Dáil Éireann díospóireacht -
Wednesday, 4 Nov 2009

Vol. 693 No. 2

Leaders’ Questions.

Deputy Enda Kenny

Will the Taoiseach comment on the live register figures? I listened to the Minister of State say this morning that they were down by 12,000 and that this was an indication that things had bottomed out. The FÁS quarterly economic commentary shows that the number of professionals seeking employment has risen by 84% this year, that one third of men in their early 20s are now out of work and the number of apprentices entering the workforce is down by 60%. In the year to April more than 18,000 Irish nationals emigrated. It is clear also that 30,000 people from eastern Europe have returned to their homelands.

It seems as if the Government's strategy to deal with the unemployment situation is to switch on the tap of emigration and to facilitate longer stays in education. Will the Taoiseach comment on that? Will he indicate what is the Government's jobs strategy to deal with a situation where the live register is clearly indicative of a rising emigration trend and, as Deputy English pointed out the other day, we are again faced with the probability of losing an entire generation of young Irish people to emigration? Will the Taoiseach comment on the figures and indicate what is the jobs strategy of the Government to deal with the issue?

The Taoiseach

The live register headline figures are officially coming out this morning and they are expected to be 412,400. That represents a month on month decrease of 11,200 or 2.6% since September 2009. The decrease is evident across all nationality groupings. One takes no great heart from the fact that we have 412,400 people on the headline total for the live register at the end of October. The unemployment rate is expected to be 12.4%, which is down from the September rate of 12.6%. When seasonal factors are taken into account the live register for October is estimated at 422,400, which is a month on month decrease of 7,000 or -1.6% since September 2009. The year on year increase of 162,000 since October 2008 is 62.3% up on that date.

It is important to point out that the live register sets out those people who are signing on for jobseeker's benefit and allowance, which comes to a total of 245,000 people. Approximately 70,000 people who are on short-time work or are doing casual work are signing on for some part of the week. Then there are people who have cases pending, whose cases have been suspended or who have been disallowed. They come to a total of approximately 78,000.

We have increased by approximately 38% the number of people who have been brought into the employment action plan process this year and more than 55,000 people, approximately half of the people on those plans, have signed off the register. It is important to note that some of those people have obtained work and approximately 13% have gone into training or work experience. It is important that we recognise that of the 55,883 people who were just three months or more on the register who were referred to FÁS under the employment action plan to see in what way they could be assisted, a total of 2,200 were placed in jobs by FÁS, 5,000 were placed in programmes, training or education and 20,495 others left the live register.

There is a lot of churn, and many people coming on and off the register all the time. I wish to make those points because sometimes the headline figure for the live register is taken to be the level of unemployment. The national household survey is the best gauge of employment and unemployment trends in the economy. Deputy Coveney suggested that cases pending are not included and that one then adds on that figure, which is not correct. Cases pending are included in the overall figures, so while things are difficult there is no point in exaggerating to make a political point.

Deputy Enda Kenny

That is all very fine but one of the big failures of the Government is that it has not interacted directly with the creators of employment and the business sector. It is perfectly obvious that many of them are struggling in terms of competitiveness, costs of transport and energy, sterling and the difficulties that are placed in the way of creating jobs and allowing business to flourish. For my part, I intend to take my economic team around the country in the few weeks before the budget to hear their views directly. The figures for redundancies from the Department of Enterprise, Trade and Employment show that there were 5,888 in August, 6,012 in September and 6,561 in October. These official figures from the Department show the trend is increasing, while the indications are that when the tax returns come in at the end of November, there will be a devastating situation in which many of those who are self-employed or are employing small numbers of people will be simply out of business.

This is the first time there has been a serious return to emigration since 1995. It is a long time since the late Brian Lenihan said that Ireland was too small for all its young people, and we have no wish to return to the experience of the 1950s or the 1980s when emigration was a release valve. In any event, there are few opportunities abroad now. In addition to those redundancy figures and the fact that both IBEC and ICTU have criticised the Government's jobs strategy, the OECD report released today states there is a risk that the high rate of unemployment could be sustained due to a combination of weaknesses in activation policies, which is jargon for a jobs strategy. The €100 million stabilisation fund is only a drop in the ocean. I am sure the Taoiseach is interested in finding ways that jobs can be created. Consider all the young professionals, such as physiotherapists, speech and language therapists, occupational therapists and so forth, emerging from university. The taxpayer has paid for their training and high qualifications but there is no future for them in this country in view of the increasing redundancy rates.

