Tuesday, 28 April 2009
Dáil Eireann Debate
Deputy Simon Coveney: I was somewhat taken by surprise there, as I thought there may be a vote. I apologise to the House for the delay. I wish to share time with Deputies Leo Varadkar, James Bannon, Michael Ring and Jimmy Deenihan.
Fine Gael is moving this motion in an attempt to be constructive and to invite the Government to debate the concepts behind our recently launched policy document, Rebuilding Ireland. We deliberately avoided the temptation to put down a motion to kick-start another Punch and Judy show in here with insults being traded across the House. This motion avoids taking the opportunity to kick the Government for its incompetence in managing the economy which, God knows, is not too difficult. Unfortunately, the Government’s response is a disappointment to say the least; it is an insult to the efforts that we have shown to be constructive, and to the House generally.
The motion proposes an €18 billion stimulus package over a four-year period through restructuring and reforming existing State companies and creating new State companies. The Government’s response is to clap itself on the back for what it has done in the past and for some of the things it plans to do in the future. The Government has yet again shown itself to be arrogant and totally unwilling to listen to Opposition suggestions, proposals and constructive criticism.
A few weeks ago the Taoiseach welcomed our policy document as a basis for discussion and debate. He went on to say he had some difficulties with elements of it, but that it would be appropriate to have a more detailed debate on the proposals, perhaps through Private Members’ time. What a load of nonsense that is in light of the Government’s response which, I understand, was drafted by the Department of Finance this evening.
The Government is in such a state of paralysis that it cannot even respond intelligently to a serious and constructive motion. The Labour Party may not agree with all that we are proposing, but it is engaging seriously in creating new structures to deliver investment in an economy that is starved of capital and investment. I welcome its amendment to our proposal, even though I do not agree with all of it. However, I agree with the Labour Party’s assessment of our current infrastructural deficit and the negative impact on competitiveness, but the Government cannot bring itself to recognise even that much. It is no wonder that people have given up on the ability of certain Ministers to lead. Even people in the Minister of State’s own party have done so.
Ireland needs a Government that is open to new thinking and a new approach to solving problems. I want to look briefly at the Government’s response to our new thinking. It is summed up in the final section of the Government’s amendment which states:
The whole purpose of a debate like this is to develop new proposals and listen to new ideas that have been costed and examined in detail. They have been launched and we stand over them, but they are dismissed by the Government in favour of putting the head down and keeping on as we are. These are the failed policies that result in the kind of economic reporting that we will get tomorrow in future predictions for the economy in the short and medium terms.
The Government congratulates itself on the planned €600 million investment by Eirgrid in a new east-west electricity interconnector. Many people would say, however, that it is €200 million more expensive than it should be. The Government also congratulates itself on a memorandum of understanding signed with Renault, Nissan and the ESB to provide electricity infrastructure in Ireland. We welcome these things, but they have nothing to do directly with the motion before the House.
Fine Gael is about reform because that is what Ireland needs. We have proposed reform in our health service through fair care proposals, and have also proposed reform in third level education by providing a funding mechanism so that people can avoid third level fees while in college. We have been proposing public sector reform for four years, as well as reform of the way this House does its work.
This evening’s debate is about reforming the way in which publicly owned companies can deliver for the economy in times of recession. We are proposing doing that by amalgamating some companies, creating new ones in new areas and potentially getting rid of some that are no longer necessary. However, the Government will not even entertain that concept for debate, never mind for consideration. That is pathetic in the context of the challenges our country currently faces and the reform agenda that is required.
The emphasis of what Fine Gael is proposing is quite straightforward. In the Rebuilding Ireland document — or New Era document as it is now being called — we are concentrating on how to get investment into the economy at a time when the Government cannot borrow any more money. We are concentrating on key labour intensive areas that require investment, so we can start employing more people in new areas. Most importantly, however, we are concentrating on areas that will be the basis for a new economy, so that in three, four or five years time when Ireland starts to recover we will have rapid growth. We will also have the arteries upon which that rapid growth can feed through new technology and new infrastructure in areas such as telecommunications, energy, water and transport. Telecommunications infrastructure in Ireland will be just as important as the motorways we have built over the past ten years. We are examining new ways in which we can invest capital in these key arteries for development which can feed future growth in a way that will not increase Government debt or the borrowing requirement. We propose to do this through the establishment of new State companies and, more important, we propose that the process should be managed by an organisation entitled the New Economy and Recovery Authority. Essentially, it will be an industrial holding company which will manage and own State companies and through which we can invest money.
People have misread what the Fine Gael Party is trying to achieve in this document when they argue that off-government balance sheet borrowing is a sleight of hand or that there is no difference between increasing the debt to which the State is exposed through commercial State companies and borrowing and spending through agencies. There is a vast difference between these two funding models. Our proposal is not the same as investing money in energy, telecommunications or water infrastructure through local authorities or State agencies, which the State cannot afford to do, but involves the establishment of a commercial State-owned company to borrow money and raise capital on the basis of making a commercial return over time. The experience of infrastructural projects is that they attract private pension fund money. They are, therefore, a good investment for the National Pension Reserve Fund because they represent an investment in the future of the economy and by and large provide a commercial return on the basis of a regulated return. For this reason, they are not exposed to the potential difficulties of a market in recession.
In short, the Fine Gael Party proposes to establish a holding company, whether known as “NewERA” or another name, which will drive efficiencies and change in the State’s portfolio of companies. For the first time in history, we will start to manage our State-owned companies as a portfolio of companies which can deliver on an overall strategic plan for the country rather than allowing them to develop little empires, as is currently the case. While the latter approach works for certain functions, it does not deliver in other areas.
I will give an example of what we propose. One of the areas on which we want to focus investment is telecommunications and broadband infrastructure. While Ireland has a considerable amount of State-owned backbone telecommunications infrastructure, it is not handled or managed in a strategic manner on behalf of the State. Iarnród Éireann, Bord Gáis and the ESB own such infrastructure and the State has spent more than €100 million on having fibre for metropolitan area networks put into the ground. All this infrastructure is managed in a disjointed fashion. A formerly State-owned company, Eircom, which is now in private hands, is dying on its feet because its parent company is broke and has gone into administration in Australia and New Zealand. The company is now up for sale and is in danger of being purchased by a new set of venture capitalists seeking to make another quick buck by turning it over and selling it in a few years, thus making a personal fortune on the back of raising more and more debt for the company. In the meantime, Ireland will not get the capital investment in broadband infrastructure which it needs.
We must establish a State-owned company which can purchase back, on behalf of the State, the infrastructure owned by Eircom. It must manage this infrastructure and all other State-owned broadband assets we have in the ground in a strategic fashion so that we can provide a web of broadband backbone infrastructure based on fibre that will provide wholesale infrastructure on which the private sector can operate and offer businesses and households an attractive and competitive commercial retail product. In doing this, we could employ tens of thousands of people. Instead, however, the Government continues with its approach towards broadband which is failing to deliver next generation infrastructure.
