Fianna Fail policies have led us into economic crisis
Issued : Friday 27 March, 2009
Statement by Willie Penrose TD
At the outset, I wish to thank all the branches, constituencies and the NEC for putting forward constructive proposals by way of motions on the agenda,
Obviously during the course of contributions here tonight, which I as the Labour Party spokesperson will certainly take cognisance of as we go forward in our efforts to formulate new policies to combat the current unemployment crisis which is the worst in the history of the State and there is not any prospect that job losses will stop in the near future unless the Government changes its policies and strategy in a seismic way and produces comprehensive jobs plan which would include a training and income plan, and as stated by my colleague Roisin Shortall, a completely new approach to the needs of the unemployed.
Some commentators have suggested that the current crisis is not as bad as we had to cope with in the 1980s. They are wrong, because in the 1980s we had a halt to the modest economic growth of the late 1970s and most people had not experienced prosperity. It was also possible for the unemployed to emigrate as the UK and the USA were growing rapidly. At one stage it was accepted, not by us in the Labour Party, that we could not all live on a small island. We may soon see how well we can all live on this island if unemployment continues to rise and the unemployed see no prospect of finding work at home or abroad.
The Government in its current state of panic is trying to blame the global economic for all our problems, but most people, like yourselves, understand that the polices pursued by the Fianna Fail led Govt over the past decade have left us ill-prepared for the current crisis. I don't wish to lecture you about economic theory, but every first-year student of economics learns that in managing the economy, Government policy should be counter cyclical. That means that in a boom period, the Govt dampens the boom by controlling spending and if necessary increasing taxation.
Since the days of Charlie McCreevy the policy of 'If I have it, I spend it' resulted in a government fuelling the boom and now that the boom is over, the cupboard is almost bare and the few bones in it must be used to prop up the banks whose irresponsible lending has contributed so much to the current crisis. At a time when banks should be lending to support existing and new businesses they are unwilling to do so. All the signs are notwithstanding their assurances to the contrary, that they are unwilling to do so, as they hoard capital in order to deal with the crisis caused by irresponsible lending.
We should not forget that about 250,000 small businesses across this State provide up to 750,000 jobs - these are often the backbone of the infrastructural fabric of many of our rural villages and towns. Many small businesses who are members of the Small Firms Association or of ISME, have had varied experiences dealing with the banks and many are now on the brink of failure because of the lack of credit which is the lifeblood of business - we are all aware that small and medium sized enterprise are the engine room of the economy. Indeed some of the banks are refusing to pass on the reductions in interest rates. People on the streets outside and your good selves are asking the question: what happened to the €7bn invested by our Govt as part of the recapitalisation plan - who in fact benefits from this massive injection. It is not filtering down to small businesses which are crucial to the economic wellbeing of the country, and to many places especially throughout rural Ireland. There are many entrepreneurs and innovators out there across Ireland, who are being stymied from getting off the ground - in this respect we in the Labour Party have proposed that Anglo Irish Bank which is now nationalised, should be used to draw down significant tranches of loan funding from the European Investment Bank which has indicated that it has a fund of €30bn to lend to small businesses in the EU. The Government owns this bank on behalf of you the people, so let us make positive use of this bank at this stage.
We are also of the view that appropriate and worthwhile start-up grants be made available to people who are unemployed and wish to start up a new business and it is my view that a small business rates relief scheme which would be based either on floor size or turnover or indeed a combination of both should now be introduced and thereby enable many of our small businesses survival that are now struggling in this very challenging economic environment.
I am aware that the hundreds of jobs are being lost weekly in the construction industry, yet the schools building programme for which money has already been allocated is incredibly slow, with more than 40,000 pupils languishing in prefabs, while the Department of Education and Science, seems to take years to even approve a new school much less build one.
I welcome the commencement of the insulation scheme, which was first proposed by the Labour Party, but which is too limited in its scope, insofar as a key component of any such scheme for our elderly, would be the inclusion of the replacement of windows and doors, as they surely contribute to the preservation heat in much of the housing stock - more than 40 per cent of our houses were built prior to 1963, and clearly have no insulation installed.
We in the Labour Party would encourage renovation and improving energy efficiency for older houses, and this could be done by reducing the level of VAT for improvement works, and reduce or remove VAT on insulating materials.
We have offered a significant number of new ideas to tackle the current crisis, and I repeat them here again.
One scheme which would greatly improve the productivity of the labour force is an 'earn and learn' scheme whereby people who are unemployed could combine short-time working with education and training.
We have a sorry tradition of allowing the unemployed to languish on the dole queue, with little hope of further training or working experience. We still have a Victorian Poor Law attitude to the unemployed and more effort is made to prove that the unemployed person is totally idle, rather than to try to get them back into the labour force.
We need to learn from the schemes in other EU countries where efforts are made to ensure that unemployed workers particularly young workers do not become detached from the Labour force.
