John Bruton
Ceist:5 Mr. J. Bruton asked the Taoiseach if he will report on his recent meeting with the British Foreign Secretary, Mr. Robin Cook. [18926/97]
Ceisteanna—Questions. - EU Employment Summit.
John Bruton
Ceist:6 Mr. J. Bruton asked the Taoiseach if he will report on his attendance at the EU Employment Summit in Luxembourg. [20025/97]
Ruairí Quinn
Ceist:7 Mr. Quinn asked the Taoiseach whether he has raised the issue of the abolition of the internal duty free industry at the Luxembourg Jobs Summit; and if he will make a statement on the matter. [20032/97]
Proinsias De Rossa
Ceist:8 Proinsias De Rossa asked the Taoiseach if he will outline his contribution to the EU Job Summit in Luxembourg; the new initiatives, if any, on unemployment which are expected as a result of the summit ; and if he will make a statement on the matter. [20159/97]
John Bruton
Ceist:9 Mr. J. Bruton asked the Taoiseach the contacts or meetings, if any, he had with other heads of Government at the EU Employment Summit in Luxembourg at which he discussed the issue of the proposed abolition of duty free sales in the EU. [20319/97]
I propose to take Questions Nos. 5 to 9, inclusive, together.
I attended the Special European Council on Employment in Luxembourg on Thursday, 20 and Friday, 21 November. As the Deputies will be aware, I made a statement to the House on Tuesday, 18 November 1997, which set out Ireland's position on the Special European Council. I also placed copies in the Library of the House of the paper entitled "Special European Council on Employment: An Irish Perspective" which I circulated to my colleagues in the European Council before the summit.
The Special European Council was very successful. The Council conclusions, copies of which I have arranged to be placed in the Library of the House, include employment policy guidelines for member states which were endorsed by the Council. These guidelines commit member states to focus their efforts on four key pillars of employment policy, namely, improving the employability of the unemployed, developing entrepreneurship, encouraging adaptability in business and their employees and strengthening equal opportunities for employment between men and women.
While having the necessary degree of flexibility to allow for differing conditions in member states, the guidelines set out reasonably specific targets in relation to interventions by member states especially in regard to the crucial areas of youth unemployment and long-term unemployment.
Member states will now be required to draw up employment action plans within the framework of the guidelines. Member states' performance in regard to the implementation of these action plans will be subject to a surveillance process at EU level. In my view, the guidelines and the follow-up surveillance mechanism which have been agreed will facilitate a more co-ordinated approach to employment policy throughout Europe and will be a stimulus to strengthening efforts in combating unemployment on a national level. This is a new and significant development which will, I believe, improve Europe's employment performance.
From an Irish perspective, many of the programmes we have in place for the young and long-term unemployed are consistent with the guidelines. We will, where necessary, intensify our efforts. Work will also now commence on drawing up Ireland's employment action plan under the procedure agreed. The action plan will be drawn up in consultation with the social partners, reflecting the relevant provisions of Partnership 2000. I envisage that it will spell out clear targets to ensure we maintain or accelerate our progress in reducing unemployment, particularly long-term unemployment.
The Special European Council also agreed a funding package to help foster job creation by releasing additional resources at EU level. These resources will involve additional credits from the European Investment Bank and additional funds to be made available from the European budget. The beneficiaries of these additional funds will include small and medium sized enterprises which have been shown to be a particularly strong engine of employment growth throughout Europe in recent years.
I raised at the Council the issue of the phasing out of duty-free facilities. I pointed out that whilst the conclusions proposed to be adopted by the Council required that all Community policies should be harnessed in support of European employment, abolition of duty free trade would have an adverse effect on employment. My intervention laid down a marker as to the importance of the issue for Ireland and the Government will continue to press the case on this issue.
I met the UK Foreign Secretary, Mr Robin Cook, MP, on Monday, 3 November last. Our discussions focused on EU issues, notably the Special European Council on Employment, Agenda 2000, economic and monetary union and the priorities of the UK Presidency which commences on 1 January next. We also noted the excellent working relationship between our two Governments, especially in regard to the Northern Ireland peace process.
The meeting afforded a very useful exchange of views on EU issues. In particular, I relayed to Mr. Cook Ireland's general approach in regard to the Agenda 2000 issues and he briefed me on the UK position on EMU in the light of the Chancellor of the Exchequer's recent statement on the subject to the House of Commons.