I have offered only one example but one can make a similar case for change in Government policy in the energy infrastructure area in which we need to facilitate energy storage and micro-generation on farms, small businesses and households so that they can sell energy back to the grid and make money in the process. We need to take a similar approach to transport infrastructure by linking electricity generation and infrastructure with our requirement to fuel transport in the future so that we no longer spend €3 billion per annum importing fuel for cars, trucks and tractors. This is the kind of new thinking Fine Gael is proposing.
We also propose establishing a new State-owned company to manage our water infrastructure rather than have 37 local authorities managing bits and pieces of pipeline all over the country. We know some areas will suffer drought and others will suffer flooding. We also know major construction projects will be required to transport water from the west and midlands to Dublin. Despite this, we persist in managing our water infrastructure in a disjointed manner.
Let us see some new thinking and an acceptance that new ideas and different thinking are emerging from the Opposition benches. The Government must give these ideas the respect they deserve by responding in an intelligent manner as opposed to dismissing them in the way the Minister has done.
Deputy Leo Varadkar: I compliment Deputy Coveney on the work he has done, not only in drafting the motion but, more important, on proposing some of the radical measures included in the NewERA document.
This morning the Ryan Tubridy show featured a discussion on the role of spin in Irish politics. The Government spin on the current recession is that it is part of an international phenomenon and we are innocent victims of a whirlwind sweeping the world. Every time one hears the Taoiseach or another Government representative speak, he or she uses the term “international recession”. While an international recession is under way, largely as a result of a crisis in the financial institutions, Ireland is experiencing a much more severe domestic recession than other countries, as will be borne out by projections due to be released by the ESRI tomorrow. The Irish recession is not due to international factors alone. Other factors include runaway public expenditure. The Taoiseach, for example, in his previous role as Minister for Finance, increased public expenditure at four times the rate of economic growth every year. That policy was unsustainable and inevitably led to a massive deficit which has forced the Government to cut services and increase taxes on hard-pressed families.
Another factor was the Government’s pursuit of tax policies which fuelled a property bubble it should have sought to contain. In addition, we had an over-reliance on the construction industry for growth, jobs and revenues. Let us also remember that the Celtic tiger was based on Ireland being a competitive economy. This was undermined consistently in the past 12 years by a series of Government policies which have left the economy uncompetitive and shedding jobs, not only low cost jobs to economies in the Far East but also knowledge economy jobs to countries such as Wales, England, Scotland, Singapore and the Netherlands where wages are high.
The most serious human consequence of recession and economic mismanagement is unemployment, which has major social consequences in terms of increasing levels of crime, deprivation, family breakdown, ill health and poverty and causing the destruction of communities. We need to ask what is the position regarding unemployment. While we may not learn tomorrow that 400,000 people are signing on, we will discover that we are fast approaching this figure, which represents 11% of the working population. How does the unemployment rate here compare with that of other countries? That is the key point. Will the Minister explain the reason unemployment here is much worse than in other countries?
Unemployment in Ireland is now 11%, higher than it was when Deputy Bertie Ahern and Fianna Fáil came to power in 1997. Let us look at other countries. The United States has a rate of 8.5%, Japan 4.5% — these are countries affected by the international recession — Britain 6.7%, Canada 8%, the eurozone 8.5%, France 8.6%, Germany 8.1%, Italy 6.9%, the Netherlands 4.1%, Denmark 2.5%, Norway 3.1%, Sweden 8.3%, Australia 5.7%, Singapore 2.6%, South Korea 3.7%, Israel 6.3% and Ireland 11%.
Of the 55 countries in the report, I can only find six with higher unemployment rates than Ireland. These are Belgium, whom we will probably overtake tomorrow, Spain, Turkey, Columbia, South America and Latvia. That is the seriousness of the situation we are in. I would love to hear an answer from Ministers as to why we have entered a situation where we have gone, in the space of one year, from being one of the countries with the lowest unemployment rates in the world to one of the highest, how that is due to international factors and how the Government can continue to claim it has no responsibility for it.
Even if one looks at the change — I am using OECD statistics — in Ireland, unemployment is 5.2% higher than it was this time last year. It has doubled from 5.2% to 11%. I cannot find another country in the OECD where it has increased that much nor one where it has increased by 4%. The next closest I can come is the United States, where the increase is 3.2% and after that the next closest is Denmark, where it is up 1.7%. The change in Ireland is dramatic relative to other countries.
I can find a number of countries where unemployment has fallen compared to this time last year, such as Germany, the Netherlands, Poland and Slovakia. If one strips away international factors, one is left with the clear conclusion that in Ireland we have a serious domestic recession and serious domestic problems, with unemployment numbers that are largely the creation of the Government, which continues to be in denial. As long as it is in denial there is no possibility for us to develop solutions. I am very interested in the Minister of State’s remarks on that particular point.
Much can be done, which is what this motion is really about. The proposals put forward in the NewERA document have two key parts. The first is taking the national pension fund, as well as other moneys, such as borrowed capital and funds and, instead of investing them overseas, they would be invested in the Irish economy through new State enterprises which will develop new infrastructure for a new era, such as broadband, alternative energy and other projects. In many ways, this is reiterating the principles of the founders of this State, most of whom were members of the predecessor of my party. They established the ESB and a number of State agencies and entities at a time when, in many cases, it was not possible for the private sector to provide such infrastructure. The time has come to do that again.
We also acknowledge that existing State companies can be reformed and re-founded into ones which are more appropriate for this time. The merger of Coillte and Bord na Móna makes significant sense in that regard. There is a recognition and a willingness by this party to accept some State-owned assets should now be sold off. We want to exchange the old assets of the 20th century for the new assets of the 21st century.
Beyond what we proposed regarding State enterprises, much more can be done. The issue of the banks will go on and on. There is no perfect solution. The Government’s proposal might work and I certainly hope it does, because if it does not the consequences for this country are catastrophic. However, none of those proposals will do what is necessary in the short term, such as extending credit to small and medium enterprises so they can sustain jobs and survive this storm. The way to do that is to do what is being done across the water in the UK and introduce a State guaranteed loan system for SMEs. One can choose to set up NAMA, have nationalisation of the banks, as the Labour Party proposes, or set up clean banks, as we propose. One can do any of those things but one still has to have a State guaranteed loan system for small businesses, otherwise tens of thousands of them will go to the wall and, with them, hundreds of thousands of jobs.
On the fiscal front, the Government needs to turn its strategy upside down. Deputy Enda Kenny is absolutely correct. We cannot tax our way out of a recession. No country ever has. We will have to have tax increases and spending cuts. No matter who is in Government that will be required, but the adjustments should be heavily on the spending side, in terms of reducing waste, getting rid of unnecessary functions, reviewing programmes and changing the entire budgetary system so we can minimise the requirement to increase taxes.
We also need to have more active ways to support business. We need to address and have a clear answer on the Government’s plans regarding the minimum wage. There can be no case for increasing the minimum wage for the foreseeable future and the Government should make it clear that will not happen, for at least two years. We need to abolish the requirement that rent can only be reviewed upwards. We need to reduce utility costs, as Deputy Coveney has said. We need to freeze rates, in particular local authority rates, and I am glad a large number of Fine Gael-controlled councils have done that. We need specific measures for the Border counties, which are being hit extremely badly by cross-Border trade.
