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Dáil Éireann díospóireacht -
Friday, 5 Jul 1996

Vol. 468 No. 3

Report on Strategy for Enterprise in 21st Century: Statements.

I am pleased with the opportunity to have a debate on this worthwhile report because, for the first time, we have set out a long-term perspective on what we, as a nation, can achieve, the potential of enterprise, and how we can adjust and adapt enterprise to achieve real results. The report sets out very significant targets that could be reached over the next 15 years if we make sensible decisions, for example to increase employment by 310,000 as it estimates, to halve unemployment, to cut long-term unemployment to 50,000, to increase the level of GNP per head from 65 per cent of the EU level to 100 per cent and to raise the quality of life of our people across the whole range of indicators of success of our economy and society.

We should have set more ambitious targets in the area of employment. We are entering a period where the very high level of labour force entrants currently running at 23,000 plus, and which will continue for the next five to ten years, will begin to fall off towards the end of the period. If anything, we could achieve more on the employment front than the target set. However, the precise targets are not that important. What is important is that it sets a vision for our enterprise, what can be achieved, setting out important goals as to where we can go if we have consensus, if we are willing to make difficult decisions at times about tough policy options. We have achieved a tremendous amount in recent years through consensus in the community to make employment our number one priority. In recent years there has been a dramatic improvement across a number of indicators. For example, by the end of 1996 we will, in just three years, have created an additional 122,000 jobs. That is more than a 10 per cent increase in the numbers at work in just three years which is unprecedented in the history of the State.

According to the labour force survey measures, we will have achieved a drop of 47,000 in unemployment.

What about the live register?

That will constitute a 21 per cent reduction in unemployment, from 15.6 per cent to 11.7 per cent. There will be a dramatic 4 per cent reduction in three years in the rate of unemployment. Comparing the comparable figures across Europe, we are close to the European average, there has been a dramatic transformation of our economy on employment performance.

We have also achieved dramatic improvement in other areas. We have brought down our debt ratio over a sustained period. In 1987 our debt ratio was at 125 per cent of GNP and we have brought that to 81 per cent. This is a dramatic improvement because we have been willing, as a society, to put other matters second to our main priority of getting a sound financial base for employment performance and focusing on employment growth.

The reality is — and this is very important at a time when we are coming to the renegotiation of the Programme for Competitiveness and Work— that not only have we attained those very significant achievements on employment and public finances we have been able to translate it into take-home pay for ordinary workers.

It is instructive to look at what happened in the seven years before and after 1987. In the seven years before 1987 on paper there were significant pay increases. An increase of 100 per cent in gross pay was achieved but this was eroded by the ravages of inflation to the point there was a decline in real terms of 20 per cent. A further slice was absorbed in tax with the result that take-home pay fell by 35 per cent.

In the seven years since 1987 there has been a degree of consensus about the way in which the economy should be managed and much lower increases have been accepted. An increase of 36 per cent has been achieved, one third of the figure achieved in the seven years before 1987. Because inflation has modified gross pay has increased by 12 per cent in real terms while take-home or disposable income has increased by 22 per cent. This represents substantial growth.

It is important to recognise that consensus on a set of objectives has worked in the economy in the past eight to ten years and can work again. What Forfás has stated is that there are exciting opportunities to be grasped in the next 15 years if we build consensus on key objectives. That is a key element and what makes this report so important.

It is time to take stock. We are by no means perfect and Forfás warns against complacency about our economic performance. We all recognise that long-term unemployment is a serious problem. It continues at a high level by comparison with other European countries.

The report identifies the key forces of change to which we will have to adapt and with which we will have to grapple in the next 15 years, given that we want to achieve the goal of full employment and higher living standards. In this respect serious challenges confront us.

We can no longer talk about a home and overseas market — this is no secret to those who have been following the debate in this House and elsewhere — as if the two do not cross over. There are now world markets. Companies quite happily switch sources from one continent to another. We are truly competing in a global marketplace where one has to be competitive and produce quality goods in order to survive.

Another major factor that will affect performance over the next 15 years is the rapid rate of technological change, including product innovation. What is also significant is that it is diffusing much more rapidly. There was a time when technology was developed in the high income countries of the west while the low income countries, perhaps in the Far East, lagged way behind. The position has changed dramatically. In the space of ten years countries such as Korea have moved from the bottom to the top of the league. They are at the leading edge.

