrate a system between the front-line Ministers for Education and Science and Enterprise, Trade and Employment and FÁS in identifying the jobs in the future and ensuring the skills are in place to attract them. The courses we have had in the past may not be relevant to the future. We must have a change of outlook and philosophy in this area. Within the next few weeks we should begin asking chief executive officers, who have great power within their communities, and city and county managers how they can provide opportunities for local people in their areas. FÁS must be made leave its cosy setting to help people change their outlook and to build confidence. We have to motivate people so that they have confidence in the future. I want to help those most in need.

We rose to similar challenges in the past and we will get it right again as long as we change our gloom and doom attitude. I am weary of that attitude which is a rehearsal of the old mantra that everything is other people's fault. We have to look at the global picture. I am proud to be Irish and to do what I can to promote prosperity in the future. Let us give confidence to the young and the not so young. I am not interested in big developers or the bankers because they are doomed in my book. I want to restore confidence to the ordinary people who have worked hard to build up this country by giving them opportunities for placements and further education. They need our help in this because they cannot manage it alone. Professional support is needed in terms of placement officers, guidance counsellors and educators. We need to flood the market with these professionals so that the people who are sitting in their armchairs and wondering where they will go next will be given opportunities and information. All I ask is that we motivate people. We have the capacity and the knowledge and we will have the resources to do so.

Capital investment is important in terms of helping small businessmen and builders to develop employment opportunities in their local communities. Small is beautiful at this point in time. I ask the Minister of State to consider some of the suggestions I and other speakers have made this evening. We are all singing the same tune to motivate people for the future.

Senator Nicky McFadden

I begin by denouncing the Government's amendment to this motion because I cannot imagine how it can unashamedly commend itself on the doubling of unemployment and our national debt since it took power 18 months ago. The plain people of Ireland will certainly not thank it for its outrageous pomposity and arrogance.

Yesterday, I met in my clinic a building contractor who has been out of work since November. He formerly employed four people, for whom he paid PRSI and taxes, but he has not received a penny since last November because he owns property. He is up to his eyes in debt with the banks but they will not take back his house. What is he supposed to do? He has worked his butt off since the 1980s and has never taken a penny from the State but now he is absolutely penniless. I do not think he will be commending the Government on its mismanagement of the boom.

I commend Senator John Paul Phelan on this thought provoking and positive motion. Ireland was the first country officially to enter recession thanks to our dependence on the construction industry. This is having knock-on effects on all other sectors of the economy. The Construction Industry Federation estimates that as many as 55,000 jobs will be lost by 2010, which is extremely worrying. Yesterday, First Active announced the loss of 750 jobs. I do not see how the policies outlined in the Government amendment will stimulate the economy. We must tread carefully when we introduce stimulus packages rather than follow Senator MacSharry's example of speaking about another great depression. Leadership must be shown in the short and medium term and our central focus must be on the future if we are to return to a sustainable and growing economy. We have to end the see-saw nature of the economy and get it going again rather than tell a different story every day.

The car industry, which is in serious trouble, would benefit from the introduction of a scrappage scheme that bridges the huge gap between trade-in and new cars. Every euro generated for the Government means it has to borrow less. This would be a way of preserving jobs in a struggling sector. Similar schemes have worked in the past and they could work again.

We should examine underperforming areas of the economy because there is wide scope for lasting and profitable improvements. Green initiatives could provide a large number of jobs in all industries. The construction of energy efficient cars, for example, would create jobs and decrease carbon emissions. We should work with FÁS to help those who have lost jobs in the construction industry to return to work. Our motion advocates back-to-education schemes so that people do not have to sign on for one year before they can claim grants. Volunteering should be encouraged because many of the highly trained people, such as architects, who are now unemployed are prepared to give their time to help the less educated.

Attention should be given to the science-based sector which currently employs 30,000 people in Ireland. The incentives for cultivating and expanding this sector are significant. Thousands of young students will graduate in the coming years, many of whom will have to emigrate. Abbey Travel has reported that it received 80,000 applications for 50,000 emigration packages for Australia. I worry for these young people. Pharmaceutical companies continue to maintain a significant presence in Ireland with 16 of the world's top 20 firms operating in this country. One of these companies, Elan, is based in Athlone. We need to encourage the growth of this sector. Fantastic courses are being offered in our colleges, including biology, zoology and environmental studies, to name but a few. By strengthening this under-utilised sector, the Government could achieve significant gains. Athlone Institute of Technology is a gateway to the midlands and if there had not been political interference, Athlone might have been the main gateway town to the region. The institute has established an innovation centre which attracts significant investment and produces a large number of quality people. Sadly, owing to political interference and a lack of leadership, the centre has been diluted. I ask the Minister of State to consider the development of a rail transport link between Athlone and Mullingar as a way to incentivise people to return to work.

Senator MacSharry stated the Government was moving very slowly but it is at a fecking snail's pace. That is unparliamentary language and I apologise for using it. We are acting at a snail's pace so the Government should try to get some spring into its step to get going again.

We are a resilient people who have been through worse. The Minister of State knows we will be able to fight and continue with our lives. There are still many opportunities available if we can just look beyond the construction industry. There are many service industries such as, for example, the tourism sector, which will be a significant contributor to this economy's recovery. We should be able to provide good value packages to people and encourage them to come to Ireland to avail of the very good services here.

This Government seems to be dealing mainly with the unions and has isolated itself from the Houses of the Oireachtas.

Seanad Éireann debate - Wednesday, 28 Jan 2009

Economic Issues: Motion.

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Seanad Éireann debate -
Wednesday, 28 Jan 2009