Kieran O'Donnell (Limerick East, Fine Gael)

I looked at the amendment tabled by the Minister, Deputy Martin, and noted it does not stand up to scrutiny. He referred to job creation but the main reason for this debate is that Ireland is no longer competitive. The Government neglected manufacturing and exportation in the past six years to focus entirely on the construction industry. The low interest rates that came about on our adoption of the euro led to artificial circumstances, thus making the Government's position possible. We must return to basics. We have a small open economy and must look after exporters. We have not done so and have lost 30,000 manufacturing jobs in the past six years. The Minister referred to job creation but he should realise we will lose 45,000 construction jobs this year. We have not dealt with this.

Since 1 January, there has been an increase in the price of basic goods, such as bread, in the order of 15% or 16%. In recent years, the main problem has been Government-fuelled inflation because the Government has not regulated the markets. Fine Gael wants the Minister for Finance, in tomorrow's budget, to limit increases in Government-regulated markets, including the gas and electricity markets, such that those increases will be below the rate of inflation. This has not been achieved to date and the prices of Government-regulated services have risen at three times the rate of inflation.

The Minister mentioned the strong management of the economy. We face a very large budget deficit tomorrow because the Government has relied totally on the construction industry without demonstrating any foresight. We should be focusing on exports and manufacturing. There are 250,000 small and medium enterprises in Ireland and they employ 40,000 of the population. They have been forgotten totally although they add to the tax yield and pay for various services that are deemed necessary.

I want to be positive and examine the area of research and development. A research and development scheme was introduced through the Finance Act 2004. To some extent, it has worked but it has not worked in the way it should have. I hope the Tánaiste and Minister for Finance will introduce reforms tomorrow and will encourage small companies to get involved. There is a stipulation that only 15% of the costs can be made up by subcontractors. That should be increased. One must ease the burden as well.

The National Competitiveness Council stated that three areas need to be addressed. We need to stimulate productivity growth. We are way behind in that and are 22nd out of 28 OECD countries. We need to develop greater innovation. In terms of business expenditure as a percentage of GDP in 2005, we ranked 19th out of 28 OECD countries. We must restore cost competitiveness in major markets. The Government must give an absolute assurance tomorrow that it will not increase inflation in the areas it controls. It must look at promoting export markets and at getting back to the basics as a small open economy which it has totally neglected in the past six years.

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