We need to use some of those spending reductions to reduce VAT, as proposed by Fine Gael in our costed pre-budget document. We also need to address issues such as employment. The Labour Party has come up with some very good suggestions on providing graduate internships and that should be taken on board. There should be an overhaul of how the €1 billion FÁS budget is used, of which €650 million is not used on payments to participants in training schemes, and we should look at how that money could be used in smarter way to assist those who have lost jobs.
That is essentially what Fine Gael is doing. We are putting forward a clear analysis that unemployment is much worse in Ireland than elsewhere. If it is still the Government’s claim that this is due to international factors, we want to know why it is still making this claim, based on the statistics I put forward today. We also want to know what is its view on the positive proposals we put forward today.
Deputy James Bannon: This country lacks two essential ingredients for rebuilding economic growth and prosperity, competitiveness and infrastructural development. Infrastructure encompasses not only motorways, bypasses and secondary roads, but the broader picture of energy, safer clean water, services, transport, communications, with an emphasis on broadband, as stated by a previous speaker, education and health.
Nowhere in the country is the infrastructural deficit more keenly felt than in the midlands and the greater BMW region. These areas, allied with the Border counties, have the lowest disposable income in the country, according to a recent study by the Central Statistics Office. The figures compiled for the report were for the period from 2000 to 2006, when the economic climate was very different from that pertaining today. This struggling region is being hit even harder by the severe economic downturn. While the countrywide figures for those unemployed show a 75% rise in the past 12 months, Westmeath has suffered an 88.5% increase in job losses within the year and Longford has suffered a 76% increase in the same period. Yesterday, some 50 job losses were announced in C&D Foods in Edgeworthstown, a company founded by a former Taoiseach.
For many who never saw the benefits of the economic boom, this is an unbearable situation. The suffering being experienced by those people and their families who have been forced onto the dole is the human side of the statistics. One of the greatest drawbacks for the BMW region has been the lack of availability of broadband for business and personal use.
Despite repeated Government promises, 18 months ago in this House Longford-Westmeath Deputies Kelly and O’Rourke voted to relocate funds for the roll out of broadband to Sustainable Energy Ireland. By diverting the money earmarked for broadband, the two Deputies concerned shamefully delayed the full provision of high speed Internet access across the midlands, for which the region is still waiting and businesses are suffering.
It is now up to the Government to copper fasten the €35 million in funding due from the EU to provide rural broadband. Regarding the national broadband scheme, the funding must be used to provide sustainable broadband to every farm, business and home across the country. Member states will be required to amend rural development plans by June to ensure the drawdown of funds in 2009 and 2010. More than half — that is, 543 — of the 1,028 electoral divisions currently deemed to have inadequate broadband services are in the Border, midlands and western region. These come under the provisions of the national broadband scheme, which is scheduled to commence this month, with the full roll-out by September 2010. For the sake of the future economic welfare of the BMW region it is to be hoped the Government will finally deliver on its broadband commitment. That is wishful thinking as far as I am concerned.
In a move that can only be described as economic suicide, the Government has short-sightedly halted planned spending on up to 80 national road building schemes. These curbs will affect 78 major construction projects in the National Roads Authority’s roads programme — 55 national primary roads and 23 national secondary roads. This move by the Minister will cost jobs and lives throughout the country. Counties such as Longford and Westmeath, which have some of the most dangerous roads in the country, could have an increase in fatalities due to black-spot accidents.
Unveiling the NRA’s programme last February, the Minister stated that the programme supported employment and economic activity. Just two months later the investments of €8,798,799 promised for County Longford and nearly €18 million for County Westmeath are to be slashed. Even though unemployment is to reach half a million or more by the end of the year, this Minister has ignored the massive job creation potential of the programme and cut €150 million from the maintenance budget for local roads. This will have a significant impact on employment and economic activity in every county in Ireland. These roads are the economic arteries of the midlands. Shame on the Minister for doing that.
Unfortunately, time constraints prevent me from talking about the full provisions of the Fine Gael proposals for rebuilding Ireland. However, I fully support this motion and commend Deputy Coveney for bringing it before the House.
Deputy Michael Ring: I commend my colleague, Deputy Simon Coveney, on the work and effort he has put into this policy and his commitment to it. He has put much effort into it and has really thought it through. I am disappointed the Government did not see fit, in these economic times, to accept his motion. People are looking for hope and leadership and for ideas from everybody in the country. This is an opportunity. Deputy Coveney and the Fine Gael Party are presenting this policy to the Government. It is not perfect but the Government may amend it. It should at least take it on board and consider which parts it can implement. If ever there was a time for a bit of hope and good news, this is it. If we want people to feel that somebody is doing something about the economic crisis, this policy is the way to do it. It proves that there are other people in the House who have ideas. I compliment Deputy Coveney on the work and effort he has put into it.
He talked about broadband. I live in an area where there are many industries. There are industries in places such as Erris in County Mayo in which members of staff must go to a street corner to pick up a signal so they can send and receive messages on the Internet. That is not acceptable. We never had as much money here as we have had for the past ten years. Eircom and other companies provided broadband that did not work and did not do the job it was intended to do. It is wrong that we are still here talking about some parts of Ireland that do not have broadband when we should be moving on to the next stage. We expect industries to come to rural Ireland, create jobs and get people into the workplace. We expect companies to go to the Gaeltacht areas, yet we do not have the most basic infrastructure. It is the same with the roads; they are not there.
A former Deputy of this House, Myles Staunton, put a company together in Ireland and America. He went to Mayo County Council for planning permission for a peat power plant which would have created many jobs in Killala. Mayo County Council granted the planning application, but an objection was made by a third party and the application went to An Bord Pleanála, which decided it would not grant it on the basis that the building of the peat power plant was not in accordance with Government policy. Government policy must change. We must consider every area in which we can create employment and in which energy can be used. Yesterday in my clinic I saw a man who has lived in a certain part of Mayo for 20 years and for all that time has been talking to Mayo County Council about wind energy. He has the money and the investors. He has the people who want to get involved in this business. Yet Mayo County Council does not have a proper policy and there is no proper national policy, even though the Minister for the Environment, Heritage and Local Government, Deputy Gormley, is a member of the Green Party and has been in Government for almost two years now. We do not know what Government policy on wind energy is. We need to become self-sufficient. We should not have to buy oil and bring our basic raw materials in from other countries.
Even at this late stage we need to investigate what can be done for the country by the Corrib gas field. How can that gas be used to support industries here? How can it be used to benefit the people of the west of Ireland, particularly Mayo, where it is coming from? I hope the Government will try to make sure we get the infrastructure we need.
With regard to the N5, representatives of industries such as Allergan and Baxter have come up to meet the Taoiseach and the Minister for Transport, Deputy Dempsey, as their goods are being damaged on the way out of Mayo. They are transporting them all over the world, but they cannot transport them from the west to Dublin because the proper infrastructure is not in place.