In the next 15 years — I suspect Deputy O'Rourke would agree with this — of far more importance to our economic survival will be the quality of our human resources rather than fixed assets such as plant and machinery. It is increasingly obvious that the companies which succeed are not the ones with huge balance sheets but the ones which have developed their human resources and which have flexible and innovative work forces which respond rapidly to change. This is underpinned by training and education systems. They have the vision to use people of quality.

Another major factor is that with the convergence of technologies such as telecommunications equipment and computers there is an information revolution which will transform the way we work and the way all businesses operate. The challenge is to ensure we are in a position to seize the opportunities and minimise the threat presented by all these forces of change.

The key question is how can we achieve and sustain competitive advantage in this rapidly changing world. It involves much more than competitive cost structures. While we have to be aware of labour, power and telecommunications costs, services which are important in terms of our ability to compete, the determining factor will be how successful we are as an innovative economy in making creative use of people's talents and in getting companies and individuals to buy the notion of life-long learning. It is the qualities and skills people possess that determine the extent to which they are successful.

We have been slow to adopt such an approach. The House will be familiar with the figures which show that there has been under-investment by Irish companies in training and human resources development by comparison with other countries. The House will be aware also that people in this country, once they leave the formal education and training system, are much less likely to avail of second and third education opportunities. There is a need for a major change in outlook.

Forfás has identified the critical infrastructure and areas which have not always been seen as being of importance to enterprise. They include education. This will have a bearing on how successful we are in the next 15 years. Many see this as a conflict and argue that education will be dragged down a barren stony road if it tries to serve the needs of enterprise. The position is changing dramatically. Companies will fail if they are not creative and innovative and do not allow their employees to work in teams and to be enterprising. They must be allowed to develop their full personality. Similarly, an education system which does not teach people to be innovative and enterprising in the workplace is failing those who participate in it.

Other areas will be of equal importance. More and more the quality of our environment is a key resource in terms of our competitiveness. Telecommunications is another key element of infrastructure. There is a valuable section in the report dealing with logistics, covering the combination of the transport system to deliver solutions and allow products to be transported from one location to another on time in the cheapest possible way. This is not just a question of hardware but also of software and the necessary skills required in managing the system. This presents a challenge.

The report highlights the need for stronger and more effective competition laws. The House dealt with this matter recently when significant improvements were made to our competition law. We also need a competitive and efficient capital market. In this respect the report points to an equity gap. Small and emerging companies find it difficult to get their hand on venture capital at reasonable rates. The capital market should channel savings into employment creating enterprises.

The labour market must also operate efficiently. As we all recognise, our tax and welfare system as they have evolved in recent years have conspired to create problems within the labour market. There are incomes above which it does not pay to receive an increase in salary or work hours. It does not pay certain categories to seek work because they would lose benefits and incur losses. The Government will continue to address this issue in an effort to create a more effective and flexible labour market where there are no obstacles to people taking up work opportunities.

The report identifies the key policy themes which need to be developed. It focuses on the importance of an enterprise culture where it is respectable to be in enterprise and create profit and of a system which removes barriers and encourages competiveness. I support the identification of the services sector as the unsung hero of employment performance in the past and the key to employment development in the future. Forfás predicts that 85 per cent of employment created over the next 15 years will be in the services sector. It proposes a threefold dimension for the interaction of the State with services. The bottom grade is made up of the traditional services in the home market. Obviously the State cannot subsidise one player as opposed to another and it must facilitate a competitive environment and provide information and advice to those setting up in this sector. The second grade, which should have a higher level of support, is made up of services which have the potential to be innovative, grow and find overseas markets, while the upper grade, which should have the highest level of support, is made up of internationally traded services which trade virtually 100 per cent overseas. I broadly agree with that philosophy which will be one of the themes developed in the strategy paper on services which I hope to publish later in the year.

The report focuses on the problems of indigenous manufacturing and the need for companies in this sector to reposition their products. Too much of our traditional indigenous manufacturing is in low margin business which trades into the UK market where it is too exposed to competition from low cost countries. Companies in this sector need to reposition their products, build scale in Irish enterprises and underpin this development with profitability. Forbairt has pointed out the need to focus on companies which have the capacity to grow and create high value markets for themselves.

The report highlights the need for us to be at the leading edge of human resource development and to produce quality people who will provide innovative solutions to problems in the market place. It also states that we need to help the many people who left school without the necessary qualifications to build up their skills so that they are equipped to meet the demands of the market place. This is a major challenge which must be underpinned with much innovative thinking, which is already beginning to emerge. In this context, the innovative training opportunities offered by the local employment service need to be further developed. This is a theme which will be developed in the White Paper on human resource development which I hope to publish later this year.

