Vol. 696 No. 4
38 Deputy Kieran O’Donnell asked the Tánaiste and Minister for Enterprise, Trade and Employment if she has encouraged the Department of Finance to make available loans to small to medium-size enterprises through a good bank or through the current banking system; and if she will make a statement on the matter. [44569/09]
66 Deputy Lucinda Creighton asked the Tánaiste and Minister for Enterprise, Trade and Employment the action she is taking to aid small businesses, in view of the drop in receipts for income tax from the self-employed; and if she will make a statement on the matter. [44583/09]
68 Deputy Michael Creed asked the Tánaiste and Minister for Enterprise, Trade and Employment if she is satisfied that the banking sector is providing adequate credit and overdraft facilities to small and medium-sized enterprises; and if she will make a statement on the matter. [44526/09]
I propose to take Questions Nos. 38, 66 and 68 together.
As I have outlined to the House in recent months, in supporting small and medium-size enterprises, SMEs, the Government's focus has been on actions to sustain a positive business environment, including the proper functioning of the banking system, allied with specific targeted supports for SMEs through my Department's enterprise development agencies.
Developments in the financial sector and wider economy during the last year have broadened the concerns for SMEs in terms of gaining access to finance and bank credit. My Department and I have held regular meetings with the representative bodies of the SME sector and other stakeholders regarding issues impacting on the sector. The Government established the round table talks on access to bank credit and subsequently the credit supply clearing group, with a dedicated e-mail contact point on my Department's website to deal with access to bank credit issues specifically.
We are all aware of SMEs' difficulties in accessing credit. We want to collate the information and present it to the banks in a scientific manner by way of explanation of those difficulties. Every Deputy who speaks in the Chamber highlights the issue, but we need detailed information. This has been forthcoming, including from Deputies.
The Government has focused on creating a fit-for-purpose banking system and has taken actions to sustain the banks and facilitate the flow of credit to the wider economy to ensure that all banks are effectively good banks and can provide the normal range of services to business clients. The bank guarantee and recapitalisation schemes, the nationalisation of Anglo Irish Bank and the passing of the NAMA Act are all aimed at this. The NAMA Act has been further strengthened by the Government amendment providing the Minister for Finance with a power to issue guidelines to the participating institutions in the NAMA process on lending practices and procedures to improve the flow of credit to small and medium-size enterprises and, if necessary, to other sectors.
There has been a major downturn in the global economy. We are in an international recession and our export markets in some areas have shrunk. The weakness of sterling vis-à-vis the euro is putting considerable pressure on particular sectors of the economy. We also had impaired banks and balance sheets. Let us be honest — accessing credit on international markets and allowing a flow of credit into the SME sector has proven difficult for banks since last year’s bank guarantee. However, there has been a reduction in the demand for credit, as has been borne out by the Mazars report. Another Mazars report on a more up-to-date analysis of lending practices and the flow of credit into the SME sector will be published soon. This is a major difficulty. If credit dries up, it can cause the economy to grind to a halt. The banks have been recapitalised. Now that NAMA is in place, the impaired balance sheets can start to be addressed. Responsible lending practices are needed to ensure there is a flow of credit into small and medium-sized businesses. If businesses that are struggling, but are potentially sustainable over the short to medium term, can get to the other side of the downturn, they will be in a position to retain as much employment as possible.
Everybody accepts that the small and medium-size sector is the backbone of the economy. There is a very strong innovative and entrepreneurial instinct in Ireland. The strong yearning of the Irish people to set up businesses on a regular basis has been fostered at every level, primarily by agencies like the county enterprise boards and Enterprise Ireland. As I said in response to a previous question, such bodies are very supportive of those who are spawning enterprise, innovation and research. We are very conscious of the need to continue to do everything we can in this regard. We met representatives of the banks last week to discuss how European Investment Bank money can be pushed into the economy. The officials in question will be able to go back to the European Investment Bank, which has said it will make further moneys available at preferential lending rates.
The Minister of State has said he is doing everything he can. He mentioned that round-table meetings are being held to collect information, etc. He did not acknowledge the truth of the problem — the reality of why it is the way it is. The European Investment Bank money is new money. The real problem we have is with working capital. The long-standing overdraft facilities of businesses are being reduced, removed or turned into loans. Businesses are being told that the margin on their interest rates over the EURIBOR is being increased. Some charges that were refunded to businesses in the past are not being refunded anymore. Charges are being increased and cheques are being bounced.
