I welcome the Minister of State at the Department of Enterprise, Trade and Innovation, Deputy Billy Kelleher.
Innovation and Job Creation: Statements
I apologise on behalf of the Minister, Deputy O'Keeffe, who, because of changes to the Seanad schedule, is unable to make the opening address. However, I am delighted to be back in the Seanad to discuss the issues that will be raised in this debate and thank Senators for making time available to discuss innovation and job creation.
As a Minister of State for Enterprise, Trade and Innovation, I am acutely aware of the distress the economic downturn is having on individuals, families and businesses. The negative consequences of the downturn, particularly where jobs are lost, cannot be overstated and our priority has been and will continue to be to respond to these challenging and difficult problems. I am glad to have this opportunity to outline to the House the decisive action being taken by the Government to underpin Ireland's recovery and future economic growth. As recognised by the OECD and other international bodies, significant progress is being made in addressing the challenges facing this country. We are committed to ensuring that Ireland will emerge in a strong position and be prepared for the next phase of global economic growth.
I believe the Irish economy has turned the corner. As long ago as his Budget Statement last year, the Minister for Finance, Deputy Brian Lenihan, referred to the fact that the most challenging period was behind us although difficult times still lay ahead. He stated at the time that Ireland was on the road to recovery. Being a small open economy, we all know our future economic growth will have to be driven by exports of goods and services. Improving our competitiveness will also help us attract more foreign direct investment. We already see a recovery in cost competitiveness with lower business costs, particularly wages and energy. We introduced an extensive package of measures to contain energy costs last summer and this is reflected in a much improved position relative to competitors. Data released recently show that electricity and gas prices fell for all types of energy consumers in the second half of 2009 and have moved closer to the EU average for most business users. We are reducing the administrative burden by driving better regulation. Local authority charges remain a great concern of the business sector and we are conducting an efficiency review of the whole local authority system at present to identify savings which will reduce pressure on small businesses.
Ireland's enterprise base can take some pride in the incredible resilience it has shown in the last two years. Although global exports in goods fell by around a third in the first quarter of 2009, Irish goods showed an increase of 1% for the same period. It is very significant that we acknowledge how Irish businesses and exports have responded in the prevailing challenging times in the global economy. When we look at major international exporters such as Germany, or other countries which had significant reductions in their exports, we see there is certain inherent resilience in the Irish economy. That should be applauded, acknowledged, fostered and encouraged in the longer term.
Commentary is also very important. When people speak and raise issues we must also acknowledge that these are significantly challenging times and there is a great deal of pressure on families and individuals. There has been a marked increase in unemployment and the labour market has shrunk significantly to approximately 1.85 million people but in the general context it is equally important we balance that with the fact we have become more competitive vis-à-vis our global competitors. Irish exports have held up and as a country we are very much open for business. If one sentiment is to emanate from this House in this debate it should be that Ireland is open for business, both in the context of bringing in foreign direct investment and, equally important, in the way our exporters are finding and retaining market share, being innovative, getting out there and responding to the very challenging times we face. That should be continually acknowledged. Negative sentiment can have a broader impact on the economy. It can also deflate the confidence of exporters and small and medium-sized businesses which are trying to establish themselves, access credit and create employment and opportunities. Continual negative commentary undermines the basic instinct of confidence. Confidence is about making sure people have a belief that we can get through these challenging times. I am sure Senators will acknowledge and highlight the difficulties facing businesses and will be balanced in their approach having regard to where Ireland is positioned globally in terms of innovation and job creation. While global services exports fell by approximately 20% overthe same timeframe, Irish services declined by just over 2%, which is another significant statistic.
My goal is to maintain and enhance the policy environment that has facilitated this resilient performance and that will drive export growth. We know export-led growth can create the jobs required to reduce unemployment, fund public services and manage the national debt. We estimate that every 100 export jobs in Ireland support at least another 70 jobs in the Irish economy.
Looking to the future, we are striving to diversify our export profile, exploit our talents and opportunities and guard against over-dependence on any specific markets. Our track record on this is strong and is exemplified by the Asia strategy. That strategy is nearing the end of its shelf life and we are currently drafting a new trade strategy that will assist, encourage and promote Irish goods and services in markets throughout the world. As an open global trading economy, strong emphasis must be placed on finding markets that are amenable to our products and that are also accessible. The new trade strategy that is to be published will be of significance. With the co-operation of various Departments in promoting Ireland Inc., and its exports, products and services abroad, we can target those markets in the years ahead.
In 2005, we set specific targets to be achieved through concerted effort by the relevant Departments and agencies to develop links with eight key economies in that region. The success of the Asia strategy has been striking. Exports to the eight countries have risen from €4 billion in 1999 to €9.6 billion in 2009, well ahead of the target of €9 billion set at the time of drafting the strategy. The number of Irish companies with a presence in these countries has risen fivefold, from 54 to 272, well ahead of the 215 companies targeted at start of the period covered by the strategy.
In addition, growth has been achieved on other targets relating to tourism, specialist food exports, developing inward student numbers, academic partnerships and a range of other links and developments. These outcomes, together with progress in wider awareness-raising, have been greatly assisted by focused high level visits. During the past five years, Taoiseach-led trade missions have been organised to China, India and Japan and other ministerial-led trade missions have taken place to China, India, Japan, Malaysia and Singapore. In addition, the Department of Foreign Affairs has expanded its network of embassies and consulates in the region.
An example of our success is that Ireland now has a trade surplus with China, a dramatic turnaround from the position only three years ago when we had a trade deficit of €2.9 billion with that country. The Government is committed to developing and expanding this engagement, as the key Asian economies represent an exciting and continuously developing market for Irish goods and services. The Department of Enterprise, Trade and Innovation is both reviewing the achievements of the Asia strategy as well as working with other relevantDepartments and the development agencies to prepare a new trade, tourism and investment strategy.
The new strategy will be broader in reach than the Asia strategy, focusing on key high growth emerging markets such as China, India, Japan, the Gulf states and Brazil, as well as on our existing key trading partners. The strategy will boost our exports, tourism and investment performance and bring further focus and coherence to Ireland's single-minded pursuit of our international economic and commercial interests.
Our recent export performance has been impressive in the context of the size of our economy compared to others and we will continue to incentivise enterprise to invest further in high value research and development to increase exports and create new employment opportunities in communities across the country.
We have seen in this recession that the companies that have invested in research and development and ensured their products or services have a competitive edge are the same companies that have held or grown market share and held or grown employment. This has reinforced our belief that our research and development strategy is the right one.
The Government's commitment to continued investment in research and development has been clearly articulated and demonstrated. The Department is determined that incentives for business to undertake research and development are strong and that Ireland continues to invest in building our reputation as a leading knowledge economy. A renewed focus is correctly being placed on stronger commercial outputs and the efficiency of investment.
The decision to create a single funding stream for the STI will greatly enhance the efficiency of the spend and the State's ability to reprioritise as economic circumstances change as the economy recovers. The Government is supporting companies with direct funding for research and development and through the recently enhanced research and development tax credit. Enterprise Ireland and IDA support companies ranging from innovation vouchers to large-scale research programmes.
We are funding collaborative research partnerships between companies and partnering companies with the strong science base we have built through PRTLI and Science Foundation Ireland. Science Foundation Ireland funded researchers now work with more than 300 companies. There are many more innovative companies being created and grown. Some 73 new high potential start-up companies, supported by Enterprise Ireland in 2009, are poised to create 900 jobs over the next three years and no doubt many more in the future.
Our wide range of enterprise supports are aimed at improving productivity, market knowledge, competitiveness and leadership and management capabilities so firms can compete successfully in international markets and grow their exports. To survive and thrive companies have to be lean, flexible and innovative.
Enterprise Ireland supported companies currently employ more than 133,000 people. Enterprise Ireland's objective is to create a further 40,000 new jobs over the next five years. Through the multiplier effect, this will lead to an additional 28,000 jobs elsewhere in the economy. In the last six months alone, Enterprise Ireland has announced 700 jobs in innovative companies such as Abtran, VoxPro and Sysnet. Up to 10,000 new jobs could also be created in one year as a result of the Government's new employer job PRSI incentive scheme. This new scheme is a direct stimulus for the real economy by saving employers money and shifting the balance in favour of job creation. In addition, the Finance Act 2010 provided for the start-up company exemption to be extended into 2010 encouraging both entrepreneurship and economic activity.
We are also working hard to sustain existing jobs through this difficult period. Companies supported under the employment subsidy scheme and the enterprise stabilisation fund have committed to maintaining more than 100,000 jobs to the end of November 2010. This is significant information for Senators. When people ask if there is a jobs strategy in place or what the Government has done to retain jobs, it is critical that we acknowledge introduction of the employment subsidy scheme and the enterprise stabilisation fund. They have maintained jobs in those sectors in these challenging times.
