In March 2006 Michael Dell summed up the relationship between Ireland and his company:
I do not think it is coincidence that Ireland and Dell share the same character and connection. Every success we have achieved around the world has been due to the old Irish recipe of big dreams, hard work and strong relationships.
Unfortunately, three years later Michael Dell terminated that relationship and took 2,000 Irish-based jobs to other countries. He did so due to several facts, most of which were actually within our control. I advise Senator Alex White that extreme caution should be used when beginning any discussion about our corporation tax rate. Just having such a debate would send alarm bells ringing in corporate boardrooms across the world. Other countries and some Swiss cantons are offering 0% corporation tax for international start-up companies. In an environment in which every country is clamouring for foreign direct investment, having such a debate is unwise.
Michael Dell was correct that we are a people with big dreams and a talent for innovation and hard work. We still have those people, who given support and encouragement would lead us out of the dark place in which we find ourselves and restore our national pride. These people are the Irish business owners up and down the country who provide employment for up to 800,000 people and they could provide significantly more if they were listened to and supported by the Government.
The biggest failing of the Government's focus on jobs is that it does not address the tough decisions and actions which need to be taken to get jobs back into the wider economy. While a number of actions would require investment on the part of the Government, a number of them would not. The businesses that employ 800,000 people are getting hammered in the recession from high Government charges, a completely outdated commercial rating system, no credit from banks and suffocating red tape.
None of the recent announcements, made with much fanfare by the Government, will do anything to aid these businesses. If we are to create the number of jobs required in the economy to fight off the recession we need to address the real problems in the economy. The Government announced another strategy last week with the claim of creating an extra 300,000 jobs before 2015. However, it contained no new policy or budgets and was simply a rehash of existing policy from tourism bodies, the revised national development plan and the smart economy policy, with a new jobs target stuck on top. The Government plan also proposed to create a new agency to co-ordinate all the existing State agencies.
It is interesting to note that at the very first opportunity which presented itself to this new agency and to other agencies like the IDA and Enterprise Ireland in Brussels the week before last to showcase Irish artisan food producers, we were the only country out of 27 EU countries with an empty table. We had a plastic Irish flag and an empty bottle of stout sitting on the table. That was our response as a Government to the jobs crisis. The sad part of all this is that rather than setting up a new agency perhaps the Government should listen to our existing agencies, one in particular, namely, Forfás. It has already provided the Government with a blueprint for recovery within the indigenous Irish business sector. Most of the structural problems for Irish businesses and the actions needed to overcome them were outlined two weeks ago in a Forfás report, which the Government happened to slip out late on a Friday evening with little or no fanfare.
The recommendations in the Forfás report focus on reducing Government-controlled costs in the economy, which is key. It also recommends investing in key economic arteries such as broadband, opening more of the economy to competition and cutting duplicated red tape on small business. Many of these policy actions have been key parts of Fine Gael's job message over the past years. The Government said it is seeking consensus and the sharing of ideas and approaches. If it is, it is only fair that I outline Fine Gael's job message.
Our NewERA strategy was recently described on the "Late Late Show" by economist David McWilliams as making absolute sense. If his opinion was worthwhile seeking late at night before the banking guarantee, I am sure it still holds some weight. Under NewERA we would use the National Pension Reserve Fund, private pension funds and sales of non-strategic State assets to accelerate investment in high speed broadband, clean energy and water, all of which are things we need to make Ireland a better place to do business in and to create jobs.
We would be well advised to follow the lead of the Finnish Government when, some weeks ago, it took the very progressive step of becoming the first country in the world to make broadband a legal right for every single citizen. Under NewERA from Fine Gael this could happen. We could rebuild our broadband, energy and water infrastructure. Our plan can build these new projects, create over 100,000 jobs in the short term and develop a better economy, all paid for off the Government balance sheet.
Fine Gael would also reform the tax system to ease the tax burden on employment. This would take the form of a decrease in tax on employment to support jobs. Employers' PRSI is the most direct tax on employment. The changes we suggest would result in a reduction of €887 million in employment taxes and costs for the 175,000 Irish businesses registered for employers' PRSI. These changes would have the effect of reducing average pay costs by2.5%, resulting in 30,000 extra jobs by 2015 according to the ESRI's rule of thumb.