The other key elements addressed in the report are the need for lower levels of taxes and a reformed tax structure. Forfás recognises that this is a controversial area and that there are wider dimensions to designing a tax structure than simply looking at the needs of enterprise. Obviously consideration must also be given to equity, fairness and what people regard as acceptable. The report clearly underlines the need for a tax structure which will give people the incentive to be enterprising and which rewards enterprise and work.

The report identifies innovation as a key dimension in helping us develop as a country. Most Deputies will not be surprised to learn that we underinvest in research and development compared to other countries. The level of investment in this area has been increased in recent years but it is still too low. We need to focus more clearly on research and development in the creation of a successful enterprise culture. The STIAC report dealt with this issue in detail and pointed out the necessary changes. The Minister of State, Deputy Rabbitte, is working on this area.

The report outlines the need for a proper framework for assessing the competitiveness of the economy. This is a crucially important theme which I hope to work on in the near future in the development of a proper structure for increasing competitiveness. The trend nowadays is for companies to measure their competitiveness against that of others and as a country we must measure our competitiveness against that of other countries. In recent years our ranking on the world competitive list has dropped. We maintained our ranking this year but it is still not good enough if we are to be a key player in world competitiveness. It is, therefore, very important to monitor our competitiveness across a range of measures. Competitiveness is not only about labour costs, it is also about innovation, education systems, the capacity to bring new products to markets, the way we manage resources etc. This will be very important element in the future and I am very keen to develop it in an ongoing way so that we have a continuous focus on the factors that matter. The Culliton report developed this to some extent and it is now time to develop it further so that we can cope with the challenges facing us over the next 15 years.

The report is a worthwhile contribution to the debate on economic policy. It is timely that it should be published when we are moving into the next round of negotiations on where we are going as a country, the Programme for Competitiveness and Work, levels of payments etc. All these matters will be determined by the challenges facing us, including tangible challenges such as the economic and monetary union and the disciplines that will impose on us. Forfás does not regard the report as an A to Z policy prescription and it wants a vibrant debate on the challenges facing us over the next 15 years so that there is consensus on important issues such as telecommunications, the services sector, innovation, human resource development, world class logistics, a reformed and effective tax structure and the need to harness the opportunities thrown up by an information society.

The Government must make its plans against the wider backdrop of the 15-year challenge. We will seize those opportunities and the White Paper on the services sector will take up this challenge. We have already appointed a group to the information society who will provide the Government with the key ingredients to take a lead in this crucial sector which the Forfás report underpins as the multi-lingual hub and the telecommunications sector for Ireland. This report is welcome and I look forward to a debate on it. It is important that we begin to shape our thinking about the opportunities that lie ahead in the next 15 years.

On a point of information, is the debate ongoing? I understood from our Whips the debate would not be finalised today and that it would resume on another occasion.

The Deputy has 30 minutes. The Minister will be called on to reply at 3.45 p.m. and the debate will continue on another occasion.

I am pleased to have the opportunity to contribute to this debate on the Forfás document Shaping our Future: A Strategy for Enterprise in Ireland in the 21st Century. The cost of this document which extends to 302 pages is a cause of regret. We have been supplied with a summary. I welcome much of the report and the strategies the Minister has outlined.

It is a source of concern and deep dismay that we are debating this report on a day when the unemployment figure on the live register stands at 8,000 higher than at the end of May of the same year, an increase of 3,800. We are debating this report on an appropriate day when, sadly, the unemployment figures show a huge increase. With the exception of the Minister, Deputy Ned O'Keeffe and the official from the Department of Enterprise and Employment we are in an empty House debating the position of the long-term unemployed whose lives have been blighted. This unacceptable number of long-term unemployed is the highest in Europe and remains unaccceptable for a country that holds the Presidency.

The Minister's strategy papers about which he has spoken were rubbished by media commentators — a little unfairly I would have thought. The strategy papers being planned for the services sector, for training, human resources, management etc. and the paper, already published, which deals with long-term unemployment are acceptable as forward strategy. For five years in the Department of Education when I started the debate on the Green Paper I maintained a hands-on day-to-day commitment to solving the difficulties, problems and challenges which beset the education sector at that time. Any Minister worth his or her salt has a strategy. Without a vision for the Department one is leading, one may as well not be in the business. Clearly there is a need for a vision and that it be translated into strategy papers, documents, initiatives and so on. I agree with all that because one has to leave a legacy to future Ministers. I left the legacy of the Green Paper to the subsequent Ministers, Deputies Noel Davern, Séamus Brennan and the current Minister, Deputy Bhreathnach. The White Paper bears many of the marks of the initial writing in 1990-91. That is proper. It provides the continuum and leads to sustained political leadership and development. That does not take from the fact that the Minister should give sustained attention to the daily challenges and difficulties which beset his Department. That is where the Minister and his two colleagues in the Department fall down because there is no political leadership on the issue of unemployment. There is a complete reliance on telling us we are the envy of Europe and the world does not know how we are doing it, that we have sustained high growth etc., all of the clichés that are meaningless to the huge number of people who are unemployed as evidenced by today's live register. It is a social disgrace.

