Unemployment Levels: Statements

Wednesday, 15 October 2008

Seanad Éireann Debate
Vol. 191 No. 8

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An Leas-Chathaoirleach: Information on Paddy Burke Zoom on Paddy Burke I welcome the Minister of State, Deputy Billy Kelleher, to the House.

Minister of State at the Department of Enterprise, Trade and Employment (Deputy Billy Kelleher): Information on Billy Kelleher Zoom on Billy Kelleher This debate is timely, coming as it does during challenging times for economies across the globe. The recent increase in the numbers on the live register is an unwelcome illustration of the challenge that lies ahead in steering the economy through what are undoubtedly challenging times. I want to outline the specific measures that the Government is taking to ensure that this country does not return to the era of long-term unemployment and emigration on a large scale.

As the current live register figures indicate, the economic downturn has already affected many. In bringing forward yesterday’s budget by six weeks the Government recognised that further measures will need to be taken to bring stability to the economy and create an environment which will allow those who have lost their jobs to quickly return to the labour market. Against this background, I want to detail the assistance the Government is providing to ensure that those who have lost their jobs receive the right supports to help them return quickly to employment.

In the current economic climate it is important that the Government and its agencies provide proactive support to those affected by job losses. With this in mind the Government is working closely with its employment and training authority, FÁS, to offer a range of services, supports and programmes to help those in our workforce to both return to the labour market and remain in it. For those who have recently become unemployed, FÁS is liaising closely with the Department of Social and Family Affairs in responding to the rising numbers on the live register. This involves more intensive arrangements with the local employment services to increase their capacity to deal with the increasing live register referrals.

It also involves an increase in the number of short, flexible relevant training courses to equip those who have been made redundant with the necessary skills to enable them to obtain alternative employment as soon as possible. This is particularly important at present in the context of the rapid slowdown in the construction sector where FÁS is focusing on the provision of retraining opportunities for redundant construction workers, for alternative and emerging areas, such as sustainable and environmental technologies. I want to emphasise that with regard to apprentices in the crafts area of construction, in particular, FÁS has been adapting a new model whereby they can come off training, while allowing them to continue with their apprenticeships. We want to ensure they can complete their training and leave with certification. In the context of yesterday’s budget, provision was made for that area in terms of ring-fencing for apprenticeships in the craft areas of construction.

The measures taken by FÁS to assist redundant workers are, in co-ordination with our enterprise agencies, tailored specifically to urgently address the education and skills needs of individuals affected by any company contraction or closure. There are those who, for a variety of reasons, have, over time, become distanced from the labour market. That is why programmes such as the community employment scheme are so important in offering a roadmap back to work, through the provision of specific active schemes within local communities that break the [486]cycle of long-term inactivity and instead offer individuals on a fixed-term basis the chance to reintegrate into a daily working regime. These programmes also help in the development of both technical and personal skills. There are almost 22,500 people on the community employment scheme and it is worth pointing out that the Government is investing €377 million this year to maintain overall numbers at this level while at the same time operating a degree of flexibility in order to both maximise the number of those successfully progressing to the labour market and support the work being carried out in local communities.

The importance of upskilling in the context of the economy’s competitiveness cannot be overstated. The skills of our workforce will need to be able to adapt quickly to meet the challenges posed by a rapidly shifting global economic market.

The participation of ever greater numbers of our population in lifelong learning is essential to ensuring that this country’s economy remains adaptable against the background of the type of economic challenges that we face today. Again, when we look at what has happened in the context of the financial credit crisis and volatility on the stock markets, these are indications of the level of uncertainty that exists. This phenomenon could continue for some time in terms of the lack of credit available for companies and small investors. It can put enormous pressures on the economy. It is important therefore that we continually emphasise the need for upskilling and training. Life-long learning is part and parcel of that and I encourage people, regardless of where they are on the educational ladder, to continue to pursue it. Again, this is something that we have been encouraging over many years.

Through individually tailored training programmes run both by FÁS and Skillnets, the Government is demonstrating its commitment to life-long learning for our workforce. We must all embrace this aspiration, individuals and social partners alike, if this country is to successfully meet the economic challenges of the future.

I indicated earlier the role played by our enterprise agencies, including Enterprise Ireland and the county enterprise boards, alongside FÁS, in the event of company contractions or closures. The continued development of our enterprise sector is, even in unpredictable economic times such as these, vital for fostering the growth of Irish companies and positioning them to compete strongly in global markets.

The development of Irish-owned companies has been pivotal to the economic growth and prosperity that this country has enjoyed over the last decade. As the Tánaiste indicated in the Dáil last week, over 250,000 small businesses operate in our economy employing approximately 800,000 people. There is little doubt that Ireland’s future wealth will depend to a significant extent on the further development of these enterprises. Productive, sustainable and export driven businesses that develop and embrace cutting-edge technologies within a supportive operating environment are essential for further business growth, whether on a local or national scale.

I am confident, but certainly not complacent, that the measures taken by this Government on research and development and business regulation as well as our highly supportive tax regime will encourage the emergence of new business creations and facilitate long-term business survival. Certainly, the figures in the 2007 Global Entrepreneurship Monitor Report for Ireland, of 2,700 individuals setting up a new business each month, are encouraging.

Investment into Ireland is also central to our economy’s continued development. We have a light regulatory system and supportive tax regime and that was emphasised by the Minister for Finance in his budget speech yesterday. He outlined what we are doing in the context of the current tax regime. He also placed a strong emphasis on the commitment to ensure that corporation tax will not go above 12.5% in the lifetime of this Government. We should speak about [487]that commitment because, globally, our competitors often try to undermine the advantages we have in terms of a highly educated, mobile and skilled workforce. Our corporation tax regime is a central plank to our policy in terms of attracting inward investment. It is important Senators highlight that whenever they get the opportunity to do so. With more than 1,000 operating companies and 136,000 people employed in the foreign direct investment sector, we have an excellent record of attracting quality investment into this country compared to other developed nations.

Through the work of our inward investment agency, the IDA, Ireland is winning high-value foreign direct investment in new cutting-edge business areas, including the Internet and media sectors. The establishment of Amazon, eBay and Yahoo in Ireland are good examples of recent investments and the announcement earlier this month by the social networking site, Facebook, that it is to establish its headquarters in Dublin continues this encouraging trend.

In the first half of 2008, IDA Ireland announced 22 investments with a capital investment of €916 million and a potential to create approximately 1,600 jobs. This compares very favourably with similar figures for 2007 which, in itself, included the winning of more than 100 new investments. I am confident that Ireland is well-positioned to continue to secure leading new investment projects over the medium term.

I am also confident that in keeping a collective focus on upskilling and lifelong learning and the continuing development of Ireland into a genuine knowledge economy, we can continue to look forward to similar investments into this country such as those made in the last year by Google and Glaxosmithkline. However, it will be important to concentrate not only on the number of jobs created by inward investment into this country but also on the quality and the scope of the employment created and, in particular, its potential for adaptation to changing market conditions and long lasting growth.

We have good reason to be optimistic despite the current economic turbulence and the slowdown caused by a number of factors, including, notably, the adjustment in the construction sector and the deterioration in the international environment. True enough, the current slowdown represents the severest of challenges but we have faced and overcome challenges of this nature before. The key difference now is that we approach this current turbulence from a stronger economic position that has been forged on a more focused emphasis on knowledge and expertise. I am, therefore, confident that in this country, the right policies and conditions are in place to allow us to ride out the current storm and return to sustainable economic and employment growth levels in the medium term.

As the Minister for Finance said in his budget speech yesterday, we face challenging times internationally and we also face challenging times domestically due to the slowdown in the construction industry. Those two issues have put huge pressures on the public finances. The first measures were taken in July when we announced cuts, or savings, of €400 million and €1 billion in 2009.

Senator Joe O’Reilly: Information on Joe O'Reilly Zoom on Joe O'Reilly A Freudian slip.

Deputy Billy Kelleher: Information on Billy Kelleher Zoom on Billy Kelleher We call it as it is. We like to be up-front and honest. In the context of this budget, people generally accept that the challenges must be faced immediately. We cannot put this on the long finger. The Taoiseach said in the Dáil this morning that we are trying to ensure we restore stability to the public finances, that we remain competitive and that we do not create any hindrance to, or place any burden on, business and investment. In the long term, the policies being pursued in this budget will be proved correct.

Nobody should be under any illusion but that this year and next year will be very challenging because of the international backdrop. Rising commodity prices and fluctuating stock markets [488]coupled with the credit squeeze have caused grave uncertainty. As a small global open economy, we are very dependent on inward investment to stimulate growth and on our export markets.

As announced this morning, unemployment in the United Kingdom has risen to 1.79 million. That indicates there are huge pressures on the stronger economies, including Germany and others. Across the European Union, many of our trading partners are under huge pressure and there are challenges in the context of inward investment in the case of the United States.

The IDA is actively promoting Ireland and we should use every opportunity to promote Ireland as a place in which to do business. I mentioned earlier our corporation tax of 12.5% and our light regulatory framework. Year after year many international surveys show that Ireland is a very competitive place in which to do business. Our best selling point is that we have a flexible, highly mobile and highly educated workforce, which we must continue to ensure. When we talk about flexi-security in the context of flexibility in the workplace and security of employment, we must ensure we get the dynamic right and that we are not too inflexible and too securitised.

I will welcome comments from Senators and look forward to hearing their views.

Senator Joe O’Reilly: Information on Joe O'Reilly Zoom on Joe O'Reilly Ar dtús báire, ba mhaith liom fáilte a chuir roimh an Aire Stáit, go háirithe os rud é go bhfuil an beirt againn ag déanamh cúrsa Gaeilge gach maidin Déardaoin. Is é sin an fáth go bhfuil sé de dhualgas orm fáilte a chur roimhe trí Ghaeilge.

The Minister of State will have no difficulty generously accepting that the corporation tax rate of 12.5% was an initiative of the John Bruton-led rainbow Government and one of the key pillars in the creation of the Celtic tiger.

