Deirdre Clune (Cork South Central, Fine Gael)

The motion is an important and relevant one, particularly as we face the announcement of budget 2008 tomorrow. It is a time of much concern as to the future of the economy. We face challenging times. We have heard the message from the Minister for Finance and we know tax returns to his Department do not match expectations.

It is not surprising the Celtic tiger, to which we have all become used, is on a downturn at this stage because it has been based, as Deputy Varadkar noted, on the construction sector and the building and sale of houses. All that is coming to an abrupt and alarming end for our economy. In recent months, we have heard much about the state of the housing market. The Construction Industry Federation has circulated figures according to which sales are down 50% on last year. In the past three months, house sales have stalled and financial institutions are reluctant to finance construction projects. The trends for next year indicate that housing output will be down by 30,000 on 2006. We are told that approximately 35,000 jobs will be lost in the construction sector in 2008, which will mean an inevitable loss to the Exchequer. Earlier, I heard the Minister for Finance, Deputy Cowen, say he is not ruling out changes in stamp duty, but we will see what that means tomorrow.

For the last number of years, the indigenous sector has been neglected through a lack of encouragement and development. We are dependent on foreign direct investment, which has been good for the economy. We continue to attract such investment but today we heard 500 people will lose their jobs at Abbott in Galway. Having been in Ireland for 60 years, the company is to cease its activities in the Galway area due to intense competition from abroad. Obviously Ireland did not win out in that competition. Medical technology is an advancing area in which Enterprise Ireland and the IDA hope to invest money to develop jobs in that sector. It is quite alarming therefore that such a prestigious industry is to move out.

We have had similar reports recently in Cork with Amgen pulling out, along with Motorola, and Pfizer curtailing its activities in the Cork region. All these unsettling developments are based on a lack of competitiveness given the cost of operating here.

Like the Minister, I attended a conference last year organised by the Cork Chamber of Commerce which hosted a number of speakers. It was interesting to see the vice-president of Pfizer outlining that company's perspective from its New York headquarters. Taking Ireland at 100% for wages, energy and services, Singapore was at 50% while China and Japan came in at 10%. The nub of the issue is that we are an expensive economy and Ireland is an expensive place in which to do business.

The global competitiveness index for 2007-08 ranked Ireland at 22nd of 131 economies. Our infrastructure was criticised in that report with Ireland ranking 49th behind Lithuania, Mauritius, Saudi Arabia, Slovenia and Estonia. The quality of our port infrastructure, roads, railways and air transport was seen as weak, thus contributing to our lack of competitiveness. That report said the most problematic factors for business in Ireland are inadequate infrastructure, inflation and inefficient Government bureaucracy. The Government could effect changes in those three areas.

Broadband availability is woeful. Our economy is described as being geared to investment, moving up the value chain in terms of job quality, yet investment in broadband has been pathetic since the original sale of Eircom.

Last week, the National Competitiveness Council produced a report highlighting a number of areas in which we are suffering economically. Weak growth in exports from 2000 to 2006 resulted in our overall share of international trade falling. Productivity growth between 2003 and 2006 is below the OECD average, and Ireland is the second most expensive location for consumers in the EU 15, with the third highest rate of inflation.

If Ireland is to become a knowledge-based economy, attracting investment at that level, we must correct the lack of competitiveness that was outlined in last week's report by the National Competitiveness Council and in the global competitiveness index. We must invest in research and development and attract R&D operations to this country. Tomorrow's budget will present another opportunity for the Minister to outline what he intends to do in this regard. The Finance Act 2004 announced some changes in that area but further alterations are needed to ensure the right type of industry will be attracted here. In that way we will be able to regain our rightful place as a leading economy.

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