As politicians we cannot say we are serving our citizens if we cannot put our hearts and our minds to settling and defining the unemployment problem. We must realise that the live register refers to a huge number of real people. The Minister may rubbish the live register if he wishes but the Government of which I was a member conducted our business having regard to the live register. We were content to do so and to realise that those who signed on were real people. It is easy for us standing here in Dáil Éireann. We should know from our daily dealings with constituents that there are untold tales of misery in real Ireland as distinct from the Ireland of "spiralling growth rates", the pretend Ireland where we are the envy of Europe.

The Minister commenced by referring to employment and unemployment. In June 1995 there were 276,000 people unemployed. I recall a debate at that time on the Estimates when the Minister and Minister of State, Deputy Rabbitte asked for another year to make progress. In June 1996 the number of people unemployed increased to 283,000. during the Minister's year of stewardship at the Department of Enterprise and Employment the number of unemployed persons, as evidenced by the live register has jumped 7,000. It is nonsense to talk about us being the envy of Europe. We are not the envy of Europe, we are the shame of Europe as evidenced by the numbers unemployed here.

I agree we need long-term strategies. The Minister has done well in plotting the long-term strategy but he must do much more and must have a hands-on sustained commitment dealing with the day to day difficulties and challenges of his Department, the chief one being the unacceptably high level of unemployment. The Minister is only scratching at the surface. Any Minister who would say we have done remarkably well when unemployment levels have increased from 276,000 to 283,000 could only be living in wonderland.

My request for this debate was granted, even though the Taoiseach said in a derisory manner that it was a matter for the Whips. That was when he thought he was riding high. In the past debates on such reports often did not take place for months or even years after their publication, but on this occasion it is taking place at least relatively close to the report's publication. It is unfortunate that we are dealing with it on the last day of the term, but I am pleased to know it will be taken again.

The report proposes the establishment of more bodies and councils. It proposes the establishment of a council on competitiveness. While competitiveness is extremely important, it does not require another body to deal with it. The report does not dwell on the barriers to enterprise posed by the proliferation of agencies. I have frequently advocated a reduction in the number of such agencies. I agree that in our time in Government the then Minister for Enterprise and Employment, Deputy Séamus Brennan, and I were party to a decision which led to a proliferation of agencies, but when we get back into Government my main task will be to abolish many of them.

Now that Forfás has completed this major piece of work, it should cease to be a separate agency and become integrated with the Department of Enterprise and Employment. Its mission is complete. The Department could then establish two policy divisions, one to deal with large businesses and another to deal with small or medium sized ones. The panoply of agencies is causing confusion and chaos and has resulted in the development of an internal market and competition between the agencies. In many cases it has resulted in the waste of vast amounts of business people's time.

Agencies offering to support businesses include Forfás, Forbairt, IDA Ireland, the Trade Board, An Bord Bia, FÁS, and so on. There are 35 county enterprise boards, 35 area partnership boards and 36 Leader groups. There are 150 State agencies dealing with enterprise matters and employing vast numbers of people. The area development board structure employs in the region of 400 staff. The county enterprise boards employ 140. Forfás employs 120, Forbairt employs 813, IDA Ireland employs 275, SFADCo employs 194 and FAS employs 2,042, but they are nearly all chiefs, with very few indians. There are 50 different EU and domestic sources of funding, eight Ministers and Ministers of State with responsibility for enterprise under various guises. Allied to this we have the Minister for Education's nonsensical decision to set up ten regional boards of education. These will prove to be a paradise for procrastination and bunkers of bureaucracy, with the inevitable duplication, confusion and chaos for consumers and claimants.

