I welcome the Minister and her officials - Mr. Michael McKenna, who is well known to us, Mr. Ronnie Sheehan, Mr. Eugene Forde, Mr. Brian Higgins and Mr. Dermot Keehan. We are considering the Estimates for the year 2002. We will take the Minister's 11 page script as read. Will she give us an overview?
Estimates for Public Services, 2002.
Vote 34 - Department of Enterprise, Trade and Employment.
As we agreed privately, in view of the time constraint, I will circulate the script. It might be more useful to have a question and answer session. The Estimate for the Department for 2002 is €1,128,868,000, which is an increase of €83,217,000 on the provisional outturn for 2001. International economic uncertainty and lower levels of competence domestically have resulted in a sharp slowdown in Irish economic growth in 2001, with the real GDP estimated to have grown by 4.4%. This contrasts favourably with world economic growth for the same year of 2.2%, and just under 0.9% in the OECD.
Although inflationary pressures remain strong, the economic intelligence unit expects Irish consumer price rises to ease during 2002 to 2003. Internationally, the global slowdown will ease traded goods price pressures, while commodity prices, including oil prices, should soften. A stronger euro will curb imported inflation and it is expected that Irish inflation will fall from 4.9% in 2001 to around 2.2% in 2003.
Notwithstanding the difficulties that have manifested themselves in the past 12 months in increased redundancies over the previous number of years, the employment circumstances remain very buoyant, with unemployment down to less than 4% according to the labour force survey and just over 4% according to the live register.
The work permit regime is of particular interest to the members of the committee. To ensure that priority was given to our own nationals and those in the EEA, a new processing method has been put in place which requires employers to first approach FÁS to see if anybody in the EEA is available before applying for a work permit. In 2001, for example, 36,400 permits were granted. In 1997, less than 5,000 were granted, which puts matters in perspective. To date, in the first two months of this year, over 6,000 permits have been granted, 32% of which are renewals from last year. The remainder, 68%, are first time permits. They range across all sectors in the economy with a particular emphasis on health care nurses, the services sector, catering, agriculture and horticulture. I will conclude here and take any questions members may have.
Are we finishing at 4 p.m.?
At 3.55 p.m.
I just had an opportunity to read through the Minister's undelivered script that we have taken as read. She introduces her Estimate with a flag that this is an increase on last year's provisional outturn. I wonder where the Minister sees things moving for the rest of this year in so far as we appear to have records pending in terms of the public finances in 1999, which was not so long ago. The gross current supply spending was less than €20 billion. Now it is more than €30 billion. That is a huge increase - over 50% in three years or in excess of 16% per annum. In terms of capital, we have seen an increase over the three year period of over 70%. I have to question the underlying theme in all these Estimates, across a range of Departments, namely that Ministers feel proud of the fact that the Department is spending more money. It is with a certain sense of shame in some cases that Ministers should be admitting to spending more money, particularly when one looks at the health services, etc. The day should be well and truly over when one expects plaudits for engaging in the spending of money rather than seeking value.
I am sure the issue of job losses is of great concern to the Tánaiste and the Taoiseach. In this last Estimate before the election, the Tánaiste can look back on her tenure of office and see that she has failed miserably in the area of regional development. We have seen congestion and bottlenecks on the east coast. Our capital city and east coast conurbation has become an area where quality of life is unknown. Counter poles to Dublin have not been established. The crucial national spatial strategy has been shelved for political purposes. The national development plan is beginning to creak and there seems to be no response to the ever increasing congestion and bottlenecks. Yet we have areas in the midlands where unemployment is significantly higher than average. We have seen no more in those areas than concrete and asphalt bypasses that allow traffic to traverse from Dublin to Cork or Galway with greater ease. What the Tánaiste said a couple of years ago about having a First World economy with a Third World infrastructure is still very true at the end of her tenure of office. There does not appear to have been any progress under the first two years of the national development plan.
I implore the Tánaiste to lead and drive the jobs task forces in an effort to stem the rising tide of unemployment in the regions. I notice that some of her colleagues, particularly the Minister for Social, Family and Community Affairs, Deputy Dermot Ahern, seem somewhat embarrassed at using the term "special jobs task force" in their constituencies. Deputy Ahern now calls it a multi-agency initiative. The import of that is the Government is running out of ideas and lacking in focus.
