Vol. 799 No. 4
93. Deputy Seán Ó Fearghaíl asked the Minister for Jobs, Enterprise and Innovation the actions he has taken to promote employment creation in Ireland and in Europe in the course of Ireland's Presidency of the EU Council. [18656/13]
Stability, jobs and growth are the central themes of the Irish Presidency of the European Union. The issue of employment creation is one that is challenging all member states across the Union. During our Presidency we have made progress in a number of areas that can create the right environment for growth and employment. For example, agreement has been reached on the youth guarantee which promises to provide young people with a good quality offer of employment, continued education, an apprenticeship or a traineeship within four months of becoming unemployed.
The European Globalisation Fund co-finances education and training support programmes for redundant workers. The Irish Presidency will continue to progress the draft regulation governing a new funding round for the period 2014 to 2020. Work is also continuing to obtain agreement on the European Union's new €70 billion research programme, Horizon 2020, including the €6.6 billion for key enabling technologies programmes and the proposed €2 billion programme for competitiveness and SMEs, COSME. I will be looking for every opportunity to further the interests of Irish and other SMEs and ensure they can extract the greatest possible benefit from the funding available under these programmes, particularly with regard to expanding the scope for participation in research and innovation activity. Deputies will also be aware that Innovation Fund Ireland and the microfinance fund are part of the measures within the Action Plan for Jobs and these are helping Irish companies to access finance in the current difficult environment.
Together with Government colleagues, I am also working to create a genuine digital single market by building confidence in cross-border transactions and services, including reform of data protection measures and providing a pan-European framework for e-signatures. I will continue to fully engage in the development of the European Union's common commercial policies, which I believe provides a strong stimulus for growth and job creation. Completing the trade agreement with Canada and launching the US negotiations would be an important step in boosting exports. Next week I will host an informal meeting of EU competitiveness and research Ministers in Dublin, the focus of which will be measures to increase employment in the SME sector, including improving access to finance. The recent agreement on the draft accounting directive will see a reduction of the administrative burden on firms.
I ask the Minister to outline the implementation procedure for the youth guarantee. Will his Department or the Department for Social Protection be the lead Department? More importantly, where is the budget line for the implementation of the guarantee? What is the current position on COSME? Is an agreement on a budget for it imminent? At the beginning of the Irish Presidency in January the Minister, the Taoiseach and others put great store in the fact that the Presidency would be a jobs-related one. We are now in the final months of the Presidency, or the final stretch of the marathon. How many jobs will have been created across Europe and here in Ireland as a result of Presidency initiatives?
One should consider the potential of the US trade agreement. If it can be negotiated and successfully launched, the figures indicate that 500,000 jobs could be created across the European Union and, proportionately, 4,000 in Ireland. Obviously, this will take time to deliver. Similarly, completion of the trade agreements with Japan and Canada will be significant in terms of job creation. These agreements could lead to the creation of 2 million jobs in Europe. The completion of the digital market has been estimated to have had a very significant impact. A figue of up to 4% of GDP could be generated by having an effective digital market. Many of these initiatives have associated job targets, but they tend to be longer term, pending completion of a range of measures.
A fund of €6 billion has been earmarked for the youth guarantee scheme for the 2014-20 period. As the fund is for areas such as apprenticeships and job placement, the primary initiative will be with the Departments of Education and Skills and Social Protection. COSME has a budget of just over €2 billion and a formal set of proposals will be developed.
We have been talking about this issue since the formation of the current Dáil. We are seeing a lost generation of young people leaving our shores. People have referred to the reduced voter turnout in the Meath East by-election, but if one looks at the statistics, one will see that approximately 5% of the electorate have left the constituency owing to emigration. This shows how serious the jobs issue is.
Will funding for the youth guarantee scheme be dependent on the European Union? When will the scheme happen and is the Government of a mind to push ahead with a youth guarantee scheme if there is no EU funding or if there is a waiting period? We made a strong point at the joint committee that a youth should not just be provided with training and reactivation programmes but that a job should be part of the opportunity.
A job.
