asked the Taoiseach the contribution, if any, he will make to the discussion on the EU White Paper on Growth, Employment and Competitiveness at the Corfu Summit, on 24 and 25 June 1994; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers. - Corfu Summit.
I look forward to contributing to the discussion at the Corfu Summit later this week on the EU White Paper on Growth, Employment and Competitiveness. I anticipate that we will also review progress on implementation of the action plan adopted on foot of the White Paper at the last European Council in Brussels in December last.
I will be particularly pleased to outline to my European colleagues the very favourable economic conditions now prevailing in Ireland due to adoption of Government policies which are fully consistent with the prescriptions set out in both the EU White Paper and the Brussels Action Plan. As the Deputy is no doubt aware the White Paper sets the achievement of stable and coherent economic and monetary policies as a prerequisite for creating the environment in which economic growth can flourish. Ireland fully accords with this prerequisite: our Government deficit is within the Treaty criterion of 3 per cent of GDP, our debt-to-GDP ratio is falling, the latest CPI figures show Ireland's inflation rate at 2.7 per cent or .05 per cent below the EU average and interest rates are at historically low levels. This stable macroeconomic environment will deliver economic growth in 1994 of about 5 per cent in Ireland compared with an average of 1.6 per cent for the EU as a whole and crucially will deliver employment growth of an estimated 23,000 or 2 per cent compared with a forecast employment decline of 0.75 per cent for Europe as a whole.
I also look forward to briefing my European colleagues on specific employment policies being pursued by the Government which are fully consistent with the White Paper strategy. For example the Government in this year's budget moved to provide special funding and tax incentive measures to encourage the development of small business and start-up enterprises and to reduce the cost of employment through a combination of income tax cuts and reductions in PRSI and levies. In addition an expansion of places on training and employment schemes has been put in place.
Turning to the Europe wide dimension of the White Paper the Summit will have before it reports of the Christopherson and Bangemann Groups dealing with Trans-European Networks (TENS) and the global information society respectively. It is in Ireland's interests as an export oriented country on the periphery that progress be made under both these headings.
I anticipate that the summit will also focus on the importance for Europe of the small and medium sized industry sector and of ensuring the full development of the Single Market to exploit the potential of this sector.
Finally it is important that the Corfu Summit ensures that the momentum created by the White Paper is maintained and that it sends a clear signal that employment growth remains at the top of the European agenda. As one who fought strongly for this priority at previous summits I will be stressing this point.
I wish to ask the Taoiseach some questions about chapters 8 and 9 of the White Paper. Chapter 8 concerns turning growth into jobs and chapter 9 concerns statutory charges on labour. Does the Taoiseach agree with the conclusions on chapter 8 of the White Paper that financial, administrative and legal burdens imposed by Governments tend to fall most heavily on smaller and medium sized firms and that it must be a priority for this Government and the Community as a whole to reduce those burdens?
In regard to chapter 9 which deals with charges imposed by Government on jobs and employment, is the Taoiseach aware of the contents of Table 2 of the chapter which show that the rate of increase over the last 20 years in income tax and PRSI charges on labour in Ireland has been twice the rate of the average of the European Union and that this imposition of PRSI and income tax charges on employment is one of the contributing factors in our high level of unemployment?
The Deputy is fully aware that the Government set up the small business task force precisely to focus on the issues he has raised. In the most recent budget we took action along lines conducive to helping the small to medium sized business sector — to remove some of the obstacles and help that sector create jobs. It is an area that can be most successful in producing jobs as many other countries have found out also.
Of course we would all like social charges on labour to be as low as possible. In that regard we are at the lower end of the scale in comparison with our partners in Europe. However, the more competitive we can become the better and that is the direction in which we are working.
Is the Taoiseach aware that whereas 20 years ago Irish charges on labour were half the European average, they have now almost reached it? Is he aware of the recommendation in the report which states that in any efforts to reduce charges on labour, changes must be simple to be successful? Detailed proposals such as those the Government brought forward to provide a reduction in PRSI for those who promise to employ a person at less than £173 per week — they do not benefit if they pay £174 per week — are the complexities which are an obstacle to take-up and have been condemned by the Commission in the White Paper. This is an error by the Government in its efforts to reduce the costs of employing people.
There are many examples of variety of rates, for instance, in the UK. The fact that we moved in the last budget to make it more attractive and less expensive at the lower end of the scale to employ people is a welcome start in that direction. The social costs in terms of Ireland's position and that in other European countries are clear. Other countries have much higher social charges than ours, but that does not mean we should not become as competitive as we can in every way possible, and that is exactly what the Government strategy is about.
Given that there are 18 million people unemployed in the Community and that it cannot compete in terms of jobs with the Japanese, Americans or the high performing Asian economies, will the Taoiseach accept that the European market is over-regulated? Does he support policies that would lead to less regulation in the European economy?
It is clear from our performance that we are competitive. If we had not been competitive in recent years our employment position would be much more serious — in saying that I am not under-estimating the significance of the size of our unemployment figures. During a recessionary period, when markets were shrinking, Irish exporters gained a bigger share of those markets, that can only come about by being competitive in the marketplace. There are many areas in which the European Union must make progress in becoming more competitive. The fact that it became uncompetitive was one of the basic driving forces behind setting up the Single European Market. Europe as a unit was losing its market share in world trade terms to the United States and Japan and that is why the Single Market had to be considered. Many of the restrictions and protections introduced in various national economies had to be removed, and others will have to be removed, to make Europe more competitive.