The Government is also proactively supporting the development of the green economy through grants and other incentives and supports. Irish companies engaged in renewable energy, energy efficiency, water, waste, green building and related services have significant opportunities to grow and create stronger export businesses. Maximising the potential for Irish business and for job creation in the green enterprise sectors will be a key focus of current and future enterprise policy. Enterprise Ireland has a range of measures primarily targeted at the small and medium-sized enterprise market to aid the greening of businesses in that sector.
The Sustainable Energy Authority of Ireland is promoting improved energy efficiency and the use of renewable energy sources resulting in substantial savings for individuals and businesses, both small and large. The IDA has formed a dedicated clean technology division specifically to entice foreign direct investment flows into this sector. Across a range of sectors, international investment will continue to be a key driver of employment, exports and growth.
The issue of Ireland's corporation tax rate of 12.5% is constantly raised. The Minister for Finance emphasised this issue in his budget speech last December when he clearly and categorically stated that the corporation tax rate of 12.5% was here to stay, was a central plank of Government policies and was fundamental to attracting direct investment into this country and supporting and enhancing Ireland's global position as a competitor.
There were a few red herrings on this issue during debate on the Lisbon treaty, to which the people responded by endorsing the treaty. Ireland is competitive for many reasons, of which a corporation tax rate of 12.5% is only one. There are many other reasons companies look to Ireland as a place in which to locate. We have a very intelligent, highly educated and flexible workforce. There is also major investment in research and development, while we continuously have quality graduates coming out of our colleges. The critical mass of multinationals already located in Ireland gives us a competitive advantage that we should exploit to the maximum. Foreign companies directly provide 140,000 jobs and indirectly 240,000 jobs in total in this country. They account for 50% of the corporation tax take, 70% of national exports and 73% of all business research and development and innovation undertaken. They spend €19 billion in the economy, €7 billion alone on payroll costs. Many multinational companies are restructuring their global operations, leading to global rationalisation, which makes it particularly important that we work to retain current investment levels, stimulate expansion and secure new projects.
We will continue to market Ireland as a location of choice for newcomer and existing investors and this strategy is working. Despite the difficult global economic climate, last year Ireland won 125 foreign investment projects, half of which were in the areas of research, development and innovation, reflecting Ireland's strengths and attractiveness as a location for cutting edge activities. Around 4,500 new jobs were created, while the value of exports from IDA client companies increased to €110 billion in 2009. The links between foreign direct investment, research and development and innovation, industry and our colleges and universities represent a critically important factor in promoting Ireland as a location for research and development. In the last few days we have become aware that a bionic arm is being developed in the Tyndall National Institute in Cork. This is an example of collaboration between industry and a university in research and development for high end technology. This is very significant and attracts interest from elsewhere around the world. In the last six months the IDA has secured investments with the potential to create almost 1,000 high quality jobs in companies such as eBay, IBM, Hertz and Pay Pal. The pipeline towards job creation in the rest of 2010 remains strong. The new IDA jobs strategy sets new targets for foreign investment to be achieved up to 2014. We are aiming to create 105,000 new jobs — 62,000 direct and 43,000 spin-off jobs — through 640 new foreign investment projects, 50% of which will be outside Dublin and Cork. We aim to see an annual client investment of more than €1.7 billion in research, development and innovation by 2014.
The Government's focus is on building a solid foundation for future economic growth. Job creation is at the heart of Government policy. We are taking action to stimulate the economy and invest in our long-term prosperity and quality of life. This year we will invest €6.5 billion in capital projects. This public investment programme is expected to support approximately 70,000 jobs. A view has been promoted that there has been no capital investment by the Government. We will be spending about €5 billion on capital investment programmes which will have a knock-on effect in the economy. This has been acknowledged all over the world, yet people are critical of the fact that funding under the national development plan, under which we were spending €8 billion to €9 billion for many years, has been reduced. However, because of the reduction in construction costs, we are now getting strong value for money in our capital projects. The recent announcement on links between the Luas lines is another significant development in the heart of the capital. We also saw the roll-out of motorway projects across the country, investment in wastewater treatment plants, research and development at third level, the roll-out of broadband and so on. These are very significant in trying to build a modern economy, competing for foreign direct investment and allowing our exporting companies to become competitive. We are encouraging the business sector to invest, grow and create new jobs. We are investing in skills and training programmes for the workforce. We are developing the green economy to create new, quality jobs thousands of workers. Implementation of the recommendations of the innovation task force will also create the environment for more jobs to be created in new, innovative sectors of the economy.
The courage and decisiveness the Government has shown in taking the necessary measures to stabilise the public finances and fix the banking system send a strong, clear message to the international community that Ireland will not hide from the challenges it faces and that we are making the right decisions to position ourselves for future growth. This debate is about innovation and job creation. We have had a simplistic discussion about impaired banks and the support provided for them. The two reports by Professor Honohan and Mr. Regling and Mr. Watson on the banking crisis highlight the deficiencies and inadequacies in the areas of oversight and governance and explain how a bubble developed in the property market. At the same time, we have spent huge sums of money in developing our infrastructure and rolling out a capital investment programme that has ensured efficiencies in the economy about which we could only dream 20 years ago. The only reason the Government is supporting the banks is that a systemic failure of Anglo Irish Bank would have a knock-on effect on the other two major banks which could have catastrophic consequences for the banking system and also the broader economy. As highlighted in the reports, it could have major implications for society also. The main focus of the Government's support package for the banks is not on the banks but clearly on job creation and innovation. Whether we love or despise the banks, we have to have a functioning banking system to make sure we get credit flowing.
The directors of the banks must now realise that there is a new relationship between the banks and the people, who through the Government guarantee and through the recapitalisation programmes stand foursquare with them. It is obligatory on the banks to make sure there is liquidity in the market and that there is a flow to small and medium-sized business and that the current credit squeeze is brought to an end. I have read the Mazars reports from cover to cover on several occasions. We have heard commentary from the banks that they are open for business and that they are willing to make sure credit flows to small and medium-sized businesses. However, we still have major concerns that they are not functioning in the way we want them to work to make sure they analyse and assess a business plan and lend according to the needs of a business.
The banks must acknowledge they have not been playing their full part in supporting the small and medium sized business sector, which is of huge significance to the Irish economy. It is the backbone of driving exports and domestic job creation. For all these reasons, it is important that Senators highlight any inadequacies they feel exist with regard to the banking system making credit available to the small and medium sized business sector. Our two major banks have a role to play in this. The credit review group under the stewardship of Mr. Trethowan has received a number of queries and complaints from people refused credit. It is fundamentally critical that the banks realise they must impair their balance sheets through whatever banking and accounting systems they put in place. Equally they have an obligation to make credit available to viable but struggling small and medium sized businesses to try to get them through the recession.
I look forward to the debate. I was in the House a number of months ago for a broader debate on the economy. I apologise if I strayed slightly into the broader issue but it is inextricably linked to this subject matter. Without the availability of credit, competitiveness and all other parts of the Government's policy, job creation and innovation would be lethargic. For all of the policies we pursue, we acknowledge we must stay focused on ensuring we are competitive and invest in the areas we are good at, which are entrepreneurship and high quality graduates.
Another important factor is that we brand Ireland internationally. There is a huge well of acceptance that we are a creative, innovative and flexible people. This is internationally recognised and sometimes we do not acknowledge this at home. We should promote it because if we promote positive views of Ireland internationally it will be easier to attract foreign direct investment. In my speech I referred to the spin-off jobs created directly and indirectly through foreign direct investment and they are very significant. They build up a critical mass of expertise. Throughout Ireland, multinational companies came and stayed for a number of years. Perhaps they have scaled down and are now involved in research and development only. The embryonic spin-off from these companies is that high quality graduates and people with expertise in those fields have gone out and spawned small and medium-sized businesses. There is a continual churning of jobs through foreign direct investment.
With regard to domestic consumption, Irish companies are in an international whirlwind. We must get right all the underlying costs that affect our competitiveness. If we continuously talk down the positive aspects of what our exporters achieve it deflates their confidence in going out to find markets in the broad international world. We are very committed to supporting small and medium sized businesses stepping off the island and trying to find markets elsewhere. Perhaps for a time we were going for the low-hanging fruit at home. That is something we must address in the context of future growth in the economy. We must keep focused, regardless of our domestic economy, on ensuring that Irish companies are fit for purpose, internationally competitive and in all the markets worth pursuing, such as Russia, India, Brazil, China and the Gulf states. The devaluation of the euro gives us an added advantage at this juncture and we should seize these opportunities.
Ireland is going through a very difficult time as are its people. The reports outlined by the Governor of the Central Bank and by Mr. Regling and Mr. Watson highlighted inadequacies in governance, oversight and regulation throughout all sections of Ireland and in some policies that were pursued. However, a little rewriting of history is taking place with regard to policies that were pursued. Many of the policies generated large tax revenues which were invested in health, education, infrastructure and throughout the broad ambit of what was required by the Irish people at the time.