Yes. It should not just be about putting people on schemes but actually getting people back to work.
Over 40,000 jobs have been lost in the retail sector since 2008 which shows that there is a direct link between the reduction in disposable income and job losses in the domestic economy. It is not a phenomenon that is peculiar to Ireland. Austerity has had a massive impact on the level of youth unemployment across Europe. The retail sector has traditionally been a great outlet for young people to start off in jobs. There was a time when it also provided a secondary job for many women. It is now becoming a primary occupation and source of income for many households. Will the Minister admit that as long as austerity continues, it will be difficult for the retail sector to recover and job losses to be reversed?
The European Union has set aside money for the youth guarantee scheme. It might be better for Deputies to table questions to the Minister for Social Protection, Deputy Joan Burton, on the operation of the scheme. I understand programmes will be developed at EU level, with national governments seeking to develop initiatives within programme guidelines. As always, EU funds will be supplemented by national contributions in the draw-down. The Minister for Social Protection can give Deputies additional data on the development of the scheme.
The retail sector is, undoubtedly, a very important employer. The Government has shown that it is alert to the needs of the sector through cuts in PRSI and VAT, the readjustment of wage settlement mechanisms, its new initiative to get businesses to go online and the initiative of the Minister of State, Deputy John Perry, to reform licensing arrangements for retail businesses. Deputy Mick Wallace is correct that a recovery in demand is crucial and the Government has been building a sustainable basis on which to rebuild the economy. That involves correcting the public finances, as well as an expansion into export markets and building employment. We are seeing the creation of, on average, 1,000 jobs per month in the private sector. We are building a strong economy which can support a retail sector. It is work in progress and a great deal remains to be done.
94. Deputy Billy Kelleher asked the Minister for Jobs, Enterprise and Innovation the latest uptake with regard to the microenterprise loan fund; the number of jobs that have been supported by this investment to date; and if he will make a statement on the matter. [18668/13]
129. Deputy Peadar Tóibín asked the Minister for Jobs, Enterprise and Innovation the targets for loan applications and rates of successful loans under the Microenterprise Loan Fund; and the cost to date in the administration or management of this scheme. [18609/13]
130. Deputy Gerry Adams asked the Minister for Jobs, Enterprise and Innovation the steps taken to ensure that the targets for additional leveraged funds for the Microenterprise Loan Fund are realised. [18610/13]
I propose to take Questions Nos. 94, 129 and 130 together.
Microfinance Ireland, or MFI, was incorporated pursuant to the Microenterprise Loan Fund Act 2012. MFI has just compiled its report for the first six months of the scheme's operation, from 1 October 2012 to 31 March 2013. The full report will be published shortly on my Department's website and the website of Microfinance Ireland. In the spirit of openness and transparency, it is my intention to ensure reports will in future be compiled on a quarterly basis.
When presenting the legislation to the Oireachtas, the Government indicated that over the lifetime of the ten-year scheme it was expected that over €90 million in additional lending would be provided to 5,500 microenterprises with the creation of an expected 7,700 jobs. From the report of the first six months of operation, of the 149 applications received by Microfinance Ireland, some 44 were approved, 58 were declined, 13 were withdrawn, two were appealed and 32 are works in progress. To the end of March, the scheme has supported 116 jobs and 44 microenterprises.
This is a new scheme and it has yet to achieve its potential. The Minister for Jobs, Enterprise and Innovation, Deputy Bruton, has been actively promoting the scheme in the context of area meetings he is conducting across the country as part of the Action Plan for Jobs. He is also taking the opportunity to meet the local enterprise offices that will promote the service in every county to discuss its promotion and their experience with it. The Minister has discussed its progress with the chair of Microfinance Ireland and he is shortly meeting Microfinance Ireland to evaluate its experience and how the scheme can be made more accessible. The key to promotion of the take-up of this, and other initiatives, is the establishment of the first stop shop at local level. Work on this is well advanced and the new approach will soon be rolled out in a number of early mover centres.