The Tánaiste calls on the private sector to engage in improving our infrastructure by creating an environment that would facilitate the creation and maintenance of jobs. The boom of recent years has been because of the vitality of the private sector. Vitality in the private sector has been met with inertia in the public sector. One has only to look at vital infrastructure such as schools, hospitals, roads and health services; they are all in disarray. Aer Lingus, Aer Rianta and RTE are all in serious difficulties.
The Tánaiste invited questions on the work permit scheme. There are two angles to that. The first is the exploitation of those who have received work permits and are working but are unaided by a meaningful inspectorate to which they can turn if they have any difficulties. There is a long delay under the new regime introduced by the Department early this year for those who have not yet arrived here to avail of the scheme. The hands off approach seems to have given rise to great uncertainty and long delays. There has not been much progress in the area of health and safety. There are too many work related accidents giving rise to injury and death, trauma for families and the high cost of insurance.
Regarding people with disabilities, I draw the Tánaiste's attention to Rehab. Under the NDTI there are a number of successful operations throughout the State incorporating quotas of persons with disabilities. The pay scale seems to be somewhat different to that of their able bodied counterparts. I am anxious that the Department extend the grant-in-aid to ensure that this type of inequality is not in the system. Progress has been particularly slow under the social economy programme. A mere 500 jobs have been created at a cost of €270 million. Are there further targets to be reached?
I notice that the Tánaiste gives us figures and statistics ranging from the fourth quarter of 1997 to the fourth quarter of 2001. The review of the past year is the one we are interested in. The performance between 1997 and 2001 is impressive on most levels. I am sure the Tánaiste will agree that she was blessed to be Minister for Enterprise, Trade and Employment during that period and to have inherited a booming economy in 1997. That is not to take away from the achievements she has detailed. The problem that she must now confront is the dramatic downturn in 2001. It does not stem from the events of 11 September 2001, or the latter part of that year. With the benefit of hindsight it becomes apparent that the downturn was evident from the beginning of last year.
In the first two months of 2002 there has been a 63% increase in notified redundancies over the corresponding period in 2001. The consecutive figures over the past five months are worse than the bad days of the 1980s. This very worrying picture is aggravated by the regional phenomenon to which Deputy Flanagan adverted. Many semi-skilled type jobs are being taken out of the system with little prospect of being replaced because of competitive considerations. It is worrying that the downturn has been so dramatic. We are exhorted by the Taoiseach, the Tánaiste and others to concentrate on the positive. There are a number of positives but the downturn is disturbing because I am advised the IDA pipeline is pretty much dry. I do not know if that is correct as it is easier to get into the vault at the Central Bank than get information from the IDA. They are overly concerned with confidentiality.
We are currently operating on nil growth. As Deputy Flanagan said, the public spending coming from the axis of the Tánaiste and the Minister for Finance is quite extraordinary. While they denounce my party as one which threatens to bring rack and ruin to the country, they are members of the biggest spending Government we have seen since I do not know when. Had we had an election last summer the Tánaiste could have gone out in a blaze of glory. There is no However, an election this summer leaves a worrying economic picture for whoever inherits it.
The question of the redundancies, which there is no point in rhyming off, is that the numbers have been grim in the provincial towns - especially so in the midlands which Deputy Flanagan represents - and there is little prospect of the jobs being replaced. The only apparent alternative is to invest in training to up-skill and re-skill those who have been made redundant. I have heard little of the national training fund since we passed the National Training Fund Act, 2000. Is it up and running and what moneys have been disbursed? The Tánaiste and her colleagues will know that we have been preoccupied with various matters today including the Competition Bill. The fund was passed by way of amendment late at night when we caught the Government on the hop. There was a great lack of enthusiasm for it in the Department but even though it is law, nobody got around to setting it up until December 2001 - probably Christmas week. Has it met and who is on the board? How did the Department interpret its role - is it purely advisory and does it have any significance in the scheme of things? The fund is separate from the Exchequer interest in training and I would like to know something about what has been paid out and what the priorities are.
