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Government parties cynically retreating from election commitments – Tóibín

11 May, 2011


Speaking in the Dáil this afternoon on the Government’s jobs initiative Sinn Féin Enterprise Spokesperson Peadar Tóibín described the initiative as paltry and accused the Government parties of cynically retreating from their election commitments.

Deputy Tóibín said:

“The domestic economy in Ireland is flat lining as a result of three years of deflationary policies. The deficit at the end of April 2011 was €9.9bn compared to a deficit of just under €7bn in the first four months of 2010. Debt servicing of national debt for the period cost €1.8bn. The government at one level is introducing a paltry jobs initiative while at the same time the thrust of their economic policy is in fact extinguishing the demand that is necessary to create jobs.

“The unemployment issue is a devastating and urgent crisis which demands an urgent and comprehensive response. This information is not new to the government as both parties made serious capital of the jobs issue in the run up to the election. Indeed they spent the run up to the election hyping their jobs plans. Fine Gael spoke of 100,000 jobs and a €7 billion stimulus. Labour equally spoke of a €500 million jobs fund and a Strategic Investment Bank backed up with €2billion from Pension Reserve Fund.

“Cynically within nine weeks both government parties have retreated fully from the election commitments and in a reverse to their pre-election mode have spent the interim period pouring cold water over expectations. And is there any wonder. Figures within the Jobs Initiative stated that there will be an additional €40 million invested in Current expenditure and Capital expenditure. This €40 million contrasts sharply with the €24 billion your government is pouring into the banks.” ENDS

Full text of Deputy Tóibín’s speech follows:

At the moment 439,000 people in this state languish on the Dole. 439,000 men and women of all ages, skill levels and experience on a daily basis are living with the reality of not having work. The outworking of the Fianna Fáil government’s policy has forced hundreds of thousands of competent men and women struggle to make ends meet and spend their days hunting for non-existent jobs.

The curse of unemployment does not stop with the 439,000 people on the dole. Hundreds of thousands of children are dependent on unemployed parents. Their collective incomes have plummeted in the last two years while in many cases their expenditures with regards mortgages, loans, food, fuel etc. have remained rigid or are indeed increasing. This not to speak of the despair and collapse in confidence that unemployment has brought.

Hundreds of thousands of others have been forced to emigrate. Roughly the same amount of people who sit the leaving cert this year will emigrate this year. On an annual basis a significant segment of the GAA generation will leave Ireland. This has the effect of decimating communities, deflating the generation with most energy and breaking up families in many cases for ever.

Minister, the business core of the Irish economy is closing down. Retailers, construction companies and wholesalers are closing down at rates never seen before. At the end of February figures were released that showed there is a 46% increase in the rate of business closure.

There were 2,900 corporate closures in 2009 and 2010. The total number of corporate insolvencies for January/ April 2011 was 558. This is an increase on the same period last year of 3%. That’s 46 corporate insolvencies a week. It’s estimated by the Small Firms Association that there is the potential for 62,500 small business closures with the resulting 200,000 jobs losses. These are shocking figures.

These closures are as a result of the contracting economy, reduced demand and a rigid cost base. The contracting economy and reduced demand have been caused by economic shock and by Fianna Fáil’s policy of austerity, damage which is now being accentuated by Fine Gael and Labour policy.

The domestic economy in Ireland is flat lining as a result of 3 years of deflationary policies. The deficit at the end of April 2011 was €9.9bn compared to a deficit of just under €7bn in the first four months of 2010. Debt servicing of national debt for the period cost €1.8bn. The government at one level is introducing a paltry jobs initiative while at the same time the thrust of their economic policy is in fact extinguishing the demand that is necessary to create jobs.

The unemployment issue is a devastating and urgent crisis which demands an urgent and comprehensive response. This information is not new to the government as both parties made serious capital of the jobs issue in the run up to the election. Indeed they spent the run up to the election hyping their jobs plans. Fine Gael spoke of 100,000 jobs and a €7 billion stimulus. Labour equally spoke of a €500 million jobs fund and a Strategic Investment Bank backed up with €2billion from Pension Reserve Fund.

Cynically within 9 weeks both government parties have retreated fully from the election commitments and in a reverse to their pre-election mode have spent the interim period pouring cold water over expectations. And is there any wonder. Figures within the Jobs Initiative stated that there will be an additional €40 million invested in Current expenditure and Capital expenditure. This €40 million contrasts sharply with the €24 billion your government is pouring into the banks.

On the information given in the report itself this will mean the creation of an additional 400 jobs. 400 Jobs! This is equivalent to the opening up of 2 Tesco stores. It is the equivalent of the amount of young people emigrating every 3 days. There are more than 400 people unemployed in any 2 large disadvantaged housing estates in Dublin, Cork or Limerick or any of the thousands of small towns in Ireland. Your response to what is one the largest crisis ever experienced in this country is shockingly disproportionate.

It’s also important to identify the gaping holes in this initiative. There is no investment in the Agri Food Sector. There is no reform of the Enterprise Development Agencies. There is no development of nationwide export programmes for small business. Other than the PRSI initiative there was no effort to reduce the cost base of small businesses with regards rents and rates. Major opportunity has been missed to develop a comprehensive jobs initiative that would reach in to every sector and reinvigorate every community.

On the macroeconomic side its Sinn Féin’s stated policy that a major and significant stimulus is necessary to inject life into the Irish economy. It is not only our view, It’s simply just good economic practice. There is no doubt that stimulus work best in large closed economies. However it is still possible to jump start a small open economy like Ireland with a strategic, targeted investment.

Competitiveness can be improved with labour intensive infrastructural projects. Investment in education can create a real knowledge economy. My colleague Deputy Doherty detailed yesterday the Sinn Féin alternative which would use €2 billion from the National Pension Reserve fund to fast track labour intensive infrastructure projects. These would include school and hospital building, upgrading water infrastructure, developing public transport networks and rolling out State wide broadband services.