Microfinance Ireland is a private limited company, a subsidiary of Social Finance Foundation, SFF. Its day-to-day costs are an operational matter for the company and the board. In accordance with the provisions of the Microenterprise Loan Fund Act, the accounts of the company will be audited by the Comptroller and Auditor General and will be laid before the Oireachtas. The cost for 2012 was €461,000, which includes one-off set-up costs of €278,000.
With regard to the cost of both microfinance and the credit guarantee schemes, Exchequer gains in terms of employment sustained and created, savings on welfare payments and increased direct and indirect tax payments have been calculated at €23,000 per job. On this basis, I am satisfied that the costs of both schemes have already been more than offset. In respect of leveraging additional private sector funds to supplement the State's injection in MFI, MFI through its parent SFF has begun discussions with three banks about leveraging further funds this year.
I remind Members that one minute is allowed for questions and one minute for answers.
Three questions were taken together. Does that not mean the cumulative amount is greater?
It does not matter. The supplementary questions, per Deputy, are for one minute, with one minute for answers and Deputies can come in as many times as they like on that basis.
I beg the forgiveness of the Chairman. Many questions have been referred to different Departments and there is a suggestion in the replies that we should table questions to different Ministers. The whole notion of the Action Plan for Jobs was a whole of Government approach. Deputy Peadar Tóibín and other Deputies cannot be coming in to the Chamber three days every week trying to ask questions of individual Ministers. Is there some way we can co-ordinate questions so that the Minister of State with responsibility for jobs can bring the information back? We can discuss this again.
I did not get the exact figure for the money lent. Some 116 jobs were created. Advertisements have started running to promote the micro-finance scheme only in the past two weeks even though we are six months into it. Since it was launched, I have been calling for wider promotion of the scheme. Yesterday, at a meeting of the jobs committee in Ballinasloe, the feedback on the scheme was that it is too expensive. I have said this before and I am aware of the issue concerning unsecured loans, which means it must be expensive. However, it is more expensive than what the banks are charging.
A point that can be addressed quicker is the three-year payback. Many people are reluctant to commit to a three-year payback given where their businesses are. If that issue can be examined, it may make the scheme more accessible. There remains a complete lack of awareness about the scheme. It is too expensive and the conditions frighten people away. What is the target in terms of the delivery of jobs? Has the target been revised downwards given the poor take-up to date?
Taking the last question first, the number of applications was 149 and the total value was €2.78 million.
It was set up as a private limited company but the intention is to deliver on the ambition of the target over a ten-year period. The Minister will launch the roll out of the one-stop-shop in every facility and obviously its promotion is very important. That will probably generate engagement on the ground. In regard to the cost of the scheme, it is a not-for-profit one. The rate is at 8.8%. There is a high risk to the loan. People have been refused by the banks. Very good evaluation is being carried out. To ensure it is successful, it is very important there is a level of monitoring for the applicant once he or she gets the funding. It is not the intention to erase current bank lending but loans for less than €25,000 are available for sole traders who cannot avail of conventional banking.
People with start-up companies are delighted to get it. There was a company in my office last evening which is very much depending on getting the €25,000-----
Not enough people are getting it.
I think people have been very reluctant to make applications.
People do not know about it.
It is about engaging on the ground. The local enterprise offices will be the promoters on the ground engaging with businesses initially to get them started and leveraging with other banks as well.
What is the term of the loan?
There is a three year term currently. It is a recyclable loan. It should be possible to return €25,000 over three years, based on the business plan. That is approximately €8,000 per year.
Every second week we hear of another plan to create so many jobs. When the Government came to power it said it would create 100,000 net new jobs. In fact, in the past year, 1,200 net new jobs were created. It also said it would create 10,000 net new jobs in financial services but approximately 10,000 net jobs have been lost in this sector. This week we heard about 20,000 new jobs in manufacturing but there is no net money being brought to the table in that regard.
It is very important that we are honest and do not over-egg what is happening here. In the press statement on this ten months ago, the Minister promised that €19 million would be made available and that 7,700 new jobs would be created. In his reply, the Minister said 116 jobs were supported. He never once told us about the jobs created. Has one job been created from this so far? If he does not have that information now, can we put in place a mechanism whereby we can measure how many new jobs are created from this?