I support devolution but we live on a small island with a small population. We do not need an endless number of bodies catering for different areas of business. What happened to Government by Ministers and officials? What happened to getting to grips with the job? There are more quangos and more people and bureaucracy in the area of enterprise, but less service to the people. People with business ideas submit applications to all these agencies for fear they might lose out on some form of funding. The manner in which enterprise is dealt with is farcical. If it were not so serious it would be comical. In a regional office of IDA-Forbairt there is rivalry about who should deal with clients who telephone the office who merely want to know if their initiatives are worth while and if they would get funding for them. I know the Minister partly agrees with me in this regard. The decision to set up ten new regional boards of education will not improve the curricula or provide better access to education of disadvantaged pupils.

I have argued for the streamlining of agencies and the establishment of a "one door to enterprise" concept in each county, but the Minister's response is to commission further studies and reports. He is in the grip of consultants. I accept that if he is to fulfil his remit as a Minister a certain amount of strategy work must involve devising strategic policies, but that should not happen at the expense of dealing with daily challenges. He should not close his ears to the cries for help from the large number of unemployed people.

The Minister has commissioned 35 studies from consultants at a cost of £1.4 million and many more are pending, with the cost increasing each time. Dozens of studies and reports are ongoing in the Department. The only decisions being taken by the Minister are those to commission further studies. A total of £21 million has been allocated in the Book of Estimates for consultants throughout all Government Departments, an increase of 20 per cent on 1995. That is only the tip of the iceberg and does not take account of the amount spent by agencies such as Forfás, Forbairt and IDA Ireland, which between them spend approximately £2 million annually on consultants' reports. That is nonsensical. Forfás commissioned 19 background studies for the report before us. I am concerned that this document will lead to another raft of studies. I agree with the Minister's proposal to carry out a study on the services sector, in which he has had a keen interest since his time in Opposition.

What has happened to decision-making? Why do Ministers not go into their offices each day, make a number of decisions and carry through on them? Although I had a teaching background, I was at sea for some months when I was first appointed Minister. I experienced trouble at first although I pulled myself out of it. I never forgot that I was in charge and that it was up to me to take decisions on a daily basis. What happened to decision-making? Has it disappeared with the consensus of the three parties in Government? Politically, that is clearly leading to a stultification of decision making. No one can take a decision because it might hurt the feelings, ethos or ideology of somebody in one of the other Government parties. The justice area is a clear example of that. I have frequently said that the instincts of the Minister for Justice are right yet they cannot be implemented because neither the Minister for Social Welfare nor the Tánaiste must be upset. For that reason, the Taoiseach refused to talk about bail and would not let the matter raise its ugly head.

When the Castlerea Prison issue arose I remember the Taoiseach and the Minister for Finance, Deputy Quinn, saying on television there are other ways of dealing with crime. There are, but they involve much social work and rehabilitation which must go in tandem with penal servitude: you cannot have one without the other. The Castlerea Prison project was cut because at the time it suited the Government to get a ready amount of money.

Yesterday, the Minister for Finance plaintively asked what the remedies were for more State spending. I advocate dropping the ten proposed regional education boards. They will be paradises of procrastination amounting to a huge bureaucratic colossus requiring several million pounds, yet no one will gain more access to education because of them. That is my party's suggestion for the Government if it wants to find extra funding but that Minister and his party had to be kept tranquil at all costs, otherwise they might kick up and we must not rock the boat.

Politically, it is always put to us that the former Taoiseach, Deputy Reynolds, experienced difficulties. It may well be there were but at least we did things. With this Government it seems that passivity, engendered by the wish not to rock the boat, is leading to inaction and we have seen the results all around us. We have seen chaos in the Department of Justice and in the unemployment figures. We have also seen chaos caused by the Minister for Transport, Energy and Communications, Deputy Lowry. If I were Deputy Lowry I would never get out of bed because the minute he wakes up in the morning and puts his foot on the ground he is a walking disaster as regards every area under his aegis. It is no wonder he gave the Luas Bill to the Minister of State, Deputy Doyle. At least she brought some sense to it. The central targets of this report are clear. They relate to the creation of 364,000 net new jobs in manufacturing — primarily in services, and I recognise the Minister's commitment to the services industry — leading to an unemployment rate of 6 per cent by the year 2010. It is an ambitious target and I do not quarrel with it. The Minister said earlier that he did not agree with targets, yet President Santer had laid out a clear target for Europe during his Presidency of the European Commission of halving European unemployment by the year 2000.

For over a year I have called for targets to reduce long-term unemployment and to that I add the need to set such targets for the unemployed generally. Rather than having what is regarded throughout the country as a platitudinous debate on the economy, we should set a specific target for reducing unemployment in the next six months. If the Minister does not reach the target I will not criticise him if he has made some effort to reach it. We have to do that, otherwise nothing will happen.