These problems are associated with working capital, by and large, rather than with new lending. This is happening because the banks are bust. That is the truth of it. It is not necessarily badness on the part of the banks. The banks' developer loans are not working. Just 65% of their small business loans are performing. Their personal loans and their mortgages are in serious trouble. The banks are bust. No round-table meeting or other information-collecting mechanism will make a difference. Does the Minister of State not agree that the only thing the Government can do to restore credit to business is to establish a new bank from scratch and capitalise it with State money so that it can lend to business?
That is obviously the Deputy's party's view on how to get credit flowing into the broader economy. We all accept that the banks had impaired balance sheets. As I said at the outset, they were unable to access money in the wholesale money markets.
It will get worse and worse.
There was difficulty in that regard.
People will default on their mortgages next year.
Regardless of what else was done, if the impaired assets had not been removed from the balance sheets of the major banks——
The personal loans and business loans have not been removed.
——they would have been unable to access——
The only loans to have been removed are those of the big developers.
——any further moneys through the wholesale money markets and lend it into the broader economy. The Deputy is right to assert that issues with short-term working capital are creating major difficulties, such as reductions in overdraft and current account facilities. Such issues are having a huge impact on small and medium-sized businesses. As their cash flow reserves are gone at this stage, such businesses are having to work off current accounts and overdrafts. The inclination of the banks to reduce overdraft facilities over a short period of time is putting huge pressures on small and medium-sized businesses. It is essential for the members of the credit supply clearing group to meet and to the correct information. The group was established to discuss these issues, highlight the difficulties that exist and collate all the information. If people have difficulties, they can bring them to the attention of the group. I assure the Deputy that I am like a mini clearing group, in the sense that people contact my office every day to discuss the difficulties they are having.
Do they get answers?
They are referred to the credit supply clearing group.
It would be great if the Minister of State were in power, as he would then be able to do something about it.
I advise the Deputies opposite who receive such queries to refer them to the credit supply clearing group. If they want to deal with them personally, they can do that instead. We are conscious of the importance of this fundamental issue. The Deputy knows as well as I do that regardless of what else happens, we need to have functioning banks that can access money. Fine Gael believes that a nationalised bank should be established. We believe that what we have done will stimulate the supply of credit into the economy. Small and medium-sized businesses will suffer, unfortunately, if there is no demand for goods and services. Both sides of the economy have to be stimulated.
Does the Minister of State accept that the functioning of NAMA will not have an impact on the banks for at least another year? We will have to wait until the autumn of next year, at least. Does he accept that the representatives of Enterprise Ireland who are working with the banks are not operating as they should? As Deputy Varadkar said, the banks simply do not have any money to give. Does he accept that the banks are lying when they say they are giving loans to business and meeting their responsibilities? They are not doing so. Is it not the case that we will have to wait for another year before something practical happens to create a credit stream to small and medium-size enterprises? Surely the Government can do something practical to make it happen.
Many things are practical. We have to live in the real world as well. The difficulty is that there has been a global downturn. We have a recession in this country. There has been a contraction of the economy. There has been a drop in demand for credit. Equally, there has been a drop in demand for the goods and services offered by small and medium-size businesses. The Deputy also asked about the extent to which Enterprise Ireland is working with the banks. The Tánaiste is in discussions about the establishment of a forum, comprising representatives of the banks, Enterprise Ireland and other stakeholders, to discuss these issues again. In the meantime, Enterprise Ireland is discussing these issues with the banks on a continual basis.
It is not working.
Another issue of concern was identified by the Tánaiste and others at an early stage is the availability of skills levels in the banks. For many years, the banks offered loans on the assumption that they had securities in the form of rising property prices. Businesses now have to be assessed on the basis of profit and loss accounts, balance sheets and business plans. As a consequence of the different lending and banking practices that were in use until recent times, some of the banks do not have the skills sets they now need. We are continually trying to address the system. The reality if that if we had not guaranteed bank deposits this time last year, at a very precarious time, we might not be talking about the banks at all because they might have capsized. Although the banks have steadied the ship, we are not yet out of the woods. Dubai, for example, recently defaulted on a sovereign loan.
Dubai is the best economy in the world, according to a former Taoiseach.
Regardless of whether we like it, the major difficulties that continue to exist internationally are having an impact on this country.