Jobs have been created because these are new start-up companies. One must remember that 250,000 jobs were lost before we came into Government and 12,000 jobs were created by Enterprise Ireland and the IDA last year alone.
How many new jobs have been created in the ten months of this scheme?
We are basing it on these figures. In the first six months of its operation, 149 loan applications were received by Microfinance Ireland. This includes 44 applications which were approved and 58 applications which were declined. Some €2.78 million has been given out. To the end of March, the scheme has supported 116 jobs.
Supported jobs are not created jobs. Supported jobs are already in existence and are being supported.
The company I met last evening will create eight new jobs. It is waiting for the application to be processed. I expect that a large percentage of the jobs supported are new jobs.
It has not put in an application yet.
It will be going in on Friday and I hope it will be successful. It intends to establish eight jobs in a software facility. Half of the jobs are definitely new jobs. The scheme is about supporting new jobs. We are talking about creating additional jobs over a ten-year period and 12,000 jobs were created last year.
I agree there can be value in this project. I am not arguing that point. Sinn Féin welcomes and supports this project. We do not believe it should be a supplement for what should be happening in the banking industry but we see the value in it. The question I asked, and which the Minister has not been able to answer, is how many new jobs have been created in the ten months of this scheme. He said 116 jobs have been supported but these are jobs which could very well have been in existence.
The Minister of State may not have the answer today but, in future, we would like-----
There were 60 new jobs created directly.
That is the information I was asking for.
I met representatives of banks in recent weeks. They are very much determined to support small companies. People are using the simplified application procedure operated by Bank of Ireland and Allied Irish Banks and they can appeal the banks' decisions. The banks are clearly supporting viable companies and, naturally enough, are not supporting non-viable companies.
It is very easy to come up with simplistic solutions but the problem is not that simple to resolve. Obviously, one must have an understanding of the position of employers. It is not just a case of getting money to establish a job, as the company must have sufficient capacity and a sufficient base.
There are nine people emigrating from the State every hour; the Government's programme has created six jobs every month.
I do not know how the Deputy arrives at statistics indicating how many people are emigrating per hour.
The Central Statistics Office.
There are people emigrating by choice. I know several young people who will be quite delighted to go to the United States if they can get in, or to Canada if they have the required qualifications.
Most would be happier here at home.
There is certain balance. For highly educated people, emigration was a matter of choice.
Most emigration is forced emigration.
Obviously, we are doing our utmost to sort out the mess in which we found the economy two years ago. One cannot just wave a magic wand. There is a definitive action plan for jobs that is encouraging enterprise. I visit companies all over the country and note it is not all doom and gloom. This morning, I was in Louth to visit an enterprise development company creating jobs. There was an opportunity for workshop development. What the company was doing for jobs on the ground was very incisive. Clearly, there are opportunities in companies that can create jobs. They are very optimistic and it is important that we note that.
It is a bit disingenuous to suggest that many people are actually emigrating by choice. This is probably not the best time to be going to other countries. The vast majority would rather get work in Ireland.
I understand that fully.
When one goes from door to door, one learns about the number of people struggling with emigration. I cannot come in here and highlight the negative effects of emigration enough. One might say people between 18 and 21 have chosen to take a few years out and travel the world but many people emigrating are my age and older, and they include people with children. People are taking children out of school and emigrating because both parents cannot get jobs. Emigration has a significant damaging effect on society. It breaks up the families of those affected. Significant milestones in life, such as birthdays, first Holy Communions and even weddings, happen thousands of miles away from grandparents.
Emigration also has a negative economic effect because the youthful energetic element of the economy is being removed from it. Football clubs are finding it hard to field teams. The level of emigration and the pain and suffering it has caused can never be overestimated. Emigration is a real problem and is happening daily on foot of the policies the Government is following.