We must remember that more than 2 million people worked in Ireland in 2007. That is hugely significant. It was a milestone that was crossed when we look at where we came from historically.
We have to get back to it.
There have been many major achievements in that context and we would not want to throw out and whitewash all that we achieved for short-term political gain. We acknowledge the difficulties, but at the same time many opportunities exist because of our competitiveness. I accept that some of the competitiveness is painful because when we speak about labour unit costs we mean salary and wage reductions. That is slightly pernicious and has an impact on individuals' lives. However, it is an area in which we are beginning to follow the kilter in the context of our competitors.
The area of energy is also being addressed through clean and green energies and we must put more emphasis on this. This is another commitment made by the Government in recent times, particularly on promoting the green agenda, which is of huge significance. This is not only because of the present hue of the Government; it is of huge economic importance as well as being important for the sustainability of the environment. It is about ensuring we are not dependant of fossil fuels and that we diversify and find a competitive economy based on sustainability in many of its facets.
I thank Senators for the opportunity to speak on this issue. The Minister, Deputy Batt O'Keeffe, sends his apologies but due to the change in the timetable he was unable to make it.
I welcome the Minister of State, Deputy Billy Kelleher, in place of the Minister, Deputy Batt O'Keeffe. It is a pity the debate did not get started until late in the evening. Many items in the Minister of State's speech are very admirable. Perhaps the Minister of State did not mean to say it the way he did but one of his closing remarks was on how the banks could return to profitability by changing their accounting systems. Part of the reason the banks got into difficulty in the first place is because they introduced some very lax accounting systems so I am sure he meant something completely different.
I acknowledge that much of what is contained in his comments is good news and should be acknowledged as such. There is a danger that we talk down the economy too much. However, if we had a euro for every time a Minister or Government Member states the economy has turned a corner at this stage——
We would not have a deficit.
We certainly would not have a deficit. Almost a year ago, the Minister for Finance told us we had turned a corner and we are still turning it. We must be dizzy turning corners at this stage. Perhaps another metaphor could be found by whoever writes speeches.
I acknowledge the performance of Irish exporters and the Minister of State is quite right to place emphasis on it. I also acknowledge the words he spoke on the Government's efforts on the fiscal crisis as opposed to the banking crisis. I agree with him on that but I do not see much action by the Government in this regard. Virtually all of the Government's actions have been on banking and we still have not approached solving that problem, whether we like it or not. I have commended in this House certain actions taken by the Minister for Finance on reducing public expenditure, which had to happen. I do not agree with the manner in which some of it was introduced but reductions had to be made. However, there does not seem to be any attempt or concerted effort by the Government to realise the way we will get ourselves out of this situation is by creating more jobs.
I acknowledge that there are certain areas where we are doing quite well. I do not have the statistics to which the Minister of State referred regarding how well we are doing in Asia. It is to be highly commended but if we are doing well in Asia we could do equally well in other areas. That during these difficult circumstances and times, we can do so well in Asian markets begs the question as to why we are not doing better in some of the other markets. It may be an area on which there can be a focus. It is interesting that the Minister of State mentioned that we are exporting more in terms of value to China than we are importing. It is a very important statistic but we should aim to do that in other places. We should try to replicate whatever has happened in the Asian office of Enterprise Ireland or whatever different agencies are involved in ensuring that we have such success in that area.
The Government has taken a few measures recently. A year after the Fine Gael proposal, it adopted the idea of a PRSI break for employers taking on unemployed people, which is good. We had a long discussion today at the meeting of the Joint Committee on Enterprise, Trade and Employment on competitiveness. There are several specific areas still creating difficulties for our economy.
On the Order of Business the issue of difficulties with regard to the leaving certificate and junior certificate examinations was raised. There are still difficulties in terms of attracting students to mathematics and science subjects. If we are serious about innovation, research and development that is an area which has to be significantly addressed. Education is key to improving our unemployment figures.
There are also difficulties with regard to languages. The Minister of State spoke about the Asian success. There has obviously been a concerted effort with regard to overcoming language difficulties but we are not attracting enough young people to study foreign languages. It is an issue I often think about. I studied German in school. It is an important language. We have substantial commercial relations with Germany but we need to extend and expand the range of languages which are on offer to people in education. Germany is a relatively small market in the overall global context.
I will pick up a on couple of points made by the Minister. I mentioned success in Asia and how we should try to use whatever successes we have had in that area and replicate them in other regions throughout the world. I acknowledged at the time of the budget that the Minister's changes to the research and development tax credit were to be welcomed, a decision with which I agree. I am a little puzzled by the comments of the Minister of State on Enterprise Ireland's objective over the next five years to create 40,000 jobs. He said it had done such a good job it created 700 jobs in the past six months. That is nowhere near creating 40,000 jobs in the next five years.
There are start ups.
I know we have to start someplace and the current time is difficult but it seems that objective will be exceedingly difficult to achieve. Nonetheless, we have to set objectives.
The stabilisation fund the Government introduced has had some success and was a good development, from the Government's point of view. I was interested at the time we had the last discussion in this House to note that Senators on the Opposition side raised a number of strategies. The Minister of State referred to the corporation tax rate of 12.5%. It would be a controversial proposal to suggest it could be reduced further but at this juncture every item should be up for discussion. We have seen in the past how significant reductions, such as the halving of capital gains tax, led to greater tax returns. There may be a case to be made to our fellow members of the European Union, some of whom have much lower corporation tax rates, that we should examine that figure. A reduction in it might attract more investment into the economy.
The Minister spoke about the level of investment made by foreign companies in Ireland and referred to €7 billion in payroll and €19 billion overall. The figures are significant and cannot be ignored. However, at times I get a sense of unreality from the Government's statistics and figures. The Minister of State referred to the IDA and its efforts to attract investment into the country but even the most optimistic of forecasters do not suggest that we will see significant decreases in unemployment over the next 12 months, yet the Minister of State did not seem to acknowledge that anywhere in his contribution today. I do not believe for a moment that job creation is at the heart of Government policy and I have not seen any evidence of where it is at the heart of Government policy.
In his concluding remarks the Minster of State spoke about how the Government had taken measures to stabilise the public finances, which it has. Could it also have fixed the banking system? It has not done so. The Minister of State referred to the importance of banking and we have had those debates in the House. I spoke about it on my local radio station recently and I still meet people in my constituency who cannot get access to credit. All the while we spend billions of euros on Anglo Irish Bank which the Government now acknowledges will never be a proper bank again. It is very difficult and there should be some level of acknowledgement that the strategy drawn up at the time by Deputy Richard Bruton, while difficult to explain and understand, was a strategy which explained the merits of the good bank and bad bank policy. It is clear that what he said at the time in regard to the establishment of a good bank was what the Government should have done. I hope we will not live to regret that his advice was ignored at that crucial juncture.
There also needs to be some immediate action by Government on unemployment. Unemployment is a personal disaster for every individual and family where unemployment has occurred. There is a serious danger that we will have another lost generation of Irish people who have to leave the country because of economic circumstances. After the Celtic tiger we should not have arrived at this juncture, where we have to export people again.
I do not get a sense of a medium-term plan from the Government in regard to investment in infrastructure, broadband and other areas mentioned today at the meeting of the Joint Committee on Enterprise, Trade and Employment. Investment in education, access to training and the fact that so many people who want to get back into education and improve their skills are having difficulty in getting the basic information on their entitlements are important matters. I am sure the Minister of State deals with this on a regular basis. Some 90,000 people under the age of 25 are unemployed. One third of all men under the age of 25 who are of employment age are not working. Something must be done immediately by the Government to improve their job prospects. Deputy Leo Varadkar recently produced a document for Fine Gael on youth unemployment. I do not get a sense from Government that this issue is being taken seriously.
Our unemployment rate increased at a greater rate than the European average in the last quarter. We are now third behind Spain and Slovakia in terms of our unemployment rate which is reaching almost 14%, which is nearly as bad as it was at the height of the doom and gloom of the 1980s here. It is something most people thought they had left behind. It is coupled with the fact that there is huge emigration, not just of Irish people but of people who came here in the good times to work and are now returning home or going to other places to work. The figures, while stark and shocking, are being distorted by the fact that so many people are leaving. The figures are much worse than the CSO statistics suggest. We should hold regular debates on employment strategies, perhaps on a weekly basis, not only between now and the summer recess but also when we return in the autumn. This is the single biggest issue the country faces and we have to put our heads together to find ways of getting people back to work.
I thank the Minister of State for his wide ranging and helpful contribution and commend him on his ability while appearing on television to explain in a common sense way what is happening in the economy and how we are doing our best to thwart unemployment and restore the economy.