Is AIB represented on the round-table group to which the Minister of State referred? An official from AIB told the Joint Committee on Finance and the Public Service last week that little or no money would come through to small businesses on foot of NAMA. We all thought the intention behind the establishment of NAMA had been to allow money to trickle through. Is that attitude shared by the banks that sit at the round table with the Minister of State?
All the banks are represented on the credit supply clearing group, which has been up and running for some time. The Tánaiste is establishing a forum, on which all the major banks and stakeholders——
Will AIB be included on that too?
We always take care of AIB.
All the banks that are covered by the guarantee will be included. Other stakeholders from broader industry, as well as representatives of bodies like Enterprise Ireland, will be represented too. Public interest directors have been appointed to the banks. There have been personnel changes within the top echelons of the banks. The first priority was to stabilise and capitalise the banks and remove the impaired balance sheets. Now we can deal with the real issue, which is the need to get credit flowing to the small and medium-sized business sector.
That is the only area that has not changed.
I would like to ask the Minister of State about the second Mazars report, which is being compiled by the Department. Will he insist that the report contains a breakdown of new and existing funding? The first Mazars report dealt purely with the amount of money — €32.4 billion — that had been given as credit to small and medium-sized enterprises by a certain date. It gave the relevant figure six months after that date, but it did not break down the figures to highlight the extent to which overdraft facilities are being withdrawn. It did not state whether rolled-up interest was included in the €32 billion figure on the later date. When representatives of AIB appeared before an Oireachtas committee recently, they said they had no problem with providing such a breakdown between new and existing lending. Will she insist that the most recent Mazers report, when completed, will have a breakdown showing the level of funding being provided to existing businesses?
Today Dell announced it is selling its plant in Poland. The Tánaiste is in the House today. It is critical that she should provide an assurance. Has she sought an assurance from Dell on the implications of that sale for the Limerick plant and the 1,000 jobs still there? Furthermore, will the Minister go back to Europe and ask the EU about the matter?. It allowed €54 billion to be given by the Polish Government to allow Dell establish the plant in Poland.
That is outside the scope of the current question. As the Deputy knows——
If that approval had not been given we might still have the jobs in Limerick. Has the Tánaiste sought an assurance from Dell that there will be no implications for——
The Deputy should not ignore the Chair.
——the jobs that remain in Limerick? These are critical questions. This has just been announced. The manufacturing base is now gone, totalling almost 2,500 jobs.
The Deputy is anxious.
I would like the bolted doors and the Mazers report to be dealt with and the Tánaiste should deal with the Dell issue.
No doubt the Deputy is anxious about this. It is a very serious matter and worthy of a request for the Adjournment debate or as a Special Notice question.
This has just been announced on the public airwaves. I would like the Tánaiste to deal with it.
Tomorrow is the day to do that. The Deputy should not expect to be able to juxtapose a question in the middle of Questions Time.
This has huge implications. I want the Tánaiste to give an assurance.
That is why it should be dealt with in a proper way.
I note the Deputy's concerns on this issue. With regard to the actual question, I can only oblige Standing Orders. Forfás is working with the Central Bank as we speak, analysing the credit supply going to small and medium-sized businesses.
They are not lending.
The Deputy asked the question.
We are all well aware of the difficulties. Sometimes banks reduced overdraft facilities and provided term loans but that was not an increase in credit to small and medium-sized businesses. We know what was happening. Now we want to get Forfás and the Central Bank together to analyse this.
Mazers 2 is also in there, assessing the credit demand. Let us be honest. There has been a drop in demand. The first Mazers report clearly pointed out there was a drop in demand for credit simply because there was a contraction in the economy. Companies and small and medium sized businesses that need to access credit, based on sound business projections and balance sheets, profit and loss statements and all that is done in normal everyday businesses, should be supported. We are trying to ensure the banks do that and are monitoring it in that context, through Mazers. Equally, Forfás is working with the Central Bank, analysing the type of credit that is being extended to small and medium-sized businesses.
I call the Tánaiste to speak on Dell.
I know the Deputy rightly regards this as a very serious matter but is cannot be juxtaposed in the middle of other tabled questions.
It is hugely relevant.