Deputy Billy Kelleher: Information on Billy Kelleher Zoom on Billy Kelleher If the Senator is looking for praise, he invited the wrong Minister to the House.

Senator Joe O’Reilly: Information on Joe O'Reilly Zoom on Joe O'Reilly I am sure he will generously accept that.

It is worth noting the gravity of the situation with which we are confronted in regard to unemployment. The live register is currently at 244,500, or 6.3% of the population. We have an unemployment rate which is higher than that in the United States, Britain, Japan, the Netherlands, Denmark, Norway, the Czech Republic, Switzerland, Poland, Singapore and South Korea among others. The ESRI predicted last week that unemployment will reach 8% in 2009. The number employed directly by the construction industry — this is a critical issue — fell by 17.9% from August 2007 to August 2008. Between the beginning of 2001 and 2007, Ireland’s cost competitiveness against our trading partners has worsened by 35%. Goods exports declined by 6% and manufacturing employment declined by 9%. That is the backdrop to what we are discussing and it is extraordinarily serious.

It is unfortunate to note that yesterday’s budget, rather than rectify the difficulty, will contribute to the problem. The budget will drive down consumer confidence because of the increased tax rates. The 1% levy on those earning below €35,000 is a horrendous disincentive to going into the employment market and it is a penal tax on work. Imagine a home help travelling from house to house keeping people out of institutional care looking at the prospect of a 1% levy on his or her income. I appeal to the Minister to amend the Finance Bill to deal with this. People will have less money to spend as a result of the budget. There will be less cash in circulation with an obvious knock-on effect on business.

The cut in the local government fund will put more pressure on local authorities to raise rates on businesses and make up the funding shortfall in this way with a consequent domino [489]effect on employment. The Fine Gael party is opposed to this. The €1 billion budget for FÁS is maintained in the budget, but there is no mention of reform or streamlining. We need to be better placed to retrain people in our rapidly changing labour market.

Another misconception in yesterday’s budget relates to a matter to which I referred at some length during debate yesterday. Yesterday’s budget suggests the capital spend on the schools building programme is increased. This is not the case. It will change from €285 million this year to €281 million next year. The reason there appears to be an increase is that the Minister included the third level capital programme in his figures. Therefore the budget for the schools building programme has decreased in net terms. This is critical because the schools building programme at primary and secondary level, particularly at primary level, offered the Government a wonderful opportunity to deal with the unemployment issue, particularly in the construction area.

I suggest the Minister should re-examine this matter. If, for example, he considers the cost of prefabs on school grounds, the cost of unemployment assistance for people displaced from the construction industry and takes on board that he can get good value for money on tenders and contracts from local builders if he uses the Department of Education and Science devolved grant scheme and that there would be a return in VAT to Revenue, the net cost of building a primary school could be very low, resulting in wonderful social and capital advantages for society. The Minister lost the opportunity to do this in the budget. When the detail of the Finance Bill is being worked out, the Minister should seriously consider using the schools building programme to create employment for unemployed construction workers.

A person must be 12 months unemployed before being eligible for the back to education allowance. This is an insane bureaucratic anti-employment and development requirement. The sooner a person dislocated from employment can be helped return to education — there is potential to get an extra 6,000 people back into education — the more immediate the implications for improving the life of that person and the economy, ultimately saving in welfare payments. The eligibility requirement therefore should be reversed and I appeal to the Minister to respond positively in this regard. Retaining the 12-month requirement commits people to continued unemployment and demotivates them rather than inviting them back to education when still in a reasonable psychological state. This must be addressed. I suggest to the Minister that the back to education allowance should be increased because there is great potential in that.

There is also great potential for the creation of employment in the green area. We must have immediate retraining for unemployed construction workers. The first objective should be to redeploy them on a school building programme, on worthwhile capital expenditure or development. The Minister remarked that he saw merit in the community employment scheme and I commend him on that. I agree with him as that scheme has done great good for the country. However, I would like to see the community employment scheme expanded. I am concerned about the three-year cap on community employment. I am not sure there is logic in allowing people to work for only three years before letting them go. People should be allowed remain on the scheme, but there should be continued efforts to bring them into the mainstream workforce. It is wrong to sentence them to a third rate existence by removing them from the community employment scheme after a few years, just when they are beginning to feel empowered.

While community employment and redeployment of construction workers have a vital role to play, we should seize the potential of green energy development and the green economy to provide employment to displaced people and to create new employment. There is immense potential for retraining in this area. People could be involved with energy audits in buildings and houses, with wind energy projects and with implementing alternative energy sources. It is [490]a pity the ESB is allowed continue to prevent the wind energy sector from supplying new green energy to the grid. It should be much easier for small groups of farmers to come together and create a co-operative for wind energy development. It also should be easier for industry to have its own micro wind generator. These areas should be examined and the ESB should be challenged on its monopoly and competition created.

The Minister of State must return to the Government with the opinion of the Seanad that an opportunity was missed yesterday in the budget to deal in a positive sense with the unemployment issue. There is too much acquiescence and acceptance of unemployment here and not enough effort is made to think outside the box. We must think outside the box on the matter of school buildings, green energy, retraining and back to education. We must also think outside the box with regard to putting a penal levy on the lowest paid, which is a disincentive to wanting to be in employment. The Government must change in this regard.

  12 o’clock

The Government must be aware we no longer have the safety valve of emigration to deal with unemployment. I have no empirical findings on this, but, anecdotally, the only country with potential for employment is Australia and it has a quota system in place and immigrants must have specific skills. The option we had in olden days, when we could dump the problem onto our neighbour, no longer exists. We will have to cope with unemployment within the country. The welfare of the human beings involved is a significant issue. There is potential for social revolution in the country if we do not deal with unemployment. We must recognise that the nature of our unemployed has changed and they will not be as docile as they were in the past.

I appeal to the Minister not to miss the opportunity to take on board my suggestions about back to school education, green energy, school buildings and the disincentive to work at the lower end of the spectrum. The Minister must consider imaginative ways to deal with unemployment. I thank the Chair for his indulgence. This is one of the most serious debates this House will have for some time.

Senator Ivor Callely: Information on Ivor Callely Zoom on Ivor Callely I welcome my good friend and colleague, the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Billy Kelleher, to the House. One of the fundamental indicators of our economy is the level of employment. The most recent data available from the Central Statistics Office indicate employment has increased by 7,000 in the past 12 months, to a total number of people at work of more than 2.1 million.

When one reflects on the transformation of this great country over the past decade, one of the greatest dividends of the transformation is the number of people at work. I listened to what Senator O’Reilly had to say with regard to the live register. He indicated the percentage of people on the register was the percentage of people unemployed. The total number of people on the live register is around 240,000 but, as we all know, the live register is not a true reflection of unemployment, as it includes part-time, seasonal and casual workers. However, what is noticeable is the acute increase in the number of people signing on. This is a source of concern.

Our economic performance in recent years reflects Government policies and investments and, more importantly, the commitment of our citizens, their education, their skills, their ability and their determination to meet the challenges and opportunities with which they are presented. Through their hard work, innovation and success, Ireland has been established as a sound and vibrant economy energised by some of the most sophisticated industries and services in the world — as mentioned by the Minister of State, Deputy Kelleher — along with a strong entrepreneurial flair driving small and medium enterprises in every region. Some argue that we have not made enough of this success. I disagree. Ireland has proved to be a good place to [491]do business and we have achieved success beyond our measure. We have been the European success story in recent years.

We are now well aware of the uncertainty in the international economic environment and of the fact that our economy faces tough times ahead. There are serious challenges to address. No one underestimates the scale of the challenges that face us. We are in uncharted economic territory and there are no easy solutions or quick fixes. The greatest challenge right now is to manage the economy through these uncertain times, to take the correct decisive actions to protect the progress we have made and to prepare to benefit from the upturn when it comes. We all need to sign up to the measures required to meet the challenge ahead, or we will lose our unity of purpose to improve the quality of life for all and our sense of national purpose. There will be no agreement on what we are trying to achieve, and perhaps the most worrying change would be increasing negativity and disillusionment and a further lack of confidence. We all need to take stock, think realistically, reorganise and reposition ourselves.

One of our priorities must be to re-establish that unique Irish confidence, create a positive climate, lift the uncertainty, doubt and anxiety, and rebuild a sense of national pride. In the 1990s there was an air of achievement. There was real progress and development and nothing seemed impossible to achieve. Above all, there was a great national spirit and pride in what was being done and what was being achieved. We had built a great team with all the players signed in. We enjoyed success for so many years and reaped great benefits and gains for all.

As a small island nation, we are vulnerable to economic shocks beyond our shores. The collapse of the global economy has taken us all by surprise. The result of this economic collapse has had a ripple effect on every region and every family on our island. One of the results has been a sharp rise in unemployment, coming from a base of nearly full employment in which an additional 1,000 new jobs were created every week over a number of years. I ask the Minister of State and his colleague the Tánaiste to spell out the proactive range of measures, job-related services, supports and training programmes that are being provided to help any individual or family facing unemployment. FÁS, the national training and employment authority, provides a range of such services and has introduced some new schemes to address emerging trends, as mentioned by the Minister of State. However, I ask the Minister of State to explain the barometer used to measure the success or otherwise of such agencies in addressing emerging trends satisfactorily and the speed of response. We must ensure that the systems, services, training and supports put in place by FÁS and Skillnets represent an adequate response to all such emerging trends and continue to harness the collective skills and talents of our workforce.