We would invest €600 million into supporting businesses in their efforts to maintain those who are already employed in viable businesses. Sinn Fein would also inject a further €500 million into the economy in the form of a family stimulus package funded through additional tax revenue. The aim of this package of measures is to reverse some of the heavy burden placed on working families and those on social welfare by the last government and in doing so to boost consumer spending. In addition to this family stimulus package, we would also immediately abolish the Universal Social Charge releasing a further €400 million of spending power back into the local economy.

Another gaping hole within the Jobs initiative was the lack of attention to Enterprise Development reform. With reform in this area it is possible to reduce costs while at the same time create more jobs throughout the country. First of all to reduce duplication and save millions of euro we propose the amalgamation of the IDA, Enterprise Ireland and Invest NI. Selling Ireland as a tourism product has already been successfully achieved by Tourism Ireland, an All-Ireland body in Ireland, representing all of Ireland. Yet there are three separate organisations promoting indigenous businesses and attracting Foreign Direct Investment on the island of Ireland. We pay on the double for duplication of offices and organisational infrastructure without any proven extra benefits with regards jobs and incoming investment.

So much could have been done to reform enterprise agencies and how they work. In many respects Enterprise Ireland is a successful in its role in supporting indigenous business but it’s role could be strengthened. While the organisation does engage with small business through marketing and the County Enterprise Board network we believe that as its currently constituted its far too reactive. Enterprise Ireland should be given a far more proactive remit whereby it goes out into the market, identifies small businesses and steps into help them.

Also the number of High Potential Start Up Businesses that are support by Enterprise Ireland each year is far too small.

Also the CEBs are at the coalface of small business development in this state. They provide valuable training and mentoring services to hundreds of small business. They know their target market and their target market knows them. Their work load has increased massively over the last few years as thousands of newly unemployed people have come on to their books. Their work has never been more important.

The establishment of one-stop-shops that would combine the efforts of Enterprise Ireland, the County Enterprise Boards, enterprise clusters and business parks, FÁS, third level enterprise partnerships and offer new businesses funding and growth advice, should be brought forward as a matter of priority.

Despite this CEBs have had their budgets reduced and have operated in a limbo over the last few years not knowing what the future holds. Given that they are at the fulcrum of new business start-up surely this Jobs initiative could have sharpened their role in this process.

There is absolutely nothing in your announcements yesterday about reducing the big costs in running a business – things like Rates, Rent, Energy, Telecoms etc. Given the state of the economy and the fact that the SME sector is crying out for help, you would think these areas would have been touched on in some fashion.

I was very disappointed that the issues of Rates for business. This is one of the single biggest issues that I am sure deputies across the board and across all constituencies are getting representations about. And yet it is not even touched in these proposals. Furthermore I checked the programme for Government and Rates aren’t even mentioned in it. Not once !

So what would we do? Progressive Rates reform is urgently needed. We need to reflect the fact that blanket rates being charged on all businesses regardless of size is not working. For example we should look at adjusting business rates depending on whether a business is an export business, an import substitution business, a R&D intensive business etc

In your programme for government you have said you will legislate to end upward only rent reviews for existing leases. Minister the longer we delay and drag this out the more businesses will close and the more jobs will be lost. Of course one of the vested interests in this whole issue is NAMA – who it is reported are opposed to abolishing upward only rent reviews for completely different reasons.

I sincerely hope that the interests of small businesses who are hanging on by the skin of their teeth and providing employment are put first on this issue. Rather than the vested interests of NAMA and developers who are charging vulnerable tenants extortionate rents from a bygone era. To put it simply, if this is not changed all sides in this area will lose because businesses will close, jobs will be lost, landlords or NAMA will get no rent, the legal profession will have a field day and to top it all off, based on this government policy the taxpayer will pick up the tab.

Again similar to Rent ad Rates, there are no measures to address the costs of Energy, Telecoms, Waste. They are not even mentioned in these proposals or in the programme for govt. For Example Bord Gais last week flagged that a 20% price rise was inevitable before the end of the year. This will make a bad situation even worse for some businesses.

There is nothing in this jobs initiative for indigenous sectors like the Irish agri-food sector? Nothing. In 2005, net foreign earnings of the sector amounted to 32% of the total net earnings from primary and manufacturing industries. In 2008, Ireland’s food and drink exports were worth €8.2bn, representing approximately 10% of overall merchandise trade exports. 1 in 7 people currently employed in the State are in the agri-fod industry. But not a single sectoral initiative was used to help this industry. Considering the upward pressure on the commodities market and the competitive advantage that Ireland has in the agri food sector it this astonishing that this sector has been left out of the jobs initiative.

The global economic recession has been associated with a series of economic, political, social and cultural metamorphoses. In considering recent developments in the Irish economy, including the collapse of the construction sector, the exodus of MNC’s from Ireland and the escalating unemployment rate, industrial policy for positive economic growth hinges on the development of competitive advantage in a range of interlinked industries or sectors. That is what is needed for the agri-food sector.

So despite the largest crisis that this state has seen, despite the massive unemployment levels, despite the promises made by Fine Gael and Labour 9 weeks ago what we have received this week is a so called revenue neutral stimulus. This is statement is in fact oxymoron, a stimulus by it very nature is not revenue neutral, it is an infusion of revenue to the economy. Minister Michael Noonan stated that this is not a large Keynesian stimulus package. This statement makes him the Minister for Finance and for Stating the Obvious. At best this is a rearrangement of the deck chairs. At a time when Ireland’s domestic economy is in urgent need of a major Keynesian stimulus what we get is less than a drop in the ocean.

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