39 Deputy Enda Kenny asked the Tánaiste and Minister for Enterprise, Trade and Employment her views of the provision of export insurance by the State for Irish companies trading abroad; and if she will make a statement on the matter. [44553/09]
50 Deputy Arthur Morgan asked the Tánaiste and Minister for Enterprise, Trade and Employment the composition of the representative group of companies that were engaged by a company (details supplied) in their assessment of credit insurance issues; the size of the companies; the sectors in which they are involved; the markets to which they export; the number of exports insured; the back-up plans that are in place for enterprises if insurance companies fail to provide better levels of cover; if a negligible number of jobs would be supported by a State-supported export credit scheme as claimed by the assessment; and her views on whether this would be more beneficial than putting persons on the live register and leaving indigenous exporters without the opportunity to expand to new markets. [44332/09]
73 Deputy Paul Connaughton asked the Tánaiste and Minister for Enterprise, Trade and Employment if she will establish an Exchequer supported export credit insurance scheme; and if she will make a statement on the matter. [44517/09]
74 Deputy Caoimhghín Ó Caoláin asked the Tánaiste and Minister for Enterprise, Trade and Employment the progress made in investigating the merits of a medium-term export credit insurance scheme as part of the forthcoming action plan on trade, investment and tourism; when the plan is due for publication; when the scheme will be introduced; the eligibility criteria that would be attached to the scheme; and if she will make a statement on the matter. [44334/09]
87 Deputy Arthur Morgan asked the Tánaiste and Minister for Enterprise, Trade and Employment if, in view of her decision not to introduce a short-term State-supported credit scheme, she has examined, analysed and investigated other EU countries such as Hungary, Luxembourg, Denmark, Finland, Germany, the Netherlands, and France which have supported the credit insurance market over the past 12 months; the conclusions that were drawn from the investigation; the reason this model will not be applied here; and if she will make a statement on the matter. [44333/09]
I propose to take Questions Nos. 39, 50, 73, 74 and 87 together.
As part of the forensic analysis of the Irish credit insurance market I commissioned last July, KPMG consulted both large business groupings and also a range of individual companies which embraced a wide spectrum of business sectors, including the food sector, engineering and plastics. These companies operated in a range of export markets and involved various patterns of exports. This engagement enabled the consultants to get first-hand knowledge of the experience of companies in seeking export credit insurance cover.
The KPMG report established that only a very small level of Irish exports are insured, that the existing cover is heavily concentrated on a single sector and a single market, that total withdrawals of cover are much more prevalent than reductions. It also found that the introduction of a State-backed short-term top-up scheme, where the risk period is less than two years, and where the market is prepared to provide partial cover, would be expensive and of very limited impact, and that a negligible number of jobs would be supported by such an initiative. In addition, it was established there are indications that this market is showing signs of recovery and that insurance companies should therefore begin to provide better levels of cover from now on. Accordingly, based on the overwhelming weight of evidence in the KPMG report, the Government decided that a State-supported scheme of short-term export credit insurance should not be introduced.
It must be appreciated that in these difficult times the Government must assess very carefully whether new proposed schemes and initiatives justify the expenditure involved. In this case, it clearly would not. As the KPMG report established, significant ongoing costs to the State would arise. Annual costs in respect of quite a low level of intervention would be about €1.7 million and this cost would rise to tens of millions of euro if risk profiles shifted upwards.
In any event, the wider issue of credit availability for business is much more significant for business and work is underway to address this, as part of the bank recapitalisation process. In addition, schemes initiated by the Government earlier this year, such as the enterprise stabilisation fund and the employment subsidy scheme, have been established.
With regard to the fact that other EU member states have introduced State-supported schemes, this development was fully considered. Under EU State–aid rules, each such scheme must be approved by the European Commission and such approvals have included a condition that the level of premia to be paid by companies under any such scheme, should be a multiple of regular premium levels. These high premia have made such schemes very expensive for business and, as result, take-up has been less than anticipated. In some cases other restrictive conditions have also been imposed, for example, the destination countries that can be covered. In several countries, including France and the UK, the schemes had to be altered in order to encourage companies to avail of them. Last month the UK Government signalled its intention to discontinue that scheme at the end of this month, because there are now signs of market recovery.
The KPMG report also suggested that we should investigate a possible medium-term intervention. This is very distinct from short-term cover, where the risk period is less than two years. It should be appreciated that most Irish exports do not fall into the medium-term category, which caters more for large projects or infrastructural goods and services, but this may be relevant to some companies. I am considering this option in the context of the action plan for trade, investment and tourism, which is being prepared at present, as recommended in the smart economy strategy. It is not possible at this stage to give an exact date for anticipated completion of this work and the publication of the plan, although significant progress will have been made by the end of the year, with an expected final draft to be presented to the Cabinet committee on economic renewal very early in the new year.