The second issue I consider relevant, although I do not see any reference to it in the Tánaiste's script or indeed in her speeches generally in terms of the regional imbalance to which Deputy Flanagan averts, is the difficulties in the roll-out of broadband. The lack of broadband high-speed connectivity seems to be a second restrictive barrier to replenishing employment outside the capital. Some of the main players in the area could not contemplate its going outside Dublin. Indeed, there are difficulties in Dublin itself but they are more serious outside the capital. It appears the private sector will not rise to the challenge. Instead of a monopoly, we have ended up with a duopoly since the acquisition by BT and so on. Competition will not therefore solve our problem in that area, much as the private sector would not have electrified rural Ireland in the 1950s. This is as important to our economic well-being as was electricity in the 1950s or the transfer to digital in the mid-1980s. This should be as important, if not more important, a matter for the Tánaiste's Department as it is for the unbelievably clumsy Department of Public Enterprise which seems to have made little progress in this area. I would like the Tánaiste to comment on that.
I would also like someone to remind me what the support in employment programme is because I have forgotten about that one. As Deputy Flanagan said, the take-up on the social economy programme is disappointing. Perhaps its nature means it will take a lot of nurturing before one can approve projects. I am not sure how we will spend €270 million at the rate we are going. I know we do not have to do so but the programme is being waved as a flag and a gesture towards social inclusion and equity.
Will the Deputy clarify what he is talking about?
I am talking about a total of €270 million provided in the national development plan for the social economy programme. I wonder what proportion has been taken up and if it is seriously contended that that amount of money will be used. It is nice to have it there as an indicator but what in effect is likely to be the uptake? I meet people who have either never heard of the programme or do not understand it - I have been talking to some of the Tánaiste's helpful officials about who should fall within the programme's remit. People are finding it difficult to obtain intelligible information on the programme.
I have not had a chance to read about the inquiries with which the Tánaiste is so centrally connected in the minds of the public but it is a pity that, although we have delayed the election, she is exiting office without this information coming into the public domain. Perhaps the conflict in the Middle East or other regions might justify the Taoiseach's extending the life of the Government for another two years under the Constitution but short of such an extension, it does not look like we will get any results here. The buck seems to have been passed to the director of law enforcement to mediate this information into the public domain. I commend the Tánaiste's efforts in this regard but it is painful that some three years and three months after she gave high profile interviews to the effect that our hair would be standing on end at the information that was to come out later that year, very little information has actually come into the public domain. I do not know if there is any basis for a story which emerged yesterday about the location of a new group of Ansbacher depositors. It takes a long time to get to the bottom of these matters and the Tánaiste's experience is testament to that.
Am I correct in understanding that some 6,000 work permits will be issued in two months? Does that imply that we will have roughly the same number of work permits as last year? I do not know what work is being done on giving us a profile of who those people are, what their skills are and what jobs they are doing but it would be interesting to have a look at that. No reference is made to FÁS in the sense of the body having to reverse engines when it reinvented itself in an era of high employment and set off across the world to Beijing, Newfoundland and South Africa. It was like polling day out there with the number of people queuing up to come here. Our direction seems to have changed dramatically since the statements that our future lay in the Jobs Ireland tour of the world but, I suppose, the essence of adaptability lies in the ability to change. That the position has changed so much will surprise people, although I am not making any value judgment on it.
We are still on line to grant in excess of 30,000 permits again this year. Does this mean there is a voracious appetite on the part of employers for a type of worker they cannot get here? The Tánaiste has acknowledged that she, the Government and the rest of us will come under more pressure because of this as the number of people becoming unemployed rises. Again that goes back to the question of investment in training and the kind of training that is available.
In relation to the CE scheme or, more specifically, the reference at the bottom of page 4 to the fact that "the mainstreaming of CE services in schools is now under way", I am curious to know why it is taking so long to transfer this responsibility to the Department of Education and Science. Do I understand this correctly? Is it now envisaged that this will be done between 2000 and 2004? There are many constituency problems associated with this. There are concerns about the manner in which this is being done and whether people's jobs are assured. People who are working in support roles in schools are very much appreciated by their employers as well as their co-workers. If the money is to be transferred to the Department of Education and Science, why can the Department not resolve this industrial relations problem? What are the reasons for this long period of transition?
I take no pleasure in saying that it is a pity that the downturn at the end of the Tánaiste's period of office has been such a dramatic one. The good days were clearly not going to last forever and the portents for the future are not good. The assumption that an improved American economy will automatically lift the IT sector here will not necessarily be borne out. Many IT companies are re-evaluating their options in terms of where they locate their factories. The broad band issue to which I referred earlier will be very much in their minds as they consider what to do next. Government intervention is needed. We cannot leave this in the hands of the private sector.
