Liz O'Donnell (Dublin South, Progressive Democrats)

As the Minister of State, Deputy Treacy, is not in the House I will commence the debate, as scheduled, with the agreement of the House.

I welcome the publication of this report. It is a draft document entitled Integrated Guidelines for Growth and Jobs — the Lisbon Agenda. Its focus quite properly is on sustaining Ireland's strong economic growth and employment performance, an issue which cannot and will not be taken for granted by my party or our partners in Government. The presentation of this report to the House affords us an opportunity to reflect on the status of our economy, how we got to where we are now and how we will navigate the best way forward.

The figures included in this document are a compelling audit of the true extent of our economic and employment progress over the past decade. The figures are compelling by any measure. The unemployment rate in 1994 was 14.7% and in 2004 it was 4.4%, which is as good as full employment. The employment rate in 1994 was 52.2% and in 2004 it was 66.7%. I could continue in that context but it is all set out in the report. Rather than resting on our laurels, the question on which we need to focus is how we can preserve the gains we have made in our economy and throughout our society. The single biggest achievement in politics, perhaps accompanied by the peace process and the success in sustaining a political settlement, as it affects real lives is the 10% plus reduction in our unemployment rate during the past ten years which is down from almost 15% to 4.4%. Those who would make light of such an achievement are in denial of the reality behind the figures. This country has been turned around. It has moved from mass outward emigration to net inward migration and the despair and misery that meant for our people for many decades. On every front there have been improvements in the quality of life. We have increased employment, increased incomes, higher living standards and lower levels of poverty. That is also the reality behind the figures in the report. The report is about building on those gains and strengths. In Ireland we have to look at how we and Europe can respond to developments in the United States, the Far East, China and India. The world will not wait for us. It will continue to develop and we must look to our own response. Ireland is a small and open economy and the key to sustaining economic growth is to remain flexible. Ireland's flexibility will be based on fostering enterprise, risk taking and innovation.

Another key instrument for sustaining our position economically in the world will be maintaining the tax system that creates the environment for enterprise, competition, efficiency and growth, a credo close to the heart of the Progressive Democrats. In Government between 1989 and 1992 and again since 1997, we have worked hard to establish that system of taxation. Despite claims to the contrary, not only do we have a taxation regime that supports the flexibility we need as an economy, but one that benefits lower wage workers over higher income earners. Deputies opposite may disagree with this proposition. The report reads: "Ireland today has the most generous tax and welfare system for single income families on the average industrial wage in the world". The income tax strategy we put in place aims at maintaining full employment and strengthening the competitive position of the Irish economy through keeping taxes on labour low. It is a policy that also includes a particular focus on the low paid and on the elderly.

The taxation system we espouse benefits all in society. By reforming the tax code we have restored a position not seen since the Ireland of the 1960s, where high earners, not those on modest or lower incomes, pay the vast bulk of tax. The top 25% of income earners pay 80% of all income tax raised by the State. We want to do more. The true value of this national reform programme is its questioning of how we can maintain our economic success. We must work harder to foster enterprise and efficiency and boost spending on research and development.

In 2003, the Tánaiste established the enterprise strategy group to prepare a report that would serve as a blueprint for an enterprise strategy for growth and employment in Ireland. Its work is an important part of the national reform programme report. The group found that while Ireland's economy remains strong, action is needed to ensure potential threats do not adversely affect performance. It set out medium term enterprise opportunities for the economy. To sustain our position, Ireland requires quick and appropriate policy responses to the needs of business, to help them build competitiveness and better manage the rapid changes taking place in world trade and investment regimes. That is our focus.

The report makes clear the demands on Europe in terms of our productivity. We must pursue productivity gains. Although EU productivity levels were growing faster than those in the US for five decades, since 1996 the EU has lagged behind the US each year. Labour productivity in the US is growing twice as fast as in Europe and as a result our relative levels of wealth have also started to fall.

Ireland's role in pursuing productivity gains for the wider EU will be to tackle inefficiencies in our sheltered private sector and in the public sector. While the export-orientated private sector has propelled the growth outlined in the report, the sheltered private sector and the public sector can hold us back. Whether it is the professions, law, medicine, the health service, airport terminals, bus markets, electricity and gas, we must pursue efficiency by competition and-or appropriate regulatory change. The Progressive Democrats have been unrelenting in their pursuit of that agenda for almost 20 years, an agenda that is shown to be an imperative by this report.

