Wednesday, 3 March 2010
Seanad Eireann Debate
Minister of State at the Department of Enterprise, Trade and Employment (Deputy Billy Kelleher): Job creation is at the top of the Government’s agenda. It is the driving force behind so much of our work in stabilising the public finances and getting the banking system working again. It is the reason at a time when there is a significant current budget deficit, we are continuing to invest so heavily in our capital programme, in building necessary infrastructure and investing so much in enterprise, research and development. The challenge presented by the live register figures is one the Government is working hard to overcome. We are conscious that people across the country want to know what actions we are taking to ensure Ireland will be best positioned when this period of economic turmoil comes to an end. If we have been remiss in regard to anything, it is in getting the message to the public about what we are doing.
While I will elaborate on a number of these points, I want to set out a portion of some of the work the Tánaiste has undertaken as Minister for Enterprise, Trade and Employment, together with me, the Minister of State, Deputy Dara Calleary, and the Minister of State, Deputy Conor Lenihan, in the period to date. The initiatives taken include, among others, job creation through research and development and the development of intellectual property assets in Ireland; the introduction of the employment subsidy scheme to help retain jobs in vulnerable exporting companies; the introduction of the enterprise stabilisation fund to help protect jobs in exporting companies hit by current difficulties; mandating comprehensive strategy reviews in IDA Ireland, Enterprise Ireland and Shannon Development; putting in place a code of conduct for business lending to SMEs enacted in order that SMEs know where they stand in regard to the banks; and establishing a credit supply clearing group to tackle the credit supply issue, establish the facts and take on the spin and myths in order to get to the bottom of what we are trying to do, that is, make sure credit flows to the small and medium business sector.
Work is ongoing on a proposal to the Government for the establishment of a targeted loan guarantee scheme. We have successfully introduced a commitment by central government to pay its debts to business within 15 days rather than 30. There has been a revamp of public procurement policy to ensure greater access to public contracts. Two separate Company Law Acts have been introduced, the first to toughen our company law regime against potential abuse and the second to ensure Ireland is best positioned to maximise the attraction of job creating foreign direct investment. We have achieved the introduction of new tax changes to support jobs. We have also secured the introduction of a PRSI exemption for employers creating new jobs this year. We are targeting enterprise funding and resources at new areas for job growth such as the green enterprise sector. Despite the financial position, we are prioritising and investing significant capital moneys in research and development, science, technology and innovation for future job growth. We are rolling out a new marketing campaign to encourage investment in Ireland from our foreign direct investment target markets and promoting Ireland as the innovation island internationally.
We have put in place an unprecedented level of training and activation measures to assist those seeking employment. We have established new and innovative programmes to keep people in jobs which are deemed vulnerable and to get graduates work experience. We are opening up training and activation opportunities to private and voluntary sector providers through the €20 million labour market activation fund. There are new types of FÁS courses to train and retrain people for jobs in new sectors such as the green economy. There has been an increase in the number of places available on community employment schemes. There has been a successful application of the European globalisation fund for former Dell employees and two other applications are in progress for other large-scale redundancies.
I am confident the Government is pursuing the correct policies which will enable the economy to once again return to growth and, more importantly, employment creation. As a small, open economy, Ireland is especially reliant on foreign trade. We are focused, therefore, on ensuring we can take advantage of the upturn in international growth and trade. Encouraging and positive trends are visible. In recent months, for example, international organisations such as the IMF and the OECD have upgraded their economic forecasts. In its most recent update in January the IMF forecast global economic growth would expand by 4% in 2010 and 2011. This represents a substantial upward revision from its previous forecast published in October.
Established trading partners such as the United Kingdom, the eurozone and the United States are all expected to experience growth in the medium term, representing renewed opportunities for our exporters. Similarly, Irish exporters are making inroads into less familiar emerging markets in which growth remains buoyant. In the past 18 months Irish exports have performed extremely well in comparison with our international counterparts, which is significant. There has been a global recession and a downward trend in international trade, yet Ireland’s exports have held up well, something which should be recognised and promoted. We should send every positive signal we can nationally to encourage a change in mindset and point out that Irish exports are competitive and finding markets at this very difficult time. It is worth examining the export figures and noting they have stabilised and that there has been growth in some areas during a time of world recession, which is significant. The issue of competitiveness which feeds into the cost of our exports is something which is also having an effect. The early indications for 2010 with regard to exports, something on which I can only adjudicate based on the flows of trade through ports until we have proper collated data, suggest the trend is that exports are being retained, something everybody in the House will welcome. Our goal is to maintain and enhance the policy environment which has facilitated this resilient performance and that will drive future export growth. We estimate that every job in Ireland associated with exporting sustains another job in the domestic economy.
International investment will continue to be a key driver of employment, exports and growth. We will continue to market Ireland as a location of choice for the newcomer and existing investors. In September the Tánaiste launched the IDA’s new innovation-focused overseas market campaign designed to position Ireland as the pre-eminent location for companies seeking to invest in future innovation. During 2009 we won a total of 125 foreign direct investments.  Almost 70% of these came from existing IDA clients who are making further investments in this country, reinforcing Ireland’s reputation as a key strategic global business hub. Again, that is very important. There has been a rationalisation by many multinationals in recent times because of the international recession. It is very significant, therefore, when companies located in Ireland continue to invest here. We are confident that this will continue. That focus of attracting foreign direct investment into Ireland is critically important and the IDA is charged with that responsibility. Any time we go abroad we consistently promote the country.
There are only a few issues that are critically important. I have stated this on many occasions in both Houses of the Oireachtas and elsewhere. There is a world recession. Politics is often played out and we have our cut and thrust debates within the parliamentary system but we must base arguments on fact rather than have fictional debates. There are a number of simple facts. Yes, there is a world recession and a financial credit crisis. It is true that Ireland has inherent difficulties because of the international aspect but equally there was our dependence on property for a number of years, with the accompanying problems that flowed from that source when the financial credit crisis came along.
Critically, Ireland is still attracting foreign direct investment. There are several reasons for this. We have a very flexible educated workforce. We also have a tax and regulatory regime that is conducive to investment and doing business. In the broader context our reputation as a location that is both foothold into Europe and, vice versa, springboard into the United States, is recognised internationally. Because of our investment and infrastructure over recent years there are many other ways in which we are seen as a hub for internationalisation. The financial services centre is critically important but is often forgotten in commentary. It is a very impressive success story. Again, it is internationally recognised and is among the top 15 financial services centres in the world in terms of the amount of funds managed there. Approximately 25,000 people are employed in the centre.
We will continue to promote Ireland as a centre for inward investment but it is important that when people speak, in this Chamber or anywhere else, they base their debate on the facts. These have been outlined in previous speeches and I shall continue to outline them today. Otherwise we undermine ourselves and make it more difficult to convince people to look on Ireland as a location. I urge Senators and everybody concerned to keep to the facts in this debate.
In these turbulent economic times, it is extremely significant that many of the world’s leading companies continue to invest in Ireland in a wide array of activities including high-end manufacturing, global services and research, development and innovation. In absolute numbers, Ireland is moving up the global rankings in employment in research and development, having risen from 19th to 11th in the latest global location trends survey. That is a testament to the science, technology and innovation, STI, strategy being pursued.
During 2010, IDA Ireland will continue its work to capitalise on our quality workforce, creativity, international attitude to business, attractive incentives for research and development and favourable tax climate to attract multinationals to set up base in Ireland as a launch pad for markets in Europe, Africa and the Middle East. Already in 2010, there have been seven IDA supported announcements in Dublin, Galway and Tullamore and there will be a further significant announcement for the north east this week. We are also working to develop opportunities for Ireland to become a key European hub for the international funds industry. In this regard, I look forward to the proposed changes in the Finance Bill to strengthen Ireland’s competitive edge.
The Tánaiste has tasked the IDA with developing a new strategy for the future direction of foreign direct investment and this will be published shortly. It will include specific initiatives which the IDA will undertake to retain existing and secure new foreign direct investment. This strategy will identify opportunities in foreign direct investment international competitiveness so we can maximise our potential to attract markets, while stressing the importance of restoring our relative foreign direct investment.
Enterprise Ireland delivers a wide range of supports to Irish companies, targeted at the specific requirements of clients throughout all regions to ensure they develop to their full potential in terms of innovation and exports which, in turn, will stimulate job creation. In recognising the significant changes in the current economy both in Ireland and globally, Enterprise Ireland has prepared a recovery strategy to identify actions that will be undertaken to help clients. The agency has refocused its efforts on strengthening and sustaining companies of strategic importance through a range of initiatives focused on the needs of its client base. The Department is drawing up a new strategy at present as our previous one came to the end of its natural life in 2009. This new strategy will look at key and emerging markets to see where Ireland should have a presence in supporting indigenous industries that seek markets on a continual basis. There is fluidity in the world. Periodically certain markets may go into recession while other parts may be in boom time. We have to be able to identify those markets and anticipate to the best of our ability where we should have a presence. In recent years there have been enormous rates of growth in Brazil, India, Russia and China, for example, which are known as the BRIC countries. There are other emerging markets where we must have a focus and a presence. It is critically important that the Irish Government, through its agencies, supports indigenous Irish industries that are trying to step outside the island, find international markets and internationalise themselves. Enterprise Ireland has been very successful in supporting those types of companies. We sometimes forget that Irish companies have been very successful in internationalisation. One need only consider CRH, Glanbia or Kerry Group, for example. There are more than 80,000 people in the United States employed by Irish companies. People may not realise that. There are many companies to which we can point both for their experience and as an indicator that Irish companies can be successful. They may have a competitive advantage, as they do in many areas, but they also have the innovation, ideas and research facilities and entrepreneurship. They have been successful in stepping outside the island and finding international markets.