We know the Government must deal with the public finances and the banking crisis, and we agree in broad principle with the figures the Taoiseach has given. However, the central issue is that there must be a jobs strategy from the Government. Putting people in programmes and placements here and there is only camouflage for the real problem. What is the main thrust of the Government's job strategy in terms of giving young people hope and confidence that they should stay in this country and that there will be employment for them? How many of these young people can we expect to see in employment as a result of an environment being created by Government in which jobs can be created and in which they can have the prospect of a job in their own country? What are the three major points of the Government's jobs strategy to give young people hope and confidence and to ensure we will not lose this generation with their skills, trades and potential to other countries?

The Taoiseach

The best way to maintain and increase jobs now and in the future is by making the economy more competitive. We must bring back growth into the economy. This year there has been a contraction in the economy of 7.5%, which has been a huge challenge to the system. What we have agreed with other members of the eurozone and what we will set out in our budgetary strategy in the coming weeks will be a preparedness to deal with the deficit, to bring more confidence back into the economy by being prepared to take the necessary decisions now. These decisions must be taken to promote confidence domestically and externally in the country's preparedness to take the necessary steps that will bring back growth into the economy. That is the fundamental issue.

With regard to activation measures or what we have been doing to try to help people who find themselves out of work, we have taken a number of major initiatives this year. The number of people on FÁS training programmes has practically doubled this year, from 66,000 to 128,000. The number of people on back-to-work and back-to-education schemes is approximately 25,000. We are seeking to assist in a number of areas in the stabilisation programme, which has helped vulnerable but viable firms in this country which supply export markets. We are facing a further difficulty with exchange rates as the strengthening of the euro against sterling and the dollar is a big problem. We must continue to deal with that.

However, as I said in the House at the beginning of this parliamentary term, the passing of the Lisbon treaty referendum, the enactment of the National Asset Management Agency, NAMA, legislation and bringing forward a budget are fundamental building blocks for building confidence in our capacity to come through this recession. In the meantime, we must provide extra places for those who unfortunately have lost employment and, in so far as we can, assist them in retraining and provide upskilling opportunities for them. That will be an ongoing challenge next year and in the following years. Yes, an unemployment rate of 12.4% is never acceptable. We are heading into 2010 when we hope growth will start to return to the economy. The first full year of growth is estimated, on current assumptions, to be the following year. However, unless we take the necessary budgetary steps in the weeks immediately ahead, we put at risk our ability to effect economic recovery more quickly. The failure to take those steps increases the risk of prolonging the period in which growth will not return to the economy for longer than would be otherwise the case.

Deputy Pádraic McCormack

Why did the Government not take those steps long ago?

Deputy Eamon Gilmore

No matter how the Taoiseach juggles the figures, the number of people out of work in this country is at a record high, at more than 400,000. There are huge consequences for the people who are out of work, including loss of confidence and self esteem and the sense of hopelessness when one cannot access employment. There are also practical consequences. They must try to survive on the subsistence level of income which they receive under the social welfare system.

Yesterday, the Society of St. Vincent de Paul published its pre-budget submission. Unlike Government Ministers and some of the hardline commentators who wish to inflict more pain on the poor, the Society of St. Vincent de Paul is in contact with people with real problems. The society reports that there was a 30% increase last year in the number of people contacting the society and one out of every four people contacting the society in Dublin is doing so for the first time. The society is now housing 560 homeless people per night in its facilities. It points out that Ireland is the second most expensive country in Europe for food and has the third highest level of poverty. The Society of St. Vincent de Paul concludes that there is no moral or economic justification for cuts in social welfare or pensions. It asks, in particular, that the Christmas bonus payment for people on social welfare, which was withdrawn by the Government this year, be reinstated.

The Labour Party agrees with the society's conclusions. Does the Taoiseach agree that there is no moral or economic justification for cutting social welfare payments and pensions? Does he also agree that the Christmas bonus payment should be restored?