In the modern high-tech world in which we live, education and training is more vital than ever. We must expand our investment to ensure that those who experience unemployment are fully capable of adapting to new challenges and emerging opportunities. The Government needs to set pragmatic targets to encourage greater participation in lifelong learning by involving people and facilitating them in increasing their skill levels and qualifications. Lifelong learning is an important key to our success and in ensuring that we remain one of the world’s competitive economies. I am encouraged by the determination of the Minister of State, Deputy Kelleher, the Tánaiste, Deputy Coughlan, and their colleagues to create and develop the conditions to foster enterprise and business growth despite the current global turbulence. I congratulate the ministerial team at the Department of Enterprise, Trade and Employment, the departmental officials and the various agencies, especially IDA Ireland and Enterprise Ireland, on their success in encouraging the development of world-class Irish companies and the strong position we now hold in the global markets. The Minister, Deputy Coughlan, is strongly of the view that a vital ingredient in our future prosperity will be the development and growth of Irish-owned companies. Her vision can be realised if the challenges faced, especially by small and medium enterprises, are met head on.

[492]I am pleased to note certain measures are in place to encourage the emergence of new businesses and to facilitate long-term business survival. One of these actions is the adoption of new strategies to support the enterprise sector. As we know, SMEs make a major contribution to the economy. A special focus and supports are now warranted in this area, especially due to the changed economic realities compounded by the international credit crisis. It is generally agreed that SMEs tend to be more flexible and responsive to changing economic circumstances and are crucial in providing employment opportunities. It is not said often enough that it is absolutely essential that SMEs have all the required supports to assist them in addressing the emerging challenges. One crucial issue for SMEs is funding, as mentioned by the Minister of State before he went on to talk about employment and increasing skills and qualifications. It is important for SMEs that the required finance be made available by the banks to keep all systems operating. One of my reasons for supporting the recent Government action of the bail-out scheme for our financial institutions was the aim of ensuring that the banks could retain their deposit accounts and access to international credit lines.

In a recent research paper on the financial stability of the Irish banking sector, reference number 2008/4313, July 2008, a number of interesting statistics were presented. The paper states that the most significant economic impact made by the banking sector is that it provides the capital necessary for business to function and to make investment for expansion. We all know that so why say it, especially if we sign up to the fact that the significant role of the banking sector is imperative. We should sign up to it especially for the small and medium enterprises.

I wish to draw the attention of the House and the Minister of State to certain bank practices that may require a level of accommodation and from the information available to me may need urgent address. In the interest of any declaration of self-interest, I should point out that I have a level of activity with some such banking groups. A typical situation that has been brought to my attention by more than one source is where an entrepreneur has obtained finance for a project, agreements reached on interest and pay back and the product produced — the ideal being profit for both the bank and entrepreneur, and economic gain for all. I now understand the banks are adopting a tighter lending policy particularly noticeable after the bank bailout and such policies are a source of grave concern even for the proven and successful entrepreneurs. This is not my understanding of the fundamental and significant role that the banking sector is expected to provide, especially if its lending policies and practices stagnate growth and-or cause businesses to collapse with the reality of a further detrimental impact on employment.

The Minister of State referred to the great numbers — we all know what happened in the construction sector——

An Leas-Chathaoirleach: Information on Paddy Burke Zoom on Paddy Burke The Senator has one minute remaining.

Senator Ivor Callely: Information on Ivor Callely Zoom on Ivor Callely I regret I am running out of time because I would like to expand on this point. I say to the Minister of State, his officials and the banking groups that I would welcome the opportunity, which is merited, to have a think-in to ascertain how we can resolve the issues that exist. The Minister of State referred to the numbers of people affected by the downturn in the construction industry. Now the people who are trying to survive in the construction industry — not just the small and medium enterprises of which we know in every region — are being put under pressure by the banking sector in a very unfair manner. I am not too sure if the same banking sector would be in a position to do so if we had not given it the recent bailout.

[493]The banks are suggesting to those people that they gave them X amount to carry out a project but are now reassessing and want them to put X amount of cash on the table. The banks also want them to dispose of some of their assets. In the present market we all know that if a person in the building industry is being asked to dispose of assets the true value of the asset cannot be realised. This is a daunting and concerning aspect at this time on a journey that may need to be completed to see the end result to the satisfaction of all the players. We have never previously experienced anything like the current economic difficulties, international currency crisis and the total financial collapse of the markets around the world. Therefore it is vital that the Minister of State and his officials——

An Leas-Chathaoirleach: Information on Paddy Burke Zoom on Paddy Burke The Senator should conclude.

Senator Ivor Callely: Information on Ivor Callely Zoom on Ivor Callely ——leave this room today with agreement to appoint either a rapid response group or a senior departmental official to work with the banking sector and SME representatives along with pragmatic players in the marketplace to help address such important fundamentals especially at this time. I regret I have run out of time, as I would like to continue in this vein.

Senator Alex White: Information on Alex White Zoom on Alex White To some extent I am sorry the Senator did not have an opportunity to elaborate further because, with all due respect to him, it might have been possible for those of us who were listening carefully to him to get to the bottom of what he was driving at in his cry for help for the construction industry and his apparent criticism of the banks for failing to ride to the rescue of the construction industry. That would appear to be the burden of what he was saying towards the close of his remarks. Perhaps he will have an opportunity to elaborate on the point when we debate the banking scheme, if and when it is brought into this House. The notion that our approach to the crisis should be one that would be predicated upon a Government supporting or even, as Senator Callely appeared to suggest, encouraging the banks to take a lenient attitude towards some of the outrageous practices we have seen in the construction industry, the legacy of which we now need to live with, I would find reprehensible. I wonder if that is what he was advocating.

We might get an opportunity to delve into that matter further and ascertain who these pragmatic players, to whom he urged the Minister of State to talk, are. I always wonder about such phrases and about the identity of these pragmatic people. Let us have this debate in the open. This is not a criticism of the Minister of State or anything like that — I will come to that in a minute. The notion that there should be talks behind closed doors between banks, the Government and the construction industry is precisely the kind of context that in my submission has led us to the kind of situation in which we find ourselves, involving the unreal levels of valuation on property which clearly exist and are likely to lead to a serious crisis not just in the liquidity of the banks and lending institutions but also in the fundamental level of the availability of capital and their capitalisation. That is clearly where the debate needs to go and we will all need to face up to that in this House if and when we get an opportunity to debate it.

I was listening to Senator Callely, as I always listen to my colleagues. One of the things he said leads to points I want to make about where we should go from here. I thought I heard him say that the crisis we are in took everybody by surprise. I do not believe it took everybody by surprise. It may have taken the Senator by surprise — although I doubt it. It cannot have taken the Government by surprise and certainly did not take Members on this side of the House by surprise because there have been repeated warnings, not just by politicians, but also by commentators, economists, journalists and even financial practitioners about what was happening. Even some Senators opposite gave warnings. In particular Senator Mary White a few months ago stated that the dogs in the street — that may not have been her exact phrase [494]— could see what was happening regarding our over-reliance on the construction industry and that the chickens would come home to roost at some point. I know there are “dogs” and “chickens” in that sentence, but I believe Senators know what I mean. It cannot have come as a surprise.

Even Senators on the other side accept we have an enormous increase in unemployment — the largest increase in unemployment for some decades if not ever. I accept it is coming from a higher base of employment. This week’s Budget Statement was devoid of any measures, plan or strategy to attack this problem. If someone coming from abroad were to point out that unemployment here had increased and asked whether the budget contained something about it, we would need to reply that it had no strategy to stimulate employment or any bold, innovative or imaginative initiatives — in fact no initiatives of any kind, good bad or indifferent. It was one of the most striking aspects of the budget presented yesterday, which we will get an opportunity to discuss later today.

The Minister of State’s speech, too, was devoid of proposals of any kind, new measures or even suggestions of new measures which the Government may intend to introduce to deal with this serious problem. I can only describe what the Minister of State said to the House today as a mildly interesting commentary on the problem but which was devoid of any new solutions, measures or initiatives which the Minister of State may intend to take. It has a ring of familiarity about it in that it looks very like a speech the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Coughlan, made in the Dáil on this difficulty, on one occasion if not more. While I have no problem with Ministers sharing their documentation and intelligence when they are running the Government, I would have hoped on this day of days and week of weeks in the economic downturn we are in that the Minister of State would have had something of content to say to Members today, but he did not. His speech even mentioned various projects already in existence and various FÁS measures which were neither specified nor referred to in detail. It also referred to programmes without any suggestion, plan or indication of any intention to introduce anything new or radical to deal with the problem.

The idea of upskilling was mentioned. An economics or secondary school student looking at the economy and drawing up an essay or commentary on it would mention the importance of upskilling. This cannot be overstated. How could one disagree with it? The Minister of State said:

The importance of upskilling in the context of the economy’s competitiveness cannot be overstated. The skills of our workforce will need to be able to adapt quickly to meet the challenges posed[.]

That is a self-evidently clear statement. We can all say that or write it down, but we look to the Government to deliver it and come forward with proposals, measures, schemes and initiatives to make those words a reality. Unfortunately, there was nothing in the Minister of State’s speech that suggested that might be done.

I emphasise that, because sometimes politicians on the Opposition side can be accused of exaggerating when they make rhetorical flourishes and say the Government is doing nothing. There was nothing new at all in the Minister of State’s speech. There are murmurs from the Government side of the House. I challenge anyone on that side to read the Minister of State’s speech and find one new thing in it. They can shake their heads all they like, but if they tell me one new thing, I will withdraw my statement. When the new things in the speech are pointed out, I will withdraw my allegation. That is a promise. There was nothing in the speech, however. Why is that the case? Why should the Opposition let the Government away with the implication it is doing something and grabbing hold of the problem when it is not doing so?

[495]The Minister of State referred to persons on the live register and arrangements in local employment services to increase capacity to deal with the expected increase in live register referrals. One would imagine they would have to make such arrangements.

One measure taken in the budget is the cutting of the standard entitlement to 15 months’ unemployment benefit to 12 months, where 260 or more PRSI payments have been paid, and to nine months where fewer than 260 contributions are made. That is an initiative that has been taken. Will it be of assistance? Will it attack or alleviate the problem of unemployment? Clearly it will not. Someone facing unemployment is now in the situation where they are affected on the double. They have had the misfortune of losing their employment, have little or no hope of an alternative job, and now cannot rely on the income they thought they were entitled to through welfare provisions provided by the Government and to which they have been contributing over the years.