Proper job creation cannot happen in this State until we get growth levels above 2%. This will not happen on the basis of depending on international markets. The Government must step into the domestic market with investment. Until this happens, we will see a stagnant labour force. The second and important point is that the other element the Government can deal with is the costs faced by businesses, including utility and rental costs and professional fees. These are not being tackled either. The county enterprise boards have been in limbo since 2008 and we still have not seen the issue they face resolved.
The Deputy has all the solutions, but it is not as simple as coming up with a cocktail of solutions. It would be very simple if we could take that recipe on board. Enterprise Ireland has had the best year ever, with exports by companies it supports topping €16 billion. At the showcase I attended in Drogheda today at 8.30 a.m., there were approximately 35 companies and they are very optimistic about the future. It is a question of confidence.
We have two economies. While the international economy is doing well, there is, without doubt, a great deal of pessimism about and a lack of confidence in the domestic economy. There is a huge amount of money being saved in the economy because there is not the confidence to spend. We have been left with the legacy of an over-supply of retail developments during the boom time. The Government is doing all it can, including activating the new local enterprise offices and providing start-up funds. The many initiatives taken by the Minister to support job creation are being taken on board. It is easy for Deputy Peadar Tóibín to say nothing is being done, but the Government is doing everything it can to encourage innovation, research and development. Despite what the Deputy says, the many small high potential start-up companies which I have met - I also meet people on the doorsteps - are very optimistic. Has the Deputy met any of the high potential start-up companies? While there are always problems in business, exports are increasing. The Deputy did not recognise the figure of €16 billion in exports achieved last year by Enterprise Ireland-supported companies and the expected €1 billion in additional exports this year.
I must ask the Minister of State to conclude.
This is important.
I know, but the Minister of State is over time.
We are talking about lifting confidence in the domestic market. The facts are not as depressing as stated by Deputy Peadar Tóibín.
95. Deputy Charlie McConalogue asked the Minister for Jobs, Enterprise and Innovation if he will request the Industrial Development Agency to produce a report into possible reasons for the poor performance in attracting new investments to County Donegal. [18638/13]
IDA Ireland is the statutory body charged with the attraction of foreign direct investment to Ireland and its regions. I have been informed by IDA Ireland that in County Donegal it supports 14 companies which employ 2,228 people in software development, systems development and the medical technology industry. This represents an increase of 403 persons at work in IDA Ireland companies in the past two years, an increase of 20%.
The industry base in County Donegal is transforming from the clothing and textile industry to high tech, high skill activity. Accordingly, IDA Ireland continues to work with its existing client base to encourage it to transform and expand existing operations, while actively encouraging new investment in County Donegal in knowledge based industries and high-end manufacturing, mainly in companies in the medical technologies sector. In October 2012 KeyedIn solutions announced its plans to establish a software development centre in Letterkenny with the creation of 20 highly skilled jobs over three years.
The challenge facing IDA Ireland is to continue to win top quality investment for Ireland in a very challenging global environment. International competition for foreign direct investment has become extremely intense and continues to increase. Leading global corporations require a significant population pool, access to qualified talent, world class physical and digital infrastructure, as well as the availability of sophisticated, professional and business support services. This does create difficulties for regional locations and IDA Ireland has to focus on the main regional urban centres which are where the interest of most visiting investors will focus. IDA Ireland continues to seek every opportunity to bring investment to County Donegal.
IDA Ireland has also assured me that it continues to focus on the designated linked gateway of Letterkenny-Derry. This focus involves developing stronger economic links with Invest Northern Ireland which includes initiatives such as the north west business and technology zone, NWBTZ, which aims to promote the linked gateway of Letterkenny-Derry in line with the Northern Ireland regional development strategy 2025.
Additional Information not given on the floor of the House
I am mindful that, in order to ensure Ireland can continue to compete globally for FDI projects, it will be necessary to undertake an in-depth analysis of our FDI strategy with a view to informing the formulation of an appropriate strategy for the period post-2014. This analysis which will be undertaken later this year will take account of factors such as key trends emerging in FDI best practice internationally, Ireland's strengths in attracting foreign direct investment, changes to the European Union's state aid rules that may be introduced in the near future and our agreed approach to regional development.