It is right to place emphasis on the services sector where the potential is huge but the discrimination that has operated against it is also huge and those blockages need to be removed. It is also good that the equation constructed puts such a strong emphasis on reducing unemployment, particularly long-term unemployed. The report should have put this issue to the fore. It is the biggest problem, with crime representing a vast waste of human resources and a loss of economic opportunity.

The full implementation of the local employment service in its 14 areas is a key to tackling the problem of long-term unemployment. In any civilised society the best measure must be its ability to encourage enterprise so that employment is created for its citizens. That will be the test for us over the coming 15 years. Half the unemployment rate is long-term and unless we take radical action that group will always be enormous. We must take the steps now.

Challenges are also posed in this document for business and trade unions. Business is expected to spend 3 per cent of payroll costs on continuous retraining as well as investing in research, development and technology. Training will have to be in the ownership of the employers much more than it is now.

The document pinpoints the weakness of indigenous industry and sets challenges for that sector as well as for the Government. It has also emphasised the necessity for competitiveness of utilities such as Telecom Éireann. However, the deal which was masterminded by that arch-strategist, Deputy Lowry, would not make one confident that the strategy will have anything to do with what will eventually emerge. Trade unions are expected to look at the longer term and have a view of the employment objectives of this plan.

What concerns me most about the report is that an exclusion factor is in operation. Those in steering groups are very much the insiders. The outsiders remain outside peeping in an odd time when the curtain is drawn back, but mostly it is drawn. I am worried that this report reflects just one prescriptive dimension.

We have to raise our sights to the future, looking at new markets and building links with South East Asia. We have been divorced from that region as we are the only European country without a direct air link to it. Luxembourg has extensive cargo links there and last month a direct air link opened between Lisbon and Asia.

We are at a turning point in a new Europe. Economic and monetary union is on a fast track and change is happening apace. This document is important for that reason. It is challenging, interesting and comprehensive but it must not be left to gather dust on a shelf. It should not just become the basis for one thousand other reports. Action must flow from the document.

I am glad this debate has taken place because in the past such debates were delayed for months, if not years. One argument I have about this report concerns the proliferation of agencies, the procrastination and the endless delays.

I question the veracity of the growth rates which are trumpeted by the Government and which have also been trumpeted by previous Governments. Much of that growth is coming about through transfer pricing arrangements. Somebody should look at how these growth rates are measured and what they really mean. If we have growth rates of 7 to 10 per cent we should have had a consequent drop in unemployment, yet we have not. In many respects those growth rates are an illusion. We are living in a time when growth is mainly dependent upon transfer pricing arrangements and that was the case for previous Governments also. Multinational transfer pricing arrangements allow the type of growth figures that feature daily and weekly in ERSI and other reports, but many of them are not for real. We heard today that unemployment has increased by almost 8,000 — in June 1995 the figure was 276,000 and two years later it is 283,000.

How many new jobs have been created?

Is the Deputy not concerned about unemployment?

The Deputy should give the full picture.

I am talking about unemployment.

The Deputy has been converted.

The Member in possession should be allowed contribute without interruption from either side.

Coming from an area where there is great unemployment, the Deputy is a disgrace to the Labour Party. If he were here for the full debate he would know that I spoke to the Minister in very frank terms. I recognise he is a strategist——

The Deputy should give the full picture.

——and that he has set firm targets for five, ten and 15 years, and I applaud that, but in tandem with that he must deliver sustained day-to-day management of unemployment. Otherwise he cannot be called the Minister for Enterprise and Employment. There are more than 200 agencies dealing with people who seek employment and there are eight Ministers and Ministers of State dealing with employment and unemployment.

The Deputy was Minister at one time.

The Minister for Education proposes to set up ten new regional boards, which is nonsense. The Minister for Finance, Deputy Quinn, is looking for savings in the Estimates so that he may give money, reluctantly, to the Minister for Justice. The Government should get rid of the proliferation and complexity of agencies, the bureaucracy and procrastination. There is much to be recommended in this 300 page book called Shaping Our Future. If the strategy on which the Minister has spent some time, and rightly so, could be equalled by day to day active hands-on management of the employment-unemployment issue, I would applaud that.

We hear daily about the huge number of jobs coming on stream as a result of the efforts of IDA-Forbairt, but at the end of each year we should be told how many jobs were created. We should pay as much attention to maintaining jobs as to fostering new ones.

I welcome the opportunity to speak to the Forfás report on a day when it is disclosed that there has been an increase of 7,000, seasonally adjusted, in the unemployment figure. That is a real monument to the Labour Party in Government.