The budget was devoid of ideas and proposals on jobs. There is no reform of the back to education allowance — the Minister is keen on second-chance education — and we need such reform to boost that area. There is no reform of the back to work enterprise allowance, no new community employment places and no initiatives on job sharing or career breaks. If one wants to encourage people to go back to college or education to increase their skills in the middle of their careers, issues regarding job sharing and career breaks must be looked at.

Practical proposals must be made to go with the rhetorical references in speeches. While I know the Minister of State must say something when he comes to the House, I would have expected something concrete, such as the proposals brought forward by my party in recent weeks. I wonder if my colleagues on the Government side, who are guffawing, have read them. They like to ask where the Opposition’s proposals are. I will send the Senators an attachment by e-mail this afternoon where they will find our proposals in black and white and carefully costed and argued. An example would be stimulation by making employment available for those in the construction sector who have lost their jobs quickly and dramatically in recent months. My party has set out and published this clear set of proposals.

If we want a real debate in this House, and the Minister of State could easily and capably participate in a real debate rather than a sham, I am happy to have these proposals tested and scrutinised by him or his colleagues to see if they stand up. No one is a complete repository of expertise. If my party, or Fine Gael, put forward real proposals, they must bear scrutiny, and be examined and criticised by the Government side if that is what they wish to do. Likewise, in a modern democracy and parliament, when we are addressed on the question of the serious and worsening crisis in unemployment, we are entitled to expect more than we received today.

Senator Dan Boyle: Information on Dan Boyle Zoom on Dan Boyle I read the Labour Party proposals, and they are a Keynesian analysis that we can spend our way out of the current situation. That raises the obvious question of which money we spend to achieve that desired end. Yesterday’s budget, which we will discuss in greater detail later, clearly shows we do not have that money to spend, and it is not a short-term response. If the response is a larger public sector, it is the wrong analysis. We live in a small country with a public sector that needs to be examined in terms of what we can afford and how we can best deliver public services. I am not sure whether the Labour Party proposals are the best way of going about it.

Senator Alex White: Information on Alex White Zoom on Alex White I am not sure Senator Boyle has read them. He thinks they are a public sector panacea; they are not.

Senator Dan Boyle: Information on Dan Boyle Zoom on Dan Boyle It is a lot of it, and there is no surprise there either. Regarding employment, we must discuss the state of the global economy. In the United States, the national debt clock that measured their debt in trillions of dollars has become obsolete because the debt has [496]moved into the quadrillion category and the clock does not measure the size of the debt any more. The United States has been recognised as the engine of the world economy, and this country has tied much of its economic interests and policies towards that established fact in the recent past.

As we look towards the type of economy that might exist in the 21st century and how it might affect our country, the first thing we may have to realise is that we may be coming towards the end of the American century. We must identify the engine in the new world economy. That probably will be in the BRIC countries, Brazil, Russia, India and China. Efforts have been made by State agencies, in particular the IDA, to establish relations with China, the fastest growing economy in the world, and we need to ask which industries will provide sustainable jobs into the future. A fair comment on the budget analysis is that we relied too heavily on the construction sector and we could never expect to build 90,000 housing units year on year.

We also need to ask how much unnecessary manufacturing capacity has been let go. Traditional manufacturing industries such as textiles and footwear are gone forever. Earlier I attended a presentation by Boston Scientific, a significant employer in the State and in my constituency, in particular. The company manufactures high-tech equipment and we need to aspire to attracting more companies like this. High-tech manufacturing is based on significant research and I am glad decisions were made yesterday to enhance research and development budgets because that is where our economic prosperity and future employment potential lies.

At the same time as replacing traditional manufacturing with high-tech manufacturing and research and development, other economies have relied on the services sector and this should be examined critically by the Government. The financial services sector relies on information technology, which provides employment potential, but it has existed on shifting sands and it is not in our interest to put too many eggs in that basket for future economic or employment growth.

I look forward to Government announcements in the coming weeks regarding green technology and employment potential in the energy, waste management and research and development sectors, which will help us move into a post-fossil fuel economy. Research and development resources are needed to develop such technology. For instance, we are catching up in the area of wind energy and while we may reach a stage where we produce the required amount of electricity through wind power, we will do so through Danish and German windmills. Had we invested in such energy earlier, we would have developed the technology and generated the necessary capacity. Ireland still has an opportunity to do this in the area of wave energy. We are ahead of the rest of the world in development in this area. I am hopeful green technology will be shown to be most vigorous in the future.

The move from the 9 a.m. to 5 p.m work model has benefitted the economy in the recent past but we need to be more flexible by assisting people to work at home and to opt in and out of the work they do and get away from seeing work in its traditional setting. If that can be done, environmental and social improvements will result in a reduced necessity for child care and the avoidance of unnecessary travel. A more productive workforce would result from the introduction of more flexible work practices. Ireland’s unemployment level should be looked on from a glass three quarters full perspective. The total workforce still numbers two million and it is anticipated unemployment will increase to more than 7%. The necessary corrections to the economy, which we will discuss later, will help to increase employment and I look forward to the Government acting on much of that potential.

[497]Senator Paul Bradford: Information on Paul Bradford Zoom on Paul Bradford I welcome the Minister of State to the House and I am grateful for the opportunity to debate the issue of unemployment and, more important, job creation. It is appropriate that we are taking this debate on the same day as we take statements on the budget because they are very much interlinked. While the focus of yesterday’s budget debate was the immediate financial crisis facing the country and the taxpayer, from now on we must examine in depth issues such as job creation and employment figures and bring forward proposals to ensure the sadly increasing trend in unemployment is reversed.

A Government Member earlier mentioned the creation of the magic figure of 1,000 jobs per week, which happened for many years. However, during the mid-1990s when the rainbow Government was in office, that figure was achieved for the first time and it was looked on as a major step forward. Until recently, that rate of employment was maintained. The construction industry led the growth in job creation and while we should not be overly critical of the industry because it responded to demand and it was good that the boom lasted so long, it must be conceded the Government adopted a construction culture rather than an enterprise culture. It must be recognised all has changed from a construction perspective and the same number of new houses will not be required annually in the next ten to 20 years. The number of people working in the sector will, therefore, reduce, which will result in an increase in the live register.

I expected the measures in yesterday’s budget to deal with the crisis facing the public finances and, hopefully, support and develop rather than hinder job creation. That is why I am concerned about a number of yesterday’s announcements and the immediate negative impact they will have on job creation and retention. The change to VAT could be presented as a modest 0.5% increase but the Government is attacking the services and retail sectors in which many people work. Money is being taking out of the economy, which will hinder rather than help job creation.

I appreciate an economic and political argument can be made for introducing all these measures. Fianna Fáil, its partners, the previous Taoiseach and our present EU Commissioner always proclaimed loudly that the reduction in capital gains tax did wonders from an economic perspective by bringing in money to the Exchequer, putting money in circulation and creating jobs but that policy was reversed yesterday when the tax was increased by 2%. That will not help job creation. The 1% income levy may not have an immediate impact on the jobs market but I fear one of its negative aspects, apart from affecting every person other than those on social welfare, will be to push a small number of people into the black economy. Due to employers who are not offering high wages, there will sadly be an incentive for people at the lower end of the salary scale to work on the margins and in the black economy instead of within the system. It will not do much for employment or job creation in the long run.

We must start looking for new ideas and solutions. Senator Alex White outlined some of his party’s proposals and my party produced a substantial document last week on broad economic issues, including job creation. There is as much of a domestic side as there is an international side. On the domestic side, the Government must put in place certain financial parameters. It is disappointing that some of yesterday’s budget announcements will not help job creation.

Senator Boyle mentioned the world’s future growth regions, such as Brazil, China and Russia. A major Government initiative must be undertaken to link our economy with some of those growing regions. Given how Ireland has developed as a society, country and economy since joining the EU and our considerable amount of inward investment, Ireland has been the bridge into the EU for many companies, particularly from the US. This has created tens of thousands of jobs. We must now try to ensure that Ireland will be seen as a bridge into Europe and north America among the emerging economies of the Far East. In terms of the workforce, taxation and Government policy, we must be an attractive location for inward investment. Every year, [498]tens of millions of jobs are being created by the economies of the Far East. We must try to get a slice of that market.

Senator Boyle referred to flexible working patterns. They will not solve all problems and will not create jobs on their own, but the Minister of State should try to encourage them. We must move away from the one size fits all system in which people leave for work at 8 a.m. and return home at 6 p.m. Working hours and workplaces must be as flexible as possible. As something that would be good for society and not just economics, flexible working hours must be encouraged.

The House will revert to this debate during this afternoon’s discussion on the budget. We must examine the Minister’s Budget Statement in more detail to determine how it will impact on job creation. With growing unemployment almost back at the bad old days of the 1980s, serious political attention must be given to this emerging crisis.

Senator John Carty: Information on John Carty Zoom on John Carty I welcome the Minister of State to the House and compliment him on his speech, regardless of what some Members of the Opposition might have stated. His speech was comprehensive and provides a line on where we are going.

We are in trying economic times and the level of unemployment is high. The construction industry is more than partly relevant in this regard. However, I agree with Senator Bradford that we cannot be overly critical of the construction industry. There was a demand. Perhaps it should have been streamlined to where houses were most needed instead of in small villages and towns where there is an oversaturation and insufficient employment to warrant such a supply.

In bringing the budget forward to yesterday, the Government fully recognised the necessity for further measures. According to the Minister of State, FÁS will be asked to liaise more closely with his Department and the Department of Social and Family Affairs to respond to the increasing numbers on the live register. Will the Minister of State emphasise to FÁS and the latter Department that speed is necessary when dealing with the unemployed and that people should not endure long waits to get their entitlements and money? A provision should be put in place so that people get the payments to which they are entitled within a few weeks of becoming unemployed. Sometimes, the situation can become protracted, leaving people in limbo.