I am disappointed by the answer but shall stay calm this time. The Tánaiste is dealing with the medium-term companies----
The Chair is very impressed.
Is it open to those companies coming in under the two-year limit, which are unable to achieve export insurance through a banking system and for which the Government will not provide, to come forward if they have a suggestion or a way out to discuss same with a person in the Tánaiste's Department, or with the Revenue? I have come across some cases in which companies are selling to somebody else based in this country who then sells on and does the exporting. However, that has tax implications with regard to the destination countries. As the Tánaiste knows, when the material reaches the foreign country duty will be put on the Irish price. If people are faced with that scenario can they approach Revenue to try to arrange an agreement? If they have other ways around this, in the absence of a Government-backed scheme, is the door open to other ideas and short-term initiatives that might help work through the problem?
We are very open to this. An attitude has slipped into this House which I do not like, namely, the notion that just because a person is not in the same party he or she cannot come and talk to Ministers about ideas. It is very important that we share those ideas. If there are issues of personal circumstances we would be more than happy to do what we can. We speak to the Revenue Commissioners to see if we can facilitate people in the context of the overall picture.
The Minister of State, Deputy Conor Lenihan, and I have been discussing the overall trade package with the Minister of State, Deputy Kelleher. I see merit in the context of the medium term where we are looking at export potential in new emerging markets. This is what we are doing. If we are going to have economic recovery and growth it will have to be based on exports. There are risks in certain parts of the country. As long as these are not completely adverse, I feel there is merit in looking at a credit insurance scheme. The short-term measure, namely, €1.7 million means 66 jobs.
The other concern I would have, which I articulated recently to the joint committee, is that only four companies are involved in this insurance. That, in itself, is very restrictive for companies. Equally, until we had these present difficulties, some companies did not realise they were insured and it came as a bit of a shock to them when the cover was taken away.
If the Deputy has a particular issue he should give it to any of us and we will look after it for him.
I hope the Tánaiste has a big pot of tea on in her office because I am sure there will be a procession of people.
I have good Irish tea bags, a choice of two.
Will the Minister give the House any indication as to the composition of the representative group of companies that were engaged by KPMG in its assessment, particularly with regard to the size of those companies and the sectors from which they came? She might provide an outline so that we may be able to understand whether it is a representative group.
The difficulty with taking four or five questions together is that it is difficult for the Minister to reply to them and for us to tease out each one. When is the action plan on trade investment and tourism due for publication? Will the scheme be introduced and what will be the eligibility criteria? I refer to Question No. 74.
Question No. 74.
If the Minister wants to deal only with the composition of the KPMG group of companies, she may do so. Was it a representative group?
I fully understand that the Minister needs to group similar amendments but it makes it very difficult to tease out individual questions.
Yes, there are a number of questions being taken together. I will call the Deputy again.
We had a very robust analysis. KPMG was involved with the UK credit insurance scheme so we were using some of its knowledge. We were operating from a different base than the United Kingdom at the time. We carried out a forensic analysis and we have a comprehensive picture of the market. Only 4% of Irish exports are insured. The existing cover is heavily concentrated in one sector, the food sector, and on a single market, the United Kingdom.
There was much consultation and several dozen companies were involved. I met the farmers and representatives of the Irish Exporters Association and a number of the big food companies. Enterprise Ireland was very much involved and used a cohort of its companies. The plastics sector was included also. We had a broad inquiry and we had considerable in-house knowledge on the basis of several meetings I had with many people.
It seems the companies were all big. Were there any SMEs at all?
SMEs were very much involved also. The SME sector, in itself, is not large in the context of obtaining credit insurance.
I met some of the smaller foreign direct investment people who do not insure themselves but one should note it was some of the raw materials that were being imported that were not being insured. This created some difficulties in itself and we had to meet some people about it. The analysis was very robust because people were considerably and rightly agitated by the issue. It is important to note that only 4% of companies were insuring exports.
I am not so sure about that. We are always talking about encouraging SMEs to export and to balance business, yet companies I know that want to do so have no export insurance available to them.
I understand the point the Minister makes on risk but if she is to develop the export market, she will surely agree we need some kind of export cover for companies. If we want them to create jobs and revive the economy, we must realise the bigger opportunities are in the international markets. Does the Minister accept companies are afraid to operate without export insurance and that this matter is worth serious consideration?