Deputy Jimmy Deenihan: I join Deputy Ring and others in commending Deputy Coveney on this motion, which is one of the five or more he has tabled during the present Dáil. I compliment him on the seriousness with which he takes politics and the fact that he is bringing new ideas before the House.
We need a major change in how we organise our country. The present attitudes were developed when we received aid under the Marshall plan back in the early 1950s. We had to draw up a programme, which was taken on by people such as Gerard Sweetman, who brought in T. K. Whitaker, and Seán Lemass. There were a few obstacles but, generally speaking, it got us where we are now. However, we need a new form of organisation. Deputy Coveney has shown that he is prepared to think differently and bring in new ideas. It is very encouraging to see a young politician doing that.
When I came back from a visit to Silicon Valley last year I said in the House that we had definitely lost our competitiveness. We were told in no uncertain terms by an IDA official that the cost of employing somebody was lower in Silicon Valley, which is one of the most expensive areas in the world, than in Ireland. We were told that the total cost of employing a person in America was $26 an hour, while in Ireland it was $28 per hour and in Poland it was $6 per hour. When I was there again a few weeks ago, I found that the Chinese and the Indians were queueing up to compete with us and they were much more competitive.
Last week the Amann plant closed in Tralee with the loss of 210 jobs, on top of the 120 jobs lost earlier in the year. The company issued a press release which stated the reason for the closure: “The need to remain competitive in a very difficult, cost sensitive market, combined with high labour, energy and other manufacturing costs have led to this regrettable decision.” There it is, in a nutshell. A factory that seemed to be doing well could not compete because of the cost of energy and of employing people.
I have a few suggestions to make. FÁS is an entity that has been much maligned in this House. This may be justified in the case of the senior management but it does not reflect the reality at local level. Without FÁS, we would have no tourism product in north Kerry. In my dealings with FÁS officials, I have found them to be very positive and co-operative. The value for money represented by their work is clear for all to see. The Minister of State may be aware of a very successful scheme known as the community youth training programme, CYPP, which is now referred to as the local training initiative. During the building boom, the Construction Industry Federation, CIF, was opposed to FÁS using apprentices for these schemes. Although it was initially supportive, it subsequently reversed that decision.
Given the large number of apprentices who wish to complete their training, there should be a renewed emphasis on this scheme as a means of allowing them to do so. On a visit to the FÁS office in Tralee yesterday, I was disappointed to see all the empty rooms which were used formerly to train carpenters. On the last occasion I visited, there was great noise and activity, but there was nobody there yesterday. There are seven phases in qualifying as an apprentice. In the case of the employment element, which is part of phases three, five and seven, people should be invited to participate in community training projects. They could build community centres, interpretive centres and other important work.
Some years ago, as Minister of State at the Department of Agriculture, Fisheries and Food, I established the Shannon Estuary strategy group. One of the recommendations in the position paper it produced was that a liquified natural gas import terminal should be established in the Shannon Estuary. This is being done by a company called Hess LNG Limited which has not sought grants. Another proposal was for the establishment of an oilseed facility capable of processing some 150,000 tonnes per annum of soy and rape seed. Ireland is not conforming with its obligations under the bio-fuels directive. In this context, the Government should give consideration to the current proposal to provide a bio-fuel refinery in the Shannon Estuary. There are positive actions that can be taken in the current climate. However, the Government is entirely stagnant and seems incapable of planning or delivering the required actions. I ask the Minister of State to consider the vast range of possibilities that exist.
I am pleased to have the opportunity to take part in this debate and to highlight the decisive measures and actions the Government has taken to address our current economic challenges. It is worthwhile highlighting the spectacular and highly visible progress that has been made in public infrastructure in recent years.
Some on the Opposition benches want to air brush out of history the substantial achievements we have made in the past 12 years under this Government and its predecessors. However, travelling throughout the State, particularly on some of our new and enhanced transport infrastructure, reveals a country transformed. Some of us have half forgotten where we were ten or 20 years ago. Some of us have forgotten the advances Ireland made in moving towards European levels of prosperity and infrastructure provision. It is true that we are facing into severe budgetary and economic challenges. However, we are doing so from a much higher plateau of development than in the past. The investments we have made and will continue to make under the national development plan will help Ireland to cope with its economic difficulties and will position us to avail of an international economic upswing.
A global economic recovery will come but it is too early to say when that will be. In the meantime, we will not allow ourselves to be paralysed into inactivity. The Government has taken firm and decisive action to address the multiplicity of challenges which confront Ireland. Some of these decisions are unpopular but unavoidable. If the Government had failed to take firm and cohesive measures in the past ten months or so, we can be certain the situation would now be far worse. The deep contraction in economic growth that we are experiencing has had very negative consequences for the public finances. Without the actions taken in the recent supplementary budget, the general Government deficit would have been 12.75% of GDP this year, reflecting the large gap needed to fund the difference between spending and revenue. This would have represented a further substantial deterioration from the deficit of 7% of GDP recorded in 2008 and from the surpluses recorded in ten of the 11 years up to 2007.
The Government is determined to take whatever actions are necessary to bring back sustainability to the public finances. Last July, we took a series of expenditure measures which will yield savings of €1 billion this year. The October budget delivered further strict containment of expenditure along with revenue-raising measures designed to yield an additional €2 billion. Earlier this year, the Government reduced public expenditure by €1.8 billion, primarily through the introduction of the pension related deduction. Measures announced in the supplementary budget will result in a further reduction of nearly €1.5 billion in gross public expenditure and additional revenue of €1.8 billion. However, the deterioration in tax revenues from €47.25 billion in 2007 to an envisaged €34.5 billion this year highlights the scale of the challenge we face. A difficult balance is now necessary between the need to show a credible route to restore order to the public finances and the need to protect our economy as far as we can this year. The Government decided that this balance was best achieved through a borrowing target of 10%.
While we cannot control developments abroad, we can take decisive actions to put our economy on the road to renewal and to demonstrate that we have the capacity to make the right choices for everyone in the State. The supplementary budget set out further details of a five-year plan to bring the deficit back to the agreed 3% limit by 2013. This budget demonstrated that the Government is taking the necessary difficult decisions to underpin the stability of the public finances and thereby sustain future economic growth.
For almost two years, the banking and financial sector has been at the centre of a storm and seldom out of the public eye. The banking system is unique and its proper functioning is critical to the smooth running of the economy. The Government’s approach to this unprecedented crisis in global financial markets has been structured and considered and has had regard to agreed principles at European Union level. The Government introduced the bank guarantee scheme to ensure banks could access funds as required. It also introduced a recapitalisation programme for our two major banks, Allied Irish Banks and Bank of Ireland, nationalised Anglo Irish Bank to ensure the stability of the financial system, and proposes to put in place a State guarantee for the future issuance of debt securities with a maturity of up to five years.