We must immediately set about reforming the Back-To-Work supports, such as the Back To Work Enterprise Allowance, and all those lead-in times which are in place for the determination of eligibility should be eliminated and replaced by three months in all cases. The welfare system should be about preventing long term unemployment rather than promoting it.
There is a precedent in place whereby people who have received statutory redundancy are already permitted to avail of these schemes immediately, so the principle is already accepted.
We must formulate the use of career breaks and flexible working arrangements. We are aware that career breaks are rarely offered to employees outside the public service, so we need to devise a scheme that provides incentives to employers to offer career breaks or flexible working arrangements, whilst providing employees with legal entitlements to their jobs back and security on other issues when that leave ends.
Reform and expand the Community Employment Scheme
At present, more than one in three of those on the live register, is a former construction worker, with several thousand of those workers who are over 50 years of age, and have general trade and handyman skills, there are numerous opportunities and a demand among this cohort of people to find fulfilling employment in the social economy sector. We should allow the unemployed to work with voluntary groups and receive some additional payments if necessary in order to utilise their skills and provide much needed services.
The Government must lift the cap on PLC courses which currently stands at 30,000 and the cost of providing extra places is marginal since most of the infrastructure and services already exist. Likewise, the cap of 5,000 on the Vocational Training opportunities should be lifted. Taking these steps would be broadly cost neutral. So let us significantly increase training places via Fas, VECs and the Institutes of Technology. We have Colleges of Further Education losing teachers and having to turn away young people who are going straight from school into unemployment. VECs and I.T.s are ready and willing to provide many more training places if they are given funding. The last area in which cutbacks should be considered is education and training.
In relation to social welfare, why not allow employers who are in a position to provide a worthwhile job but whose financial position prevents them for doing so, top up the rate of the Jobseekers Benefit or Jobseekers Allowance of individuals who wish to be in employment and ensure the top up would bring the individual's income up to a good wage. We must be innovative and show flexibility in the new circumstances.
Further, it is surely time to increase the VAT exemption level for those who supply services from its current threshold of €37,500 up to €65,000 and similarly the exemption figure for the supply of goods must be increased from its current low threshold of €70,000 to €125,000. The complexities of VAT would require a small business to employ a bookkeeper for a half day each week, which is another burden on small businesses.
The Government has strangled companies and small businesses with unbelievable levels of regulation, so it is time to simplify the process by ensuring a unitary style form is made available which satisfies all the criteria for submission to the various governmental bodies and agencies.
The role of the County Enterprise Boards, and their contribution to employment creation at the microlevel is very important and needs to be recognised. We are committed to expanding the functions and job creation capacity of CEBs and give them greater flexibility and more discretion as to enable them to contribute to employment creation, and so the stricture where they can only grant aid a business up to 10 jobs, will be removed. We would also allow a wide range of start-up-grants and a loosening up of the eligibility criteria.
Currently, about 353,000 people are out of work, and the projection is that this could reach 450,000 or more by the end of 2009. Behind these raw statistics are human beings, their families, and dependents. Some 200,000 people have lost their jobs since this Government came to power in May 2007, representing a cost of €4 billion, since every job lost costs the State approximately €20,000, in terms of increased social welfare payments, a reduction in income tax paid, and this is without any consideration of the cost of secondary benefits and the loss of spending power in the economy.
In the Forfas Report of 2007, Towards Developing an Entrepreneurship Policy for Ireland, a major problem in the area of entrepreneurship policy was identified. Whilst one cannot deny that the Government is investing in programmes which aim to develop and encourage small businesses and entrepreneurship, too many agencies, bodies and Departments are involved in this area. The Department of Enterprise, Trade and Employment supports entrepreneurs and start-up businesses through a range of bodies, including city and county enterprise boards. The Department of Education and Science is responsible for the delivery of entrepreneurship education and training in the education system. The Department of Community, Rural and Gaeltacht Affairs is responsible for Udarás na Gaeltachta, the Leader Programme and area partnerships. The Department of Arts, Sport & Tourism is responsible through Failte Ireland for the development of tourism enterprises.
The Department of Justice, Equality and Law Reform is responsible for regulating residence and work visas for third country citizens and issuing business permissions to such individuals. The Department of Finance is responsible for overseeing the fiscal incentives for enterprise establishment and equity investment such as the seed capital and business expansion schemes.
Therefore, it is clear Ireland lacks an explicit and articulated entrepreneurship policy directed at Ministerial level. Labour in government will commit itself to bringing all the foregoing responsibilities within the remit of one Minister, who would have control of a single Department and perform all of the activities carried out by a variety of Departments.
The Department of Entrepreneurship Policy would be responsible for delivering various initiatives which impact on entrepreneurs and the environment in which they operate, in a cogent and cohesive manner.
ENDS
Contact Willie Penrose - 087-824-1933
www.labour.ie/press