On behalf of the Irish Exporters Association I urge him to put in place a new international trade and investment strategy to assist small and medium sized enterprises which are currently focused on the declining domestic market. The chief executive of the Irish Exporters Association, John Whelan, has stated: "We will continue to bleed the job losses seen over the past 18 months, unless a new dynamic international trade and investment strategy is put into place by Government to help us trade our way out of the continued downward job spiral". As a nation, it is imperative we commit to selling our way out of this recession.
Along with Connie Doody I set up Lir Chocolates, a company which now employs 200 people. For 16 years, we worked on a 24-seven basis. Unless a company achieves sales, it will go out of business. Small and medium-sized Irish companies need urgent assistance if they are to begin to export. They need stimulus measures that can be implemented immediately. The drive to develop the smart economy is, of course, important but businesses will be empowered by an international trade and investment strategy. I learned the hard way that the home market is too small but if one invests the effort and the shoe leather, it can be done. The Irish Exporters Association proposes an export outreach programme as a core part of its strategy.
At a recent forum in Farmleigh House, Dorene Mallon, who is a participant in Bord Bia's prestigious fellowship programme, made several points regarding the future of the Irish food industry. The food and drink industry in Ireland employs 150,000 people, manufactures two thirds of our indigenous products and comprises almost one tenth of the Irish economy. This bears witness to the capacity of the industry to meet the challenges we face.
Crudely put, Ireland has enviable agricultural advantages for which almost every other country would kill. It has abundant fertile land, lots of water and miles of coastline, all situated in close proximity to 400 million affluent people. We are one of Europe's largest dairy and beef exporters and home to several world class firms and hundreds of food artisans. Global demand for food is projected to increase by 70% over the next 40 years. Despite all the factors in our favour, most Irish food exports are sold as commodities or on a business-to-business basis as food ingredients or for private labels. Irish firms have limited contact with end consumers in foreign markets. This means we are selling our raw ingredients to branded global companies which through their packaging, branding and marketing activities triple the price of our products by the time they reach retail markets. Why are we not investing in the development of Ireland as a high quality food island rather than selling our products at cheap prices to multinational companies?
Irish food and drink companies need to move away from being middle men or suppliers to focus on branding our own products.
An interesting article in the farming supplement to today's Irish Independent reports:
UCD's associate professor of public health, Paddy Wall, said Irish dairy products needed to be differentiated on a global level.
"All milk is not equal and it does not have the same nutritional profile," Prof Wall said.
"The family farm setup cannot be compared with the intensive system they have abroad".
"We have the imagery and yet we don't market it."
One cannot even compare the quality of our milk with that produced under intensive farming in the United States. We should differentiate ourselves from other producers so people realise Ireland is a special location for quality food and drink products. We must brand ourselves as the ideal place for nutritious food produced in a sustainable rural farming environment.
Instead of competing in commodities markets, we should develop branded products along the lines of Actimel and, perhaps, Red Bull.
There is no reason why we cannot come up with new products through intensive research and development. Lir Chocolates, of which I am still a board member, has to develop 30 new products annually to hold and grow our market position. We are in an ideal situation because we know there will be major increases in the demand for food.
I concur with the Minister of State's endorsement of multinational companies but we must also develop indigenous industries by supporting high class and branded products rather than commodities and ingredients for pizzas and grated cheese. I commend him on his passionate speech. It was a pleasure to listen to him.
Every time the House discusses unemployment and job creation, it must reflect on the context in which it is debating these issues. As time passes, we tend to make monthly comparisons of the unemployment rate. These show only minor trends such as slight increases or decreases in the unemployment rate and do not give a true indication of the position. For this reason, I do not make any apology for reflecting on the extent of unemployment before proceeding to address other issues.
As of the end of May, there were 437,922 people on the live register, an increase of 283,912 or 184% since the end of May 2007 when the Fianna Fáil-Green Party Government was elected. In Swords in my constituency, which includes Donabate and Portrane, unemployment has increased by 245% since the general election, while Balbriggan has experienced a massive increase in unemployment of 253% in the same period. The towns in question have been hit hard and are relative unemployment blackspots. It is unacceptable that in both locations only limited signing on services are available and people must trek into Dublin city centre for routine signing.
Unfortunately, the live register figures for May make clear that we have not yet hit bottom and defy the claims by the Government that we have turned the corner. I concur with Senator John Paul Phelan in this regard. In addition to increased unemployment, tens of thousands of people have been forced to emigrate, while tens of thousands more have remained in or returned to education for the same reason.
Tackling the jobs crisis is critical to securing an economic recovery that will help close the budget deficit and reduce the need for future tax increases. The knock-on effect of endless job losses on the public finances is enormous, with every additional person on the dole costing the State approximately €20,000 a year between lost tax revenue and extra welfare payments.
What is the social impact of these developments? There are 85,620 people under the age of 25 years on the live register, an increase of 180% from 30,561 at the end of May 2007, the month in which the Government came to power. Youth unemployment is a social time bomb. If young people are condemned to a pattern of long-term unemployment in their teens and early 20s, it will be very difficult for them to emerge from the current recession unscathed. Young people without skills or qualifications are especially at risk. During the boom years, many young people left school early to enter the workforce. Unless the Government ensures significant investment in the further education and training of these young people, they face a future of long-term unemployment and are in danger of losing self-esteem. The difficulty they experience in making a successful transition from school to work will potentially place them at life-long disadvantage. A life of unemployment, with lower wages and greater unhappiness, will lead to poor health for many in later life.
While unemployment is bad for the economy, it is also bad for society as it will inevitably result in increased social costs. Crime will rise and widespread social unrest and devastation of lower income neighbourhoods can be expected. For this reason, joblessness must be given the priority it deserves. What should the Government do? It must place people before banks and private profit. Unfortunately, getting people back to work appears to be low on the list of Government priorities. The Government does not have a strategy for getting people back to work, retaining jobs or creating serious alternatives to life on the dole for the many people, particularly young people, who long to secure appropriate training.
The Government should act on the call from ICTU, IBEC and a number of other organisations for continued investment in infrastructure to return people to work. The Labour Party has, over the past year, consistently made the same call. Mr. Danny McCoy of IBEC stated yesterday:
Since 2007, more than 140,000 construction jobs have been lost, with employment in the sector dropping from 270,000 to 130,000. Government has a huge role to play in halting this process. With construction prices having fallen by 30%, now is an ideal time for Government to put in place specific investment plans representing good value for money to protect jobs and generate a return for the economy.
While I do not always agree with IBEC, the accuracy of Mr. McCoy's analysis is blindingly obvious. Domestic demand will only improve with investment. In the current climate of banking crisis, investment must be led by the Government. When we have ICTU and IBEC singing off the same hymn sheet it is significant and due notice should be taken of the hymn they are singing together. Unfortunately, not only is the Government not on the same hymn sheet, it is not even in the same church.
The ISME bank watch survey, which revealed that more than half of the companies that applied for credit in the past three months had been turned down, is extremely worrying. It is a damning reflection of the failure of the Government to deliver on promises to make banks provide badly needed credit. The banks have been denying for months that credit is not available. The ISME survey confirms, however, what first-hand reports received by all public representatives in their constituencies show, namely, that viable companies are being choked to death by the failure to secure credit. Jobs are being lost as a result and people who want to work are being condemned to a life on the dole.
Despite ploughing substantial amounts of taxpayers' money into the banks, Fianna Fáil and the Green Party have failed to honour commitments the Government made that the banks would be required to free up credit in return. This reinforces the case for the establishment of a strategic investment bank, as proposed by the Labour Party. What we need is a new, green field bank with a clear mission to support investment in SMEs and innovative firms and assist in the funding of infrastructural investment. The Labour Party has always argued that the action required to deal with the banking crisis and budget deficit must be accompanied by a strategy for jobs. Creating jobs is the key to getting Ireland moving again.
The Labour Party has proposed a series of job creation initiatives, including the establishment of a strategic investment bank which would use €2 billion — less than 10% of the total — of the National Pension Reserve Fund to support commercial investments of up to €20 billion in critical infrastructure projects, innovative start-ups and the small and medium size enterprise sector; an SME working capital guarantee scheme, which would ensure that viable small and family businesses are able to secure the loans they need; a €1.15 billion jobs fund to support training schemes and labour intensive capital investment; a PRSI holiday for employers who take the long-term unemployed off the dole; and a graduate and apprentice programme which would guarantee relevant work based training and an opportunity to obtain new qualifications for all young people out of work.
Just a few months ago, the Government voted down a Labour Party Bill which would have scrapped upward only rent reviews in the retail sector. The legislation, if enacted, would have reduced costs in the sector, saved countless businesses and safeguarded thousands of jobs but was rejected by Fianna Fáil and the Green Party. My party's policy document on tourism, Extending the Welcome, which was prepared by Deputy Mary Upton and is the subject of Private Member's time in the Dáil tonight, contains well thought out proposals to sustain and develop the tourism industry. It would result in the creation and retention of valuable jobs in the sector. In addition, Deputy Seán Sherlock is completing a policy paper on the food and agri sector.