The Taoiseach indicated that growth in Ireland will produce about 23,000 jobs. Will he tell the House over what period — and in what sectors — he expects these jobs to be created? Will he agree that wage levels are only one factor in a range of complex factors in the question of competitiveness? Will he indicate that he will resist attempts at the Corfu summit to further create what is referred to as a flexible labour market, which essentially means removing the social cover for workers in Europe, particularly in Ireland? Will he resist attempts to create a position whereby employers can hire and fire at will without giving adequate cover to workers? Will the Taoiseach attempt to persuade the German Government to remove its opposition to the Fourth Poverty Programme which is currently held up as a result of German objections. Even though it is minimal in its effects — providing about 3p per head of those currently living on the poverty line in Europe — nevertheless it is the only programme proposed to deal with poverty in Europe?
I am not certain that the last aspect of the Deputy's question will appear on the agenda——
Will the Taoiseach put it on the agenda?
——but if it does, our position will be very clear. We are not in the business of dismantling any of the programmes the Deputy may have in mind, whether on poverty or worker protection. We want to make the Irish economy as competitive as possible. Deputy De Rossa is making one recommendation while Deputy Harney's recommendation is almost the direct opposite, but we want to continue to create more jobs in the economy. We want to ensure better growth and translate that growth into jobs — the projected estimate by economic commentators is 23,000 jobs this year.
Will the Taoiseach agree that the European Union White Paper on jobs will have a much better chance of being implemented under an effective President of the EU Commission? On that basis will the Taoiseach confirm that he will not let the national side down if there is an opportunity in Corfu to have Peter Sutherland appointed to that position?
The Deputy is raising a separate matter.
It is a totally separate matter. The question relates to the contribution I will make to the White Paper on growth, competitiveness and jobs.
That would be the best contribution the Taoiseach could make.
I will continue as I have done at numerous summits up to now. I was a lone voice for a good while in trying to get job creation to the top of the European agenda and now that it is there, I will keep it there. A co-ordinated approach by all member states in this matter can make a much greater impact than the single policy of any member state.
Is the Taoiseach aware that the White Paper — this is apropos of Deputy O'Keeffe's question — pays specific tribute to the contribution of liberalisation of world trade to every occasion on which employment grew in Europe and that it would make sense to have somebody who understands the importance of liberalising world trade at the head of affairs in the European Union.
The Deputy is adverting to another matter.
I am adverting to page 12 of the White Paper, which I am sure the Taoiseach would like to consult.
That issue is worthy of a separate question.
If you wish to consult it I will make it available to you to verify the relevance of my question.
One has to admire Deputy Bruton's efforts to bring in an extraneous matter. Our best performance in the creation of jobs was in the years 1987-89. The way forward is to ensure high growth and to translate that growth into the maximum number of jobs. Deputy Bruton is trying to introduce an extraneous political matter.
Is the Taoiseach aware that on every occasion when there was substantial growth in employment in this State it arose as a direct consequence of a decision by an Irish Government to set a realistic value on the punt? This occurred following the realignment of the punt in 1986 and, subsequently, its realignment in January 1993 which Fianna Fáil and Labour resisted. In the light of that experience is it the Government's policy to join a single currency without our principal trading partner in circumstances which would deprive us of the right to set a realistic value on the punt because we would then be on autopilot?
That is not a medium or short term agenda. Everybody realistically looking at the position in Europe today recognises that the introduction of a single currency is not around the corner. As a former Minister for Finance, the Deputy knows that neither I nor the Minister for Finance speculate on hypothetical questions about what a Government might do.
Is the Taoiseach——
Order, I want to bring these questions to finality.
Is the Taoiseach aware of the Maastricht Treaty?
Deputy Bruton, please hear the Chair. I am bringing these questions to a conclusion.
May I put one further question?
Let me advise the House, as is my wont, that nearly 30 minutes are available to deal with questions to the Taoiseach. I want to bring them to finality quite quickly. I will call Deputy Boylan shortly.
May I put one further question arising from my previous questions?
Yes.
Is the Taoiseach aware that the single most important economic decision a government can take concerns the devaluation of its currency? Is he aware there would be serious consequences for Ireland if, as the Maastricht Treaty provides, we were to go ahead with the single currency without Britain as Ireland would then be in the position where it no longer would have the freedom to set the value of its own currency? Has the Government considered this?
Deputy Bruton knows that the Government takes all those matters into consideration. He should also be aware that whereas the Maastricht Treaty sets 1997 as the target year, nobody believes that this is realistic. It is more realistic to speak in terms of the end of the decade——
On the contrary.
——and hopefully it might come by the end of the debate. That is the real position in Europe.
The Maastricht Treaty is out the window.
The Taoiseach lauds small businesses for their role in job creation and I fully support that. Does he accept, however, that there is no Government support for the start-up of small businesses and that within six months of starting one as many as 12 inspectors from 12 different Government agencies will descend on the business to harass the employer and close it? Is the Taoiseach making any effort to advise officials that small businesses need time to get their footing and that they should be given the time to do so?
There are 21 measures in this year's budget to support small business. The £100 million subsidised interest rate facility was brought forward and recently the Minister for Finance and his European partners agreed at the ECOFIN meeting to further subsidised interest rate facilities. The list of recommendations of the task force on small business is being implemented and a number has already been implemented.
No Government understands better and is doing more for the small business sector than this Government——
The Taoiseach is not aware of the little men with the briefcases that cause small businesses to close down.
Order, if the Deputy seeks to intervene, he should stand and seek the permission of the Chair.
——and it will continue to do so.
Does the Taoiseach expect to meet the British Prime Minister at the margin of meetings during the Corfu Summit? Will he press for an early conclusion to the current discussions on a framework document? Given the appalling spiral of violence in Northern Ireland in recent weeks, there is urgent need for political progress to fill the vacuum that exists.
I expect to meet the British Prime Minister, John Major, at an appropriate opportunity during the Corfu Summit. We will certainly review the work of the liaison committee and the position to see how we can advance the political situation. That is certainly on both our agendas.