The Deputy wanted to abolish Forfás.

I called for its abolition.

Let there be no interruption. Deputy McDowell is in possession and should not be interrupted by either side of the House. I do not wan to to have to say that again.

It is great to see Deputy Broughan in the House. I will stay to hear him apologise to the Irish people——

The Deputy will be waiting.

——for the devastation his party has wreaked on the economy, for the electoral fraud it committed. I will not interrupt him when he says his few words and I hope he will not interrupt me when I set the stage for his humiliating climb-down.

That depends on what the Deputy says.

Deputy Broughan likes to be the John Prescott of the Dáil, Labour's tough man, the rottweiler who is sent in here. The problem is that his colleagues will not let him have any influence on Government policies.

That might change.

Yes, there could be a reshuffle — in fact I recommend a reshuffle because little could be worse than what is going on at present.

We are in the closing months of this Dáil and, just as when one is flying to London, somewhere over Anglesey there is a difference in the engine noise of the plane and one gets the feeling it is beginning its descent to Heathrow, we get the same feeling that the Dáil is beginning its wind-up. The manoeuvring process is starting for the next election. I notice the Fine Gael Party has started talking, as it always does coming up to a general election, about tax reform. Its ideological dentures are reinserted from the tumbler where they have been while the party was snoozing for the last few years.

The Deputy should wait for the next budget.

We will hear the Fine Gael Party say that it will achieve tax rates of 25 per cent and 45 per cent, which will be great news. It will accomplish in one year what this report rather timidly suggests might be accomplished between now and the year 2010.

The Government has had its opportunities in regard to tax reform. It could have taken dramatic action, but it did nothing of the sort. By the end of this year, when the rainbow coalition has been in power for two years, it will have succeded in increasing the total tax take by £1.3 billion, income tax by £500 million and the tax burden on the hard-pressed PAYE sector by more than £400 million. In just two years it will have driven up the tax bill by 12 per cent, in a period when inflation stood at 4 per cent.

The ratio has fallen.

As Deputy Harney said this morning, taxes do not increase by accident, they are caused to increase. If we look back, for instance, at the Culliton report and other reports, there has been a constant refrain that in order to do something about unemployment one should tackle the tax problem.

However, every time the Labour Party gets it hands near the levers of power, the whole process is put into suspended animation.

That is not true.

Please, Deputy Broughan.

The Deputy will have his opportunity to speak.

What about the Government in which the Deputy's party was a partner?

I will not allow the Chair to be disregarded in this way. It would pain me, on the day of the recess, to have to ask the Deputy another serious question. Please let the Member in possession proceed without interruption.

It would pain me more because it would let him off the hook in terms of apologising for the fact that there are 280,000 people on the dole.

May I make a point of information?

No, the Deputy may not. He will have an opportunity to speak in a couple of minutes. I welcome the remarks made by Deputy O'Rourke, a number of which I intended to make and, therefore, will not repeat at length. The idea that government is the answer to all problems, task forces deal with all issues, consultants are the repository of all wisdom and setting up more quangos every week is the way this country will get out of its economic difficulties is radically mistaken.

I agree completely with Deputy O'Rourke that the daft proposal of the ideological looney left to impose on education ten regional boards in which educational policy will be more democratic is absolutely for the birds. The expenditure on that project, were it to be implemented, would be between £20 million and £50 million. That daft project will divert from real education needs into bureaucracy a huge sum of money which this country cannot afford. The Minister for Education, Deputy Bhreathnach, has not yet brought the Education Bill before the House, but it will be opposed and, if I have anything to do with it, repealed at the earliest possible stage. This is a small country of five million people and we do not need ten regional education boards any more than does the city of Manchester. We need a system of education that delivers where resources are most needed, in the classroom, not in the office blocks. We cannot afford any more mistakes.

In regard to the proliferation of job creation agencies, I was glad Deputy O'Rourke acknowledged the error of going down that path. I am not saying "I told you so" but that departure into a multiplicity of local agencies was one of the most misconceived notions ever to strike this country. Deputies, including Deputy Broughan, must be getting tired from the sheer weight of the post we are getting from all these agencies, each production glossier than the other.