Overall, I believe our meeting, and Mr. Cook's visit in general, has improved mutual understanding of our countries' respective positions on EU issues and has helped lay the foundation for fruitful co-operation during next year's UK Presidency.
When the Taoiseach was Minister for Finance he participated in the decision to abolish duty free sales. Does he agree that if that decision were implemented it could cost up to 2,000 jobs in Ireland? Will the Taoiseach explain why the Minister for Public Enterprise said two or three weeks ago that there is considerable support at the highest level in other member states for reversing the decision to phase out duty free sales while he indicated in Luxembourg that there was very little support for revising that decision in which he participated while Minister for Finance?
This issue was recently discussed in the House and the Minister for Finance gave a very detailed reply. In 1992 I was very pleased that, rather than banning duty free sales from 1 January 1993 as part of the harmonisation of taxes and the single market, the campaign which was led by several countries, including me on behalf of Ireland, managed to get an extension until 1 January 2000, which was a considerable improvement.
They could not have done anything if the Taoiseach had not agreed because it required a unanimous decision. All he had to do was say no.
I am shocked and aghast that the Deputy who understands the EU better than most Members, would not know that was one of the crucial decisions in the context of the single market. We managed to get an extension. It is all on the record.
I spent four years setting it up for the Taoiseach and he dropped it.
I wish the Deputy had done a bit more in the last while when nobody raised the issue.
The Taoiseach is still dining out on what I did.
We got it seven years later.
We must deal with supplementary questions.
The campaign continues, especially at the level of the Transport Ministers among whom there is agreement on the need to endeavour to get some changes made. There is little support at ECOFIN level and there is some, but not much, support at heads of Government level. In recent months, consultants to the Minister for Finance have been preparing a study on the impact of the decision on jobs and this will be ready in due course.
I intend to continue to make the case on this issue for two reasons. First, decisions were made in the context of an ideal Single Market. However, this does not exist because of tax differentials and other disparities. I have made this argument on previous occasions and I made again at the summit. Second, there was an understanding before the decision was implemented that studies would be undertaken by the EU in advance to establish the effects of the abolition of duty free sales. In 1996, the European Parliament ascertained that the EU Commission had taken the view that, since the decision had been made to abolish them, there was no need to undertake these studies. I strongly contest that argument.
At what stage during the summit did the Taoiseach raise this issue? Did he get a response from any of the other Prime Ministers? Did anybody support his case?
I stressed the Irish position and did not seek support. I made my case in the main part of my contribution to the summit, before the heads of Government and where the Irish position would be understood.
Was the matter discussed?
I framed my argument in the context of the employment study in the presence of the heads of Government — it is regrettable that such an approach was not adopted at previous summits — when we addressed the possibility of improving the position of the 18 million unemployed in the Union. I was glad of the opportunity to point out that the only comprehensive EU study on the abolition of duty free sales indicated that another 140,000 people would be added to that list.
What response did the Taoiseach get?
Would the Taoiseach agree that it would be easy for people on all sides of the House to score political points about what happened in the past? The relevant issue is what he will do in the future. Would he also agree that in making a broad presentation to the summit on the Government's position on the employment issue he put down a marker on the abolition of duty free? If so, did he advance that marker in the form of a request to President Santer to initiate the studies which the EU has declined to undertake? Will he indicate if he received support from the Finnish or Greek heads of Government whose representative at ECOFIN have expressed concerns regarding their transport costs to the rest of the EU?
Support offered in the past continues; the difficulty rests with the EU Commission, not with the ECOFIN Council or the European Council.
It does.
The EU Commission has been approached by the industry, the trade unions, some employers, Transport Ministers and other delegations, including ourselves, but it is holding firm. It does not want to change the decision because it believes that to do so would represent a major row back from its concept of the Single Market. It also believes that the original adjustment period, from 1993-2000, was probably too long.
I raised the matter with President Santer and others at the fringes of meetings at the summit. The format of these meetings was not ideal and I hope to raise the matter again in a more formal context. I hope to discuss this matter, Agenda 2000 and EMU at an upcoming meeting which I have been requesting for some time. I also intend raising it again in the context of the meetings on 12 and 13 December.
Will the Taoiseach accept my commendation for admitting the gross error of his ways in 1991-2?
My successful ways.
If it is of any comfort to him I remind him of the text, "There is more joy in heaven over one sinner who repents than over ten just men who do not need repentance." Will he now employ the zeal of the convert in campaigning for this? Does he agree, notwithstanding what he said, that it is a cause for serious concern that Commissioner Monti has only in recent days shown himself to be unbudging on this and will the Taoiseach apply himself to the Commissioner in the same way he contributed to his self-education? Is that where he needs to put in the effort?