The county and city enterprise boards continue to provide support for small businesses in the start-up and expansion phases. Job creation is an inherent consideration in the activities of the boards. In 2010, the county and city enterprise boards will continue to assist micro-enterprises throughout the country by direct grant aid to businesses and project promoters and also through the provision of a range of other important business supports such as mentoring, business training and business advice designed to help to stimulate indigenous enterprise creation and boost employment creation.
The development of the “smart” or innovation-based economy is the key challenge facing Ireland as we lay the ground for economic recovery. We are well aware that our enterprise and investment landscape must continually transform itself to stay competitive. The model we strive for today as the basis of our economic renewal is the smart economywhich builds on our dual strengths of innovation and entrepreneurship. The Government has made a major commitment, through substantial public investment in the strategy for science, technology and innovation, SSTI, 2006-2013, to making such a transition to the smart economy. This whole-Government strategy comprises research and the application and commercialisation of the fruits of that research, across six Departments.
In December 2008, the Government reinforced the importance of the investment in the SSTI through the paper, Building Ireland’s Smart Economy — a framework for sustainable economic renewal, which prioritised continued investment in science and engineering infrastructure and research. For us, building a smart economy is about the development and application of human capital — the knowledge, skills and creativity of people — and our ability and effectiveness in translating ideas into valuable processes, products and services and, ultimately, into employment.
In this context, Science Foundation Ireland is playing a critical role in building our competitive academic research base while maintaining a strong focus on excellent research. This work has been highly rewarding. Today researchers funded by Science Foundation Ireland are connected to over 300 companies in Ireland which support the employment of 56,000 people. The objective of the research and development programmes administered by our state agencies is to harness the benefits of research collaboration for the benefit of the Irish economy. This entails building up a strong cadre of indigenous firms and attracting and further embedding leading multinational companies here. This is the essence of the Government’s strategy for STI and it is proving to be the engine of economic growth. At this time of scarce economic resources, the Government has allocated €600 million to STI departments and agencies in 2010. We are confident the net gain from such sustained investment will be more and better jobs.
If we look back over progress made in recent years, it is clear investment in the higher education sector is now having a significant impact in terms of Ireland’s human capital development, feeding through to the attraction of foreign direct investment and commercialisation. For example, last year 49% of the IDA’s foreign direct investment wins were research, development and innovation-related. These were valued at €500 million and built upon initial investments made through Science Foundation Ireland and the Higher Education Authority. We are working to encourage indigenous enterprises to prosper. Evaluations of State support for research and development show that research and development performing companies have higher rates of growth in turnover, exports and employment and much higher productivity and export intensity than low research and development performing companies.
New high potential start-ups will make a substantial contribution to export and job growth. In 2009 Enterprise Ireland supported 73 such companies across a range of knowledge-intensive sectors, including life sciences, biotechnology, medical devices and telecommunications, and a number of specific niche areas such as compliance and risk management. These companies are expected to create significant numbers of new jobs in the next three years, demonstrating that entrepreneurs across the country are capable of creating high value, export-focused businesses which support employment. Only by implementing these policies and targeting our limited resources can we hope to position Ireland as a competitive, innovative location in which to do business, grow business and employment and create prosperity.
Ensuring enterprises receive support to assist them through the current difficult period is the key to safeguarding employment. This is why the Government has introduced a broad range of enterprise support measures. Last year it introduced the enterprise stabilisation fund which aims to support viable but vulnerable companies experiencing difficulties because of the current economic climate. Companies receive funding to support a range of activities, including market development, productivity improvements and development. In 2009, €58 million was spent on 181 projects, supporting approximately 7,500 jobs. The fund continues to attract a high volume of applications in 2010.
My colleagues and I are also keen to support small and medium enterprises and I am particularly aware that there is a difficulty for some businesses in accessing credit. To address this issue, the Minister for Finance announced in budget 2010 a new credit review system which will examine the credit policies and practices of the banks, particularly for SMEs. This new system will inform the Government as to what further action might be necessary to secure the flow of credit to Irish enterprises and, through publication of the analysis from the review process, help to ensure the performance of the banks participating in NAMA will be transparent to all.
The Government is conscious of this situation. To take what has happened in recent years, the bank guarantee was introduced on 29 September 2008 and was a critically important decision by the Government. At the time there was panic in international markets and a financial meltdown following the collapse of Lehman Brothers earlier that month.
Deputy Billy Kelleher: That was a very important first step in making sure we did not have a systemic run on the banks and economic meltdown in Ireland. We moved on to nationalisation of Anglo Irish Bank but, importantly, we also had a capitalisation programme for the two major banks, following which Mazars prepared an analysis of lending to SMEs. We are aware that businesses are finding it difficult to access credit. Following the Minister for Finance’s recent announcement in the Budget Statement of a credit review body under Mr. Trethowan, it will be set up quickly and will work to ensure that if people are being refused credit, an appeals mechanism will be available independent of the banks.
The banks also have a fundamental role to play. The relationship between them and the people has fundamentally changed through the guarantee and the capitalisation programme. The banks have an obligation to shareholders and, equally important, the State to ensure credit flows through the broader economy. Any retraction of credit has an immediate impact on the ability of companies to trade and continue to retain or create employment. For that reason, I urge the banks which I have met on numerous occasions to ensure that, when they analyse a business plan, they consider it in the most positive frame of mind possible and that they positively consider lending money. They have become risk averse. We must change this culture to ensure they step up to the plate and honour their commitments under the previous capitalisation programmes in order that they can play a critical part in ensuring we return to growth in 2010. As I have stated on a number of occasions, if Senators or Deputies have information in this regard, they should pass it on to the credit supply clearing group in my Department. Where a business has been refused credit and believes it should have been granted it, given its viability and the creditworthiness of the individuals concerned, this should be highlighted. We want to have that type of information to bring it to the attention of the banks through the credit supply clearing group. Senators and Deputies should feel free to forward such information to the group which will pursue the issue through the mechanisms set up within the Department.
Last year the Government introduced the enterprise stabilisation fund which aims to support viable but vulnerable companies experiencing difficulties because of the current economic climate. We supported more than 181 companies, helping to retain 7,500 jobs. Applications for the fund are coming in quickly in 2010. Some might say it is only 7,500 jobs but we need only talk to any of the individuals whose jobs have been retained to know it is significant.
The live register figure for February shows there has been a stabilisation of job losses. While it might be said it is at a high figure, we must welcome the fact there has been stabilisation. Last year 26,000 jobs were lost in February and 30,000 in January. Twelve months on, while there has been a major rise in unemployment, seeing the figures stabilise in what traditionally is a very difficult month is welcome. Obviously, this has come very late for the many thousands who have lost their jobs. However, we must get to the bottom of the recession curve before we will be able to see light at the end of the tunnel. All of the international commentators and analysts recognise that we are on the right path, although it is a difficult and painful one for many. Recessions are not easy, particularly for the vulnerable and those in the public sector who have experienced wage reductions. The Government is acutely aware of this point. I suggest to the House that it has been recognised internationally that what the Government is doing, difficult as it is for many, is necessary. It had to take decisions to protect our international financial sovereignty. There is now commentary that that sovereignty is under threat in other countries simply because they did not take the decisions required of them to ensure they would have international credibility. International credibility is of huge significance for Ireland for a number of reasons, including that we are borrowing a lot of money to maintain services, we are trying to attract foreign direct investment and we have a very important financial services centre.
An additional measure to support enterprises in retaining their employees was the employment subsidy scheme which was introduced last year. Between 2009 and this year, we are investing a total of €135 million in the scheme, under which enterprises receive a subsidy of up to €9,100 for each subsidised job retained. There have been two calls under the scheme. Applications in response to the second call are still being assessed but it is expected that, between the two calls, approximately 80,000 jobs will be either directly or indirectly supported.
The enterprise stabilisation fund and the employment subsidy scheme reflect the Government’s commitment and determination in assisting companies to come through this difficult period. Between the two schemes, we are investing €235 million directly in enterprises, safeguarding thousands of jobs and securing our enterprise capability in the process.
The Government is also encouraging employers to create new jobs by reducing the costs associated with employment. Under the employer jobs PRSI incentive scheme, where an employer creates a new job and takes on a person who has been unemployed for six months or more, he or she will be fully exempt from the liability to pay PRSI for the first year of that employment. This will give employers an 8% to 10% saving on employment costs for each new job created and actively encourage the creation of new employment when it is most needed.