However, further action was needed. On budget day, the Minister for Finance announced the Government’s plan to establish a national asset management agency, NAMA. The objective of this agency is to strengthen the banks’ balance sheets, reduce considerably uncertainty over bad debts and, as a consequence, ensure the flow of credit on a commercial basis to the real economy, thus protecting and growing employment while maximising and protecting the interest of taxpayers. We must ensure householders can access credit for home loans and consumer spending, that small and medium-sized businesses can fund their enterprises, that deposit holders have confidence their money is secure and protected and that international investors are satisfied as to the stability of our banking system. Removing these risky assets from the balance sheets of the banks is the way to do this.
The Government has shown in both its recent budgets in October 2008 and April 2009 that despite the need to secure substantial increases in tax revenue, it remains committed to maintaining and enhancing pro-employment business tax reliefs. In budget 2009 and the subsequent Finance Act, the Minister for Finance introduced a considerable enhancement to our research and development tax credit regime. Measures were included to increase the rate of tax credit for research and development expenditure from 20% to 25%; allow for the carry-back of unused tax credits for set-off against corporation tax paid the previous year and for any remaining unused tax credit to be refunded over a three-year period; set 2003 as the permanent base year against which to measure incremental research and development expenditure for the purpose of the tax credit; and allow a proportion of the expenditure on new or refurbished buildings to be used in part for research and development purposes to qualify for the tax credit, thus recognising that much research and development takes place outside traditional laboratories.
In his Budget Statement of 7 April this year, the Minister for Finance mentioned the increased importance globally of intellectual property. The budget included a proposal to introduce a scheme of tax relief for the acquisition of intangible assets, including intellectual property, as a means of supporting the smart economy. The details will be published in the legislation giving effect to the budget provisions on 7 May. This measure will help to attract high-quality employment.
Measures to stabilise the public finances, support the financial sector and maintain a business-friendly tax environment provide the essential framework for economic recovery. Also important is a targeted infrastructure investment programme, addressing in particular those infrastructure deficits which would constrain economic development. The National Development Plan 2007-13 sets out a comprehensive framework for delivering public infrastructure. Much has already been achieved and significant investment will continue up to the end of the plan in 2013.
Government investment in infrastructure is most clearly evident in transport. The transport networks here are being transformed. We now see a network of motorway standard taking final shape, giving us world class road links from Dublin to our principal gateway cities. Already for some time, a motorway to the Border is in full operation. Intensive work to fill the remaining gaps between Dublin and Cork, Galway, Limerick and Waterford is visibly advancing.  Completion of this network and the synergies it will bring will of themselves be powerful contributors to economic recovery all round the country.
Public transport has also been the beneficiary of a very substantial investment programme in recent years, the most substantial in the history of the State. In the greater Dublin area, we can see the benefits of investment in commuter services like the Luas, the DART and other suburban rail connections. Investment is continuing on three more Luas projects as well as work on the Kildare and Navan lines. Investment in the greater Dublin area has been complemented by investment in mainline national rail, with much more frequent services on some lines, particularly between Cork and Dublin, as well as in commuter services like the Cork-Midleton route.
Supporting our enterprise sector in this difficult climate is clearly a priority. In particular, the recently introduced stabilisation fund will provide targeted support to indigenous companies to assist them in the present exceptionally difficult business environment. The stabilisation fund will have a total budget of €100 million over two years. Particular attention will be paid to small and medium- sized enterprises. Companies engaged in exporting will be eligible to apply for assistance. Funding will be provided in a wide variety of forms, but equity injections are most likely to be used in practice. Assistance will be available to companies that meet particular criteria. Enterprise Ireland will also continue its regular supports for indigenous companies in 2009. The total capital funding available to Enterprise Ireland to support industry in 2009, including the stabilisation fund, will be €103 million. Funding for foreign direct investment from IDA Ireland will amount to €70 million in 2009.
The decision by Government to allocate significant levels of funding to science, technology and innovation sends out a signal to the research and development community and to those enterprises looking for a base in which to expand their research and development activities that Ireland is committed to the research and development led smart economy path. That path dictates that a strong science base, matched by a paradigm shift in the capacity of our enterprise sector to create knowledge, to innovate, and to exploit new knowledge across global markets, is critical. Without innovation and even a modest element of research and development, few businesses will grow in today’s markets. Innovation will prove commercially successful if it is genuinely customer driven. Commercial success in turn leads to stronger profitability and a stronger enterprise base across the country. Ireland is doing well in innovation. We are above the EU average and are the best improving EU country within our peer group. We performed particularly well in innovation in throughputs, where we are fourth and in human resources and economic effects, in both of which we are in fifth position, in the European Innovation Scoreboard for 2008 published in January.
The work of IDA Ireland, Enterprise Ireland and Science Foundation Ireland, together with the research and development tax credit introduced in the October budget, puts Ireland to the forefront of research and development regimes globally. As well as increasing Ireland’s attractiveness as a location for research and development activity, it will provide a stimulus for value added activities. Research and development in Ireland has expanded dramatically in recent years reflecting the Government’s massive injection of funding into the sector. In the past five years, IDA client companies have invested €1.31 billion in new research and development activities.
The Government has shown, in its recent supplementary budget allocation, the importance it attaches to energy efficiency. The allocation for Sustainable Energy Ireland’s energy efficiency programmes were increased from €44 million in 2008 to €93 million in 2009. Of this, €50 million is for the home energy saving scheme, which will facilitate insulation and energy efficiency works in up to 30,000 private homes and which will also give employment to construction workers. Additional funding of €20 million was also provided to local authorities to improve the energy efficiency of local authority housing.
However, the bulk of our investment in energy continues to be made by the State’s energy companies. In 2009, these companies will invest more than €1.8 billion in the electricity and gas network and in power generation, including renewable energy and wind farms. This investment will ensure that we have a modern and efficient energy infrastructure, with improved security of supply.
The substantial investment by the Government in environmental services infrastructure has enhanced the environment for the benefit of all of Ireland’s citizens while supporting future business investment. There has been an increase to 95% in the number of group water scheme households in compliance with national drinking water standards at the end of 2008 compared to 85% at the end of 2007. Some €500 million of Exchequer funding in 2009 will be used to continue to upgrade and improve our water and waste management infrastructure, meet ongoing commitments for some 150 schemes in progress under the water services investment programme and provide for continued investment under the rural water programme.
The year 2008 witnessed the continuing development of Ireland’s waste recycling infrastructure. A total of 47 waste recycling projects, such as bring banks, civic amenity sites, composting facilities and materials recovery facilities, were in receipt of grant assistance of more than €24 million from the Environment Fund and the Exchequer. Overall municipal waste recovery is now more than 36% compared with just 9% a decade ago.