Following a period of unconscionable buoyancy, it is disheartening to see that people are again losing their jobs. People who had returned to this country from England and America are now considering emigration again. Many young people here grew up believing that the word 'emigration' starts with the letter 'i', but the reality is that many returned emigrants now feel that they have no alternative but to leave the country and seek work elsewhere.
I appreciate the comments of Deputies Rabbitte and Flanagan.
Before the Tánaiste speaks, I too would like to put forward some views. Tribute should be paid to the Tánaiste and the staff in her Department for the programmes they have funded in recent years. The Estimates for 2002 show that further funding will be provided for programmes which will, I hope, add further value to the position in which we now find ourselves.
It is worth noting that, in five years of the Tánaiste's stewardship we have achieved something close to 40% growth. That is an outstanding result. There is not another country in Europe that could compare with that figure. When one looks at the figures quoted by the Tánaiste, one sees that unemployment decreased by 57%, or 99,000, and the long-term unemployment rate decreased from 5% to 1.2%. Figures such as these underline her achievements and tribute should be paid to the Tánaiste and her Department.
There is no doubt that the economy has experienced decline lately. The Chinese and American economies have had a role to play in this. If the Tánaiste had experienced only good times during her period in office, people could dilute her achievements by saying that she had an easy term in Government. However, it is apparent that she has managed turbulent and successful times equally well. Even when one acknowledges that the economy slowed down in 2001, real GDP is estimated to have grown by 4.4%. That figure is 100% greater than the global economy growth for the same year. It is important that the criticism of Deputies Rabbitte and Flanagan is balanced with an outline of the achievements of the Tánaiste.
Regarding subhead K2, I will give further consideration to the issue of apprenticeships. I know that in my constituency, people are experiencing difficulty in getting apprenticeships. There has been some growth in this area, largely due to the boom in the construction industry. However, it is still difficult for young people to obtain apprenticeships. Also, FÁS schemes wherein people are trained and then put into the marketplace are scarce. This is having an impact on employers who are seeking new staff. The other day, I spoke to the director of one of the largest independent supermarkets in Dublin, who told me that the future survival of his enterprise is threatened by staffing shortages. A large percentage of his staff are from non-EU countries. Members may be aware that in 2000, I campaigned to make the work permit scheme a more user-friendly one. The aforementioned supermarket owner is of the opinion that having to request a letter from FÁS is a joke, because it is not in a position to provide staff who are EU nationals. Consequently, I ask the Tánaiste to consider a speedy review of the work permit scheme. We need only to put our finger on the pulse of some of the larger enterprises to know that the current state of affairs is unsatisfactory.
I have a particular interest in the area of specialist training providers for people with disabilities. This is an area of great scope and I would be grateful if the Tánaiste could advise me of any progress that has been made.
The economy is no longer growing at the high rates of recent years. However, Ireland still has the best performing economy in Europe. Last year, we created an additional 42,000 jobs. Since the early 1990s, the workforce has grown from approximately 1.15 million to just under 1.8 million people. Consequently, when we talk about redundancies, we must refer to them in the context of the huge growth in the workforce. I know Deputy Flanagan is particularly interested in the situation in the Midlands and unemployment there has fallen by 52% since 1997. Employment there has increased by 16% in the same period. We set a target for the IDA that 50% of all of the new green field jobs would have to go to the Objective One region.
Many of them went to FÁS.
We are on target to achieve this. It is true the jobs pipeline is not what it was a few years ago, but it not true that it has dried up. There will be expansion of a number of existing projects announced in the near future. The largest bio-pharmaceutical plant under construction in the world at the moment is being built very close to Deputy Rabbitte's home in Clondalkin, a $2 billion facility at Grangecastle. Genzyme is another big bio-pharmaceutical firm investing in both Offaly and Waterford.
In the new industries we are doing well, but the challenge is in the more traditional sectors, where companies are trying to compete with economies with much lower wage levels. In that kind of environment, we must make up the gap by boosting productivity through technology or we will not succeed. We have all unfortunately seen some very high profile company closures recently, companies that were in regions for considerable lengths of time and whose employees' skills were based entirely upon the traditional activities of those firms. That will be a very big challenge for us.