Sector by sector, the Labour Party is addressing the crisis that has been allowed to develop by the Government. In contrast, we discovered in recent weeks that five months after it was announced in the budget, the Government has made virtually no progress on its PRSI incentive scheme for employers, which was supposed to facilitate the creation of some 12,000 new jobs and reduce the numbers on the dole queues. It is high time the Taoiseach and his ministerial colleagues gave unemployment the priority it deserves. Creating and retaining jobs is the key to getting our economy moving again. We need a much more proactive approach by the Government, one that is in line with that proposed by the Labour Party.
On third level education and education places, third level applications have risen but not enough places are available. Why does the Government believe it is better to have young people on the dole than in college? Its plan to penalise those who do not take up training that is sometimes unsuitable and fruitless is not the way to proceed.
I welcome the Minister and thank the Leader for arranging this extremely important debate in such an expeditious manner. I was surprised by the rhetoric of the previous speaker as I wanted to have a debate on job creation rather than unemployment statistics.
The Labour Party has been the subject of considerable criticism recently for failing to produce policies. This criticism has not been levelled at the Fine Gael Party to the same extent. It appears from the previous speaker's contribution that the Labour Party's plan to create new jobs is to re-inflate the building boom by investing in infrastructure and creating a new bank. I am startled by this proposal, which would not create any sustainable jobs and would be retrograde in terms of the direction of the economy.
I was taken, however, by Senator Mary White's contribution in which she spoke of a high quality food island. This is a genuine suggestion. I worked in the dairy industry for many years and the Senator is correct that Ireland produces a large quantity of food ingredients. Many food companies and co-operatives are based here.
Senator Ó Brolcháin does not look like a dairy farmer.
I assure the Senator that I worked for many good companies in the dairy industry for a number of years. In many cases dairy companies produce food ingredients which are shipped abroad. There is great potential to achieve added value. The vision of high quality food production is a good one and one we need to prioritise. The Green New Deal, the Smart Economy, the Green Economy and NewEra are the titles of vision documents proposed by various parties. The Smart Economy and the Green Economy are Government documents. However, all of the documents have much in common. They suggest a way forward and a vision as to how we can create a large number of jobs. There are debates about how many can be created in the green economy or the smart economy. The programme for Government suggests there will be approximately 127,000 jobs in the green economy in the next ten years. I have heard Deputy Kenny on many occasions talk about a similar proposal and he has suggested a figure of 100,000 new jobs. We can argue the toss about the number. It does not really matter whether it is 100,000 or 127,000 new jobs; the reality is that the potential for job creation is enormous.
In the energy sector we import approximately €6 billion worth of fossil fuel energy supplies. In the past two years of the Government we have moved from a figure of 7% to 15% in the use of renewable sources of energy, a significant achievement that is not often highlighted. The green and smart economies have the potential to replace that figure of €6 billion and keep the money in this country, in the process creating many jobs which will generate even more money. The Minister of State said that for every 100 jobs created in export industry, 70 indigenous jobs were created. The more we can export the better for the economy.
I refer to a comment made by Senator Quinn in a previous discussion. He suggested we did not need the Government to create many jobs itself, but to create the right environment in which jobs could be created. It is not the job of the Government or the banks to create jobs. However, it is the job of these institutions to create the right environment for entrepreneurs to create jobs. The only jobs the Government can create are in the public service and at this time it is not realistic to expect many new public service jobs to be created.
I refer to what I call sustainable energy zones. To foster entrepreneurship, it is important to allow the right business environment to be created. There are many blockages in the energy sector. I cite the example of a gentleman who tried to set up a wind farm in Galway. He received planning permission that lasted for a period of five years. Throughout that time he tried to secure a grid connection from the ESB. It took him seven years to secure it, at which point the planning permission had expired and he had to reapply. In the meantime the land had been redesignated partly as an SAC and he found he could not obtain planning permission again. At this stage he had secured a grid connection and invested a considerable amount of money but was unable to set up a wind farm. That is not acceptable. This point has been put to various Ministers and the Government is making amendments to the Planning and Development Act to prevent this problem occurring in the future; it is allowing for extensions. Considerable work is being done to ensure the time taken to approve grid connections is greatly reduced.
There is a gap. There is a sustainable energy zone in Dundalk that has been extremely successful. Unfortunately, it is very difficult for Irish businessmen to set up decent small green businesses, which is hampering job creation in this viable sector. It is easy to suggest setting up a business in the green energy sector. However, it takes considerable investment and many years to do so, with many blockages in the way. The Minister should work with the local authorities on renewable energy zones in order that Government and local authority policies work in tandem to remove all the blockages in the way of businessmen who want to start businesses in the renewable energy sector and the green economy. It is important that small businesses are prioritised in order that we do not see them closing because of cash flow problems, which, unfortunately, is the case. We need to address this issue. We also need to deal with the issue of local authority rates. It is not acceptable for local authorities to raise rates at such a time. We need to ensure they reduce rates to allow small businesses to become viable.
There are great opportunities in horticulture, a very important sector on a regional basis. The Government has introduced a policy to increase the figure for forestry from 11% to 17% by 2030. Throughout the country there are great opportunities in the sector. We have not tapped into the potential to produce biogas. There are blockages in that respect in that the issue crosses three Departments. Biogass accounts for some 40% of Germany's renewable energy supply, while in Ireland the figure is zero. There is great money to be made in its production and it would also help the farming industry. The supply of biogas is not intermittent in the way that it is in the case of wind power and biogas can be used to supplement renewable energy supplies in particular areas.
We should not forget that we have some of the best water supplies in the world. We also need to consider the great potential of tourism. We have a very good tourism industry but need to ensure measures are taken in order that when we face difficulties such as those caused by the recent volcanic eruptions, the industry will not fall apart if there is a sustained problem with air travel. We need to look at many measures. We need to be innovative and come up with suggestions on how we can stimulate business and create the right environment for entrepreneurs to flourish. We need to be positive; we should not look negatively at unemployment figures, while indicating how appalling the Government is. The reality is that it is doing its best. Fine Gael is also making positive suggestions.
I welcome the Minister of State and would be delighted if he would listen to what I have to say and, above all, take it on board. I was impressed by what Senator Ó Brolcháin had to say. For one moment I thought he was not a member of one of the Government parties or perhaps his views were not getting through to the Government. Much of what he said made considerable sense.
Is the Senator saying the Government does not make sense?
I am. If the Government listened to some of what the Senator had to say, it would make a difference because it dovetails with some of what I have to say.
I come to this debate as an employer in the past for five years, between the time when I was teaching and the time when I was elected to the Seanad. I have some knowledge, therefore, of what it takes to create jobs. I created six jobs, the importance of which is not to be minimised. Just over one year ago, with two others, I set up Job Creation Initiative Oranmore. Each month we hold a panel session to provide support. We provide expertise that could cost an individual up to €2,500. We have undertaken various initiatives. For example, our most recent conference was on the opportunities available in the green energy sector.
I will discuss generally what the State can do and entrepreneurs should do, as well as how to support entrepreneurs. The State cannot create jobs except for those in the public sector, and these are not multiplier jobs. Entrepreneurs can create jobs whereas the State creates posts or positions, many of which are necessary and worthy but by definition incur a net economic cost to the nation.
We must consider all the jobs created by the State and be honest about the proportion which is useful as against those which are wasteful and unnecessary. As Taoiseach, Deputy Bertie Ahern created many wasteful and unnecessary jobs. The proportion which is wasteful and unnecessary in the public sector now is up to 30% but if we had a slim and motivated public sector we would save up to €7 billion per annum, or a third of the public sector pay bill.
The State can only create jobs by allowing the risk takers in the real world to create jobs. It should do this in two ways. It must create the sectors with the most job creation potential and support them through modest tax concessions and grants. It should remove as many bureaucratic barriers as possible for the entrepreneur prepared to take risks. A friend of mine argues that if the gate is opened and we stand back, the multiplier will be let through. These people are able to create the wealth and hire people in a process that will ultimately solve the mess we are in. We need entrepreneurs who will create jobs and pay taxes that will fund our public services.
We need to target sectors such as renewable energy for domestic use and export, maintain existing high-end foreign direct investment and promote Ireland as an educator. Ireland has significant potential in international education; we currently make €500 million from Ireland as a provider of the English language whereas the UK makes €10 billion and Australia and New Zealand are the other providers. Why do we not make more? Our justice system and visa regulation in particular are not tied into education. We are losers in that respect and I have spoken about this on many occasions on the Adjournment.
Ireland can also be an entertainer and leisure destination. Culture means business and people love us as entertainers and for our culture. We should build on this and bring about multipliers in this way. The Government relied on Ireland as builder, which is all but over, and it has all but snuffed out other more sustainable sectors.