The PRSI exemption for employers creating new jobs this year is in addition to the maintenance of the substantial capital investment programme across government. This includes the national development programme and implementation of key Government programmes such as the €425 million rural development programme 2007-13, under which some 12,000 jobs will be created, and the €1 million invested each week in the home energy savings scheme, providing work for some 3,690 registered contractors. A grant is available to make homes more energy-efficient. The scheme was also designed to retrain people from the traditional construction areas and move them into the area of home energy installations such as installing boilers, wood-burning stoves and insulation. It provides employment opportunities for many of those in difficulties because of the downturn in the construction sector. The Government is also investing substantially in the provision of key infrastructure such as broadband, in respect of which the number of subscribers has doubled during the lifetime of the Government, and electricity generation from local renewable resources, in respect of which, at 15%, we have already met our target for 2010.
The Government remains fully committed to upskilling the unemployed in order that they will be successful in getting back into employment. The lesson to be learned from the previous recession in the 1980s is that people must be retained as close as possible to the labour market in order that those who fall out of employment into unemployment are at least provided with training programmes in order that they can more easily re-enter the labour market. If people are removed from the labour market, they often lose their confidence, their skills sets may no longer be required and they drift into long-term unemployment. Of all the blights in society, the blight of long-term unemployment is something we cannot allow happen at this time of high unemployment. The Government is hugely conscious of the need to ensure we provide training and upskilling programmes for those who find themselves unemployed.
My colleagues and I are proactively leading the Government’s response to Ireland’s unemployment level and driving implementation of the framework for sustainable economic renewal. The Cabinet sub-committee on economic renewal is also ensuring a co-ordinated approach across Departments in response to the rising numbers of unemployed. This approach has included a substantial increase in the number of job search, training and work experience places available to unemployed persons. We are also focusing our resources on a number of key cohorts of the unemployed, including the lower skilled, the long-term unemployed, those under 35 years of age and those formerly employed in the manufacturing, construction and retail sectors. These cohorts have been prioritised, as they are most likely to drift into very ong-term unemployment. The Government is investing substantial resources in tackling our unemployment problem. For instance, my Department will invest over €1 billion in the provision of a range of labour force measures this year.
As regards job search supports, in 2009 FÁS employment services, together with the local employment services, doubled their capacity. The annual referral capacity under the national employment action plan rose from 78,000 persons in 2008 to 147,000 last year. The additional resources allocated by the Government to tackling the rising unemployment rate have also enabled my Department to significantly expand its activation training and work experience places. This year the total number of training and work experience activation places funded by my Department will be approximately 147,000. This compares with the 66,000 places delivered in 2008 and the 130,000 places delivered last year. The bulk of this additional provision has been due to the increase in the number of training places on short-term courses for the unemployed.
FÁS now provides modular-based training in order that participants can pick which modules they most require to improve their skills and ultimately increase their employability, while maintaining a close link to the labour market. In addition, training courses are being delivered in innovative formats such as on-line, blended learning and night courses. In this way we are providing for a range of delivery methods, in addition to the traditional classroom approach, which enables more people to access the services of FÁS. In addition to the places I have just mentioned, this year Skillnets and FÁS will be providing almost 10,400 training places for the unemployed or those engaged in short-time working. Owing to the economic downturn, many individuals are working for two or three days each week and receiving social welfare payments for the days they are not working. Both Skillnets and FÁS are providing training opportunities for those who find themselves in this position. Individuals participating in these programmes can avail of training on the days they are not working while retaining their social welfare entitlements, subject to the normal social welfare rules applying. This means that the individuals concerned will now be able to use their reduced working week as an opportunity to upskill themselves, thereby improving their employability.
The Government is acutely aware of the large numbers under 25 years who are unemployed. This is the reason it has decided that this cohort will receive priority access to the State’s supports for the unemployed such as the FÁS employment and training services. The Tánaiste has also asked FÁS to make significant prioritisation of services for those under 25 years a key element of its provision in 2010. An initiative has also been put in place to immediately activate 18 and 19 year olds, instead of waiting the usual three months for automatic activation.
The main specific provision for early school-leavers continues to be training at community training centres and vocational education committees under the Youthreach programme. The Government is maintaining the 6,000 places available under this programme at a cost of approximately €110 million. Another important initiative of particular relevance to this group is the work placement programme which offers 2,000 places, of which 1,000 are for graduates. Participants in the programme gain work experience for a period of up to nine months and may retain their social welfare entitlements, subject to the normal social welfare rules applying. This work experience will significantly improve their chances of securing paid employment in the future. The Government has implemented a variety of measures which will support around 4,000 redundant apprentices to progress their apprenticeships.
I thank the House for affording me the opportunity to outline the wide and varied spectrum of measures the Government is taking to cultivate the growth of employment in the economy. I have been present for many debates in this House about unemployment and job creation, the economy and access to credit for small and medium-sized businesses and the broader economy. Public representatives on all sides of the House have firm views on the issue of how the current difficulties are to be tackled. A number of factors must be continually promoted and highlighted. Ireland is not the only country affected by recession. Most of our trading partners are in recession. The United States of America is the largest economy and currently has an unemployment rate of 10%. It is disingenuous, therefore, for some commentators to almost suggest this is the only country finding it difficult to come through the economic crisis and with financial difficulties because of the credit crisis, with rising unemployment. Many countries in the eurozone are also finding this a very challenging time. I agree there are inherent difficulties in the economy which exacerbate the problems——
Deputy Billy Kelleher: ——but equally I heard very little commentary five or six years’ ago that we should have slowed down the process. Every party’s view was that we should further reduce taxation on property development. They were advocating the creation of a further inflationary bubble in an already over-inflated market——
Deputy Billy Kelleher: ——and then the commentators said it had been foreseen by everybody. The fact is it was not foreseen by anyone. None of the international organisations monitoring various economies or independent observers highlighted it.
Deputy Billy Kelleher: ——at any of the commentary from the IMF, the OECD and the European Union, it can be seen that very few foresaw what would happen which culminated in financial meltdown across the world in 2008. It will have to be dealt with on a transnational basis. It would be very difficult for the Government on its own to deal with the fallout from an international credit crisis. It has to be dealt with at European level, at G20 level and probably at G8 level. The larger countries need to come together to try to find some mechanism to make sure there is enough liquidity going back into the global economy. More importantly, they need to ensure the measures that are put in place do not stifle or stymie globalisation, growth and trade. They need to make sure we do not have the type of activity we saw in the financial services sector. I refer, for example, to the unregulated movement of capital and the outflows that caused some of these difficulties, which are inherently international in nature.
I am just making the point that when we have debates of this nature, we should stick to the facts. We should point out where we are and acknowledge the difficulties we are in. It is equally important to acknowledge that opportunities are available to this country. It can position itself to become more competitive, for example by ensuring the workforce is ready. During a period of increasing unemployment, it is important to invest in skills and retraining in advance of the upturn. All the figures suggest that a global upturn is on the way. That has been suggested by international commentators. The IMF has upgraded its forecast to approximately 4%. We have to position ourselves to make sure we take advantage of that. At the same time, we have to promote Ireland as a place for inward investment continually.
Education is another key area in which I see substantial potential. People from other countries come to Ireland for educational purposes — to learn English and to obtain third and fourth level qualifications such as doctorates. There are significant opportunities for Ireland in this area. When students come to this country, they pay to do courses and to stay in digs. There is an immediate spin-off from that. It is also of longer-term strategic value to have students coming to this country to be educated. When they go back to their own countries, they retain the links they have forged with Ireland. If they get involved in business at a later stage in their lives, they may become key business influencers in their own countries. Their backgrounds may also lead them to become key academics, researchers or politicians.
Deputy Billy Kelleher: This should be part of our longer-term strategy. We must be conscious of the continuing need to promote Ireland as a centre of excellence for learning, which is something that has come under attack in recent days. The Minister for Education and Science has announced that the perceived dumbing down of diplomas and other third level qualifications will be investigated. While I do not accept that such dumbing down is taking place, I believe we need to ensure that the integrity of the educational system is protected. It is important for Ireland to be recognised internationally as a place of educational excellence. I look forward to hearing the views of Senators during this debate.
Senator John Paul Phelan: I welcome the Minister of State, Deputy Kelleher. Although I like him and think he is a good Minister of State, I have to say we have listened to 45 minutes of pure tripe from him. I refer in particular to the last part of what he had to say. I will absolutely confine my remarks to the facts, but I will not be lectured by anybody from Fianna Fáil on what was said in this House or the other House about our reliance on property.
I had the privilege of serving as Fine Gael’s spokesperson on finance for five years, during which time the current Taoiseach held the position of Minister for Finance. Every time he came into the House, I raised my concerns about Ireland’s over-reliance on property. On one occasion, he almost laughed at me as I expressed my concern about the future of the property bubble. That is a fact. It is on the record of this House.
Every time Deputy Bruton responded to a budget, he said we are too reliant on property. Until recent years, he was laughed out the door by people on the Government benches. It is absolutely wrong to suggest that nobody was criticising the Government, politically or otherwise, in this regard. To claim that nobody made the point that we could not continue indefinitely down the road we were following is not based in fact. I wish the Minister of State had based the part of his contribution that dealt with this issue in fact.
I have no problem with a number of the points made by the Minister of State in his speech. I agree with his comments about the Irish Financial Services Centre, which is an excellent facility that is continuing to expand. The Opposition supported the recent Companies (Miscellaneous Provisions) Bill 2009, which sought to harmonise some of our accountancy practices with US practices, because it will allow us to continue to attract foreign direct investment to the IFSC and the rest of the country. We were happy to co-operate in that regard.
