Thursday, 8 December 2005
Financial Resolution No. 5: General (Resumed).
Micheál Martin (Cork South Central, Fianna Fail)
As Minister for Enterprise, Trade and Employment I warmly welcome the budget for 2006 presented to this House yesterday by my colleague, the Minister for Finance. I am confident the budget is good for business, work and the economy. It puts in place the essential strategies that will ensure Ireland's competitiveness in future. In the space of less than 15 years we have built a new, robust and successful economy, underpinned over the past eight years by the sound policies of the Government, which have ensured that the fruits of our success have been cultivated carefully, used wisely and distributed fairly. We have generated an economy that is the envy of many and a model that others are seeking to follow.
At the root of this exceptional performance is a deeply embedded commitment to pursue policies in a joined-up way across Government that boosts our competitiveness, a competitiveness that provides us with the means to improve equality and opportunity for all in society.
Budget 2006 represents a continuation of those policies and it will prove to be a watershed in terms of investment in our human capital, helping those on low income and social welfare payments, ensuring a business friendly yet fair tax system and in providing significant supports for child care, employment and entrepreneurship.
The Government's policies in the areas of employment and the labour market have delivered unprecedented success for our people. Employment increased by 96,000 in the 12 months to August 2005, bringing the total number of people at work to just under 2 million and we expect to create a further 60,000 jobs in 2006. Unemployment continues to be maintained at a low level of 4.3%, which is half the EU average. Long-term unemployment stands at 1.4%, which again is well below the EU average. Building on this exceptional performance, budget 2006 will support the continued growth of business and jobs in the economy.
While we now have record numbers in employment, upskilling the workforce is area which needs to be addressed if Ireland is to maintain its position as a leading-edge, knowledge-based economy. The 6% increase in funding from the national training fund for 2006 announced in the Book of Estimates a few weeks ago reflects my Department's commitment to the promotion of lifelong learning as a means of supporting the knowledge-based economy. Combined with a 9% increase in Exchequer funding for FÁS's training and integration supports, a total of €429 million will be available in my Department's Vote in 2006 for up-skilling people in and for employment.
I strongly support the budget announcement of €1.2 billion over the next five years to support change, innovation and infrastructure in higher education. This investment is a vital component in responding to the needs of our increasingly knowledge based economy and society. This investment and the development of the PhD fourth level of education has perfect synergy with my Department's investments through our enterprise agencies and Science Foundation Ireland and focus on driving investment in knowledge, research and development as a fundamental component of future competitiveness.
The substantial tax relief package in this budget has been widely welcomed by business and it reinforces the Government commitment to a low tax economy, it further incentivises employment, reduces pressure on labour costs and rewards workers. I particularly welcome the benefits to the average industrial earner, who will pay tax at the lower rate in 2006. The removal of those on the minimum wage from the tax net will assist those who are unemployed to transfer to the active labour market.
The Minister for Finance's decision to increase the VAT thresholds for small businesses will remove 2,200 businesses from the VAT net and will support small business development into the future. Last July, I established the small business forum to examine whether the strategies being followed supported and developed the spirit of entrepreneurship in Ireland. One of the issues that came out of the forum's deliberations was the fact that the current VAT registration thresholds were too low and had not been revised since 1994. The forum noted that an increase in the VAT registration thresholds would reduce compliance costs of accounting for VAT and would encourage early stage entrepreneurial activity.
In the Finance Act 2004, we reduced the capital duty on shares from 1% to 0.5%. The Minister, in budget 2006, has eliminated this tax which was an additional cost incurred by Irish companies raising capital by means of issuing shares. Now that we have eliminated this tax, it will further enhance Ireland's reputation as a place from which to do business, it will assist those businesses operating in the financial services sector and reduce the cost incurred by Irish companies raising capital by means of issuing shares.
Similarly, the major investment by the Minister in a new national child care investment programme will help to promote increased participation in the labour market, with the creation of an extra 50,000 child care places up to 2010. This initiative responds to the European employment recommendations which have been made to Ireland calling for the provision of a greater number of affordable child care places to support the needs of those in, or wishing to join, the labour force. I wholeheartedly support the Minister for Finance's decision to make a significant investment in this area, one that will continue to be built upon over a five year period.
The capital allocation to my Department for the five years 2006-10 amounts to just under €2.5 billion. This represents an increase of €271 million on the five year envelope for the period 2005-09 and reflects commitment to significant on-going investment in science and technology development, capital support for indigenous and foreign firms and upgrading FÁS training capacity to improve the skills of apprentices and other new entrants to the labour market.
With the increased capital envelop, my Department's allocation for science and technology will amount to €257 million, a €39 million increase on 2005 and a reflection of the continuation of the significant investment in science and technology which has been underway now for a number of years. The extra funding announced in the budget will be used to increase in-company research and development and to strengthen collaboration between industry and the education sector and will follow through to the subsequent years of the five year capital envelope.
Science and technology remain at the forefront of the Government's priorities. To sustain economic growth and prosperity, we must achieve a globally competitive knowledge-based economy with high levels of research, development and innovation. The Government's goal is that by 2013, Ireland will be internationally renowned for the excellence of its research and will be at the forefront in generating and using new knowledge for economic and social progress within an innovation-driven culture. The commitment to investing heavily in science and technology, as demonstrated in the budget, will enhance Ireland's reputation as an ideal location for research and development.
Budget 2006 will put more money into the pockets of workers, particularly the lower paid. The Government is committed to keeping inflation down and ensuring that consumers get value for money. As Minister for Enterprise, Trade and Employment, I am determined that consumers will not be taken advantage of because of their increased spending power. My Department's spending on consumer affairs will increase by 76% in 2006 to €7.2 million. As well as continuing to fund the work of the Office of the Director of Consumer Affairs, the increased allocation will support the activities of the interim board of the new national consumer agency which I appointed last June. A total of €3 million of new funding will be allocated to the interim board to carry out some initial work in the area of consumer awareness, advocacy and targeted research and to prepare for the establishment of the statutorily-based agency.
The allocation for the Competition Authority for 2006 has also been increased by 15%, to €5.831 million. This will provide the authority with the opportunity to double resources in its cartel enforcement division and enable it to substantially increase the number of investigations that it can carry out into criminal breaches of the Competition Act. These increases will help to demonstrate to consumers that real change is underway and that their interests are being supported.
This is a budget which strikes the right balance between addressing the needs of the economy by helping it to prosper, the needs of those in work, especially those on lower pay, and the needs of those in society who require our support, such as the elderly, the unemployed and young children. It is a budget that reinforces Ireland's position as a leading location in which to do business, a leading location in which to work, and a leading location in which to live and, as I said at the outset, it will prove to be a watershed in the development of our economy and Irish society.