On top of this are bureaucratic barriers, including the planning process. Did the Minister of State hear what the Minister for the Environment, Heritage and Local Government came out with this morning about the planning process? I spoke to a man recently who has a quarry that is fully compliant but because the Minister has come up with a new regulation for quarries, the man will incur up to €40,000 in costs. The Minister should go after quarries which are non-compliant first. He will choke up the planning process and An Bord Pleanála, as well as the courts. That is how ridiculous the Minister is.
There is endless unnecessary and unquestioned paperwork and associated fees for many employers, an unreasonable delay in issuing licensing permits and slow payment by public bodies. There is unspoken hostility from some in the public service, including the unions, to those who they perceive as doing better on the outside. Those who were doing better on the outside in the past are no longer doing as well, and they have been our employers.
I will give an example through a case study. The current joint labour committees, JLCs, have had a frozen rate of pay for the past year and a half. The Government has decided to increase the rates to a level which is much higher than that agreed by unions and employees at the JLCs. The unions and employers are happy with the current rates because they facilitate the maintenance of jobs to some degree. An increase in the JLC rates will force employers to lay off people as they cannot afford to pay such wages. It is a death wish designed to drive more people on to the live register.
I know a large supermarket owner employing 120 people and because the JLC rate will be increased in the autumn he will close on a Sunday and must lose 10% of his staff. The Minister of State is part of the Government that has collective responsibility to address the issue before it worsens. Does the Minister of State want his Government's job creation policy to put people on the live register?
The State is currently close to being an enemy of the people as outsiders are seen as a nuisance and a threat. For example, an assistant director of IT in the HSE — the Minister of State will recollect the PPARS computer system — is an insider while an old lady on a trolley is an outsider. The hard political challenge is to intelligently cut away the fat and leave a much trimmer body of principal State employees who are motivated and proud to serve. It can never be perfect but it could be done over ten years with the right leadership and support for an informed and included public which is screaming for an answer and a plan. It is a significant task but it must be done.
Senators in this House have heard me say many times that the Taoiseach, Deputy Brian Cowen, should make a state of the nation address laying down a plan for the next ten years.
He should place a vision before the people and enlist their support in getting Ireland back to work. He must help our employers and entrepreneurs be the people they want to be. We can then get taxes from them to pay for our public services.
We can imagine getting to a point where the €7 billion I outlined would be available for productive economic and social use and there would be a re-engineered business plan for Ireland, explained clearly and passionately by leaders of standing and trust. That will bring the people on board for a different ten years of pain; this is preferable to ten years of propping up banks and other vested interests while withdrawing education, health and social services wholesale, with our brightest and youngest leaving the country while a bureaucracy stays in place. The Government should eliminate the unnecessary bureaucracy because otherwise we will be doomed.
The Government should act constructively to eliminate the bureaucracy. The Minister of State should ask the Taoiseach to lay a plan before the people to bring us with the Government. I say this as a member of the Opposition committed to the country before my party.
I welcome the Minister of State, Deputy Conor Lenihan, and compliment the Minister of State, Deputy Kelleher, on a very comprehensive speech. It was positive rather than negative and we should take the central message from it.
The Taoiseach, Deputy Brian Cowen, made clear in a recent speech that the thrust of Government policy on the restoration of fiscal stability and a properly functioning banking system is to create the conditions in which economic growth will recommence and jobs will be created.
It is clear the decisive action taken to date is bearing fruit. The latest Exchequer returns show tax figures are on target for the period to end of April, indicating that this Government's firm action to correct fiscal imbalances has taken effect. The evident determination of the Government to take the necessary actions, however unpopular, to tackle this problem and our equally determined actions in the banking sector have significantly restored international confidence in Ireland, as evidenced by recent announcements of further investment in Ireland by IDA clients.
At every level of Government activity, jobs are at the heart of our strategy. The public capital investment programme for 2010 is expected to support almost 70,000 jobs in the economy and non-Exchequer capital investment for 2010 will be €3.4 billion, which is expected to support a further 30,000 jobs.
I appeal to the Government to exert pressure on the NRA to build new roads, particularly to the west. I accept that I am being parochial in this matter. County Mayo has some stretches of well-developed primary roads, namely, the part of the N17 that runs from the Galway boundary to the Sligo boundary, which is newly constructed and magnificent, and the part which runs from Castlebar to the Roscommon boundary. However, the N5, which runs through Roscommon and into Longford, is a disgrace. Money devoted to developing the N5 would be well spent. It would enable County Mayo and other western countries to attract industry. Building the road would create employment. More importantly, it would assist in enhancing the activities of existing industries and provide them with access to larger markets.
Ballina, Westport and Castlebar are home to large industries that depend on exports. Due to the state of the roads, however, these towns are at a serious disadvantage. The recent decision by An Bord Pleanála to uphold objections to upgrading of the N26 was wrong and has placed Ballina at a serious disadvantage in the context of its ability to attract industry. Mayo needs industry and has several assets at its disposal with regard to attracting it. The first of these is Ireland West Airport, Knock. It is hoped that an industrial park will be put in place there and plans are proceeding in this regard. I congratulate the relevant bodies and Departments providing assistance in this regard.
I hope IDA Ireland will endeavour to bring employment to peripheral areas, particularly those on the west coast. It is vital that employment should be created in the regions to ensure that communities can grow and sustain their existing populations. Despite claims in recent years to the effect that the Government misspent the money that accrued to the Exchequer during the period of the Celtic tiger, it is clear that many good things were done. Child care facilities were provided, community centres were built, sporting facilities were either provided or upgraded and new schools were constructed. This was all done for the benefit of young people. However, all this work will have gone to waste if there is no one around to use these facilities. In such circumstances, employment must be created and existing populations sustained so that communities might survive.
Enterprise Ireland is targeting the creation of 40,000 new jobs in the next five years. Through the multiplier effect, this is expected to lead to the creation of an additional 28,000 jobs elsewhere in the economy. The report of the high-level action group on green enterprise, published in November 2009, identified the potential to create approximately 80,000 new jobs in the coming years. Implementation of the recommendations of the innovation task force will create the environment for even more jobs to be created in innovative sectors of the economy.
The Government has taken decisive action to get credit flowing again to business, particularly the small and medium enterprises that are the main source of employment here. Undertakings required of the main banks in the recent recapitalisation exercise will ensure that they will repay the debt they owe to the taxpayers by restoring the flow of credit to enable business to exploit the opportunities offered by recovery in global markets. The Minister for Enterprise, Trade and Innovation, Deputy Batt O'Keeffe, has met representatives of the banks and will continue to closely monitor the activities of these institutions to ensure that they fully honour the commitments given in respect of the matter to which I refer.
If employment is to be created, it is vital that small businesses have access to money. Having been so well catered for by the Government and the State, the banks must open their coffers and give money to small businesses.
Finally, a bit of sense.
Those of us on this side of the House have been saying that for some time.
Good man, Senator, go for it.
Jobs must be created. I am delighted the Minister is meeting representatives of the banks and is putting pressure on them to ensure——
We heard about Ministers meeting representatives of the banks on previous occasions. Did it make a difference?
I am glad the Senator listened to what was said previously.
The actions taken by the Government will ensure that the economy will be well placed to take advantage of the international recovery. They will also assist in restoring growth in the areas of economic activity and employment, which is vital. I was delighted to read a report in one of today's newspapers with regard to a Chinese consortium establishing an international trade centre to the east of Athlone. If such a development comes to pass, the employment, and so on, to which it will give rise will also benefit the region in which I reside, not far from Athlone. However, we must ensure that the proper road infrastructure is put in place in order that people might travel to and from this centre.
I was delighted to hear the Minister of State, Deputy Kelleher, refer to the Asian markets. The work done by people from Ireland who went on trade missions to China is beginning to pay dividends. A few years ago, Ireland had a trade deficit with China. Now, however, it has a trade surplus of €2.9 billion with that country. I acknowledge what Senator Healy Eames said with regard to education and the teaching of English. I was glad that following his most recent trip to China, the Minister for Foreign Affairs, Deputy Martin, stated that he would take action in respect of this matter and indicated that Chinese would be placed on the junior and leaving certificate curricula.
I was referring to the visa system.
Yes. I agree that the position regarding the visa system must be examined. However, it would be a positive development if Chinese were placed on the junior and leaving certificate curricula. This must happen and I am delighted the Minister has taken suggestions in this regard on board.
Cuirim fáilte roimh an tAire Stáit. Senator Carty was going well until the end of his contribution. However, what he said earlier was correct. The banks must play a significant role in job creation and in assisting innovation and enterprise. On today's Order of Business, Senator O'Toole stated that the cost of regulating the banks last year was €39 million and that the figure will increase to €50 million this year. This is another enormous amount of money the people are being obliged to pay out. The practice of bailing out the banks — with no apparent dividend for the people at the end of the process — must be brought to an end.