I would like to take issue with a number of other points made by the Minister of State, however. He referred on a number of occasions to the IMF’s forecast of 4% global economic growth between this year and next year. No one is forecasting that Ireland will enjoy 4% growth this year or next year. It does not matter what the Government might think about the IMF forecast for the rest of the global economy.
The Minister of State also referred to the county and city enterprise boards. Having spoken to representatives of my local enterprise board, I understand the funding given to such boards has been cut in some way. The county and city enterprise boards will have reduced funding to give to small and medium sized enterprises, which avail of such funding under normal circumstances.
The Minister of State spoke at length about the “smart economy”, which is an example of a catchphrase that causes people’s eyes to glaze over when they hear it. It sounds good but, in practice, the public does not see the Government implementing the smart economy. Although I could not argue with most of what the Minister of State said about it, we are not seeing any proof that it is coming to fruition. That is my bugbear with the Minister of State’s comments in this regard.
The Minister of State mentioned the Government’s key investments in infrastructure. I cannot say I disagree with the investment in roads infrastructure. While it has improved in recent years, our broadband infrastructure remains pathetic and abysmal. Many businesses across large tracts of the country — I refer to rural Ireland in particular — do not have access to broadband. We also need to consider the whole question of how far down the global league table we are when it comes to next generation broadband.
I would like to mention a number of other facts. Unemployment has increased threefold over the last three years. That is a fact. A further minor increase in unemployment over the 12 months up to the end of February was announced today. It is a personal disaster for the approximately 2,000 additional people who are on the live register. According to today’s figures, some 437,000 people are on the live register.
Unemployment is a personal disaster for those who lose their jobs, their families and their communities. It is also a disaster for the economy. We correctly invest money in our education system and in training schemes to ensure that people can get jobs. It is important for people to be able to contribute to society in terms of taxation and to feel good about themselves. The link between unemployment and issues of self-esteem was a significant problem in the 1980s. I do not think any of us wants to revisit that problem, but we are there now whether we like it or not.
Over the eight years I have spent as a Member of this House, I have continually listened to Fianna Fáil Senators talking about how unemployment is so low. I must admit I have not heard them referring to unemployment levels as often during in the last 12 months. It is worth pointing out that there are more people unemployed now than there were when Fianna Fáil and the Progressive Democrats came into government in 1997. The absolute figure at present is 437,000.
I am disappointed the Tánaiste is not here to explain her recent comments on young people who emigrate. What is the Minister of State’s own position on this matter? This is the big bugbear I have with the last 12 years of Fianna Fáil-led Government. The Government had an unprecedented opportunity to ensure that our economy did not return to the bad days of the late 1970s and the 1980s, but we now have wholescale emigration again.
Many friends of mine have left the country. Most of them are younger than me. I am 31 years of age. Many people in the group that left school and college just after me have had to leave the country. The Tánaiste said on the BBC a couple of weeks ago that such people are making a lifestyle choice. The Minister of State spoke about what the Government is doing to help younger people who find themselves on the live register. It is shocking that one third of men under the age of 25, but of working age, are unemployed at present. I do not believe the Government is doing enough to try to get this cohort of people into gainful employment.
The Minister of State referred to the fiscal and banking crisis. The reality is that the Government’s proposals and plans — its efforts to solve our banking crisis — have been an absolute failure to date. Yesterday, AIB announced its disastrous results and we will have even more disastrous results from Anglo Irish Bank soon which will present the Government with the two options of either further capitalising the banks to the tune of €12 billion or nationalisation. In recent weeks Government spokespersons, including Senator Donie Cassidy, have referred to the desirability of opening a new national recovery bank, which Fine Gael first proposed almost a year ago. I was surprised to hear the Taoiseach yesterday in the Lower House claim NAMA would ensure money would flow through the economy. We have been told by different Government spokespersons, especially the Minister for Finance, that this was not what NAMA was set up to do. The Minister of State was correct to say, in pointing out our banking difficulties, that money is not flowing in the economy. However, what the Government has done heretofore has not worked. I have no confidence, and neither does the public, in what the Government will do from hereon in.
Anglo Irish Bank is an unmitigated disaster. It was mainly concerned with the operations of large developers and, therefore, had no systemic importance. There is now speculation that it will require even more significant re-capitalisation soon. It should have been wound up in an orderly fashion but the Government decided to inject billions of euro of taxpayers’ money into a white elephant. It will never operate properly as a bank again. In years to come, we will be looking at investigations into why the Government made its decision to nationalise the bank and capitalise it to the extent it has.
If yesterday’s announced tax returns for the first two months of 2010 are replicated for the rest of the year, there will be a €1 billion hole in the Government’s fiscal figures, meaning its plans to solve the fiscal crisis look to be in some difficulty already.
Three weeks ago, a Private Members’ motion was devoted to youth employment during which I pointed out how we must examine the measures responsible for the large increase in employment, particularly through foreign direct investment, in the mid-1990s. On that motion, Senator Shane Ross said Ireland’s low corporation tax rate may need to be lowered further as many other EU jurisdictions have introduced a similar if not lower rate. We should be examining a cost-benefit analysis of the potential gains of increased employment rates versus lower tax revenue. EU membership was also instrumental to our success in the mid-1990s which was recently reinforced by our last vote on the Lisbon treaty.
While I have been critical of social partnership, it did deliver social cohesion, making us attractive to foreign direct investment. We certainly do not have social cohesion now. While I believe social partnership was responsible for many of the difficulties that emerged in the latter part of the Celtic tiger, we really need it now. I urge the Government to do what it can in that regard in the next several months.
Our educated workforce also made us attractive, a feature acknowledged by the Minister of State and whose comments on it I agree with. It is not whether our education system is working adequately but rather how it is perceived overseas in multinational boardrooms. This week serious reservations were expressed by several large employers about third level education standards. While I accept the Minister of State has not dismissed them, they must be addressed. We must strategically set about answering these critiques to ensure the perception of our education system remains strong. We must also ensure it can justify the marks its students receive and is fit for purpose as the economy develops.
I apologise if I started somewhat angry but I disagreed profoundly with the Minister of State’s closing comments that no one saw the current economic difficulties emerging. Few saw them as happening quite as quickly as they did but many had serious reservations for some time about the tax incentives introduced by the Fianna Fáil-Progressive Democrats Government to incentivise property development. Much of that property across the State will not be occupied for the foreseeable future. There is no use in retrospectively throwing stones at one another across the floor of the House. We must look to the future and job creation.
Senator Larry Butler: I welcome the Minister of State, Deputy Billy Kelleher, to the House who carefully outlined the Government’s positive proposals for job creation. It is important to bear in mind the Government itself cannot create jobs but it can create the economic climate that will encourage inward investment and new jobs. The Government produced the policy document, Building Ireland’s Smart Economy, which was the first positive approach to attracting new high-tech industries. We will need a highly educated workforce to fit into such an economy. Costs must be reduced to attract new industries and companies to Ireland. Cost competitiveness, along with the quality and availability of the workforce, will be important factors in assisting a company in deciding to locate in Ireland. Ireland largely depends on fossil fuels for energy production, fuels which are fast running out. To ensure high quality and reliable power supply to new industries, the Government is building a new interconnector.
The green energy programme, which I proposed many months ago in the House, has been introduced by the Government and the Minister for Communications, Energy and Natural Resources. The national energy efficiency retrofit programme now employs 16,000 people from the construction industry. This year, the Department has increased the grants available which will bring another 5,000 people to work in the programme.
Last year, I invited the Spirit of Ireland organisation, a national project for energy independence, to make a presentation in the audio-visual room in Leinster House. I propose that all Senators and Deputies listen to the proposal. The group is in the House today meeting with the Joint Committee on Communications, Energy and Natural Resources. It could create up to 100,000 new jobs in the construction of five new power stations, which will be run by turbo and wind energy that will get us away from our dependence on fossil fuels. In itself, that would create close to 50,000 new sustainable jobs. It will also guarantee a new energy industry for this country. This is what the smart economy is about — being smarter, more efficient and using natural resources better. That is why we must move to the smart economy.
Senator John Paul Phelan spoke about the bad old days but the bad old days will always come around. The US, one of the biggest countries in the world, had the worst recession in the 1930s and is now back in the same situation. No one can say we will not get into a recession again. I have seen five recessions, three of them in the UK and two in Ireland. The blame game is pointless. The job of Members, in government and in opposition, is to be constructive and find solutions. We find solutions in the new proposals outlined in today’s debate. These debates are important.
McDonald’s will spend €12 million on four new restaurants creating 250 new jobs. This is very welcome. Probiotec Limited will establish a new European manufacturing operation in Dundalk, which will start off with 70 new jobs. That is welcome because it is a sign we are producing the correct climate, with low taxation, which acts as an incentive for companies to move to Ireland. Having a local market of 500 million people in the EU is also an incentive and is vitally important. There is further investment by Apple on Grafton Street, with 25 new jobs being created in a shop selling retail goods for Apple. These are positive developments and I encourage the Opposition and the Government to listen to all proposals.