Some €2.4 billion was directed towards social and affordable housing and improvement and regeneration measures in 2008. This record level of investment, which included Exchequer funding of €1.73 billion, allowed the needs of approximately 19,500 households to be met in 2008 through the full range of social and affordable housing programmes. In the current economic climate, there remains a very significant level of investment by the Government in the delivery of housing supports across a diverse range of needs, with €1.4 billion in Exchequer funding provided in 2009. Within this provision, the Government will attach priority to meeting the needs of the most vulnerable and disadvantaged in society. The use of long term lease arrangements will be key to continuing momentum in meeting social housing need and will take advantage of changed market conditions. The provision of €190 million for regeneration and remedial works projects will allow a number of energy efficiency measures targeted towards improving performance in the social housing stock and a number of regeneration programmes to continue.
Capital investment in the health sector has brought about a significant improvement in the standard of facilities across all care programmes. Government policy aims to maximise the health and social well being of the population. The primary focus is the promotion and protection of the health of the whole population with a particular emphasis on reducing health inequalities and improved recovery rates. A well designed health care environment can lead to faster patient recoveries, reduced suffering for patients and reduced risks of infection.
In this House, all sides share the common ambition of seeing Ireland successfully emerge from its current difficulties. I commend Deputy Coveney for putting forward proposals for debate. However, there is a world of difference between aspirations and having to devise hard headed, practical solutions.
Turning to the proposals in the Opposition motion, I am not satisfied that they are thoroughly thought through. They are very aspirational. The job numbers proposed are unsubstantiated; 100,000 jobs is a very round number. This type of promise is reminiscent of a previous era in politics, where politicians made dramatic promises about precisely how many jobs their policies would create in a specific timeframe.
Deputy Martin Mansergh: They also envisage a new quango type structure with no clear mandate. It is very odd that a party which has spent the last year determined to eliminate quangos at all costs now proposes a new quango, the quango of all quangos, as the panacea to our problems. Deputy Coveney mentioned State bodies in the plural.
Creating a superbody with the name “New Economy and Recovery Authority” does not of itself create recovery and sounds like a form of political outsourcing. It also strikes one as strange that the new solution consists of a body for “co-ordination, restructuring and financing”. It is not much of an improvement on the last effort of a contract with the people, which the people did not buy. They accuse us of inaction, but is this the best those opposite can produce?
It seems to be all about creating a plausible and reassuring front for present purposes, while giving nothing away about what Fine Gael would actually do in government with others. I have no great affinity with the main opposition party across the water, until recently allies of Fine Gael in the EPP, but two days ago their leader, David Cameron, warned that an incoming Tory Government would have to take “some incredibly tough decisions on taxation, spending and borrowing”. I have not heard parties opposite speak as frankly in these tones to the Irish people.
The Government certainly does not propose to set up another State body at a time when we are committed to reducing the numbers and improving efficiency and effectiveness through rationalisation of State bodies, a move which those opposite previously indicated they strongly support. It is unclear what the Opposition means by competitive charges for infrastructure. Does this refer to more tolls or even water charges for domestic users? Perhaps they should spell it out to the voters.
Deputy Martin Mansergh: Deputy Coveney referred to a return to rapid growth, but given the experience of recent years it is more important to achieve a recovery to sustainable growth. Much of the policy document seems to be based on the distinction between the Exchequer borrowing requirement and the public sector borrowing requirement and I am unsure if there is any validity in that.
Deputy Varadkar referred to the unemployment level of 11% which is far too high but it is still a good deal lower than it was some 20 years ago. To consider the matter positively, employment is still at a level several hundred thousand above the level in 1997.
Earlier, I referred to the budgetary challenges facing Ireland. Notwithstanding this the Government is still committed to a very substantial Exchequer capital programme in the coming years. In the next five years we will spend some €31.4 billion on public infrastructure amounting, on average, to more than 4% of estimated GNP. In 2009 the Exchequer will spend some 5% of GNP on public infrastructure. This will make a substantial contribution to turning the economy around.
There is no denying the severity and scale of the challenges facing Ireland. The road ahead will be difficult; hard decisions must be made and unpalatable decisions will confront this Government and any Government in the years to come. There are no easy choices. However, if we build on the progress make by Ireland in the past decade and if we face the hard choices before us the future remains bright.
Deputy Conor Lenihan: I thank Fine Gael for tabling the motion and I thank it for bothering to put the time and effort into proposing documents, hard policy choices and alternatives to those tabled by the Government. There has been a genuine change in the behaviour and attitude of the Members opposite. In these extraordinarily difficult times it is the responsibility of the Opposition not only to criticise or join the chorus of negativity emanating from the commentariat and those charged with analysing politics and the economy, but to propose very strong positive alternatives. Fine Gael is belatedly beginning to learn this as the crisis unfolds.
Deputy Simon Coveney: The Minister of State, Deputy Lenihan, would do well to read some of those policy documents as would the Minister of State sitting beside him, Deputy Martin Mansergh. They might then understand what they are taking about.
Deputy Conor Lenihan: We face an extraordinary economic and financial crisis of the like that no one in the House and no one in the elected parliaments throughout Europe and the world has ever seen before. We are living through especially difficult times. Were Fine Gael or Labour in Government today rather the Fianna Fáil and the Green Party they too would encounter the same difficult challenges.
I refer especially to the difficulties we have faced in the past year. It has been very hard to make ready public opinion for the extraordinary events of the past year. No one could have forecast events. I realise some Members opposite suggested there were predictions or warnings. However, such warnings are two-a-penny at a time of plenty. Some commentators seem to make an art form out of warning and preaching doom and gloom during the good times. Then when calamity occurs in the international financial system such people are immediately up to tell us, “I told you so”. However, very few people of any repute told us or warned us of what was about to take place in the global economy. We must be clear regarding the origins of our current difficulties. They lie in the banking system and especially in the banking system of the greatest and strongest market economy on earth, namely, the United States of America. It was there where the difficulties began. To this day the United States of America represents some 35% of the global economy. It is no coincidence or accident that such an economy would encounter the difficulties which have arisen there as a result of sub-prime mortgage lending and incorrect decisions made concerning which banks to recapitalise. Mistakes have been made at various points in this very difficult journey. Mistakes have been made by Governments throughout the world including that of Ireland. We have tried to learn from the mistakes made elsewhere and from the mistakes of the Federal Reserve and other United States authorities in their attempts to cope with the very serious crisis as it unfolded.
There is no doubt the response of the Government has not been perfect, but were Fine Gael, Labour or any of the Members opposite in Government they too would make mistakes and would find it very difficult to introduce policies popular with the public. There are few ways of devising popular policies which essentially take money from people. It is very difficult to sell hard times. The Minister of State, Deputy Martin Mansergh, can testify to the extent of that difficulty as he worked as an adviser to the former Taoiseach, Mr. Haughey, in the 1980s when he was paring back public spending in a radical manner. Let no one here say those decisions were popular. Mr. Haughey embarked on that journey and within a few years he lost his position as Taoiseach.
These are not easy decisions to make. There is a great difficulty when one takes more money from the public by way of further taxation, by lifting thresholds, or by curtailing schemes and grant systems which have been taken for granted for a ten year period of extraordinary prosperity. It is very difficult when one suddenly applies the brakes to public spending, as we have done, and as we did in a smaller fashion following the 2002 election. The then Minister for Finance, Mr. McCreevy, applied the brakes because of the threatened downturn which occurred or was feared.