Competition and reform can be messy and unpopular at times but this cannot be an excuse for freezing inefficient practices in certain sectors. We must be radical and determined in pursuing productivity gains for our economy and the Lisbon objectives. Our labour market has changed utterly in the past 20 years posing fresh challenges for us as policy makers and for employers. Two central elements in this regard are migrant workers and child care. In recent weeks the business in the House ranged from the Employment Permits Bill and other legislation dealing with the changing environment of the workforce.

Latest estimates indicate that in the year to April 2005 Ireland had net migration of more than 53,000 compared with 31,000 in 2004. In the past year alone 50,000 females entered the workforce. These two issues, female participation and inward migration, raise particular challenges for the wider society, not to mention sustaining growth.

In regard to child care, we need sensible measures to increase the supply of places for children and thus reduce costs. I am happy the Minister for Justice, Equality and Law Reform, Deputy McDowell, has significantly increased investment in child care services in recent years under the equal opportunities child care programme. Total expenditure will amount to just under €500 million for the period 2000-06 in the form of capital, staffing and quality improvement grants. Under the programme, 26,000 new child care places were in place at the end of June 2005. Programme commitments already in place should lead to the creation of a further 13,000 places.

We need to continue to develop programmes such as the equal opportunities child care programme, beef up their budgets and create more places. The programme should be nuanced to take account of different types of communities, established communities versus newer settlements in the growing commuter belt where support systems are weak. We all accept we have to help ease the increasing burden of child care costs on young families. Initiatives, however, must be sensible and thought through. Contrary to recent policy announcements from the Labour Party for example, this is not about lashing money at the issue, it is about increasing funds in a targeted way to help those bearing the greatest burden. It is about increasing supply and reducing costs. The Progressive Democrats want to see diversity in the child care sector. One size does not fit all families. Parents should have choices in this most important aspect of their lives and child care provision should reflect that choice, not be some form of homogenous State controlled monolith.

In regard to the second major development in our labour market, migrant workers, we must ensure our policies are the right ones. I spoke in this House two weeks ago on legislation to codify the existing administrative work permit arrangements. We should and will provide new and increased protections for migrant workers, who are so important for our economy, and will provide for the introduction of a green card system which would comprehend long-term or permanent residency. In my contribution I stated a modern, progressive migration system is well overdue in Ireland and must be separate in process and policy from asylum.

Ireland's changing demographics pose challenges in housing, education and health. Right across all Departments, wise people should be planning for the best outcomes in terms of integration of all the new people coming to live among us. These new members of our society must be treated fairly and the Employment Permits Bill and the related elements in the NRP report demonstrate comprehensively that although we have been playing catch-up in the area of inward migration, our policies are now beginning to take shape. However, they need constant tweaking and a constant sympathetic response to the changing needs of the newcomers to our society.

The national reform programme report is a result of commitments given by Governments at the European Council meeting in March. EU leaders agreed to refocus the Lisbon strategy on jobs and growth and prepare a programme report. This is a welcome reminder that national Governments still have a massively important role when it comes to macro and micro-economic policy and employment policy. Some parties would have us believe that Ireland has ceded its control over these matters at European level and that we are powerless in these matters. Others claim the advances we have made would have happened anyway.

The national reform programme process and report demonstrate, beyond question, the central role national Governments and their policies play in promoting and sustaining domestic and European economic development. We have not ceded all control and these matters are not settled by diktat from Brussels or anywhere else.

The policies of the two parties in Government are critical to the extent of economic development and progress and, as a result, to living standards and poverty. If the parties opposite had been in Government in recent years, there is absolutely no doubt that taxes and unemployment would higher. Thankfully for Ireland, this was not the case. The Progressive Democrats, in conjunction with our partners in Government, have ensured that we had the right policies for Ireland. We sought a mandate for them and got it. These are policies to foster enterprise and initiative, to drive competition and efficiency, and to provide the most generous tax and welfare system for single income families in the world. As this Lisbon NRP report demonstrates, it is in Ireland's national interest, and Europe's, that the economic strategy espoused by the Government remains at the centre of our policy-making.

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