The Taoiseach

While I recognise the wonderful work done by the Society of St. Vincent de Paul, the moral situation we must face is how we can provide a sustainable level of assistance to people who are on social welfare, based on our current economic circumstances. If it is suggested that the choice is that one leaves everything as it is because one wants to be in favour of helping those who are unemployed or dependent on the social welfare system as against another crowd, depicted as the Government, who are against people of that ilk, it is a totally wrong choice to put forward. During the good times we ensured, quite rightly, that people on social welfare received unprecedented increases to assist them. Anybody who looks at the successive budgets will acknowledge the progressivity in those budgets in terms of helping people on low incomes, working families and people on social welfare. We are proud of that record. In the past five years, with inflation of 11.9% since 2004, the basic jobseeker's allowance increased by 37.7% and pensions increased by 51.1%. It was correct that these increases were granted, particularly in view of the resources available to us at the time.

Deputy Pádraic McCormack

What about the €50 million spent on voting machines?

The Taoiseach

However, we now face a completely different situation as a result of a crisis that has developed.

Deputy Pádraic McCormack

The Taoiseach should outline the complete picture.

The Taoiseach

The idea that we can deal with that situation by stating that over 35% of our current spending can remain immune from consideration in all circumstances does not take into account the seriousness and scale of the problems we face.

Deputy Pádraic McCormack

What about all the money the Government squandered?

The Taoiseach

I am interested in providing a solution to this problem which recognises that we must assist the people who are most vulnerable to the greatest extent possible and consistent with a sustainable path forward and a sustainable budgetary position. If we do not have such a position, we will place at risk our ability to maintain the level of supports we would otherwise be unable to maintain if we do not make the necessary adjustments now. That is the truth of the matter and people are entitled to know it.

They are also entitled to know that we will do everything we can in the context of providing a response to the problem that is as fair as possible. However, I do not accept the idea that 35% of total current expenditure should remain immune from any consideration whatsoever, particularly in light of the scale of the problem we face. There is a deficit of 12% and, as previously indicated, an adjustment of €4 billion will be required simply to stabilise this in 2010. That is the nature of what we are facing.

In the past we were able to provide — and rightly so — increases that were three, four or sometimes five times the rate of inflation. However, interest rates are now lower and, for the first time since 1931, prices are falling.

Deputy Noel J. Coonan

They are not the only thing falling.

The Taoiseach

Last year we provided a 3.5% increase. I acknowledge that this is a difficult matter for anyone to be obliged to deal with. During the good times, however, when resources were available we ensured——

Deputy Pádraic McCormack

The Government wasted the money.

The Taoiseach

——that money was provided to the categories to which I refer, and rightly so. We now face a situation where, if we want to maintain levels of support into the future, we must discover a sustainable budgetary position and policy. The idea that 35% of the total current spend should remain immune from consideration does not take into account the scale of the challenge we face.

Deputy Eamon Gilmore

The Taoiseach did not answer the question I asked. I do not disagree with the assertion that the budgetary position must be stabilised. However, there are choices to be made.

Deputy Michael D. Higgins

Hear, hear.

Deputy Eamon Gilmore

One of the choices the Government appears to have already made — the Minister for Finance referred to it — is to rule out any tax increases for the super rich. The Government is not applying the same principle to reducing the incomes of the people who are at the lowest end of the scale. I refer here to those who are on subsistence incomes. Due to the fact that they cannot survive on those incomes — which are provided by the State — the people to whom I refer are being obliged to approach charities such as the Society of St. Vincent de Paul. These individuals are facing up to the human consequences of the economic problem.

When it comes to making a choice, the Taoiseach does not have a difficulty in stating that he will do what is needed in order to protect the interests of people who are very rich and that those who are poor will be obliged to face the consequences.

Deputy Micheál Martin

That is outrageous.

(Interruptions).

Deputy Eamon Gilmore

The Government had no difficulty in coming forward with a formula to deal with the banks under which it is paying more for the bad debts of those institutions than those debts are worth.

Deputy John Cregan

Rubbish.

Deputy Eamon Gilmore

However, people who are on pensions, those from whom the Christmas bonus has been taken and individuals who have lost their jobs and who are trying to survive on minimum incomes that they are going to be obliged to carry the can for what has happened.

(Interruptions).

Deputy Timmy Dooley

How did they obtain their jobs in the first instance?

Deputy Eamon Gilmore

That is unfair and it is not the way to proceed. The approach being taken will divide society in such a way that it may take decades for it to recover.

The Taoiseach

I do not accept the contentions made by Deputy Gilmore and I wish to make a number of points in reply. I had a discussion with Deputy Kenny a few moments ago regarding the importance of providing employment in order to avoid the possibility of people's incomes falling.