Of concern to me and all rural representatives is the community employment scheme. Although I am not happy that almost 22,500 people are on the scheme, I welcome the Government’s investment of €377 million this year to retain overall numbers while maintaining a degree of flexibility to both maximise the number of those successfully progressing to the labour market and to support the work being carried out in local communities.

In recent years, the scheme has been successful. It gives people in a certain age category — the over 55 year olds — who may have lost their jobs or have never been in employment the opportunity to do something constructive in their local communities. It is phenomenal to drive through any village or small town and see the amount of work done under the scheme. It has lifted villages and small towns that, ten or 15 years ago, had grotty entrances. Since the scheme has come on stream, the people it has employed have done significant work. It has given people in villages and towns the initiative to do up their premises. It is worthwhile and I am delighted that the Government will invest so much money in maintaining it.

People of a certain age cannot get employment on other schemes. From a social perspective, the work being done by the scheme’s employees is visible. While they are in receipt of social [499]welfare payments, they are giving something back to the community. They are proud and happy to do so.

Major companies such as Allergan, Coca Cola and Baxter Healthcare are providing good employment in this county. While this is welcome, they could do more were they guaranteed power, which is problematic for them. I am sure that the Minister of State is well aware of the problem. He has met the people in question since assuming his position, as has the Tánaiste.

However, most employment in County Mayo and most rural counties is derived from small indigenous industries that employ 20, 25 or 30 people. Each town may have a few such industries, presenting a significant asset. The industries are always complaining that excessive regulation and red tape are crippling their business. They must employ people to answer the questions of the ESRI or other bodies. While this is important, something should be done to alleviate the amount of time that small companies spend on administration. They tell me that the level of detail they must give is incredible and they find it difficult. This could be examined and more help could be given to small companies. These are indigenous and will not run away at the first sign of an economic downturn. They are family-owned businesses in many cases and are there for the long haul. More help and encouragement should be given.

Senator Jerry Buttimer: Information on Jerry Buttimer Zoom on Jerry Buttimer Ar an gcéad dul síos, cuirim fáilte roimh an Aire Stáit. Tá an dífhostaíocht ag méadú. Cad atáá dhéanamh ag baill an Rialtais? Is dóigh liom nach bhfuil faic á dhéanamh acu. Níl aithne acu ar chathair Chorcaí. Tá méadú mór ar an dífhostaíocht sa chathair sin. If we take the starting point that the Minister of State and his colleagues have slaughtered the Celtic tiger and that the era is over, we might get some honesty.

If I can be parochial regarding Cork city, I ask the Minister of State to address core issues. In the Cork city social and family affairs office, there is a 45% increase in the number of under 25s signing on and in Cork county the increase is 60%. Unemployment has increased by 45.5% overall in Cork city, twice the national average and a worrying trend in our city. If the current trend in the unemployment rate continues, unemployment will be higher than when this Government took over from the rainbow Government in 1997. That is the legacy, Senator Ormonde, of eleven years of boom and bloom.

Senator Ann Ormonde: Information on Ann Ormonde Zoom on Ann Ormonde Senator Buttimer should not look at me.

Senator Jerry Buttimer: Information on Jerry Buttimer Zoom on Jerry Buttimer Why does Cork have twice the national average rate of unemployment? Is it because Government has not provided the necessary infrastructure to entice business to Cork or because the Government has not provided funding for the eastern gateway bridge to regenerate the Cork docklands? Is it the fact that Cork Airport is saddled with debt and the Government has failed to appoint a chairman to the Cork Airport Authority? These are pertinent questions that have not been addressed.

In one of her stirring contributions on the Order of Business some days ago, Senator Mary White referred to the cost of doing business. The Minister of State made numerous references to the same issue. We must address it.

The graph shows a spiralling increase under this Government in the past three years and especially in the past three months. I listened in my office to the speech of the Minister of State. Some of it sounded good and read well but there was nothing new, as Senator Alex White stated. There was no new policy statement, roadmap or new direction. There was much rhetoric. In the first few lines of his speech the Minister of State said: “The recent increase in the numbers on the live register is an unwelcome illustration of the challenge that lies ahead in steering the economy through what are undoubtedly challenging times.” This is true but we cannot blame foreign events for the mismanagement of our economy. We fuelled the boom in [500]the construction industry. As a consequence, many of the migrant workers have gone home or to London or wherever and our people have been left behind on the unemployment scrapheap. Will they be consigned to that? I hope not.

As a director of adult education in my previous incarnation, the Minister of State will get no argument from me because I fully subscribe to education, upskilling and retraining. From experience, however, much of it is happening without co-ordination or joined-up thinking. Many of those involved work alone. I hope the Government prioritises retraining and upskilling in the next 12 months.

As the Minister of State knows, the area of Cork city and county has lost many jobs in the electronic assembly sector. What plans have been made to tackle that?

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I do not wish to jump on the anti-FÁS bandwagon because it serves no one well. Mistakes have been made by FÁS, which everyone recognises. Through the community employment scheme, however, FÁS has provided the opportunity to engage in worthwhile and, as Senator Carty said, valuable practices. Under the Ministers, Deputies Martin and Harney, there has been a rowing back of this and a reinvention of FÁS schemes. Now, trying to keep people on such schemes is like trying to get through to the Vatican, so to speak, unless I talk to someone such as the Minister of State. We must be serious about community employment because it is a valuable asset to the community. In a time of recession, we should enhance it and not take people off such schemes and put them on jobseeker’s allowance or whatever.

I agree with Senator Boyle’s reference to flexible working patterns. In the context of the fact that Ireland has become very expensive to do business in — the Minister of State may be right in saying we should not talk down Ireland but the reality is that we are where we are at — I agree also with Senator Bradford that we should build bridges with countries we can have links with. I am not referring in that context to Governor Palin’s bridges to nowhere.

I ask the Minister of State to prioritise lifelong learning. There are great models from which we can learn. At UCC, Dr. Máirtín Ó Fathaigh demystified lifelong learning and brought it to the heartland of rural Ireland and the suburbs in Munster. If we do the same, we will be on the right track.

I ask the Minister of State to address the matter of FÁS and the speed with which it responds to situations, as referred to by Senator Carty. Members on all sides may be concerned at the way FÁS handles that specific issue. It is worrying that two thirds of new claimants were men and that a quarter were under 25. We cannot blame outside forces for the cost of doing business here. The rise in youth unemployment is worrying and I ask the Minister of State to address this.

Senator Ann Ormonde: Information on Ann Ormonde Zoom on Ann Ormonde I welcome the Minister of State and wish him well now, more so than ever, in these challenging times. We are discussing the increase in unemployment as a result of the downturn in the economy. Yesterday, we spoke at length on the budget and we will have an opportunity this afternoon to discuss aspects of the budget relevant to this subject.

I am not here to do a bashing exercise, so to speak, nor will I ever speak in that role. However, all that some colleagues can do is engage in such a bashing exercise without doing any constructive thinking of their own. They think they have the answers but if they have, why are they not in government? We are doing our best to stabilise the economy, a difficult job at this time. There are no guarantees that this is the right way forward but the budget is helping to stabilise the economy. We are here to face up to how we might help those who have become unemployed. As the Minister of State said, according to the August statistics there are more [501]than 240,000 on the live register. That is a considerable increase and is very disappointing. It appears that the principal fall-off is in the construction industry and the credit crisis has also come into its own. We had extraordinary growth and cannot expect it to be rosy in the garden always. The challenge is there for us to face.

The role of FÁS will be very important in how we handle unemployment. Although the organisation has got a bad press in the past it now has a golden opportunity to address that and rise to the challenge of handling the new situation. It is not about upskilling, a word that I hate. Upskilling means saying to a person, “You were good at plumbing, now we will put you into something else”. I would not like FÁS to think along those lines in the future but would prefer to see in its programmes and modules research into where future jobs lie. There will be a new emphasis and it will not be on the construction industry but on climate change and in the area of energy. Underground cabling has become a new phenomenon in construction. There is also the area of child care and the entire service industry. Technologies are coming forward and the question is whether FÁS will be able to handle the research needed and how it can apply such research to the live register.

A great variety of job skills exists that was required once but is no longer. How can we change the thinking of FÁS? How do we interview everybody on the live register in order to find out their position and where they are going? How do we do the joined-up thinking between the Department of Education and Science, the Minister of State’s Department and that which deals with the live register? How can we work in a way that will tap into this for the individual ? I am a guidance counsellor. How do I know how to reach out to that person, interview him or her, at a guidance or a counselling level, in order to give the person an opportunity to move from A to B? That is where we must step in.

The Minister of State’s speech was very good. He said that these areas are being examined. FÁS will continue to be involved. The Department of Education and Science, which deals with the VEC schools, has a golden opportunity to engage in joined-up thinking with FÁS at local level. The Minister of State mentioned community employment schemes. There is an opportunity to pursue those and to see how people can be brought back to life-long learning programmes such as those to which the Minister of State referred. There must be research into opportunities for the future. Perhaps many who are plumbers, plasterers or roofers will not wish to continue those trades. What might their inclinations be? Where might they be placed?

FÁS has a role. If it wishes to redeem itself it has expert professional people in its own organisation. Let them come out from behind closed doors, examine the live register, do their interviewing and their placements and go to the VECs which have equally good back-to-work and education programmes. These organisations can link up in order to help those people, boost their morale and provide opportunities. It can happen.

We must introduce flexibility. Work may be a morning or afternoon affair because the day of the 9-5 job is over. We have an opportunity to look at the areas in which FÁS can help in a significant way. There must be information centres. I do not know where I would go if I were on the live register at this time. If I were told that my job was to go in the morning how would I know where to go? FÁS must tell those who are unemployed it is there to help them and that it will work with the Department of Education and Science on its programmes. In that way education and training can gel together. One does not go without the other although we isolated them in the past. We had education but training was not mixed with it. That has changed and the thinking of the future must change too.