Our biggest problem is that we cannot provide sufficient capital to small and medium-sized enterprises. They are crying out for credit. The banks’ proposal is to increase rates by 0.5%. That will add €60 to the average household mortgage when the Government introduced a budget that tried to reduce costs. The banks are adding costs. I would also force AIB to sell its overseas assets, which are worth €1.9 billion or €2.3 billion depending on what commentator one listens to. Most of the banks are running down their investments in other countries and it is time we considered that. Instead of providing capitalisation of €4 billion, we would only have to provide €2 billion. It is important we consider every aspect of where we can capitalise and spend less money on banks. If we have a controlling share in the banks, I suggest the Minister outlines guidelines for lending and identifies a certain number of billion euro that should be provided from the banking sector for investment in new job creation in small and medium-sized enterprises and multinationals. We must consider where are the opportunities.
I do not want to go over time and want to ensure we have an orderly finish to the debate. Although the Minister of State is not responsible, I ask him and the Minister for Finance to consider the matter of finance for small businesses. If we keep them open we retain jobs; if we close them our expenditure increases by €20,000 per employee. We have an obligation to ensure these people remain in business for as long as possible.
Senator Nicky McFadden: I welcome the Minister of State and thank him for taking time to discuss this important issue. I will refer to the banks’ response to small business, community employment schemes and enterprise boards. I compliment the IDA and Mr. Barry O’Leary on the announcement on Monday in Athlone of 50 new jobs, with the possibility of 200 jobs. It is warmly welcomed. Athlone is managing to hold its own because it is lucky to have the Defence Forces, Athlone Institute of Technology and the Department of Education and Science. We are lucky to hold onto those good public service jobs.
Senator Nicky McFadden: The positive announcement on Monday shows the IDA is always plugging away trying to source new jobs for Ireland. It shocked me that county enterprise board funding was cut by 35%. We need to support small businesses more than ever and to create new small businesses. I am incredulous that we are cutting enterprise boards to such a degree. Small businesses are the bread and butter or the mainstay of our country. Small businesses exist in every single town and village in the country and they keep communities alive. County enterprise boards represent these voiceless people and provide advice to them. In the Westmeath area the county enterprise board runs programmes attended by over 800 people per year. It runs over 60 programmes and represents craft businesses, food businesses and engineering businesses. I must reiterate and explain how important these are to the community. They provide valuable services to the Westmeath and Longford area.
Enterprise Ireland focuses on exports. County enterprise boards support those who have fewer than ten jobs in the business. Our family business is a pet shop that employs two people. We are on our knees and if it was not for my sister’s husband, who has a decent job, we would have closed the business. It is about hanging on and that is where county enterprise boards come in. They give advice and ideas to people on how to retain business.
The most extraordinary statistic in the global economic survey report was that 90% of small businesses employ fewer than ten people. A total of 2,500 SMEs employ 800,000 people, a staggering figure. I have known this in my heart and this survey supports my theory.
This leads me to the outrage that is our banking institutions. I warmly welcome the possibility of a merger between Permanent tsb, the EBS and other smaller banks. If the two larger banks, Allied Irish Banks and Bank of Ireland, are pushed to one side, the proposed conglomerate might be more willing and able to support small business. More than half of SMEs have been refused funding. Some were told following an initial telephone call or meeting that they need not complete an application for credit because they will be refused. That is an outrage when one considers the billions of euro we have put into supporting the banks.
Senator Butler requested us to come up with solutions. The banks should be instructed and we should have this control and power when the Oireachtas and NAMA are supporting them to tell them what to do and how to support small business which are the mainstay of the State. The banks say they approve nine out of every ten loan applications but most SMEs cannot even get to the stage of completing an application form because they have been told by their bank manager that they need not apply. That statistic is disingenuous.
I attended a meeting of Westmeath County Council yesterday. The council debated the jobs that need to be carried out around the county and the fact nobody is available to do the work because of the public service recruitment embargo. One councillor asked why all the people who are signing on cannot be put on a community employment, CE, scheme and encouraged to work in local authority areas. I acknowledge this could raise industrial relations issue with unions and so on but there are ways around this. FÁS through CE schemes gave a fantastic start to many people in the past. FÁS was the provider of CE schemes in the past and I cannot see why this cannot be done again. It is Fine Gael policy to introduce more of these schemes. For example, they could be established to employ people to improve the shorelines of Lough Ree and Lough Ennell, to paint buildings and so on. So much work could be done.
The Minister of State gave us a comprehensive report and I always like to look at the glass as half full rather than half empty. Over the past few weeks, a few positive developments have happened with a number of foreign companies taking on new employees or announcing new jobs. That is positive because had the downward trend continued, we would have been in serious trouble. Nobody likes to read the figures highlighting the massive number of people unemployed, especially those aged under 25 to whom the Minister of State alluded. That is a tragedy.
A great deal has been done for apprentices but a number of them are caught in a dilemma in that they had almost completed their apprenticeship with different companies, which went into liquidation, and they cannot secure their qualification. I have asked the Minister of State, Deputy Calleary, about this in the House and I acknowledge the issue is being worked on but I ask that it be treated with urgency. It is disheartening for these young people. Some of the proposals FÁS is coming up with are ridiculous. Perhaps the organisation was too liberal in the past but it is no good now to go to the other extreme. We must move on and give young people an opportunity.
We have never had an awful lot of employment in my part of the country but we were fortunate in our local communities to have indigenous industries and, thankfully, they are still going strong. For example, Ballyhaunis still has Dawn Meats, Western Brand Chicken Limited and engineering companies such as Cashels Engineering Limited. They may have cut the hours of workers but they continue to give employment and everything should be done to help and encourage them and to ensure they are kept going. They are a major asset to south and east Mayo and to parts of counties Sligo and Roscommon.
Not enough use has been made of Ireland West Airport Knock in my county. The airport has a large land bank, which is zoned for industrial use. The IDA, the county enterprise board and a number of Departments are working together to make sure something gets off the ground similar to Shannon Development. I ask the Minister of State and his Department to give every support to this enterprise. It is the jewel in the crown and it is well situated to take up the slack for many areas.
He mentioned education in his contribution. It is still the most important factor. The introduction of free education in the mid-1960s by Donogh O’Malley took a while to seep through the system but when it did, we were on the crest of a wave with a young, vibrant educated people who were ready to take up the jobs coming on stream. Everything possible should be done to keep that going. This is close to the Minister of State’s heart.
He alluded to the banks, as did a number of Senators. The banks are not being fair and they are not doing right by the people given the amount put into them by the State. They are not giving back anything. The Minister of State said he has talked to them and asked them to make money available to small businesses. It is vital they do so and the sooner the better. At present they are not doing it and it is causing immense problems for businesses.
The Minister of State spoke at length about research and development, which I regard as vital. It is good to know we have, I suppose, a friend in a high place, the new Commissioner, Máire Geoghegan-Quinn, and that research and development is in her remit. I hope the Government will work closely with her to get whatever is available from the European perspective for research and development.
Many grants have been given to support jobs, which I welcome. However, I have one gripe. I recently heard of a case of a man who applied for a job through the community employment scheme only to be told after the interview he was not eligible because he had worked for 15 weeks in the previous 12 months. He was in receipt of unemployment assistance and went to work for 15 weeks which showed he was willing and wanted to work. Now, because he worked for those 15 weeks, he cannot get on the community employment scheme. Rules are rules and nobody knows more about them than I do. However, I believe that is bordering on the ridiculous. A person who genuinely wants to work should be given every encouragement to do so rather than placing obstacles in his or her way. I ask the Minister of State to review the matter. I know it goes across a few different Departments and comes primarily under the remit of the Department of Social and Family Affairs.
Senator Brendan Ryan: I welcome the Minister of State, Deputy Calleary. To tackle unemployment we must retain and create jobs, which should be the top priority for Government. The haemorrhaging of jobs has been the most significant contributor to the state of the public finances. The Government has been too focused on the issues of banking and public finances to the relative neglect of the unemployment issue. Training and education initiatives must be prioritised to enhance the skills of those in employment and increasing the employability of the unemployed. There has been much fanfare about the smart economy but little concrete action. It is only through reviving economic activity and reducing unemployment that the fiscal crisis can be properly addressed.
Ireland must effect a major economic transition from a property-dependent economy to an export-led economy. We must build strong indigenous firms as well as attracting foreign direct investment. It means putting in place infrastructure that complements the knowledge economy and ensuring investment is channelled towards enterprise and infrastructure. Crucially, it means investing in people at all skill levels. The knowledge economy will not be built just by talking about it. We need concrete action to build up the firms we have and support job creation with realistic economy-wide and sectoral strategies.
Labour is proposing to establish a jobs fund to support a new jobs strategy. This fund would not be allocated through the conventional Estimates system. Instead, Departments and agencies would be required to submit business cases to a Cabinet task force which would evaluate them and distribute resources accordingly. Measures to be supported by the fund would include additional resources to support enterprise, sectoral development strategies, a major skills and work experience drive, and fast-tracked and high priority capital projects. Obviously the issue of costs, as highlighted by an bord snip nua, must be addressed, but the overriding concern is the need to support enterprise and enhance employment creation. Certainly, there is a requirement for better analysis of the outcomes of spending programmes. Money must not be wasted.