I do not disagree on the role of the SMEs in the export sector. That is why the plan we have will be international and will focus on our trade opportunities. Tied to it will be the export credit insurance scheme, which will be very complementary.
Another issue raised is equally appropriate for consideration. I was asked whether I would publish the report. I am not in a position to do so on the basis that I and KPMG had to sign a legally binding confidentiality agreement with the insurance companies in order to obtain the information we needed. Unfortunately, the information is not available because of its sensitivity. However, the Deputy can rest assured that I was forensic in my questioning of KPMG in the context of what happened. We have noticed that even the French scheme has not worked very well. The United Kingdom has withdrawn and the operation has turned out to be very expensive. The age of cheap money is gone and there are other methods by which insurance cover can be obtained through the banking sector. I hope the market will come back into force and provide further cover.
40 Deputy Seán Barrett asked the Tánaiste and Minister for Enterprise, Trade and Employment the number of times the task force on unemployment has met; the Ministers that attended in each case; and if she will make a statement on the matter. [44503/09]
The high-level group on labour market issues was established under the provisions of Towards 2016: Review and Transitional Agreement 2008-2009, which was ratified in October 2008. The high-level group is chaired by the Department of the Taoiseach and comprises two representatives from each of the social partner pillars and senior officials from several Departments. The group met in January of this year. A framework for a pact for stabilisation, social solidarity and economic renewal was negotiated with the social partners in late January. This pact covered a range of areas, including maximising employment and helping those who lose their jobs.
Members of the high-level group were also among the participants in a meeting held on 24 September 2009 to provide suggestions arising from the practical experience of active labour market programmes. The ideas raised on that occasion are feeding into current work in the area of further activation initiatives.
The Cabinet sub-committee has co-ordinated a range of innovative and significant actions for protecting jobs and assisting those who become unemployed to return to the labour market. Labour market issues have been discussed at ten of the Cabinet committee's 14 meetings.
The new actions include doubling of the provision of training and work experience places managed by FÁS to over 130,000; increasing the referral capacity of FÁS employment services from the Department of Social and Family Affairs to 147,000 persons in 2009; and establishing the employment subsidy scheme to protect, directly or indirectly, over approximately 80,000 jobs at a total cost of €135 million over 2009 and 2010. I assure the House that the area of employment, in all its facets, is a central priority for the Government.
I understand from the Minister's reply that the group met only once, last January, and that no Ministers are members. It is chaired by the Taoiseach.
The Department of the Taoiseach.
There is no ministerial representation at all in the group and it has met only once. I cannot believe this at a time in which unemployment is increasing rapidly and affecting young people under 25 in particular. To whom does the group report? When was it established? The Minister stated it was established under the provisions of Towards 2016: Review and Transitional Agreement 2008-2009. That the group has met only once is extraordinary, certainly at a time when the unemployment rate is so high.
As I indicated, it is part of the social partnership programme. The group has been superseded by the Cabinet sub-committee on economic renewal, which has discussed labour activation measures at every meeting. The group is a high-level group and is made up of officials. It is not a ministerial group. The ministerial work is done through the Cabinet sub-committee. The work of the high-level group feeds into that of the Cabinet sub-committee in addition to other areas.
It has met on only one occasion.
What is happening is that its work is being superseded by the work of myself, the Minister for Social and Family Affairs and the Minister for Education and Science.
Is there any point in having the group at all?
It is a part of the social partnership group. What has happened arising from that——
Is it a sop?
No. There was a meeting in September 2009 to analyse the labour market activation programmes. The committee had points to make on these yesterday and I will be taking them on board in the context of quality assurance. It is important to reiterate that the group has been superseded by the Cabinet sub-committee, which has met almost every fortnight. All these matters are discussed at political level and implementation is carried out by the high-level group of senior officials.
There is an awful problem in that there are too many committees and sidebars. If one attends our committee and listens to politicians who are in contact with the people, one will note they are making suggestions every day, as they are paid to do. A profitable step would be to scrap half the committees. Reducing VAT and having PRSI exemptions would actually help to sustain and create employment and address the issue of competitiveness, particularly with regard to Government charges. That is the way forward. There is no need to bring in any more accountancy or legal firms or social partners. It is a landscape which anybody can paint and anyone can put forward solutions. We should have no more committees. We should throw ourselves fully into the one black spot in the country, namely, the current rate of unemployment. As Deputy Varadkar said earlier, half of our deficit is made up of unemployment benefit and social welfare payments. There is a simple solution. Let us all pull the rope the one way and forget about committees.