At least I am putting in the effort.
I had the Transport Ministers set up for the Taoiseach.
I will follow the advice of Deputy Quinn and not go back too much into the past as it is a very sorry story. I note what Commissioner Monti stated in the European Parliament. Under pressure from members of the parliament, he seemed to claim this is his position but if somebody changes it he is prepared to move on. That is not the technical legal position as the matter rests with him. We must continue to lobby on this question. The decision in 1991-2 was greatly appreciated by the duty free industry across the Community, not only in this country. It was on the understanding, not the agreement——
That studies would be done.
Yes, I looked at the wording very carefully before I went to the summit. I read the entire document last week and cross referenced it. There was a clear understanding and one could not take any interpretation other than that the studies would be done prior to the final trigger. Somewhere along the way the Commission made a decision not to do that. Regardless of what happens and what decision is finally made, it behoves the Commission and those of us who have some voice to make the point that the study should be carried out. We are doing it in the context of our national position but it should be done in the context of the EU. That is a fair line of argument and one which I will push.
If the Taoiseach is not persuaded that 2,000 jobs are at risk as a result of this decision on duty free sales, how many jobs does he believe are at risk if he does not manage to pull it out of the fire?
The only figure I can give is 140,000, based on the only authoritative study carried out by the industry. That is the figure in the documents I quoted from on Friday last. In terms of Ireland the study covered much of the work done by the previous Minister for Finance and followed on by the current Minister and the report will be finished by Christmas. We will then see the position in the context of this country.
An integral feature of the midwest region and Shannon is duty free shopping and there is concern on this issue in Shannon, Dublin and Cork especially. Does the Taoiseach find at European level that he is reminded by his European counterparts of his agreement in 1991-2 and does it make the position difficult that he is seen as inconsistent on this issue in looking for the continuance of duty free sales? As the Minister for Finance, Deputy McCreevy, refused to participate in a recent "Prime Time" programme, would the Taoiseach agree that, even with a study, he is whistling past the graveyard, that he is not really serious and has given up on the cause already?
I will be charitable to the Deputy. The view is to the contrary, that in l992 a number of us got far too much, and the Commission does not want a repetition. That is how the Commission would look at it.
I hope the Taoiseach did not say that in public. That is a hell of a negotiating position. All he had to do in l992 was to say "no".
We are making the arguments we made then. I do not accept what was said about the report for the reasons I stated earlier and because the ideal Single Market that was spoken about at the beginning of the l990s does not reflect itself. Disparities in taxes and duties and other issues mean that the reason for abolishing duty free is not nearly as strong as it was towards the end of the last decade and the beginning of this one. Equally, many countries take no particular interest in this issue.
Is the Taoiseach optimistic? He is pessimistic. He should be honest.
Would the Taoiseach not agree that there is a certain sense of complacency and cosiness about this debate? We are talking about an emerging crisis in relation to transport costs on this island, the only part of the European Union that is not physically connected to the rest of it. According to preliminary studies, there will be serious implications to the extent that in some cases the ferry services on the southern corridor could be discontinued altogether. Is the Taoiseach prepared to give an undertaking to this House that, in view of the strategic importance of the impact of the abolition of duty free on access costs to Ireland as well as on internal employment costs, which are important but secondary, he will raise this with the President of the Commission as a matter of strategic importance to Ireland, and serve notice that Ireland's attitude in respect of other matters will be informed by how well the Commission responds to Ireland's indication that this is a matter of strategic concern and not an academic desire to complete the internal market from the perspective of tax harmonisation?
That is the line I am taking.
It did not come across.
There has been very little support for this issue for a long time but that has not stopped us from continuing to raise the issue. Duty free was very nearly abolished before we got an extension because, to a number of countries, it is irrelevant and they find it hard to understand additionality in respect of Irish industry.
We do not need the Taoiseach to make that case. We need him to make our case.
What is the Taoiseach's strategy?
Fine Gael should have been making the case last year, but did not do so. The strategy is to talk to transport Ministers, ECOFIN, the European Council and the Commissioner and to keep making these points. I do not want to mislead the House. The position is the same now as it was last year. The Commission is holding out on this. I will attempt to deal directly with these issues armed with the report we will have in a few weeks, which will strengthen our argument.