The Government's recent target for job growth in tourism was immediately under pressure as it refused to scrap the nonsensical passenger tax. I am certain in the long run this tax will prove to cost more in lost revenue than it will collect. The tourism sector is still in for a tough year unless the Government introduces friendly policies to get more people to visit Ireland. In this context, the passenger tax makes no fiscal sense whatsoever. The CEO of every major airline operating in this country, not just Michael O'Leary, has called for the tax to be scrapped. During the crisis in tourism the Government set up a tourism renewal group to report to the Minister for Tourism, Culture and Sport, Deputy Hanafin. It reported last year and one recommendation it made was the scrapping of the €10 travel tax.
Let us do two things. We should scrap the tax for a year and call the bluff of Michael O'Leary and other CEOs. Michael O'Leary says that without the tax he could increase passenger numbers by millions and create 6,000 jobs in the process. Let us give him that chance. Let us call his bluff and give him two years without a passenger tax, and if by then he has not delivered on his promises we should perhaps consider reinstating it. However, we should at least give Michael O'Leary and others such as bed and breakfasts and hotels the injection and opportunity they need to pick themselves up off the ground once again.
Despite what our banks might say in public, they have simply shut up shop and are hoarding capital. Every single cent of what we have invested in our banking system is sitting in bank coffers and not one cent of it has made its way into the real Irish economy. Last week I met a businessman based in Galway who has been operating in China for the past 20 years, forging very strong links with the Chinese Government and industrialists. He said he has four ideas at the moment that he is convinced, with his experience, would create up to 2,000 jobs in this country. He has approached three different banks, none of which is willing to offer him the support he needs.
The ECB has confirmed to us in the past few weeks that we are not lending. Truly viable SMEs are under severe pressure as credit lines dry up. Fine Gael supports a Government partial loan guarantee scheme for SMEs that is based on the principle of risk sharing between the State and banks. If that option was open to the businessman in Galway to whom I referred I assure the House he would have availed of it and, with his experience and expertise, would have gone on to create the jobs which he mentioned. In addition to restoring some credit lines, the scheme would be necessary to start the rebuilding of relationships between small business and banks and to encourage better business analysis skills among banking employees because that relationship has broken down completely. There is now no communication between the banking sector and small businesses in Ireland.
Fine Gael will also publish an action plan for implementing the recommendations of the Government's National Competitiveness Council and the Competition Authority. Of the 168 specific recommendations made by the Competition Authority since 2002 only 71, or just under half, have been implemented. Tough decisions are now needed by Government to open the economy to greater competition in order to drive down costs in the economy, especially in the area of legal fees.
Some three years on from the publication of the Government's business regulation forum report, only 4%of the targeted red tape reduction on business has been achieved. The forum estimated that Government regulations alone are costing businesses up to €500 million each year which could be completely avoided. In today's fiercely competitive business environment that €500 million is the difference between a lot of businesses surviving or going under. To date, only €20 million in savings out of a possible €500 million have been achieved. The overhauling of business regulations and cutting out unnecessary red tape must be a policy priority for any Government as we work to make the Irish business environment competitive again. For most politicians in this House, our ongoing assessment of how businesses are doing is based not only on the experience of our own businesses but also on the coming into contact with other businesspeople throughout the country. I can tell the Minister of State, from my interaction throughout the summer, that businesses in County Galway are suffering like they have never suffered before. One of the biggest challenges they face is the payment of commercial rates which are now hopelessly out of date and bear no relationship whatsoever to their earning capacity. During the summer I spoke to numerous Galway business owners who are faced with the stark choice of either paying their 2010 rates bill and closing the door on their business or seeking a reduction in their bill and surviving. In 2001, when the new rates Valuation Act was passed, a commitment was made by the then Government that in every one of the 88 rating areas there would be a complete revision carried out by the Valuation Office. On that basis, many businesses held out hope that at long last the revaluation and revision would offer them the lifeline that they needed. Almost ten years later, of the 88 rating areas, only three have seen a revision and there has been an average reduction of 30% in rates. For many businesses, that reduction of 30%, if applied across the entire 88 rating areas, would mean, I am certain, the difference between survival and going under.
I recall the Minister for Finance, Deputy Brian Lenihan, speaking in the House on the night the bank guarantee was introduced. At the time I remarked to him that he was fortunate to be in the position he was in and still make that point and claim. This crisis, the darkness in which we find ourselves, offers a fantastic opportunity to do things and innovate and reform like we have never done before. Therefore, can we, please, let this crisis mark the beginning of a new and genuine approach to supporting our job creators?