Deputy Conor Lenihan: That downturn was occasioned by the extraordinary and horrible events of 11 September in the United States, especially at the twin towers in New York. Following that, we applied the brakes because there was a perception globally that growth would be stalled, paralysed or reversed. In fact, that did not take place. There was a sudden Exchequer downturn in that case from which we emerged rather quickly. I remember well how instantly unpopular Mr. McCreevy became because of his decision to apply the brakes to public spending at the time and to exercise what I term “due caution” in respect of the international outlook at the time.
Deputy Conor Lenihan: We must take measures in the budget and in the supplementary budget and in respect of the whole spending profile in which the State engages to rectify matters and to ensure that when we emerge from this period the possibility exists to be competitive relative to other economies in Europe and beyond Europe’s borders.
The stimulus package which some, in a rather naive way, sought is not the only response required. We are not as free as other countries including our neighbour Great Britain and the United States of America, the economies of which are not analogous. We cannot involve ourselves in a deep rooted fiscal stimulus package which would allow, force, or encourage people back into the shopping malls and shops to kick-start consumer spending.
We are one of the most globalised economies in the world. Relative to our size we have the fourth most open economy in the world. We are a trading economy and some 80% of our produce is for export. Given the nature of our economy we are very dependent on open markets and on what takes place in the United States. It is no accident that, even in recent months and the period during which we have experienced recession, we are still reckoned to be one of the most open economies in the world. We are open for investment as indicated in all of the surveys whether from The Economist or others which measure these matters. We are still an open economy ready to trade with the rest of the world.
It has been a very exhausting time for the Government. Rescuing banks is not an easy business and those who say otherwise and produce instant solutions are generally incorrect. We have seen those failures particularly in the United States. The fabled choice or decision in regard to Lehman Brothers is a singular example. This Government produced a guarantee which stabilised our banks to a certain extent for a certain period and we are now proceeding with the recapitalisation. As a very extensive and positive move, we are now moving to create a new agency under the National Asset Management Agency, to take what are called the toxic assets of property lending or the bad loans — and the good loans as well — and move them off the balance sheets of the banks in order that they can provide the vital liquidity and lending in credit into the economy. We all know this. It is not as if we are naive in this House; we are all constituency Deputies as well as the many offices and front bench positions we hold. We know the reality out there is not pleasant for people who are looking for credit because the banks are not particularly willing to extend or advance credit even when the credit-worthiness of the client is beyond reproach. This has to be addressed and we cannot continue in this situation whereby credit is essentially and effectively paralysed in this State. This is the reason the Government is proceeding with NAMA and the recapitalisation. We need to move quickly and the Minister for Finance will move quickly with regard to NAMA——
Deputy Conor Lenihan: It can and should take place and come about in a timely and speedy fashion, even if it is required to move ahead of any requirement for legislation. If it can be created in shadow form and move forward that would be a positive action to take. It is very important that we respond to the obvious demand from the public for credit.
I thank the Opposition for tabling this motion. We do not always agree on much but I see this as a sign of particular maturity on the part of the Fine Gael ranks that they are bothered to respond to Government calls to put down positive proposals. I wish that were shared in other Opposition parties. I thank Deputy Coveney for his contribution and I remind him it is not all negative as some extraordinary gains continue to be made by our inward investment agencies——
As the Minister of State was speaking and his colleague talked about the smart economy, I wished at times we could have some confidence that we had a smart Government. Unfortunately that might be like small children wishing for the tooth fairy to return because this Government seems hopeless. What we know is that people are tired of the Government and the sooner it goes, the sooner this country might face into some level of recovering its reputation and start on a path of recovery, which is possible but only with a change of Government.
The Minister of State spoke about his brother, the Minister for Finance. I recall seeing the headline in The Financial Times on St. Patrick’s day from the Minister for Finance, a day when the country receives some welcome attention but the headline was about crony capitalism, the economy falling off a cliff or diving off a cliff — I cannot remember which expression he used — and his rather strange revelation that there were incestuous relationships in Irish capitalism between bankers and developers. Of course, as we know, the strain runs that the bankers funded the developers and the developers funded Fianna Fáil and, unfortunately, that is the core of our present dilemma. There is a worldwide recession and a collapse of the post-Washington consensus of the 1970s created by Ronald Reagan and Margaret Thatcher. This Government enthusiastically bought into the idea that there is no alternative to the Washington consensus of unbridled capitalism and free markets, that no matter what happens, the market is always right. Fianna Fáil has been unable to answer the question that if the market is always right, why are we looking next year at unemployment rates spiralling potentially to 16%, rates not seen since the 1980s and a Government which seems incapable of responding at an appropriate level?
Those becoming unemployed are a diverse group of people. Large numbers are coming out of the construction sector, some of whom are very highly skilled and entrepreneurial and others with traditional construction sector skills which are self-taught. All of them have worked very hard for the past 12 to 15 years. Another group are the highly skilled and educated graduates who are finding that the contracts they had with banks and finance houses, architects and solicitors, are linked to financing construction and property development. They are aged between 28 and 42 years of age. Some have family commitments, young children and mortgages. They are losing their jobs and they are confronted with dealing with the Department of Social and Family Affairs. These people are used to using technology. They may complain about the absence of broadband in areas throughout the country but they know how to use technology. However, they cannot access public agencies on a speedy basis. They can book an aeroplane ticket to Hong Kong in a few minutes using technology but they cannot interact with the agencies of State such as the Department or FÁS. They have to go and queue instead. These are people who have been brought up to expect something different. I know some Members on the Fianna Fáil benches might think a four or five hour wait in a queue is good for the soul but if this is what Fianna Fáil Ministers regard as the appropriate response to the best people in a generation when Ireland did well, it has completely lost touch.
The boom began to fade in late 2006 and early 2007. Once the banks started selling their properties to private investors for their private, tax-subsidised pension plans in late 2006, this was the high point of the boom. From 2000 onwards, although there was quite an amount of infrastructural investment, in terms of the scale of demand of the economy it was in many ways too little. Now we are left with a substandard infrastructure which is a serious constraint on competitiveness.
Ireland has one of the lowest rates of broadband penetration in the EU. Ireland’s urban public transport systems are decrepit and disjointed while public transport is not an option for many rural communities, particularly for people who want to journey between smaller towns and villages. Major growing urban areas are at risk of drought in the coming years without significant investment in our water supply and water works. Ireland’s energy grid depends on carbon-intensive generation and will require significant investment to facilitate a shift to low carbon generation. Ireland’s creaking public health infrastructure and hospitals are a continuing embarrassment. A total of 40,000 young children are being taught in prefabricated classrooms. Despite the fall back in productivity and employment, significant numbers of young children are entering the education system. A decade of squandered wealth is one of the greatest travesties of our economic malaise. As the economy boomed in the 1990s and the noughties, tax revenues ballooned. However, rather than investing the growing contents of the Exchequer coffers in closing our infrastructure deficit, this money was used to cut personal tax rates and provide generous tax incentives for property speculation. As a result, bottlenecks developed in the economy, our cost base rose and competitiveness deteriorated.