Having listened intently to his reply, I take it all the Taoiseach sought was a derogation. Why was he associated with the unanimous agreement reached in 1991-2? If this decision is to be reversed he should have the active public support of the Minister for Finance. It gives no comfort to see the Minister, Deputy McCreevy, struck dumb on this issue.
This decision had to do with the introduction of the Single Market in 1990.
The Deputy is aware of that. Unanimity was required.
It could not have happened if the Taoiseach did not agree.
He could have said no.
Given the ramifications, that would not have been a bright decision.
(Dublin West): On the critical level of unemployment in the EU, and leaving aside the usual plámás in communiqués and statements by party leaders after such meetings, will the Taoiseach agree that no serious quantifiable action is planned to bring to an end the scandal of 18 million unemployed in the EU? There are vague aspirations but no sanctions are envisaged. What did Chancellor Kohl mean when he said: “One thing is clear concerning public budgets, we will make no decisions which require additional funding”? Is it not the case that the unemployed are taking a poor second place in the gallop to cut back social and public spending to meet the criteria for EMU? Is this not also shown by the fact that the EU will spend the same in direct cash terms on jobs over the next three years as it spent last year in subsidising the tobacco industry which created a product of such inferior quality it could not even be sold in the EU?
The European Commission had a proposal before the summit to create 12 million jobs over five years but it was not agreed. It also had a proposal to reduce the average unemployment rate for the entire Union from 10.6 per cent to 7 per cent but it also was not agreed.
It still remains the Commission's target to reduce the unemployment rate to 7 per cent and to create 12 million jobs. I do not accept the Deputy's assertion that this is all diplomatic plámás. The policies pursued by the EU have led to a great improvement in employment in recent years. In spite of some of the difficulties, the Single Market has broken down trade barriers and is a major contributor to economic growth and employment. This has been the policy of the EU for more than a quarter of a century. Community policies, such as the Common Agricultural Policy and Cohesion and Structural Funds, have contributed directly and indirectly to the creation of employment in member states. Economic and monetary union which is due to come into effect from 1 January 1999 will also assist in this regard.
The guidelines, reporting structures and surveillance mechanisms in the programme will be of assistance as we move forward. In the past people argued the Community was only interested in a monetarist philosophy and fiscal budgets, not growth. The same mechanisms will obtain in creating jobs in that there will be an action plan for employment as there is for economic targets and people will have to meet those plans. That has given a much better focus to the employment issue in the Community than has been the case in the past. I admit the system is not perfect, but it is better than that which existed in the past.
In the Taoiseach's original reply he said that one of the four pillars of employment policy is to improve employability of the unemployed. He referred to extra credits from the European Investment Bank and additional funding from the budget. Does he agree the biggest barrier to re-entry to the workforce for people clustered in the main unemployment areas is low skills, or no skills? Will any of the additional money be devoted specifically to investment in training or retraining of the people in those geographic blackspots?
Following on the point made by Deputy Quinn about ferry services, the position here is already uncompetitive in that ferry fares per mile are far in excess of those in other European countries and the abolition of duty free sales will make that position even more uncompetitive. The European Union wants to abolish duty free sales on grounds of competition, but how can it stand over a proposition where the position would be more uncompetitive as a result of a widening of the gap between ferry fares to and from Ireland, which is dependent on tourism for its viability, and those for other European countries?
In answer to Deputy Rabbitte's question about the European Investment Bank, the money will, by and large, go towards SMEs. In the context of the other funding, the emphasis at the employment summit, and in our document, was on skills shortage, which is rapidly increasing in the European Union. The next question deals with the information society. While there is an enormous number of jobs throughout the Union in the skilled area, there is a shortage of skills. In that context we must concentrate on upgrading the skills of FÁS trainees. Money for that purpose comes from the European Social Fund. That fund must be maintained into the next decade because skills are more necessary now than when we entered the Community in 1973.
A sum of £250 million has been provided for education but, at the lower end of the scale people are dropping out of school early. Many people on long-term unemployment worked in traditional industries and their only opportunity to get back into the labour market is by training and retraining. That point was made by everybody last week. Chancellor Kohl made an impassioned speech on this issue which, from a man of his expertise and years, was enlightening. He spoke about the importance of helping people who are socially disadvantaged.
Deputy Barrett is right about ferry services. In terms of competition, costs must be increased or there must be subsidisation. The European view is that there cannot be subsidisation and, therefore, costs must be increased. To reiterate for the third or fourth time, we have made this argument but many countries on the European mainland are not concerned about it because they do not incur this inbuilt expense in their transport costs. We will continue to make this case.