Terence Flanagan (Dublin North East, Fine Gael)

I am pleased to have an opportunity to speak to this timely motion before the House and thank my party's spokesperson on enterprise, trade and employment, Deputy Leo Varadkar, for tabling it. Tackling competitiveness should be an urgent priority in budget 2008. The foremost priority of the Minister for Finance when he makes his Budget Statement this afternoon must be to rebuild competitiveness and boost productivity. The National Competitive Council's annual report, which was published recently, is an indictment of the Government's record in this area. The report sets out the many challenges we face in this area, including the shift of growth from being export and productivity led to domestically driven growth which is dependent on new jobs in construction and public services for increases in GDP.

The unfortunate slowdown in activity in the property market and increasing unemployment mean many challenges lie ahead. Ireland's price and cost environment remains distinctly unfavourable towards firms and households. General cost levels are among the highest in the European Union and the position is worsening, with inflation rates still among the highest in the EU. In response to these developments, labour costs are increasing across a range of sectors at a rate well in excess of the EU average, which increases the threat of a wage-cost spiral.

Physical infrastructure remains poor and despite high levels of investment, Ireland's international rankings in this regard have not significantly improved since 2000. Our transport, energy and ICT infrastructures, upon which so many of our exporting sectors depend, lag behind those of our counterparts in the OECD. The Government must ensure we bring inflation under control. Currently running at 4.8%, it is doing untold damage to business and is affecting our competitiveness. The Government needs to tackle rising business costs by setting an inflation target of 2%, as requested in the motion.

The Government must also take the action needed on regulatory reform, public sector pay and taxation to ensure the inflation target is achieved. We need better value for money regarding our infrastructure projects. We also need to promote the creation of a lifelong learning culture and develop better performing higher level educational institutions.

The loss of 500 jobs yesterday at Abbott Ireland in Galway shows the scale of the economic crisis affecting the economy as another large employer falls foul of international competition.

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