In the budgets introduced in October 2008 and April of this year, we increased personal taxation to a considerable degree in an effort to shore up the position while we awaited a full review of all expenditure programmes. The latter will form the focus of many of our deliberations in the coming weeks. We increased taxation but the yield is down and unemployment has risen. If we move to a higher rate of tax of 54% as has been suggested, the marginal rate will be 63%. Are people of the opinion that this will assist in maintaining jobs that are already under threat? Are they of the view that it will ensure that people return to work more quickly?

One can make a comment and obtain a certain circulation in respect of it. However, we face a situation where employment is under threat and where we are trying to improve job security and ensure that the productive sector of the economy can be maintained. We know that export-led growth in a more competitive economy is the best way of creating jobs, extricating ourselves from the difficulties we are in and creating growth in the economy. The latter is fundamental for providing money for all public services, including those available to social welfare recipients. If the locomotive's engine is not running properly, it is not possible for it to pull the train.

The idea that there is a monopoly of compassion on the opposite side of the House and that compassion does not exist on this side is not true. What I and the Government are trying to do is ensure that we can maintain jobs to the greatest extent possible. Thankfully, there are still, according to the most recent national household survey, 1.9 million people in employment. I accept that 245,000 people are drawing jobseeker's benefit or allowance on a full-time basis and that 70,000 others are drawing these on a part-time basis. Approximately €500 million of the social welfare budget is being allocated in order to assist those engaged in casual and part-time labour to retain their jobs.

If we recognise that jobs and growth are fundamental requirements and that they must be restored quickly in order to assist us in dealing with our economic problems, then we must be very careful to ensure that we do not take decisions in the short term which will place those jobs at greater risk. It is false to suggest that we have a choice with regard to taxing one area or not spending in another. We must examine the overall position and make a decision to retain jobs.

Deputy Pádraic McCormack

What has the Government being doing for the past two and a half years?

The Taoiseach

To the best extent possible, we must also maintain the position of those on low incomes. There is a 12% deficit in respect of the current account. In light of the cyclical nature of things, when growth returns to the economy that deficit can be dealt with over time. However, there is also a structural deficit in the economy——

Deputy Joan Burton

Which the Government created.

The Taoiseach

——which must be dealt with.

Deputy Eamon Gilmore

The Government is responsible for that deficit.

An Ceann Comhairle

The Taoiseach, without interruption.

The Taoiseach

In the context of the deficit and what we are spending compared to what we are in a position to earn——

Deputy Pádraic McCormack

What has the Government being doing for the past two and a half years?

The Taoiseach

——there is a gap which must be closed.

An Ceann Comhairle

Deputy McCormack should cease making interruptions.

The Taoiseach

In attempting to close the gap, it is necessary to consider all areas of expenditure. The size of the problem is such that the idea that we can exclude 35% of the current spend from consideration is unacceptable. There are those who say that the social welfare budget should not be touched, while another constituency is stating that the €19 billion in public service pay and pensions should be immune from consideration. In such circumstances, we must consider the remaining €15 billion which is used to provide the services on which members of the public depend. Are people seriously suggesting that we can obtain a €4 billion adjustment out of that €15 billion? That is not an option. As a result, we must consider everything.

Against the background of our purchasing power this year — during which we increased social welfare payments by 3.5% and which has been marked by an increase in inflation of 4.5% to 5% — we must, therefore——

Deputy Emmet Stagg

Target the poor.

Deputy Eamon Gilmore

The poor must pay.

The Taoiseach

No. I am simply making the point that in that context and in this year alone, purchasing power was approximately 8.5%.

Deputy Emmet Stagg

The Taoiseach is saying that the poor must pay. God help them.

The Taoiseach

When we bring forward our budget and when those opposite frame their alternatives, we must all consider what is the sustainable way forward. In light of the fact that up to the end of October the total revenue accruing was €26 billion while the social welfare bill alone stands at €21 billion, are the Deputies opposite suggesting that it will be possible to maintain all payments into next year regardless of the consequences? Are they also suggesting — demands were made of me earlier in this regard — that we should increase jobs, provide further job security, boost exports and bring the public finances back into order?

Deputy Ulick Burke

The Taoiseach should throw his hat at it.

The Taoiseach

That is not possible and the Deputies opposite are aware of that fact.

Deputy Pádraic McCormack

Is the Taoiseach sorry he did not take action sooner?

(Interruptions).

An Ceann Comhairle

That concludes Leaders' Questions.