We must employ global thinking in order to re-employ those who do not wish to go back into roofing or plumbing, who want to change their way of life and have the opportunity to do [502]so through FÁS’s research and modular programmes, and morning programmes. Whatever way FÁS wishes to implement this it now has a greater opportunity than in the past.

Senator Feargal Quinn: Information on Fergal Quinn Zoom on Fergal Quinn I welcome the Minister of State back to the House. We are seeing a lot of him in recent times. That is good news but, on the other hand, unemployment is not.

I was a member of a partnership group which I had to leave when I was elected to the Seanad. I was concerned by a memory I had of previous times where groups were formed in different parts of the country to solve a problem. I thought it was great that people were getting up and doing something for themselves but when the group got together what was the first thing it did? It decided to send a deputation to Dublin in order that the problem would be solved from there. I am a great believer in the notion of doing it oneself, in self-help and in people being able to organise themselves. I remember going to the first meeting of that partnership in which I was involved. I brought a number of ideas but discovered that nobody else was thinking of doing it themselves. They thought they would get some organisation to do it for them, that they would get in touch with FÁS or some other group, many of them referred to by the Minister of State in his speech.

I said to them that there was a future in the area. We had a supermarket there and we needed somebody who could make jam and somebody who could provide good celery which was hard to get. One person started to grow lettuce. Another set up a car valeting business, another a window washing service. Suddenly we found there were a number of jobs, none of them big jobs, but they were getting people to think correctly. They were thinking of doing it themselves rather than relying on somebody else to do it for them. I have a concern, therefore, that when we set up or use State agencies, we might forget that there is work that requires to be done. There should be a way of doing it.

We must ensure and encourage the continuance of foreign direct investment. I was disappointed in one aspect of the budget. With all the tough decisions and all the bad news, something that created a spark was needed in the Minister of Finance’s speech. The importance of foreign direct investment must not be forgotten. I was delighted that the Minister gave a guarantee that the 12.5% corporate tax rate will not change.

A few weeks ago in the first debate between Senators Obama and McCain in the US presidential election, Senator John McCain made an error. He criticised Senator Obama because of the likelihood that he would increase tax, and pointed out that Americans should look to Ireland. He said that when this country reduced tax it took in more money and that its corporate tax was 11%. He meant, of course, 12.5% but perhaps he was giving us a hint. It would have been great if, when the Minister was announcing the tough decisions and the bad news, that he had announced brightly that we were taking Senator McCain’s advice and were dropping our corporate tax to 11%. The reason I raise this is that every time taxation rates have been reduced, revenue has increased. As corporation tax was progressively cut from 30% to 12.5%, revenue generated from this source increased significantly. The decision by former Minister for Finance, Mr. Charlie McCreevy, to reduce betting tax from 20% to 10% was greeted with a chorus of criticism. However, the increase in income from this tax was such that the Minister decided one year later to reduce it further to 5%. My intention is not to be glib but to remind others that we must show imagination in addressing unemployment.

While it will not eliminate unemployment, a recent French initiative to tackle the problem has impressed me. Retired engineers, architects and other skilled professionals in the field of construction have established an association which groups from around the country contact when they wish to have buildings of cultural value to their respective area repaired. Members of the association travel to the area in question and provide free advice on how the building [503]can be patched up or repaired. Local firms usually supply the equipment required for the works, while local unemployed people carry out the work. It must be possible to be imaginative in creating work for people who are unemployed. Perhaps people who are unemployed and out of the habit of working could be used to do this type of work at little cost to the State. One expects those who are unemployed to be willing to work if employment can be found for them in their local area. I have thrown this proposal into the melting pot for consideration.

As unemployment rises, it is essential to get people back to work. The Government should do this by providing schemes and training in specific skills. Having rescued the banks, it should make greater efforts to assist those who are in the unfortunate position of having been made redundant.

A new report published on Monday last found that the number of companies collapsing — perhaps that is the wrong word to use — has increased by 90% this year in comparison with last year. I was stunned at the figures in the report. A total of 477 companies collapsed in the first nine months of this year compared to 256 in the same period last year. I accept, however, that an essential part of business is that not all companies will succeed.

The number of people on the live register is increasing at the fastest rate in the history of the State. Certain straightforward initiatives can help to address the unemployment problem. For instance, the Government should reconsider the requirement that people must wait six months before they become eligible to participate in a FÁS course. Many people learn in advance that they will be made redundant. If they were able to join a FÁS scheme on becoming unemployed, there would not be a gap between employment and training.

Other new schemes are worth noting. An additional 700 people are signing on at Kilbarrack social welfare office while a further 1,000 people are signing on in Coolock. In 2006, a jobs club was established by the Northside Partnership with sponsorship from FÁS. This club is a tangible example of an initiative which gets people back to work, providing training programmes to assist participants who are ready for work to develop the skills they possess or teach them new skills. These can then be used to find a job or suitable training course.

The number of employees being laid off in the construction trade, which has featured strongly in this debate, is a major problem. More construction companies have gone out of business this year than in all of 2007. Considering the state of disrepair of many schools — I understand 40,000 children are taught in prefabricated buildings — the Government should consider diverting construction employees to work on public projects such as school building in addition to the road building projects which form part of the national development plan. Many people need building services. Establishing a regulated building service provider to ensure cash payments are regulated and go through the books would provide increased tax revenue. Builders would also arrive for jobs on time, an unlikely scenario during the Celtic tiger era, and many of those losing their jobs in the construction industry would be re-employed.

We also need to press ahead with the roll-out of broadband services. Recently, the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan, rejected data indicating that Ireland is at the bottom of the broadband penetration pile. However, the new European performance index contradicts the Minister’s statements on broadband as it shows that Ireland is lagging far behind our European competitors. While one could ask where we will get the money to fund the roll-out of broadband, we must show imagination as we endeavour to overcome the challenge of unemployment.

I am pleased the Minister of State is present as I know he will give the issue of unemployment serious attention. From experience, I know he get things done if he gets to grip with an issue. I urge the Government to use imagination in addressing the problem of unemployment and to avoid talking us into a recession, as we have done much too easily.

[504]Senator John Hanafin: Information on John Gerard Hanafin Zoom on John Gerard Hanafin I welcome the Minister of State, Deputy Billy Kelleher, to the House. There is no doubt that governing is akin to paddling a canoe. If one keeps paddling on either the right or left, one moves in circles, whereas if one paddles on both sides, one moves straight ahead. If the financial crisis of recent weeks has shown us anything, it is that State intervention, when necessary, is beneficial. This principle also applies when dealing with unemployment.

Yesterday, a welcome recognition was given to the benefit of Ireland’s low corporation taxation regime in attracting industry. When one speaks of unemployment what one means is the period when one prepares people for employment. The budget featured other innovative, imaginative and progressive measures, including an increase in research and development tax credits and a remission in corporation tax and capital gains tax for new start-ups. At this difficult juncture, positive and immediate steps are being taken to promote employment.

Much has been said about the construction industry. The difficulties we are experiencing were the result of an over-dependence on this sector. However, a similar over-dependence has been evident throughout the world. In addition, the mis-selling of financial instruments has resulted in a serious correction.

Construction, which has benefited the economy, is still important and could expand in future. A number of solid Irish companies, for example, the Grafton Group, McInerney Holdings and Cement Roadstone, have a European and an international dimension. Increased Government expenditure on education and school building projects is another positive step which will improve education facilities and provide employment in the construction industry.

In another positive development, the Government increased mortgage interest relief for first-time buyers. It is important, given that the boom was created by the construction industry, to take positive steps in this area because construction is an important part of the economy which could still expand, especially in terms of exports.

I am conscious that many construction workers enjoy substantial earnings. I am informed, for example, that when asked about wages, a Dublin builder indicated he was paying €2,000 per week for skilled and semi-skilled labour. It is difficult for people to move from such a high level of income to being unemployed. That is a challenge for the Government. It is where community employment, training and education schemes come into focus. Community employment schemes are highly regarded. It is interesting that people who have had highly paid jobs seek to participate in these schemes from which they would get an income that is €38 above what they would receive in unemployment assistance. They seek to participate in them because they know the work involved is worth doing. It is highly visible and of benefit to the community.

I am conscious that it is difficult now for apprentices to get jobs. There is a role for FÁS in this respect. I ask the Minister of State to make it as easy as possible for people to participate in these schemes as soon as possible. Many of the reasons for the delay in allowing people to participate on these schemes relate to possible abuses of them. Perhaps he might reconsider this matter because these schemes are highly valued by people who are skilled and wish to contribute to their community.

It is expected that we will have a higher unemployment level this year, but there are measures that can be taken in that respect. Like any good player of a sport, we should be where the ball is going to be and not where it is at. It is interesting that even during the Great Depression there were areas of growth in the new technologies of electronics and in other areas that we now take for granted, but they were new at that time.

In the area of science, technology and innovation, I commend the Minister on the grants and increase given for that area. It is a recognition that it is a growth area. There are still possibilities for growth areas in the biotechnology sector and in ethical biotechnology in particular, which will have an important role to play in the development of genetic solutions to health and [505]medical problems. There will also be growth in the services sector in the future and we need to prepare for those markets.

It is also possible to prepare in respect of energy efficiency areas. With regard to the construction sector, jobs can be created to ensure that houses are insulated to the highest possible standard. It is a benefit of the boom that we have a high standard of housing stock and a high standard of living.

A further area we should examine in terms of development is what are known as the BRIC countries, those of Brazil, Russia, India and China. These countries are expected to grow at a strong rate for the next ten to 15 years. There will be emerging markets that will present wonderful opportunities. We should focus our attention on expanding our markets in these countries.

Senator Frances Fitzgerald: Information on Frances Fitzgerald Zoom on Frances Fitzgerald I welcome the Minister of State to the House and wish him well in the task of dealing with the appalling unemployment figures we face in this country. I also wish him well in reaching out to those who have become unemployed because there is nothing more harrowing or distressing for an individual or a family than to face into a period of unemployment and feel unsupported, not knowing where to turn or what one’s next step will be. That is the way many people will feel at present, given the economic situation we are facing.