That is exactly what has happened. The Cabinet sub-committee on economic renewal is now the main committee dealing with all these issues. Competitiveness, energy, tourism and education are all interlinked and are all under the auspices of one Cabinet sub-committee. The implementation of policy is done through the high level group or additional work is put back into the committee. Any decisions must go to the Cabinet for final appraisal. There is one group which is completely focused and is representative of all Departments, depending on the agenda. The activation agenda, the competitiveness agenda and energy are constant issues in the context of the discussions which take place.
Is the Minister telling us it is completely superfluous?
One cannot talk to the social partners every day.
41 Deputy Jan O’Sullivan asked the Tánaiste and Minister for Enterprise, Trade and Employment her views on the recommendations of the special group on public service numbers and expenditure programme that the jobs initiative scheme should cease; and if she will make a statement on the matter. [44605/09]
The jobs initiative scheme was launched in July 1996 and continues to provide full-time employment for people who are 35 years of age or over, unemployed for 5 years or more and in receipt of social welfare payments over that period. The main purpose of the programme is to assist long-term unemployed people to prepare for work opportunities by providing participants with work experience, training and development opportunities. The programme is sponsored by voluntary organisations and public bodies involved in not for profit activities.
Following changes introduced by the then Minister for Enterprise, Trade and Employment, Deputy Martin, on 10 November 2004, no new entrants have been admitted on to the job initiative schemes. However, contracts for existing participants are renewed allowing them the option to continue until they are 65 years of age. Where persons leave the job initiative scheme, that place can be allocated as a community employment place. The full range of FÁS services are made available to participants who leave voluntarily.
The 2009 budget for the job initiative is €39 million and there are currently 1,444 participants, with this number decreasing annually due to retirement and other reasons. The Government will continue to support the positive role of FÁS employment schemes in meeting the needs of long-term unemployed persons while at the same time providing essential services to communities. The operation of this scheme is being kept under constant review in the context of current difficult unemployment.
The jobs initiatives scheme forms part of the Government's response to unemployment. Other initiatives include a doubling of the provision of training and work experience places managed by FÁS to more than 130,000 places, an increase in the referral capacity of FÁS employment services from the Department of Social and Family Affairs to 147,000 persons in 2009 and the establishment of the employment subsidy scheme to directly or indirectly protect approximately 80,000 jobs at a total cost of €135 million over 2009 and 2010.
I compliment the Minister of State on his reply, in particular the skilful way in which he avoided answering the question. He would have made an excellent barrister. The Minister of State knows that the McCarthy report indicated the jobs initiative scheme should be closed as soon as possible, something with which we do not agree, and that €10 million would be saved by off-setting the cost of accommodating the existing 1,400 participants on alternative schemes, compared to a gross saving of some €30 million.
Does the Minister of State have a view on that? If so, what is his position? In a time where there is significant unemployment and solutions, which are well thought out and would contribute to tackling the scourge of unemployment, are ten a penny from the Opposition, why has the jobs initiatives scheme remained closed? It was closed on 10 November 2004 by the Minister, Deputy Martin. Why is such a blinkered approach being taken to a scheme which offers people opportunities? It is a static scheme and there is plenty of room for development.
I remind the Deputy that I am not a barrister, and I am the only member of my family who is not. I have always prided myself on saying that I am the most honest member of the family. We will leave that matter for another day.
We do not intend to finish the jobs initiative scheme. Capped numbers are involved and people are allowed to participate until the age of 65. The Tánaiste referred to the valuable work being done by the committee on economic renewal, of which I am proud to be a part. It is generally recognised by Ministers and Deputies that many of the people who participate in these schemes are doing very valuable work for the communities in which they work.
There is no intention on the part of the Taoiseach, the Tánaiste or the Government to disturb that reality. However, we need to examine other training schemes to get a higher throughput of people because new people are coming forward.
The McCarthy report has been kicked to touch.
I want to be very clear that we are not of the same mind as the McCarthy report, with regard to the savings it predicted could be made from closing the scheme.
The Tánaiste knew what she was saying six weeks ago.
Written Answers follow Adjournment Debate.