Ireland has suffered considerable reputational damage as a result of the banking crisis but still offers important attractions to overseas investors. These must be preserved, including the 12.5% corporation tax rate. We might even consider reducing this tax rate as one of the previous Senators suggested.
Greater attention must be focused, however, on the development of indigenous firms in high value added activities. Enterprise supports provided through State agencies have a vital role to play in helping firms to start up and grow. They provide assistance and knowledge at critical phases in the life of a firm. When the system is functioning at its best, a firm can draw on a range of formal and informal resources, including contact with other firms which can share knowledge and experience. The role of the enterprise support agencies is also vital in understanding market conditions and demanding improved performance in return for assistance. The enterprise support agencies will function best when they operate in a coherent network that emphasises the importance of market knowledge.
Merging the Film Board into Enterprise Ireland, as proposed by an bord snip nua, for example, risks the loss of specialised expertise with minimal savings in return. Enterprise strategy should be focused not on the withdrawal of supports but on their extension and development. The criteria for support should be extended. These would include, for example, support in certain circumstances for import substituting firms as well as those with an export focus. The range of interventions should also be expanded.
The employer job PRSI incentive scheme is welcome but I question the need to restrict the scheme to people who have been on the live register for at least six months. If a person has lost his or her job, why apply this restriction? Will the Minister of State reconsider this requirement? I have mentioned to him the length of time — currently 22 weeks — for unemployed people to have their application for benefit processed. Although I risk being accused of going on about it, it is vital to resolve the matter as quickly as possible.
Greater focus and resources should be placed on using the county and city enterprise boards to support small business start-ups. The eligibility criteria for support from the county and city enterprise boards should be re-examined to promote activity.
An bord snip nua highlighted a rapid rise in spending on science technology and innovation and the inadequacy of formal evaluation of this spending. It does not provide adequate justification for its proposal to centralise and cut spending in this area. This approach risks an excessive targeting of resources on a limited number of areas. We must maintain investment in a diverse range of knowledge areas and enhance the capacity of the system to develop commercial applications for research activities. This should be built into the STI funding system.
It is also important to develop sectoral strategies to be pursued by relevant agencies. The maintenance of the Irish Film Board, for example, should form part of an overall strategy for developing jobs in creative industries. Labour has also recently published proposals for developing so-called green jobs, to which I will refer later. It is important that short-sighted proposals in the an bord snip nua report are not implemented. For example, the suggestion that tourism marketing budgets be cut is particularly ill-advised given the fall-off in numbers coming to Ireland and our loss of market share, especially from Britain. Rather than cutting marketing spend in the UK, there is a strong case for expanding it.
The jobs fund would be available to support sectoral strategies in a number of areas, with particular emphasis on food, tourism, creative industries and green jobs. In its document entitled Just the Job, the Labour Party has set out a series of initiatives to provide training, educational and work experience opportunities for those without work, including an earn and learn scheme that keeps people in employment while upskilling, a graduate and apprentice work placement scheme for 30,000 young people, reducing the qualifying period for the back to education and the back to work enterprise allowances, a tax-back scheme to fund full-time study, mobilising further education colleges and institutes of technology to respond to demand for retraining, a skills exchange to help maximise the expertise available for retraining, and additional resources for literacy programmes.
Throughout the bubble years there was a rapid expansion in the scale of the public capital programme. Economic circumstances have now changed, and there is a need for a re-assessment of investment priorities. A new national development plan should be drawn up based on a fresh assessment of key economic and social investment needs. This should be explicitly linked to the requirements of enterprise strategy. Given the fall in tender prices across the economy there is scope for a substantial reduction in the capital programme without affecting the volume of activity. We must support capital investment projects that can be rolled out quickly. These should include a major schools building and prefab replacement programme, an additional allocation to the warmer homes scheme as part of the compensating measures accompanying the carbon tax, and other initiatives supporting training needs, including capital provision for further education.
It is internationally accepted that renewable energy projects have the potential to create new employment and replace jobs in traditional industries that are unsustainable. In Germany, for example, the number of jobs in the renewable sector is now greater than in car manufacturing. Initiatives aimed at taking advantage of these opportunities must be put in place immediately. Earlier this year, Bord na Móna announced the creation of 300 sustainable clean energy jobs over the next five years. The jobs will be created in green energy, resource recovery and environmental solutions using innovative green technologies. That is the future for job creation in Ireland. The future can be good for Ireland but we must exploit the opportunity and make it happen.
Key to success for the indigenous sector is credit flow from the banking sector and despite what the banks say when they appear before committees of these Houses, the evidence on the is that this is not happening. I heard what the Minister of State said earlier but greater pressure must be brought to bear on banks to release the essential credit to viable businesses.
I want to raise some questions regarding the former SR Technics workers who are seeking funding under the European Globalisation Adjustment Fund. Has the Department of Enterprise, Trade and Employment provided the additional information to the Commission as requested? Why was the application to the globalisation fund made so late and not straight away when they were let go? Can the Government provide a bridging loan to the DIT in the meantime until the funding comes through? Will the matter be resolved before the workers’ jobseeker’s benefit runs out on 3 April 2010 when will they face a means test for jobseeker’s allowance?
Senator Mark Dearey: I welcome the Minister of State, Deputy Calleary. It is nice to meet him. I was almost freaked out by the welcoming comments made to me last week, namely, that my background in business qualified me to be an expert in business. I will make it clear. In the overall economy I am a bottom feeder. I take product in, add value and sell it on. It takes me and nine others to do that and we are employed gainfully in doing it, but it is the people I rely on — my customers — many of whom are involved in exports, who are the real wealth creators. That is the great engine of wealth creation in any economy.
While I would be glad to be in receipt of any help as an employer, for instance, with the PRSI holiday when taking on an unemployed person, what I would really like to see emanating from these Houses is an attack on costs that would allow our exporters to work more productively and successfully. It is on export led manufacturing and services that I want to focus my attention initially. I will refer also to finance for job creation, the often complex and frustrating experience small and medium-sized businesses and State agencies enjoy, how we can deal with that and begin to ramp up in terms of scale and speed the potential of SMEs in a number of sectors.
On the question of costs for exporters, there is a tacit acknowledgement that our PRSI rates in this country are high at 10.75%. We must examine that in a clear sighted way and determine whether it is a block towards attracting investment into the country and a factor that makes our potential exporters less competitive. We must do that in a clear sighted way and assess all the costs incurred by exporting businesses through the lens of job creation.
Another example would be utility costs, which probably have further to fall. The burden of local government finance needs to be shared more widely so that local authorities can be more flexible in their dealings with companies in terms of development levies, rates and other charges. I work closely with the Minister for the Environment, Heritage and Local Government, Deputy Gormley, on the way local authorities can cut a less burdensome deal with businesses, especially exporting businesses.
We do some things really well in this country, including food, financial services and software development, but I see energy as the next great export. The east-west interconnector has been referred to. Ultimately, there will be a connection to mainland Europe that ought to allow us export what we are abundant in, namely, naturally generated electricity through either tidal or wind power. That is an export area towards which we are only slowly ramping up. It is an area on which we need to focus much more attention and, ultimately, the green jobs — a term I hate although it is probably forgivable to use it in this context — that will emanate from it will be many.
Indigenous companies that are exporting are heroic in many ways. Our peripherality on the edge of Europe means it takes a particular kind of effort and individual to become a manufacturing or a service exporter. I am aware of several in my part of the world who have dedicated years of their lives, and in some cases much of their windfalls or pensions, to developing new ideas for Ireland. They want to work here because they are loyal to the country. I pay tribute to their heroic efforts.
In regard to credit, very often for an SME a “no” from the bank seems to be the end of the idea but that should not necessarily be the case. There is a way in which our enterprise agencies and county enterprise boards can begin to engage in a more creative way with SMEs regarding credit if the bank is saying “no”, and they have been saying “no”. While there are signs this may change soon, it is not a reason not to look elsewhere for liquidity. For instance, for companies with a market value of €2 million to €3 million there is the possibility of a secondary listing on the stock exchange. A few SMEs may have to merge to create that kind of value but the merging of smaller companies to create an entity that can attract finance is something our enterprise agencies should be examining more creatively. As long as debt was cheap, and it was during the Celtic tiger years, other ways of raising money went out of favour, but they need to come back into favour and one way in which that is possible is through venture capital and equity. I am aware that Enterprise Ireland, for instance, runs a type of venture capital scheme for high potential worth businesses, but that could be extended to enterprise boards to allow them get involved at a more local level with smaller companies that are experiencing great difficulty accessing credit. They should be encouraged to examine that idea, even if it means they have to develop skills in company merging and so on.
The third point I want to raise is the interface between enterprise and the agencies. The previous contribution was heavily laden with reference to agency support for SMEs, but very often it is one frustration after another for those SMEs. I am talking about the view from their side of the fence. There appears to be an inability at times to speak the same language, and that must be tackled. The area is complex but we need to intensify the relationships between dynamic SMEs and, in particular, research teams in our institutes. Research and development needs to be better informed by the market and the emphasis should be on supplying products to the marketplace because we are in a jobs crisis. While research for the sake of it may be worthwhile in the good times, it is not something in which we can indulge at present. We must emphasise the job potential of any research project undertaken in our colleges and institutes of technology, as well as the capacity of small and medium-sized enterprises to deliver.