We may all have different perspectives on economy recovery and job creation. Ultimately, however, we all want to see people across all sectors of society in employment. Hope, vision and a plan for job creation must be provided but none of these has been forthcoming from the Government. Government Members can point to the fact that they are putting the banking system in order and that they have cut spending, reduced the amount of money allocated to Departments, and so on. However, the report of the innovation task force states, "In order to achieve this vision and secure Ireland's economic future we need to significantly increase our current rate of job creation and new company start-ups."
Senator Healy Eames is correct that the Government does not necessarily create jobs, except, perhaps, in the public sector. In that context let us consider the budget, which contains a commitment to reduce corporation tax over a period, introduced in the UK earlier today. This will have significant implications for Ireland, particularly in the context of the new Dublin-Belfast access route, which is a welcome development but which could have a profound affect on the west and the south. Aer Lingus has indicated that there will be no flights out of Shannon to America in the autumn.
Our competitiveness is being eroded. Ireland has been referred to as the builder and creator of jobs in the construction industry but what about Ireland the employer? It is stated day after day that the cost of doing business in this country is not being addressed. A Martian who landed in Ireland in 2005 and returned in 2010 would find it difficult to conceive the programme for Government and Government policies that have got us where we are today. Some 439,1000 of our fellow citizens are unemployed. One can blame Lehman Brothers and the euro but the bottom line according to the two reports on the banking sector was internal factors. Sadly, I lay the blame fundamentally and squarely at the door of former Taoiseach, Deputy Bertie Ahern, former Minister for Finance, Mr. McCreevy, and the ideology of the former Progressive Democrats. The biggest mistake made by Fianna Fáil was to pretend at Inchydoney that it was, like the emperor, adopting a new set of clothes and was going to be a socially caring Government. It did not do so and so let the people down.
When the Opposition parties promote ideas such as NewERA or any type of jobs creation policy a litany of Ministers appear on the plinth and elsewhere criticising them. Fine Gael has never been afraid of making the right decisions. We supported the initial bank recapitalisation schemes, made decisions in regard to the budget and put forward an alternative programme in terms of the budgetary situation in which we find ourselves. I would like to be a little parochial at this point. Senator Carty referred earlier to the capital programme of expenditure. There is a need to offer stimulus and hope for employment. The model for this is the eastern gateway bridge in Cork which would have kick started the docklands and created jobs. Linked to this is the development of Páirc Uí Chaoimh. I congratulate the Cork city councillors who voted for the redevelopment of Páirc Uí Chaoimh and supported the sale by Cumann Lúthchleas Gael of land in the show grounds for the creation of a new corridor in Cork. It is hoped we will have a new convention centre attached to Páirc Uí Chaoimh.
One of the most important events that took place this year was the acceptance of the Croke Park agreement. My colleagues in the Labour Party opted to abstain from giving its opinion in this regard while the Government and Fine Gael were united in stating it should be accepted. It was difficult for the public sector workers to vote "Yes". As a public sector worker for many years, I congratulate and salute them for doing so because it was the right thing to do and it put Ireland, job creation and job retention first. I agree with SIPTU that the momentum behind the Croke Park agreement must be maintained. As stated by Senator Healy Eames, public sector reform is necessary and must be followed through.
We need a more competitive Ireland. We should follow the best practice of other countries and ensure key infrastructural spending on energy, telecoms and water is put in place, thus creating jobs. A generation of Irish men and women require from Government the political leadership which sadly has been lacking. It is hoped that tonight we will see a relaunch of Ireland at work.
I welcome the Minister of State, Deputy Conor Lenihan. This is an important subject relating to the future of Ireland and how we go about getting our economy back on track. I believe every party is at one in this regard. We all want to see jobs created.
While I was heartened by the speech given earlier by the Minister of State, Deputy Kelleher, having read it again I am unhappy with some aspects of it. I believe the Minister of State's speech is simply putting words on paper. The Minister of State stated that the Government is reducing the administrative burden by driving better regulation, that local authority charges remain a great concern of the business sector and that it is conducting an efficiency review of the local authority system to identify savings which will reduce pressure on small businesses. It is a pity the Minister of State did not explain what he meant in that regard. Perhaps the Minister of State, Deputy Lenihan, will do so when replying.
I attended a meeting yesterday of Mayo County Council, the county manager and director of services of which is obliged to meet with Oireachtas Members. One of the biggest burdens on local authorities is the 30% local contribution they must come up with in relation to the creation of new waste water treatment and facilities. Most local authorities do not have the rate base to do so. The local authority business sector is lumbered with finding this 30% contribution. Perhaps the Minister of State, Deputy Lenihan, will spell out in detail how this will be done given the statement earlier by the Minister of State, Deputy Kelleher, that the Government is seeking to take the pressure off small businesses.
It is all made up.
I am aware of the many burdens on small businesses as I am involved in that sector. The only burden on councils in respect of small business is that of rates. The vast majority of local authorities have not increased rates for the past year or two. There have been huge increases in the cost of waste disposal — it is an ever-increasing cost — and huge increases in the cost of insurance. The development charges in respect of new business, which are expensive, have driven up the cost of business. Perhaps this is at what the Minister of State was hinting.
The Minister of State referred also to driving better regulation. This country has run amok in terms of regulation.
The Senator is correct.
What members heard yesterday from the county manager is frightening. I would like to know if the Government will revisit the provisions introduced under section 80 of the 2005 Act. The vast majority of staff within local authorities must under health and safety legislation be retrained or at the very least trained to do the job they are doing. If not, they will be at risk. I heard on Joe Duffy's "Liveline" programme today that Army personnel are not allowed to cut lawns owing to health and safety regulations and that this task is being farmed out. We expect Army personnel to drive and use tanks but will not allow them to use a lawn mower, which is ridiculous.
Perhaps the Minister of State will say if the Minister intends to revisit the legislation concerned. The Minister of State, Deputy Kelleher, stated earlier that the Government is reducing the administrative burden by driving better regulation. Does this mean the introduction of more regulation or the abolition of existing regulation? The Minister of State did not state clearly what he intends to do. Under law one is innocent until proven guilty. However, under health and safety regulations one is guilty until proven innocent. Health and safety officials have been bragging — I do not know if this is contained in its annual report — about convicting local authority personnel and holding them accountable. We need health and safety measures but regulations have become ridiculous and are placing a huge burden in terms of administrative costs on small businesses. We must look at this issue. Health and safety regulations add as much as 25% to the cost of a local authority project. The cost of a job projected to cost €1 million will increase by €250,000 because of health and safety requirements. A whole new industry has been created by bureaucrats.
This burden needs to be lifted from local authorities and small businesses. The Minister of State's remarks were ambiguous, but I hope this is what he meant.
Statements on job creation and innovation are hugely important. This debate should be seen as an opportunity to do more than simply knock the Government, although we all like to do this from time to time. The Government deserves to be knocked for its failure to create jobs. However, we should also use the opportunity to look at and focus on solutions. It is easy to point out where the Government strategy has gone wrong and there is no doubt it is going wrong. It has been announced today that 40 jobs will be created in my townland. However, this time last year we were losing 40 jobs a day in the same county and we are still haemorrhaging jobs in County Donegal, in which the unemployment rate is 21%. The total workforce in the county is just above 60,000, but there are 21,000 on the live register which accounts for over one third of the workforce. This rate of unemployment is not replicated anywhere on the island of Ireland. The unemployment rate in County Donegal has always been above the national average. When there was full employment, we had an unemployment rate of 12%, according to the household index surveys.
We need to look at solutions. We need a different and radical approach. The public tends to focus on what Fianna Fáil and Fine Gael offer. What they offer is very similar. I listened to Deputy O'Dowd speak last week during the Deputy Enda Kenny and Deputy Richard Bruton battle. He talked about how different Fine Gael was from the Government. He said Fine Gael would not cut €1 billion from the capital budget but would take it entirely from the current spending budget and that the Government cuts were not tough enough. A report on third level fees will be published in the next few days. How will the Fine Gael proposal on third level fees help to create jobs in counties such as mine? In Border counties it is very easy for people to get an education in the Six Counties and the proposed graduation tax will place third level institutions in Letterkenny, Sligo and Dundalk at risk.
We need to look at the solutions being brought forward by other parties. I have helped to draft policies to tackle youth unemployment which Fianna Fáil supported and stated were sensible. Why do we not invest in job creation? We hear much about the 80,000 people under 25 years who are unemployed. Why do we not instruct FÁS to develop a long-term career path for every one of them? If a person under 25 years remains unemployed for a period of time, it will be difficult for him or her to get back into the jobs market. We know jobs are not available and that people need reskilling and retraining. Going to a local FÁS office and being told this or that course is available is no good. Everyone is unique and has different skills and abilities. We need a pathway for each and every unemployed young person. Why do we not recruit career guidance teachers who would be available between now and September to provide such a service for the under 25s during the summer months? Why do we not look at a job creation strategy to invest State money in getting people back to work instead of having them on the dole? That would require a radical shift from the policies of the two major parties which want to cut, cut, cut, instead of invest, invest, invest.