The Minister has not answered my question, namely, if he will commission a report on the reason County Donegal has not been attracting its fair share of new investments in the past few years. He has rightly pointed to how well existing IDA Ireland companies in County Donegal have been doing, 14 of which between them employ 2,228 workers, an increase of 400 or 20% in two years. This shows the county is a place in which business can be done and that businesses which locate in the county can thrive. However, during the past few years none of the new investments in the country have been attracted to County Donegal. It attracted only one of the 88 new investments nationally last year. Of the 61 new investments attracted to Ireland in the previous year, none was attracted to the county.
We have only had 13 visits by companies in the past five years. That record is not good enough. A report investigating the reason we are not getting our fair share of new investments is needed. I have asked the CEO of IDA Ireland the question I am about to ask the Minister, to which I received a response that was non-committal. That is reason I am putting it to the Minister in the Dáil. Will he commission a report on the reason for this poor performance in order that it can be addressed and County Donegal can attract its fair share of new investments in the country?
I am surprised by the Deputy's comments. A 20% increase in employment in IDA Ireland companies is a good performance in my book. It probably exceeds the performance achieved in most, if not all, other counties. It is a strong performance. I agree that we continually need to examine our strategy and IDA Ireland will undertake an indepth analysis of our FDI strategy to inform its formulation for the period after 2014. We continually examine the sectors in which we can seize opportunities. As the Deputy will have noted, earlier in the week I launched our strategy for manufacturing which has the capacity to have a better regional spread. If one examines the make-up of IDA Ireland investments in recent times, there is no doubt that the investments being attracted are in sectors in which there are very deep labour market pools. There is a focus on urban centres, but there is also a real opportunity to develop existing and new sectors. Manufacturing is a sector that has further potential which we will be examining, but one cannot pick out one county and say, for example, that one has a strategy for County Donegal. We need to have a strategy for Ireland to win foreign investment and then we need to position the regions to have a competitive advantage whereby they can win investors. That is the approach and we will certainly actively continue to market County Donegal and position our overall policy to create employment in foreign owned companies.
The Government has a target of locating 50% of FDI projects outside Cork and Dublin. However, last year 75% of investments in FDI projects were in these cities. Only 9% were outside Cork, Dublin, Galway and Limerick. The Government plays a role in this regard. One might sometimes say it is market-led, but the botox firm located in County Mayo did not choose to locate in that county on the basis that the well turned out people of County Mayo meant it was a good place in which to locate such a firm. German financial firms did not locate in the docklands in Dublin because they thought it was a good place from which to do business. Governments can orientate FDI companies, but it takes political will to do so.
The time allocated for this question has expired.
I have a brief question.
I will allow the Deputy 15 seconds to ask it.
Thank you. Will the Minister arrange for the carrying out of a simple exercise, an assessment of the poor performance in regard to first-time investments? We have seen a number of actions by the Government in recent times which have made it more difficult to attract new jobs to my county. We have seen the Minister downgrade the IDA Ireland office in Letterkenny and remove gateway status from the town. There is also a much reduced commitment to the A5 project. There is obviously something that has resulted in County Donegal receiving less than its fair share of new investments compared to other parts of the country. If there are impediments, it is important that they be outlined and addressed in order that those of us involved in the political system can ensure they are tackled over time. I ask the Minister to conduct the simple task of commissioning a report on the reason there has not been the same level of performance in County Donegal considering the number attracted to the country.
I have given the Deputy some latitude. We must move on to Question No. 96.
96. Deputy Barry Cowen asked the Minister for Jobs, Enterprise and Innovation the measures contained in the Action Plan on Jobs 2013 to deal with the threat to employment in town centres that is posed by restrictive parking regimes; and if he will make a statement on the matter. [18665/13]
I understand parking by-laws are a roads function of local authorities and made under cover of the Road Traffic Acts 1961 to 2011. They fall within the remit of the Minister for the Environment, Community and Local Government, Deputy Phil Hogan, and the Minister for Transport, Tourism and Sport, Deputy Leo Varadkar.