I am particularly interested in the smart grid idea, that is, the development of registered power zones throughout the country so that devices can talk to one another and respond to the supply and demand of electricity. This is an area in which dozens of small and medium-sized enterprises could be established because a world of new product is needed to create the smart grids. The concept is still in its infancy in Europe and although we are slightly behind the wave, we can catch up. Research teams can get together with dynamic local small and medium-sized enterprises to create products that can deliver the smart grid.
Senator Rónán Mullen: Cuirim fáilte roimh an Aire Stáit. In any economic crisis the first tangible and damaging result is the loss of jobs. In Ireland, the abundance of opportunities that presented to younger people over the years of the boom are now sadly lacking and our brightest and best are on the dole queues or contemplating emigration. These are tragic times for our country.
It will not be easy to address this problem and a number of initiatives will be required. I am sure I am not alone in confessing that I do not have the answer but I see areas where changes made now would make it easier to create jobs. We need to offer incentives to employers to take on new employees. The greatest barrier to workforce expansion is the lack of need and many employers struggle to find work for their existing employees, never mind create new positions. Despite this obstacle, it remains the case that some workplaces have the capacity to create jobs and we need to do everything in our power to incentivise them. In particular, we need to expedite the PRSI holiday scheme announced in the budget for newly created jobs. Currently, PRSI contributions by employers run at about 10%, which is a huge disincentive for them to employ staff. A similar scheme existed prior to the 2010 budget but it has been closed to new entrants and its replacement has yet to be published.
We also need to investigate the minimum wage. I have previously addressed this issue in the House. Nobody wants to see our citizens working in sweatshops but equally we do not want them scraping by on the dole. A mechanism exists for companies to pay less than the minimum wage where they are unable to afford the agreed rates. While it is regrettable that employers are forced to do this, it would be far more regrettable to force people out of employment and onto the dole. I question whether we have the mechanisms we need to oversee the minimum wage rates set by the various joint labour committees and registered employment agreements. The recent Industrial Relations (Amendment) Bill 2009 was a missed opportunity to change the regime and perhaps we ought to revisit the issue in light of subsequent experience.
We need to enable and encourage unemployed people to upskill. This objective could be aided by a review of the restrictions placed on people seeking to access FÁS and VTOS retraining schemes. Most of these schemes require an applicant to be unemployed for a number of weeks or months and while there may have been good reasons for this requirement in the past, we need a far more flexible system today. Let people who want to access the schemes do so at the earliest opportunity. A change to this requirement would be very helpful for the young people who, as I noted earlier, are among the worst affected.
Equally important for the people who are lucky enough to get an offer of employment is the decision about leaving the safety net provided by the social welfare system. Nobody wants to stay on welfare but people risk losing benefits once they enter the workforce. I ask the Government to explore ways of allowing people re-entering the workforce after a period of unemployment to keep certain benefits, as is currently the case for medical cards. The cost of such a measure would be minimal and it would pay for itself if it acted as a further incentive to work. I acknowledge, however, that I am speaking about the small minority of people who are lucky enough to gain an offer of employment and that we must focus the majority who are not in that category.
The driver of our knowledge economy is education. I want to highlight the Government’s shocking failure to map out a roadmap for the third level sector. Despite its great importance to society and the economy, a coherent mission statement does not exist for the sector. I do not propose to be prescriptive at this stage nor am I urging that colleges be run centrally. I am simply advocating that the third level sector be given goals towards which colleges are encouraged to work. This would eliminate some of the mission creep seen in certain institutes. I understand a working group under the auspices of the Higher Education Authority has been created and I strongly urge the Minister for Education and Science to expedite its deliberations and work towards the creation of a strategy with a strong focus on graduate employability.
As for college courses, Senators have discussed in recent days the worrying practice of grade inflation. It would be dangerous for the country if this type of behaviour affected the reputation of our institutions of higher education. Does course design change with the times? I am a strong believer in Newman’s idea of the university as a provider of holistic education, especially in respect of the humanities. I have often argued that students pursuing courses in engineering, medicine and other applied disciplines should also be exposed to the humanities as part of their education. However, we must also move with the times in course design.
In a recent issue of the alumni magazine of my alma mater, NUI Galway, I read about a new course in the faculty of commerce designed in collaboration with local businessmen, notable among them Padraig Ó Céidigh of Aer Arann. Business people give a considerable amount of mentoring to final year students so they can learn practical skills and the course requires from the students a demonstration of entrepreneurship. This is a timely response to the crisis because we need graduates who can hit the ground running and think outside the box. That mindset needs to permeate the culture of our third level institutes and their graduates.
Mar achoimre ar an méid atá ráite agam, i measc na rudaí is tábhachtaí, tá an-ghá bealach a thabhairt go mbeidh fostóirí sásta glacadh le fostaithe nua. Glacaim leis go bhfuil ganntanas éilimh faoi láthair ach mar sin féin tá bealaí ina bhféadfaimis cabhrú leis an bpróiseas seo. Is cuid thábhachtach é an PRSI féin, go mbeadh tréimhse a bheadh saor ó PRSI ar fáil d’fhostóirí. Chabhródh sin lenár gcás agus le fadhbanna dífhostaíochta. Luaigh mé freisin go dtarlaíonn sé anois nach bhfuil fostóirí in ann an minimum wage a íoc agus dá dhonacht sin is measa ar fad go mbeadh daoine dífhostaithe agus ag fáil leasa shóisialaigh. B’fhéidir go gcaithfimis breathnú arís ar an gcóras sin. Is é oideachas an rud is tábhachtaí agus sinn ag lorg réiteach na faidhbe atá againn. Caithfimid na constaicí a thógáil uathu siúd atá ag iarraidh dul ar ais i mbun oideachais, daoine atá dífhostaithe le roinnt míonna nó seachtaine. San am atá thart, bhí orthu fanacht go dtí go bhféadfaidís fáil isteach ar chúrsaí FÁS agus mar sin. Caithfimid scéim níos solúbtha a chur ar fáil do na céimithe sin. Ní chóir go mbeadh an chontúirt ann go gcaillfeadh daoine leasa sóisialaigh áirithe nuair a rachaidís ar ais ag obair. Caithfimid gach constaic a thógáil ó na daoine sin.
Caithfimid díriú isteach ionas go mbeidh plean leagtha amach do na hinstitiúidí tríú leibhéal oideachais, go mbeidh straitéis acu a chuirfidh béim níos mó ná riamh ar na cúrsaí iad féin agus curaclam na gcúrsaí sin. Molaim go mór an rud atá déanta ag Ollscoil na hÉireann, Gaillimh, i ndámh an ghnó i bpáirtnéireacht le Pádraig Ó Céidigh, ceannasaí Aer Arann. Tá na mic léinn ag obair ar an taobh teoiriciúil ach chomh maith leis sin ag dul i mbun oibre le lucht gnó, ag fáil traenála agus tacaíochta uathu le go bhfuil meon an ghnóá chothú iontu. Beidh sin go mór ar ár leas san am atá romhainn.
Senator Marc MacSharry: I welcome the opportunity to speak on job creation. Last week, we had a debate on unemployment, which is obviously the biggest issue facing the country at present. I welcome the opportunity to make a few new points and to reiterate others that were made in the last couple of debates. This is a subject we must discuss on a monthly basis at least and if people can suggest new innovative approaches, they should be listened to with an open mind by the Government. I am sure that will be the case.
First, it is important to acknowledge that the latest unemployment figures are a cause of relief, if not celebration, given that when the figures are seasonally adjusted they show there has been a reduction of 2,300 on the live register. That is the most positive news we have had with regard to unemployment for the last couple of years. I hope it represents a stabilisation, but there is a long way to go when one considers that approximately 12.8% of people are unemployed and that 28.4% of those are under 25 years of age, which is the highest rate of youth unemployment in Europe.
The Government has undertaken a number of good initiatives. There was the IDA announcement earlier this week about its focused approach and the prioritisation of gateway cities under the national spatial strategy. I welcome this very much. It is a shame that after the national spatial strategy was launched seven years ago to much fanfare we did not follow that blueprint in a more rigid fashion. Occasionally, there were Government announcements which made reference to the national spatial strategy when it suited but more often than not they avoided mentioning it if, as was the case in many instances, the policies being pursued or the announcements were not necessarily in line with investing in the nine gateway cities and the hubs.
Over the last couple of debates I have had the opportunity to highlight some of the things I have worked on, such as a paper on entrepreneurship education for Ireland. I will not discuss all the proposals highlighted in the paper but Ireland is one of the few countries in the developed world which has not embraced the need to introduce an integrated policy of entrepreneurship education to run from primary school through to third and fourth level education. I hope there will be more progress in that regard. I have spoken to the Secretary General of the Department of Education and Science about it and the Minister of State, Deputy Kelleher, and the other Ministers responsible for enterprise are favourably disposed towards it.