That is not fair — not the two major parties.
Just one of them.
I thank Senators for their contributions to the debate which is hugely important. It is also important that we recognise that the worst is over, that we have turned the corner and, in the fabled words of the Minister for Finance when presenting the budget last December, that we have marked a different line and are on the cusp of economic recovery. All of the evidence available to the Government and the agencies which work with it is that recovery is under way.
The Minister does not know that.
It is forecast that the growth rate will be positive at the back end of the year, which is not too far away. We come to the close of the parliamentary session with the tantalising prospect of economic recovery beginning at the latter end of year and continuing into 2011. That is good news for all Members of the House and all those outside who look to the Houses for guidance and leadership and the light at the end of the tunnel that recovery represents for many who have lost their jobs or are in employment which is vulnerable.
We have taken and delivered hard medicine to the economy and the spending profile of the Government and public services. These tough decisions were not taken with any relish, but we have taken the decisions that will restore the cost competitiveness of the economy and the country. It is not only the Government who is saying this. Virtually every independent economic commentator at international level commends, with awe and envy, what Ireland has done in the past two years. The Government has been involved in a fire-fight during the economic crisis. It may be that we have not communicated our aims, ambitions and goals clearly. However, if a small restaurateur has a fire in the kitchen, it is very difficult to provide good customer service while the fire is raging in the kitchen.
Especially with the health and safety inspector outside the door, inspecting the Government.
The Senator had her opportunity to speak.
Come on, he is well able for it.
We have had a fire raging in the kitchen of the economy for the last two years, but we have turned the corner. There is now the prospect of recovery. We have done a crash course in competitiveness which is the envy of other countries. No other country in Europe could have withstood socially the reductions we saw in public service wages and salaries. There were were huge reductions of between 12% and 35%. Interestingly, the average reduction of 12% reduction is equal to what the best economists say was the differential between public and private sector workers.
From where will the €3 billion come?
We have bridged the gap. Many economists complained about the partnership process because it had conferred a salaries and wage benefit on those in public service employment of the order of 12% over comparable grades in the private sector. That has been pushed back, which is good both for competitiveness and equality. Public and private sector workers are now on a level playing pitch in salaries and wages. That is why the Croke Park deal undertakes not to cut public service wages further.
From where will the €3 billion come?
The Senator may not interrupt another speaker.
Come on. This is about the country. It is not about procedure in the Seanad.
The Senator had her opportunity to speak. The Minister of State should now be given his.
He might have the answers for us.
If the Senator will not obey the rules of the House, I must ask her to leave.
Fine. No problem.
The second fastest drop in Europe in energy costs has occurred in Ireland. Many competitive factors are now playing in our favour. When IDA Ireland promotes new projects and investment opportunities in Ireland, it finds it is able to pitch for projects for which it could not have pitched three or four years ago. We are now in a position to attract more inward investment because we have gone through this competitive process.
There are 435,000 people unemployed.
——and because we have reduced our costs. There are——
I will not allow this to continue, Senator. The Minister is replying and if you continue to interrupt, I will ask you to leave the House.
I have no problem. If the Cathaoirleach wishes me to leave, I shall leave.
You will not interrupt and I guarantee that if you do, you will not return for the rest of the week.
I would like the Minister of State to answer the real live questions.
The Minister of State is replying. You had your opportunity. If you do not want to listen to his reply, I ask you to leave.
This is a joke.
I ask you to leave.
This is a joke. The Government cannot take questions.
Senator Healy Eames, I ask you to leave the House.
No problem. As I said, the House is not working.
The Minister of State may continue.
I am happy as anything to leave because I was putting very basic questions——
Senator, you cannot continue. You know the rules of the House. Respect them.
I respect them. I will always leave when I am asked.
You will lose your Adjournment matter now.
I note with interest and gratitude the thanks the Senator so clearly gave me. Some elements of my speech must have been addressing her concerns if she was noble enough to say "Thank you". I thank her for that.
There are some key statistics about the economy of our country which are interesting. We are the fourth most open economy in the world and the second most entrepreneurial country in Europe. Eighty per cent of what we physically produce in this country is for export, 76% of those exports are generated from the multinational sector and 5% of our GDP, twice the European average, is spent on our public capital programme. We are maintaining that through the worst recession the country has seen since the 1920s.
There are a few talismanic figures and statistics which show that Ireland remains intensely competitive and globalised, up there and competing with the best countries in the world. It is no accident that 50% of the inward investment gains and wins we have made in the past two years are in the area of innovation, research and development and science and technology. These valuable investments of those two years show the competitive strength of the intellectual capital we have built in this country through our universities and institutes of technology. Ireland is now a good place for people to invest if they wish to locate a research and development activity here. That is the message I get when I make visits to the United States and elsewhere. Basically, in a great many cases, the competition boils down to us and Switzerland when we pitch for investments on the research and development side or for shared services activities, whether in the IFSC or elsewhere among the corporations that have established a presence in Ireland. That is good news. We are up there with the best and are still competing and winning the high-end jobs that will represent the future here.
I heard Senators say — it is almost a ritual now — that the Government has no recovery plan. We took the opportunity through the Taoiseach to launch our recovery plan by means of the smart economy framework. That is a very strong document which very few people in either House appear to have read. That is the Government's recovery plan and is one that would have had to be enunciated publicly in any event, even if we were not going through the severe downturn we went through in recent years. We would have had to move up the proverbial value chain into a higher end of manufacture and services. We are doing that as we must have done even if there was not an international recession. The clear evidence from before the period of recession is that many jobs of a lower order of manufacture and service provision were moving or drifting away to other locations — to central or eastern Europe, the Far East, etc. We have executed this particular move, therefore, in a time of great difficulty but have managed and moved it. Again the evidence is present about the recovery being under way. If one talks to Enterprise Ireland, it is very clear that a recovery is happening in this economy. If one talks to international people involved in freight forwarding, one hears the containers are filling up again. International trade is becoming more robust as the weeks and months turn.
In Ireland, the most recent survey by the NCB purchasing managing index shows that manufacturing expanded for three months in a row. The most recent figures from that index are very interesting because they show that not only is manufacturing expanding, but the employment associated with manufacture also expanded in the most recent three month period of which I speak. That is very interesting because, generally speaking, it is typical that manufacturing employment lags as does the actual expansion of manufacturing. In other words, employers take the opportunity to move to newer forms of technology and higher productivity which does not involve adding extra jobs. Now, however, we are in a very good place. Manufacturing is expanding as is the associated employment. That is really good news and bears out a great many things that were said to me by leading international bankers, financiers and economists when I was in New York some months ago. They said they believe Ireland will come out of recession perhaps more quickly than even the United States, precisely because we are a nimble, agile, globalised economy, the fourth most open economy in the world, and that we will emerge much faster with the onset of international recovery.
The smart economy, with its emphasis on science, technology and innovation is at the heart of where we want to be, as a country in the future with high quality jobs, whether in green tech, the food sector, ICT or bio-pharma. A figure not often quoted in public is the fact that more than 40% of our GDP is generated from the pharma, chemicals, bio-tech and bio-pharma sectors. This is an enormous amount of our GDP. One of the key challenges for us as our economy moves forward is how we achieve convergence, as between some of the major investments which have been made in Ireland in the bio-pharma and bio-tech sectors and in ICT. If we can achieve a level of convergence between these different industries, we will create thousands of extra jobs in this economy. There are good prospects for our economy.
This debate has been very good because people should always remember that we must stop running ourselves down in this country. I do not say the Opposition, this week at any rate, has been so negative with regard to the Government. It is very important, whether one is in Opposition or in positions that command public air time, to stop running down this country. Other countries with bigger economies than ours have had many more difficulties. France and Germany have had 35% drops in their exports. In recent years we have experienced a decrease of only in the order of 6% which is very low compared to those big trading economies. When one hears what the commentary is like in France, Germany or the UK, one notes that people do not go around advertising their difficulties. Bigger countries do not use their national media as some sort of therapy to give out about things or to run themselves down.
Talk to Joe.
They do not tend to advertise their difficulties——
They need to go on "Liveline".
——in quite the same way as we do in this country, or to the extent to which we run down the country. Sometimes I have heard leaders of the Opposition say——
They visit economists bringing garlic.
The Minister of State's time is up. No interruptions.
In recent years, a leader in the Opposition ranks described this country as being "bust" when he attended a conference at Davos. That was perhaps the most ignoble statement ever made by an Opposition leader in this country, going to a foreign forum and publicly undermining this economy in such a fashion. That person was re-elected leader of Fine Gael this week. I wish him the best of luck.
There was no contest in his re-election.
The best of luck to him but with that sort of negative mindset I do not believe he will create many jobs in this economy.
I shall leave my comments at that. I thank the Chair.
When is it proposed to sit again?
Ag 10.30 maidin amárach.