In the early 1990s I worked on the National Economic and Social Forum and the Minister of State will remember that it produced a report at that time on coping with long-term unemployment and the steps that the then Government needed to take to deal with it. It is sad to think that we have to take up that report and check if there are recommendations in it which we can now put to good use. I agree with Senator Quinn that we need to be imaginative and show initiative in dealing with the current situation if we are to reach out to help the people who need it most.

I am concerned about the provisions in the budget announced yesterday. The budget does not protect the vulnerable, those at the cutting edge and those who are least able to cope with the downturn in the economy. It will result in an increase in costs and charges for them. This is a demanding time in terms of dealing with the unemployment figures.

The level of unemployment here is now higher than that in the United States, Britain, Japan, the Netherlands, Denmark, Norway, the Czech Republic, Switzerland, Poland, Singapore, South Korea. Therefore, it is not correct to say that the international situation has led to the rising level of unemployment here. There are national factors involved. Decisions were taken here that have led to a situation where jobs are being lost at an alarming rate.

I had hoped that the budget would have contained some particular initiatives to deal with unemployment. In his speech the Minister of State gave very few specifics. I ask him and his Department to come up with more. We need to hear of the initiatives that will be taken to retrain people and help them get back to education. Those are the areas on which we should be focusing in order to give people hope.

Fine Gael has made a number of recommendations on back to education incentives on which the Government could act. It would be worthwhile for the Minister to examine them. One of the recommendations is the extension of the back to education allowance. We must try to ensure that we do not return to an era of long-term unemployment and emigration. We will need a more proactive approach than we have seen to date.

In this context, I refer to the example of the debate on FÁS in recent weeks and the criticisms of that agency, yet one of the first points the Minister of State made in his speech concerned the role played by FÁS. This is an agency that has been heavily criticised recently, yet in almost the first point he made in his speech, the Minister of State outlined FÁS will offer a range of [506]services, supports and programmes to help those in the workforce. I hope the agency can do that, but it is clear that there needs to be a great deal of supervision, monitoring and reporting back to the Minister about the initiatives it is taking.

What are the more intensive arrangements with the local employment services to deal with the increases expected in live register referrals? What are the short relevant training courses they will provide and where will they be available? I would like to hear much more about that. Senator Ormonde said it is important for people who suddenly become unemployed to know where to turn and what is available. We need to hear much more about this. We also need to hear much more about initiatives on the retraining and back to education side as well as about the support for the community employment schemes. That is essential.

The scale of what is happening is frightening. The number of unemployed people signing on the live register in my area in Clondalkin has increased by 47%. Facing unemployment is a dramatic change for families. People are seeking support from MABS on how to deal with their day-to-day bills. The sudden unemployment people are facing has a serious impact on their personal lives. I am receiving contact from constituents about having to queue in the rain outside the unemployment office in Lucan. The office does not have the capacity to cope with the numbers.

The issue of how we deal with the people who become unemployed is important. We have heard reports from many Senators about the conditions, the way people are being dealt with and the delays they encounter in getting their benefits. We heard more announcements last night about the number of stamps people will need before they will be eligible for allowances. This increases the stress on the families concerned. We also need to examine those aspects.

Increasing our competitiveness is a key factor. I spoke to individuals involved in small businesses this morning and they are devastated by the budget announcements. They do not believe there were any initiatives for small business, but that in fact the pressure on them has increased, and these are the people who have been creating most of the jobs in the country, as we know. They did not get much solace, yesterday, from the budget, and perhaps the Minister of State might comment on that.

There has been a great deal of talk about the amount of bureaucracy and red tape that so many employers in small business have to deal with on an ongoing basis. Something could be done about this. It would help to restore our competitiveness. Initiatives must be taken to restore competitiveness in the country. One can see that our competitiveness graph has been falling and this is a key factor behind the type of unemployment we are facing. We need to hear from the Minister of State about the type of initiatives that are being taken to restore competitiveness in the country. It is critical. We must do it if we are to increase exports. Growth rates in Irish exports have fallen below our peer countries in recent years, and our share of global trade has declined each year since 2002.

Our productivity growth has been below the OECD average since 2003. High inflation has affected our competitiveness as well as poor infrastructure across the board and not enough investment in research and development — although I take on board what Senator Hanafin said yesterday about that. That is what is going to make a difference if we are to reduce the unemployment figures and stop the type of job losses we have seen in recent weeks and months.

Senator Quinn spoke about the number of small businesses going to the wall and expressed his surprise at the statistics. If we are not competitive and continue to make the demands on small businesses that we have been making, we will see more of them folding. That is the sector which needs the support and initiatives to make it realistic for small businesses to continue to keep the people they have, employ more and grow and develop.

[507]Again, we did not see that, yesterday. We are in 22nd place in the global competitiveness report, which was published. I want to deal with the reasons behind that. It is largely due to our inadequate infrastructure, high inflation and inefficient Government bureaucracy. We did not see any reform announced in the budget yesterday, and that is a big disappointment. There was no reform of the bureaucracies that have been built up. We are not going to get efficient frontline services if we do not reform the bureaucracies and they will eat away at our money. All the extra tax put on people yesterday in the budget will be used up on these bureaucracies and the money will not be available for the creative initiatives that might make a difference in terms of creating more employment.

Senator Joe O’Toole: Information on Joe John O'Toole Zoom on Joe John O'Toole I welcome the Minister of State to the House. I see the Government side is losing its appetite for debates on unemployment and the budget. However, I hope there is a full attendance at the debate on the budget later so that Members can do their duty.

In terms of unemployment, the budget is regressive. There are a number of points that will create difficulty. In fairness, Senator Hanafin pointed out one of the few good points, dealing with the question of research and development, and I agree with him. That is enormously important and it is something I have asked for many times in this House. I wish the initiative well and hope it is successful. However, it must be said that other countries, equally, are engaged in similar initiatives to try to promote research and development.

The Minister of State is too young to remember, but the Cathaoirleach and I can recall the same situation, in 1987, when we ran into difficult times. The first thing the Government decided to do was to increase class sizes, and there was an unholy war about it at the time, because people felt that was not the way to go. The new initiative will create unemployed teachers. If there was a surplus of teachers, they could take their falls like everybody else. However, young students went into teaching because they were assured that a supply of teachers was needed. We have the largest class sizes in Europe. Ireland is the country in Europe most in need of teachers and reductions in class sizes, yet the Government takes the opposite route. I understand the Government’s reasons, and I am not quibbling with that. I would not have whinged if it had increased income tax by 2.5% but would have conceded that it needed to be done, perhaps with one codicil, that it must exclude the minimum wage. The Minister of State, in his section of the Department that deals with labour affairs, must have some sympathy with my viewpoint in this regard, because again, it is as if we have forgotten history.

One of the reasons we brought in the minimum wage and why every Government tried to bring those at the bottom of the range in terms of wages and salaries out of the tax net was to soften the bridge between unemployment and employment. We had reached the point at one stage where people might have been better off on the dole, as there was no incentive to get work. However, what we have started to do now is reduce the incentive for people to get on the first rung of the ladder. People are for the first time querying whether it is worth their while to get themselves into the tax net. It is a disincentive, at a time when we are trying to create employment.

The other extraordinarily bad decision, which will also impact on employment, is the increase in the VAT rate. It is was already extraordinarily high and was brought in as an emergency measure, as I recall. To increase it to 21.5% will have a very negative impact. With all of this we are creating further disadvantages within society.

The Minister said yesterday — it has been echoed today by many — that the Government forecasts unemployment will exceed 7%, which is extraordinary. However, these things happen and I do not join the general chorus in blaming the Government for all that has gone wrong. That is not my style. All governments make mistakes, the global impact is a fact and I believe the regulator is more right than wrong in terms of what he has said about the safety of our [508]banks and their capitalisation. Those who say otherwise should offer us the proof. I do not come from the stable of having a go just for the sake of it. Mistakes have been made, but the reality is that we have now created an enormous number of angry people, including those over 70 years of age, parents and teachers, whose fury is aimed in the wrong direction. It does not help the unemployment issue or create the employment opportunities or support structures that we need.

The Centre for Early Childhood Development and Education, CECDE, had originated from the view that the blackspots of unemployment coincided with the underprivileged areas. In order to break the cycle of underprivilege, it was felt that early intervention was necessary. It was felt that my children, say, and those of the Minister of State, coming from homes which were not dysfunctional, and with space etc., did not need the same start, but that early childhood intervention for the disadvantaged was enormously important in order to get people into a position of readiness to learn. CECDE was set up to break the cycle of underprivilege and get children into education, which was the bridge to employment. The proposal to abolish it is a very regressive initiative, although I recognise that politics is politics and we cannot always do things that we want. However, these are issues which are taking us backwards.

There might be a case for an increase in the size of classes if we had extraordinarily low class sizes. We now have the largest class sizes in Europe. It is a regressive measure at a time when we are trying to sell ourselves internationally on the basis of a solid, progressive, successful educational system and structures. I guarantee the Minister of State that if The Economist passes a comment on the educational aspect of the budget next week, it will not support it and will say this is the wrong way to go. We must think about the long term. The Government said we must think about the long term, that this would not happen in a year, that this was a plan for a number of years and that we must defer certain things, which I understood. However, this is going backwards and it will take us years to pick up. The Minister of State’s Department will be at the forefront of dealing with unemployment and this will be of no help to it.

Senator Eugene Regan: Information on Eugene Regan Zoom on Eugene Regan I am puzzled by the Minister of State’s statement in regard to what we are doing about unemployment. I did not find any justification for some of the assertions made in the statement. In bringing forward the budget by six weeks, the Government recognises that further measures will need to be taken to bring further stability to the economy. I do not see where we are going by bringing forward the budget by two months. Are further measures, in addition to those in the budget, to be taken? I do not see anything in the budget which helps the unemployment situation.