Last week, there was also an opportunity to discuss an integrated labour policy. There are anomalies between the Department of Enterprise, Trade and Employment with its focus on employment and the Department of Social and Family Affairs and its responsibility for unemployment. We must have a single integrated Department for labour where unemployment is not seen as a social welfare issue but as an employment issue, on which FÁS and employment assistance is focused. There are abuses and we must be cognisant of that, and if it was a Department of Enterprise, Trade and Employment rather than social welfare issue, we could be more focused. I have been given two anecdotal examples from sources I believe in my constituency of Sligo-North Leitrim. One is a crèche which interviewed 29 people for three positions. No individuals were prepared to take a full-time job. They preferred to work for three days so they could claim social welfare for the other two as they liked the lifestyle that would result. That is fundamentally incorrect and we should not facilitate it.
There is also the anomaly whereby an adult with an adult dependant on the minimum wage gets approximately €340 per week whereas an adult dependant who is not working but is on social welfare get approximately €10 less than that. I am not arguing for a decrease in the minimum wage or for increasing unemployment assistance but there is an issue in that regard. That has been demonstrated in Sligo today, where people have said they would prefer to work for just three days and claim social welfare for the other two. That is wrong and an abuse; it should not be allowed. Ireland does not have much of a future if we work on that basis. There is also anecdotal evidence of a transport company which put all its employees on a three day week. Now that the company is a little busier very few are prepared to go back to a five day week because, again, they prefer that lifestyle. They can work for three days and claim social welfare for the other two. These are the issues on which we should focus.
I am pleased to be involved in an analysis to be undertaken of the allocation of resources towards entrepreneurship policy in Ireland. This involves Dr. Tom Cooney, who is a research fellow with Dublin Institute of Technology, DIT, Professor Anders Lundström, founder of the Swedish Foundation for Small Business Research, and Professor David Storey, professor of entrepreneurship in the University of Sussex. I was pleased to meet with the Tánaiste and other Ministers last week about the research programme. It will carry out an analysis of all entrepreneurship expenditure across all Government Departments. The results will be known later this year and will assist the Government in targeting expenditure and maximising the outcomes from expenditure in the enterprise area. I welcome this analysis.
I will now turn to retail employment in the Border counties. A very serious situation has emerged in the last number of months, if not years. There are a number of anomalies such as a differential of approximately 30% in the minimum wage, the sterling-euro exchange rate, a difference in VAT rates, although the 0.5% decrease in our VAT rate has improved matters since the last budget, and the fact that people are crossing the Border to shop. I do not and cannot blame people for seeking value for money. However, this is a very serious issue for the six Border counties and must be addressed. I call on the Minister to consider actively the introduction of commercial rates subvention for retail businesses in those counties. That could be done through a fixed percentage decrease in rates by each of the local authorities in those areas, which could be refunded to the local authorities through an increase in their allocation from the local government fund so they are not penalised for supporting retailers. This would be of great benefit to retailers in those areas and ensure that retail employment can continue. In Sligo alone, 2,500 people are connected with employment in the retail sector. However, like shops in all the towns throughout Ireland, many shops are having difficulties and this has been exacerbated in Border counties by the price differentials as a result of the minimum wage, VAT and so forth. Directly subventing commercial rates would be an innovative approach and something tangible the Government could do for retailers in those six Border counties. Indeed, Sligo Borough Council reduced rates by 2.5% for businesses this year.
Another initiative in Sligo, which other counties might have mimicked, is what is called the Fair Dealer campaign. The trade union movement has joined with the chamber of commerce and a number of retailers to focus on where they can reduce prices and directly compete with cross-Border shopping. It is an innovative campaign. In Sligo they have introduced a “Love Sligo” retail card which is distributed to all members of the trade union movement, students in the institute of technology and anybody else who is prepared to take it. It gives discounts in the participating stores. In fairness to the innovation and commitment of those retailers, who are trying to save employment and support enterprise in the area, the Government should be seen to try to match that. Obviously, it cannot reduce the VAT rate for just those six counties or give that type of assistance. We could reimburse the local authorities, through the local government fund, which would give the retailers concerned additional resources to help them further reduce prices and compete with colleagues on a cross-Border basis. As a republican, I am a strong advocate of a united Ireland but until we have a universal VAT rate and minimum wage, we will have these difficulties in the Border counties. Many initiatives have been taken to create employment. Let us ensure we can maintain them in the retailing sector in the Border counties through innovative approaches such as a subvention in respect of commercial rates.
Senator Paschal Donohoe: I raise an issue which I have raised in the House on a number of occasions, that is, the attitude the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Mary Coughlan, has taken towards emigration and the creation of jobs for young people. I wish to focus on the fact that in the past two years the number of people under the age of 25 years who have lost their jobs is 104,000. They account for almost 60% of the total number of job losses in the economy. These are the people who are bearing the brunt of the changes which have taken place in the labour market.
An Cathaoirleach: It is not good enough to have mobile phones ringing in the House when Members are speaking. I ask Members to leave their mobile phones outside. It is not fair on the Senator who is being interrupted.
Senator Paschal Donohoe: I am aware of that. Those bearing the brunt of the changes which have place place in the labour market and the economy are young people. They do not have a voice or representation which other parts of our society enjoy.
On young people and emigration, in the past few weeks the Tánaiste has been questioned twice regarding her role in the matter. I would like the Minister of State to take the opportunity to outline the view of the Government. I saw the Tánaiste being questioned on BBC on whether she accepted the level of involuntary emigration. She refused to answer the question and at one point said young people were emigrating for fun. It is true; I saw it with own eyes. She went on to say it was not a bad thing that our best and brightest were going abroad to look for work in other economies. The transcript is available at the BBC. When she was questioned, she did not deny it. A week later, when she was asked on “Primetime” on RTE if she accepted the level of involuntary emigration, again she did not answer or acknowledge the question. If we have a Minister running the Department of Enterprise, Trade and Employment and making a statement that it is not a bad thing that some of our best and brightest are going abroad and that some are going for fun, what does that say about our hope to deal with the issue of youth unemployment? The emigration of our best and brightest is not policy, rather it is a dereliction of duty and a catastrophe. I would like the Minister of State to indicate to the House his views on the matter, as the Tánaiste and Minister for Enterprise, Trade and Employment appears unwilling to do so.
One reason this is a disaster for the country is that in previous times when the economy experienced emigration, people returned home. I was lucky enough to be able to do so, like many people my age. We were able to return because two things fell into place. First, the national finances were strong which allowed the creation of employment and people like me return. Second, there was a focus on job creation measures and strategies which focused on young people and getting emigrants to return home.
More could be done to select industries to receive support targeted at job creation for young people. What is happening in the gaming industry is an example. Some two thirds of the people working in electronic media are under the age of 35 years. More should be done to integrate measures in the social welfare system in order to allow young people to enter employment without having their wages reduced. As was suggested, we should examine the idea of a PRSI and income tax holiday for people under the age of 26 years. If such a measure was implemented, we could combine it with an examination of the role and level of the minimum wage for people of that age because what is happening to young people, in particular young men, is a disaster. A far more activist approach should be taken to deal with the issue.
Senator Fidelma Healy Eames: I thought about what I would say on the issue of job creation and thought I would give a practical example because everybody has given an overview of the situation and mentioned the almost 450,000 people who are out of work, of whom more than 100,000 are under 25 years of age. This time last year people came to my office who were very stressed as a result of losing their jobs, in particular fathers in their mid-40s with two children in college and a third in a grind school. One man said he had an idea to set up a cycling tourism business which I said was great. He asked where he would receive help. When I mentioned the enterprise board, he said he needed a job to repay his mortgage because he was worried he would lose his house. I told him I did not provide jobs and asked him to discuss his idea for a cycling tourism business. That experience stayed with me.
This time last year, before National Women’s Day, which is next Monday, three other colleagues and I had a conversation, from which was born the Job Creation Oranmore Initiative. We were careful to describe it as an initiative as our aim was to help people to get started in business and provide hope. It is going from strength to strength. We set up a panel of experts which is available free of charge and which includes a former banker with more than 40 years’ experience, a marketing person, an IT person, a solicitor and a number of business coaches. We worked out the initiative and coached a number of people who had come to me to develop their skills. They start with me; I work on their needs and refer them to the expert panel which can give them help. We are like a friendly “Dragon’s Den”. We meet every two or three weeks and, on average, have four or five clients every time we meet. Last October we had a job creation open day and were fortunate to have George Lee attend. There were approximately 300 people present. The initiative has since gone from strength to strength. Each week in my constituency office I hold a jobs clinic and the panel meets regularly. Last night I presented the idea to Athlone Chamber of Commerce because it was gaining credence and popularity. We developed the initiative because no solutions were being offered by the Government. Therefore, we decided to help ourselves. When somebody comes to us, we can offer him or her expertise which, if he or she was to get started in business, would cost him or her €2,500 to €3,000. It is all available free of charge. We do not say we will be there for ever. Obviously, people must help themselves as well. However, I shall list some of the businesses we have helped to date. They include a fashion business, a young company working in environmental planning, a person who wants to get started in water harvesting, a person in the interior decor business——
It would be well worth the Government’s while to look to local groups and chambers of commerce to see how they facilitate helpful initiatives like this in their communities. I could say much about the need for enterprise——
Senator Fidelma Healy Eames: ——and education to be linked to build on the creativity of our young people. I shall leave that for another day. Global responses are needed. I strongly encourage the Minister of State to look at the measures for job creation in Oranmore.
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