Our infrastructure deficit was one of the critical constraints on Irish competitiveness in the early part of this decade. Now it is one of the key constraints on our economic recovery. We talk about the reputational damage to Ireland. Foreign multinationals looking at a country to make a foreign direct investment, FDI, have a list of 40 items they tick. Unfortunately, Ireland is increasingly ticking negative in many of the boxes because of the reputational damage we have suffered. Those issues FDI was prepared to tolerate, discount and put to one side because we were seen to be agile, active, enterprising and successful, are unfortunately becoming constraints against new or continuing investment in Ireland. It becomes easy for foreign investors, who are faced with a plethora of choices around the world, to say Ireland is no longer as “hot” as it once was, and decide not to invest there or, in the next cycle of investment, not to reinvest.
We have set out a number of proposals. The Labour Party has proposed a national development bank as a way of providing in particular for off-balance sheet investment in terms of the national accounts which would allow for the injection of money into critical public infrastructure, without damaging our debt position, which is already fairly perilous. We have also suggested a number of very inventive schemes that would provide, on the lines of the investment bank in Germany, money and capital that would get certain schemes going. We have also proposed a graduate and apprentice internship training programme that would provide a bridge for those tens of thousands of young graduates and apprentices who are graduating but have no place to go.
The Irish economy was once described as agile and inventive. This Government has lost it and, as a consequence, people want to say “Goodbye” to this Government and see fresh faces and ideas, and some kind of hope injected into our economy. If we built the Celtic tiger, we are capable of plotting our salvation and economic recovery, but not with Fianna Fáil.
Deputy Arthur Morgan: I thank the Labour Party and Deputy Burton for sharing time with me. I am generally supportive of the thrust of the Fine Gael motion. Just over two years ago, the Taoiseach wrote in the foreword to then new national development plan, that the document, Transforming Ireland, was “a road map for sustainable economic expansion, social justice and a better quality of life for all our citizens over the next seven years and beyond”. That was just two years ago. It is clear that the road map for investing in infrastructure in Ireland has been lost and the Government’s capital investment policies are written off. The road map has more than potholes. It is also clear that Fianna Fáil does not really care that we do not have the schools, public transport networks, digital broadband infrastructure, hospitals and health service and social housing that are the acid test of real social justice and the proof that a better quality of life is being delivered.
It seems that the job of the Fianna Fáil and Green Party Ministers is merely to talk daily, as we heard again this evening, of the “smart economy”, the “knowledge economy” and the “competitive Irish economy for the 21st century”. Enterprise Ministers, past, present and sacked, are allowed add the words “innovation” and “research led” at will. Their Green Party colleagues also get to say “green tech” once a day in Government press releases. It is clear that there has been significant investment in the infrastructure of hype, but only hype.
The economic downturn has hampered the investment capacity of Government and so we must prioritise some infrastructural developments over others. It is also clear that the Fianna Fáil strategy of spending taxpayers’ money wildly in the boom times must end. We do not need any more overpriced, badly thought out projects of which the West Link is a glittering jewel in the Government crown of infrastructure failures. We are still waiting for a simple, clear explanation of how it came to be that the Government paid National Toll Roads €15 million to build the bridge and then had to pay over €600 million to get it back. That has been forgotten, as have the Luas, M50 and Dublin Port tunnel cost overruns, replaced instead by a lot of bluff from the Government benches on “value for money”. There is no real delivery or proof that value for money is being delivered in Government spending.
Sinn Féin has been clear in our job creation and public finance documents that we accept that we are facing straitened circumstances, but we firmly believe there is an alternative to the failed strategy of frittering away taxpayers’ money wildly in the boom years and then cutting off spending in recessions. Across the globe there is a recognition of the need for sustainable, community-focused social investment as the key to the next phase of economic development. We need a policy of investing in people, their education, their health and the infrastructure that helps them work more productively and efficiently. My party believes we have an opportunity to reshape the country and that a recovery plan must focus on ensuring we come out of this recession ready for the future, that we have the infrastructure, skills and public services that will put us at the top of competitiveness rankings, as well as delivering a tangibly improved quality of life for all our citizens.
For now, the coalition seems determined not to produce a coherent investment strategy. Take the example of primary and secondary school buildings. We know there is an ongoing need for more school capacity in coming years. The INTO has estimated that 100,000 additional pupils will enter primary schools over the next ten years, generating the equivalent need of 400 schools. In June 2008 the Department of Education and Science estimated a requirement for 2,300 classrooms over the next five years, but where are those classrooms? In budget 2009, €581 million was earmarked for school building, with a further €75 million added in February 2009. In the April budget, €30 million was cut from the schools building programme, raising a question as to the Government’s ability to plan if it can change the schools building programme three times in seven months.
My party proposed an increased building and refurbishment programme from late 2009 through to 2013 that would aim to take an extra 125 schools through to construction by the end of 2010, and at least 125 schools in each year between 2010 and 2013. We also proposed that the schools summer works programme be maintained in 2009 and continued until 2013 and an increase in expenditure in the devolved small schools scheme. These measures would create local employment while building vital infrastructure.
Replacing the outdated copper telecommunications network with a full fibre-optic digital network running as a backbone across the island rather than an overdependence on wireless solutions is another vital step we need to take. We propose a full implementation of the promised €252 million in NDP funding introducing ICT, broadband and digital media into primary schools, with a target of full roll-out of the scheme by the end of 2010. We must fast-track the €435 million promised spend on the broadband network so that it is delivered between 2009 and 2011 instead of in 2013 and must set a target of full broadband connectivity for all businesses and households by the end of 2011.
The Government talk a mean game concerning green tech but it ends there. Proof of this was found in the €13 million cut in funding for Sustainable Energy Ireland’s research programmes. The coalition Government which supposedly has a green edge ignores the opportunities of green tech investment. It ignores a 2008 report, jointly sponsored by Forfás and IntertradeIreland, which forecasts that the global environmental goods and services sector will grow by one sixth, or $100 billion, by 2010, with a further $100 billion growth predicted by the end of 2015. It is vital we ensure the Irish economy is best placed to take advantage of this growing economic sector. The Forfás ITI report showed a green tech sector on the island that is currently estimated to be worth €3.6 billion annually and employing approximately 6,500 people. What message did the Government send to these people by cutting research and development investment in this sector? Talk is cheap with this coalition and the cuts run deep.
I remind the House that in May it will be a year since the failed public private partnership, PPP, experiment in five inner-city Dublin communities collapsed, dashing hopes of decent housing for thousands of marginalised families and their communities. McNamara builders and Castlethorn Developments pulled the plug on a commitment to invest €900 million building 1,800 homes in a mixed retail and commercial development. In the boom times Fianna Fáil told these communities they had to wait and now they are being told to wait again. All participants in the debate tonight must recognise that when it comes to our houses, our schools, our environment and our telecommunications infrastructure there will be no private sector rescue. We need to start again.
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