There are no specific measures in the 2013 Action Plan for Jobs related to parking in town centres. However, I am aware that the impact of parking restrictions has emerged as a concern for some retailers in town centres and this concern has recently been outlined to the Oireachtas Joint Committee on Jobs, Enterprise and Innovation by RGDATA.
The 2013 Action Plan for Jobs includes a number of measures which will support the retail sector, including an initiative to introduce a single portal for business licence applications, a new scheme to help more businesses to trade online and the integration of local business supports into a stronger local enterprise office network to provide better supports for micro and small businesses. My Department will also be chairing an indepartmental committee to consider what measures might be taken to assist the sector in the short term, for example, in the context of budget 2014 or next year's Action Plan for Jobs. In that context, I will ask my officials to examine the recent paper which I have seen on town centre parking prepared by RGDATA in consultation with the Departments with relevant policy responsibility for this issue.
I thank the Minister of State for his reply and for offering to bring this matter to the interdepartmental committee. While they do not fall directly under the jurisdiction of the Minister of State some issues arise from the way this is distorting retail competition. Retailers in town centres are forced to put up with these charges while they do not affect those out of town. There are many other issues surrounding this, with policies differing between towns and counties, and often between streets within a town. It is important that the interdepartmental committee consider this and I look forward to hearing further from the Minister of State about it.
I have seen the report. Town trading is made very difficult by the out-of-town centres and it is important to incentivise people to shop in town centres. This report has been before the Oireachtas Joint Committee on Jobs, Enterprise and Innovation. I will report to the Deputy on the recommendations of the interdepartmental committee.
Town centres are facing a really difficult challenge. Many shops in towns are closed. The local government grants which used to fund local authorities have been reduced over the years and local authorities must generate funds from car parking fees. That pressure would not be there if the Government funded local authorities properly. Will the Minister of State consider the Sinn Féin proposal for a progressive commercial rate that takes into consideration the profitability of the business such that more profitable businesses pay higher commercial rates? In the North of Ireland we brought in a commercial rate which shifted the burden from small businesses to the larger out-of-town shops. There is no strategic plan for most town centres. Local authorities and the new local enterprise offices should be sitting down with the retailers in every town in the country and developing a strategic plan to see how they can grow in a healthy, sustainable and uniform manner.
Does the Minister of State agree with me that the problems of the shops in the town centres is more directly linked to the reduction in people's disposable income than to parking problems? Retail Excellence Ireland published a report stating that the introduction of the property tax has negatively impacted on retail sales during the first part of the year and in its quarterly barometer the retail lobby group said that overall sales across the sector continued to disappoint during the first quarter. Given that the property tax is not based on ability to pay does it not worry the Government that it is further reducing disposable income which is impacting directly on jobs in these town centres and shop units?
In response to Deputies Tóibín and Wallace, there are many integrated plans for town centres, some of which are very effectively managed by the local authority. The Minister for the Environment, Community and Local Government, Deputy Hogan, is examining the management of local government. The local enterprise offices will consider every aspect of business and there will be business representation on those committees. A total of 65% of all property tax will be retained. The tax base will be broader whereas until now it was only the business people who paid rates. Local authorities will have more autonomy and discretion to give a derogation to a vacant unit to allow somebody occupy it without paying rates. That will be considered under the new management structure in every local authority where elected members will have far more say in what they want to do to promote business especially in town centres.
Does the Minister of State agree that the people passing the doors of the shops will have less money in their pockets? It is a vicious circle. The Government is taking more money out of their pockets and that will impact on jobs in the retail sector. The more money the Government takes out of the system the more difficult it is for the system to work in a healthy manner.
I will not deal with the property tax but from what I hear about the evaluations the rate will be as low as the cost of a TV licence in certain cases which should not dramatically affect the overall spend. It is important to encourage activity in town centres and offer variety. Some retailers are doing exceptionally well in certain town centres. Where the owners or proprietors personally manage shops they can do quite well but the multiple retailers and discounters have grown dramatically over the period too.