The Minister for Arts, Culture and the Gaeltacht, Deputy Higgins, recently produced a verbose and rather idiotic document on broadcasting policy. I was surprised to get an equally elaborate document from the Combat Poverty Agency, which must have cost many thousands of pounds to publish, drawing to my attention poverty issues in broadcasting. The only poverty issue involved in that is poverty of intellect. We do not need magazines, books and volumes to tell us about poverty issues in broadcasting. This is the madness of Labour in power. A Minister produces a report the size of a telephone directory on poverty issues in broadcasting, most of which was unintelligible to those of us who have to make do with ordinary words——

In the Four Courts.

——at least words mean something in the Four Courts — while another semi-State agency produces a document of equal elaboration on poverty issues in broadcasting. That is an absurd waste of money.

A statement in the report reads: "Further reductions in personal income tax are needed to promote enterprise and the incentive to work". We all agree with that but do we propose to do anything about it?

The answer is "no".

Next January.

Deputy Broughan was told to keep quiet.

The document then suggests that by the year 2010, 80 per cent of all taxable personal income should be liable to be taxed at a standard 25 per cent rate with the remaining income taxable at 40 per cent. With the greatest respect to the authors of this document, which must have been some kind of ideological compromise, that suggests we should take the next 14 years to establish what the Fine Gael Parliamentary Party says can be done in the next budget. Who are we codding?

If taxation has a disincentive effect on enterprise and employment, why should we contemplate postponing arriving at relatively sane tax levels until the year 2010? It either has an effect on employment, enterprise and the will to work, or it does not. If it is the right medicine, it is completely inconsistent to say we should deal with it on an incremental basis that will achieve these results by the year 2010. If taxation is a problem, it must be the case that radical action is needed to deal with that problem.

I want to make a simple point in that regard. Between 1989 and 1992, tax rates came down from 35 per cent to 27 per cent——

The overall tax rate increased. The Deputy should tell the truth.

This is totally unacceptable, Deputy Broughan.

——and the top rate of tax reduced from 58 per cent to 48 per cent. If that kind of change can be made to the tax system in three years, how can it possibly be said we must wait 14 years to achieve a change of lesser significance in terms of the rates?

The report recommends that 80 per cent of people should be on the low rate of 25 per cent, but 60 per cent are already on that low rate. To move people at the rate of 2 per cent or 3 per cent per annum is an appallingly humble target, if I may use that phrase.

I believe Deputy Broughan agrees with me in large measures on the effect of tax on the incentive to work. He is one of the radicals of this Government in that respect but he is in the wrong party. I am not giving him an invitation — he is carrying other bits of baggage that might make it difficult for him to move to my party——

I will consider it over the recess.

——but I know he shares the fundamental thesis I have advocated for the past ten years, namely, that this country must face up to the issue of taxation.

If the Minister for Enterprise and Employment is really interested in this issue, he must face up to the fact that the greatest competitor for jobs in the Irish economy that any small employer faces is the Minister for Social Welfare, Deputy De Rossa. Every day people are forced to make a rational choice as to whether they spend 40 hours a week in heavily taxed employment or opt out of the economy and go back to welfare.

The policies of the loony left.

That is the reason there is an additional 7,000 people signing on this week. It is not because the economy has got sicker in the past month, that it is going downhill or that we do not have a sane system of tax on work: it is that ordinary people faced with ordinary decisions about their own lives have to make a choice and, because of the mad policies we pursue in this country, that choice makes it more worth while not to work than to work. We can argue them this or that way but those are the facts.

As well as low rates of pay.

One way of getting around this problem is to use mechanisms like family income supplement to help those who want to work to overcome the poverty and welfare traps. Another way is to examine the whole culture of unemployment, in particular the young unemployed, and to ask ourselves if we want anybody under the age of 25 to be paid by the State to do nothing. The answer to that question must be "no".

As a community we must face up to the proposition that people in the 18 to 25 years age group should never get a handout from the State on the basis that they abstain from work. The State must offer training, third sector employment and some useful activity to those young people because to tell them they should start down the road of personal despair and ruin, and become a feature of our dole queues, is the most demoralising message the State can convey to them.

Whatever action is taken, whether it is Tony Blair's view of welfare to work, there must now be a system whereby those who are embarking on the labour market for the first time are not offered money by the State as a form of human set-aside not to work during the prime of their working lives. That is the radical challenge we face.

The report deserves serious consideration. It recommends private sector provision of public infrastructure in roads, etc. This has been underplayed but why should the private sector not provide finance for the Luas project or the Dublin-Belfast motorway? The report also recommends demerger and sale of Cablelink. Why did the Government press ahead with the sale of Telecom, including Cablelink, to KPN-Telia——

That was a good deal.

——thus spancelling our capacity to sell off any further significant shareholding in that company?

Debate adjourned.
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