People with a third level education will, in the main, find it relatively easy to find good quality employment. Those who are unskilled, particularly older workers and those in regional locations, will be faced with major challenges. That is why the emphasis of the National Training Fund and FÁS is on training the employed. In previous years characterised by high unemployment, the emphasis was on large projects with many jobs and on training unemployed people for those positions. Now that long-term unemployment is down to 1.5%, the focus is on the training of the employed and re-equipping people with new skills. I have seen fantastic examples of this, such as the former employees of Fruit of the Loom, acquiring new skills and working in an entirely different industry, many of them earning more money in technology companies. The challenge is to repeat this where we can in other parts of the country.
I agree with Deputy Rabbitte about broadband, and the private sector will not provide it. It was a Government initiative that brought global crossing here in the first place. The size of this economy is such that it will not be an investment made by the private sector alone. The Government had to be involved in kick-starting the investment in that infrastructure and now has to be involved in rolling it out. The Minister for Public Enterprise announced last week that it will be rolled out to 19 towns, and it is planned to extend this to 67 towns in total over the short to medium term. It is probably a more important piece of infrastructure even than transport. If one has a telecommunications capacity it almost does not matter where one is as all sorts of global connections are possible.
Some 60% of the work permits granted to date this year have been for outside Dublin. They have been granted across a range of areas, but the bulk is in catering, horticulture-agriculture and the health sector - nurses, paramedics, care assistants and so on. The new regime puts the onus on the employer to seek the assistance of FÁS in finding an Irish or EU national. The rate of refusals in the first two months of this year has increased from roughly 2.2% to about 4.5%. We are talking about under 300 cases, but it is a significant change. I gave a report to the Cabinet this morning on the work permit regime and would be happy to make it available to Deputies Fleming and Rabbitte. It contains all the statistics, county by county, country by country. The highest single country of origin is Latvia, with 12%, followed by the Philippines and South Africa. People are coming here from all over the world.
To think of all the trouble to which I went to get them to set up a credit union movement in Latvia.
We have to be concerned about public spending and, to use that cliché, to live within our means. If revenues are down, spending has to be down. Most people would acknowledge the Department of Enterprise, Trade and Employment has probably been among the most prudent, notwithstanding additional responsibilities. If my mathematics are correct our spending estimate is up by about 6-7%. When one considers the increased remuneration for CE participants, salaries of staff and so on, and increased responsibilities like Science Foundation Ireland, it is not a bad achievement.
There have been huge expenditure increases in health, education and welfare. Even with reduced numbers on the live register, welfare spending is up by more than 50% because of a conscious decision to increase child benefit and old age pensions. The challenge now in a more constrained environment is how to get more for less. There has to be radical reform because we are not getting the value one would expect for the huge increases in spending, particularly in health.
Deputy Rabbitte asked about supported employment. This refers to grants given to employers to employ disabled people. My Department took over responsibility for training people with disabilities, and we have had a number of initiatives to heighten awareness and encourage employment.
Regarding community employment, the reason for the three year transition is that existing CE employees were on contracts with FÁS. The transition cannot fully take place until those contracts run out. It was not a question of just saying that people on contract with FÁS legally now have to be employees of the Department of Education and Science——
I am sorry, Minister, but we are running out of time, if you would like to sum up.
The answer on the training fund is that yes, the committee has been established. I accept it was at the instigation of Deputy Rabbitte that this committee was put in place. It is not a representative committee but is chaired by Anne Herighty, the chief executive of a major company here, and comprises two nominees of the ICTU, a nominee of IBEC and other people with expertise and experience in the area of training. They have had a number of meetings, and their role is to advise the Minister for Enterprise, Trade and Employment on an impartial basis about training needs and the future direction of training policy.
I will quickly run through the subheads. Subhead A ^ administration budget - approved; subhead B, approved; subheads C to J - enterprise programmes - approved; subheads K to M - labour force development - approved; subheads N to Q - enterprise competitiveness - approved; subheads R to S - commercial regulation - approved; subhead T - health and safety - approved; and subheads U to Y - other services - approved.
I thank the Tanáiste and her officials for their participation in today's consideration of the Estimates and for their support for the committee at all times throughout the year. I thank the Members of the committee, especially the spokespersons, for their contributions.