We had chronic unemployment in the 1980s. The only way that was resolved was by creating the underlying conditions for a competitive economy, for export-led growth and for a low inflation economy.

Senator Frances Fitzgerald: Information on Frances Fitzgerald Zoom on Frances Fitzgerald I would like to call a quorum. I noted there was no Government speaker when the last Senator finished speaking.

Notice taken that 12 Members were not present; House counted and 12 Members being present,

Senator Eugene Regan: Information on Eugene Regan Zoom on Eugene Regan In the interests of procedures of the House, the Minister of State should not be worried about the time I have been allocated, or will take, to relay the few comments I wish to make on this issue.

The basis of the Minister of State’s statement was that the way to deal with unemployment was through lifelong learning, our education system, etc. There is no basis for that statement because when one considers the cutbacks on the education front in the budget, we are going [509]backwards in terms of providing the investment in human capital which laid the basis for resolving the chronic unemployment we faced in the 1980s.

In regard to promoting enterprise, it is a self-evident proposition that investment in research and development is essential for any developing economy. It should be no surprise that we continue the process of investing in research and development. There is nothing new there.

The 12.5% corporation tax, which is so important for attracting foreign direct investment and which was introduced by the John Bruton-Deputy Ruairí Quinn led Government, was criticised at the time by the Opposition, including Deputy Bertie Ahern and Charlie McCreevy, as a negative. However, it was subsequently adopted and agreed with the European Commission. That low corporate tax regime has been fundamental to attracting inward investment.

In regard to every other aspect, we seem intent on undermining the competitiveness of this economy which is fundamental to continuing the process of attracting further investment. By the Government’s own admission, this budget will add 1.1% to inflation. The cutbacks for local authorities will create a situation where various stealth taxes will be necessary in the coming years to sustain the public finances.

I refer to the conditions necessary to prevent a growing unemployment rate. All the forecasts indicate the unemployment rate will increase significantly in the coming years. What we now have is similar to the chronic situation in the 1980s where we are borrowing for current spending. Despite the cutbacks in the budget, there will be an increase in borrowing in 2009. We have a doubling of the national debt, which affects the entire credit rating of the country, and we have a budget, which is deflationary and contributes to reduced growth. Therefore, I do not see the basis for the Minister of State’s statement. It is very selective and sets out no propositions that suggest the Government is adopting measures that will do anything to reduce unemployment or moderate the rate of increase in it. It is back to the bad old days of Charlie Haughey and spendthrift Governments where the public finances are out of control. That is the biggest obstacle to creating the conditions for a competitive economy and reduced unemployment.

Minister of State at the Department of Enterprise, Trade and Employment (Deputy Billy Kelleher): Information on Billy Kelleher Zoom on Billy Kelleher I welcome the contributions of Senators. I have only a short time to sum up on the discussion. The gross national product is estimated to contract by approximately 1% next year, unemployment is expected to average approximately 7.3% and inflation is expected to ease to 2.5%. I say this in the context of what we face next year and to explain why the budget was brought forward this year. It was to address these concerns and to get our fiscal policies in place to ensure we did not let the situation spiral out of control. Were we to have allowed the situation to have continued, we would have had an enormous hole in the national budget, the deficit would have been extraordinary and we would have been playing catch-up for longer.

We began to take prudent decisions in this regard some time ago. As early as last July when I came to this House, I spoke about the measures necessary in the context of paring back more than €400 million in this year’s budget and of making savings next year of approximately €1 billion. We have now brought forward the budget, which is financially responsible and outlines a clear pattern for what we are trying to achieve. Let us be under no illusion that what we face in coming years in global economic terms with the downturn in the world economy, potential global recession, credit difficulties and lack of finance availability for companies means we are in a very difficult situation.

I wish to refer to some of the points made. A simplistic assertion and criticism is often made of the construction industry. The perception is that everyone in the construction industry is coining it. In excess of 14% of the labour force was actively employed in the construction [510]industry in recent years, it was a vibrant part of our overall economy and provided long-term sustainable employment for many people, especially those in the crafts and labouring sectors. It is, therefore, facile to make the flippant, throwaway remark that the construction industry was a burden on society and the economy. It cheapens the debate we want to have.

There is no doubt we were overly reliant on the sector. It was estimated we would need approximately 55,000 housing units year on year. In 2007, the number of units built crept up to almost 90,000 units. We were, therefore, over-supplying the market. That said, the cheap credit available through the European Central Bank and the euro was also a major factor in escalating house prices. Affordability existed because people were earning good salaries and cheap credit was available. This was coupled with extraordinary prices paid for land in some cases. The lack of zoned land in critical areas was another factor.

These issues were outlined as far back as when I was a Member of this House from 1992 to 1997. The Bacon report and others pointed out the concerns at the time regarding increasing densities, availability of housing land, investment in infrastructure, etc. The difficulty was at the early stages then, but it increased rapidly owing to cheap credit following our involvement in the euro. This is something we never acknowledge, but it was a critical factor in escalating house prices. We are now in a situation where demand has dropped off, but this also has a global context.

The Government has made a decision and will bring forward legislation tomorrow with regard to the guarantee for the banks. It is important we send out a clear message to the banks. I will watch all banks to ensure they do not send out credit hounds to collect from small businesses struggling with overdrafts, etc. and that they look at the most productive sides of the economy and ensure credit is available to them. I will hound the banks until I know they are looking at the positive aspects of the economy where there are employment opportunities and to which they would make credit available, such as small businesses that may be suffering because of the credit squeeze, rather than looking at the balance sheets and bad debts in the context of inflated property prices and drawing on the current accounts of small businesses to ensure the books look good for the Financial Regulator.

I urge Senators to be conscious and sensitive to that and wherever they see the opportunity, to encourage the banks to listen. The situation has changed and there is a new relationship between the Oireachtas, the Government, the people and the banks. In my experience and judging from what has happened in previous global downturns and credit squeezes in other countries, the banks send out their credit hounds to small companies, pull the current account overdraft facilities and the companies fold. This happens because the banks want to get money in to ensure their books look good in the context of deflating property prices. I urge Senators to be aware of this whenever they have the opportunity to speak to banking people and during debates in the House.

I would like to go through each point made by Senators, but do not have time to deal with all the valuable contributions made. I agree with Senator Regan and others with regard to research and development, our competitiveness and attracting foreign direct investment. Every Government since the 1950s has acknowledged that corporation tax is a fundamental plank to attracting foreign direct investment into the country. For that reason, we have been very successful in that regard. Our low corporation tax, coupled with investment in education, access to third level, high quality graduates and recent infrastructural investment have brought foreign direct investment into the country. Senators should be under no illusion, however, that if we are not competitive in the context of our cost base, we will lose the foreign investors. I am concerned too much emphasis may be placed on the research and development side and we [511]will lose sight of the fact that manufacturing is a fundamental plank to ensuring we have strong employment growth.

Over the next few years we should try to link the two factors. Not only should we send out positive messages internationally about us being available for research and development, having high end third and fourth level graduates and high quality engineers in the life sciences and other areas, we should also send out the message that we have a highly motivated skilled workforce. We must send out not only the message that we can do the research and development, but also the message that we are able to compete on the manufacturing side. We will never be able to sustain the growth and employment we need for our current demographics if we do not have a manufacturing base. We should not lose sight of this nor dismiss manufacturing as something that is no longer possible in this country. Manufacturing is a fundamental plank. One can have five or six high-end engineers designing a product, but one needs approximately 1,000 to manufacture the product for market. We should try to gel the two areas together and I am confident this can be done.

The issue of work-life balance was raised. It is important to have flexibility in the workplace, not just from the point of view of employers and large companies that may have peaks and troughs in production and demand, but also to ensure there is flexibility for employees so they are content in the workplace and they have the flexibility to deal with their families. Each year we have a work-life balance day, generally in February. We have also set up a panel of experts to advise companies on how to bring forward policies and procedures in the workplace that are family friendly. This is something that has benefited companies and on which there is greater emphasis. Issues such as pressure of travel at peak traffic times, child care costs etc. come into play as well. There are many reasons, therefore, work-life balance should be considered positively by companies and actively embraced. I urge them to take up that offer in the context of the availability of the expert panel, and to bring forward ideas and policies for improving work-life balance.

  2 o’clock

Community employment schemes are an important part of society. We must make sure we have a commitment that people in long-term unemployment do not descend into a black hole and become removed from society. They must be part of the community and a productive part of society. There are 2,500 places available on community employment schemes and they are fundamental in ensuring that people can remain in the labour market and can progress. They are an active labour market progression mechanism. We also must be conscious of the fact that some people who are currently in employment schemes may not progress to the active labour market and seek employment. We must have this debate. Are community employment schemes just active labour market mechanisms or are they also social employment schemes? We need to sit down and have that debate because these are fundamentally different concepts. Some people will continue to the full-time labour market while others never will.

We will listen intently to the views of Senators in the context of the budget. The debate on this is currently ongoing in the other House, and I know there also will be a debate in the Seanad. These are challenging times. We must ensure that tight budgetary policies are pursued and that we obtain value for money. In this way we as a Government and as a people — but as an Oireachtas as well — can ensure that Ireland remains a competitive nation. Senator Regan may be right in stating that from time to time we fluctuate, but we are still at the top end of the global competitiveness scale. We should not lose sight of that.

The social partners came together recently to discuss a national pay deal, which is being voted upon by the various stakeholders in partnership. Industrial harmony and peace is another important selling point that we have. We do not lose a large number of days or weeks to [512]industrial disputes, as is happening in other countries. We should be conscious of that when we speak out nationally and internationally. As the Minister said yesterday, it is time to be patriotic. It is time to put the flag around ourselves and put our best foot forward in ensuring that Ireland goes through this turbulent time with everybody’s assistance.

Sitting suspended at 2.05 p.m. and resumed at 4 p.m.

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