Brendan Smith (Cavan-Monaghan, Fianna Fail)

As the Minister for Finance has outlined, the fundamentals of our economy are sound. Our current difficulty does not represent a return to the 1980s. Indeed, the economy has changed dramatically over the past 20 years. Our public debt is the second lowest in the European Union. The general Government debt has declined from over 100% of GNP in the 1980s to 53% of GNP in 1998 and to a forecast of around 25% of GNP this year. This means that provided we continue to follow sound economic principles and policies, Ireland will return to higher economic growth when the difficult economic conditions pass. The Government has demonstrated that it is prepared to take difficult decisions in the short term in order to ensure an early recovery from the current problems.

The decision by the Government to implement a number of prudent spending measures representing €440 million in savings this year and €1 billion next year signals our resolve to deal with these economic issues now rather than face a more difficult situation in 2009 and subsequent years. The decision requires a renewed focus on spending public funding wisely while maintaining the investment in infrastructure and the productive sectors of the economy that lay the foundations for future prosperity.

The focus of the measures announced by the Government is on administrative expenditure, streamlining the delivery of services and improving efficiencies. For the Department of Agriculture, Fisheries and Food, the Government decision involves savings this year of €9.1 million. The savings will be absorbed by the administrative budgets in the Department and its State agencies and will involve savings in operating costs, including salaries. A saving of €1.04 million will be applied to the administrative budget of the Department and savings of €5.391 million will be sought from among the State agencies, while a further saving of €2.679 million will be found on the cost of consultancies, PR and payroll costs. Further savings will be sought next year.

The Department has, of course, been engaged in ongoing efforts to improve efficiency and has reduced staff numbers significantly in recent years. As part of the recent efficiency review, the Department again reviewed all aspects of expenditure with a view to identifying further savings on administrative spending. The exercise included the State agencies under the aegis of the Department. I will now consider specific proposals, including staff costs — both pay and non-pay — and the possibility of further staff reductions, to realise the expenditure savings this year. Savings next year will be considered in the context of the preparation of the 2009 Estimates.

While the decisions taken yesterday do not target particular schemes for savings, this situation must be reviewed on an ongoing basis, particularly next year. I must manage the resources available to the Department to best effect. In that context, I will also be examining every aspect of the Department's programme of schemes and services with a view to ensuring that expenditure is fully justified and that we get the best possible value for public investment. I would, however, like to clearly state my commitment to the continued development of a modern, efficient and competitive agrifood sector. I remain fully determined to maintaining a focus on investment and other measures designed to develop productive capacity, protect the environment and ensure the sustainability of the agriculture, fisheries and food sectors into the future.

Just last week, the Department published a number of reports on the important contribution which the agriculture, food, forestry and fishing industries contribute to the economy, particularly in rural areas, and to Irish society in general. The agrifood sector is one of our most important indigenous manufacturing industries. It accounts for almost 7% of GDP, 8% of employment and 10% of exports.

To gain a further understanding of this contribution, a report produced by Brendan Riordan, research consultant, in May 2008 provides estimates of the net inflow of funds to the Irish economy associated with the agrifood sector and makes comparisons with other sectors in the economy. The report shows that the agrifood sector, more correctly referred to in the report as the "biosector", contributes approximately one third of the net flow of funds into the economy generated by primary and manufacturing industries. This is at least double the sector's contribution to exports and underlines the importance of the sector to our economy.

Policy makers around the world are realising the importance of agriculture and natural resources generally as providing solutions to many of the key problems facing mankind, including challenges relating to food security, energy provision and climate change. At a time of challenging economic circumstances, both nationally and globally, this report provides a timely indication of the importance of the agrifood sector to our economy.

It indicates that in 2005, net foreign earnings of the sector, including agriculture, forestry, fisheries, food and drink industries, amounted to 32% of the total net earnings from primary and manufacturing industries. This was double the sector's 16% contribution to exports in that year. These findings are consistent for the period from 2000 to 2005. It is also worth noting that the report highlights that in 2005, for every €100 of exports from the biosector, €48 was retained in Ireland. This compares with €19 retained for every €100 of exports in the non-biosector.

The reasons given in the report for the sector's disproportionately large net contribution to earnings from exports include the fact that the import requirements per euro of biosector exports were found to be lower than in the non-biosector; foreign ownership, and thus profit repatriation outflows, was lower than in other sectors; and receipts of EU payments were almost entirely in support of agriculture and its exports.

I find it interesting that the results are not, however, heavily dependent on EU receipts in any of the years from 2000 to 2005. Furthermore, global price increases for food, feed and forestry products in the years since 2005 may have further boosted the contribution of the sector and may well have strengthened its position as a major contributor to the future prosperity of Ireland. Finally, this study emphasises the strength of the biosector's linkages with Irish businesses. These connections are particularly close for the natural resource-based industries of agriculture, forestry and fishing, along with industries using their output, and these linkages demonstrate the importance of these sectors to the economy.

Against all of that background, it is more important than ever that we get value for money for public investment in this sector. The Agri-Vision 2015 report published by the Department in 2005 outlined a number of key challenges if we are to capitalise on the significant potential of the sector to expand and develop.

The over-riding objective is the development of a consumer-focused, competitive and sustainable industry capable of meeting the challenges of more liberalised global markets and a range of broader societal demands. In practical terms, this means delivering high-quality food in which consumers at home and abroad have confidence and which is produced in an environmentally friendly manner for high-value markets and at a competitive price. This is not something that can be achieved by Government alone. Producers, processors, State agencies and all of those involved also require significant effort.

The same underlying objectives apply to the development of the fishing sector. The strategy for a restructured, sustainable and profitable Irish seafood industry 2007-13 focuses on rebalancing fishing capacity with stocks and on developing strong and vibrant fish processing and aquaculture sectors.

This Government is delivering on these objectives through the implementation of a wide range of measures provided for in the national and rural development programmes for the period 2007-13. Schemes such as the farm waste management and farm improvement schemes, the REPS and disadvantaged areas scheme, grants for afforestation, the breeding and welfare scheme for suckler cows, installation aid and the early retirement scheme, the marketing and processing scheme, the suckler cow scheme and the FIRM and stimulus funds for research and development, involve expenditure by my Department exceeding €1 billion in 2008, and are aimed at improving the structure and productive capacity of Irish farms, protecting the environment, ensuring that primary production methods are sustainable and meet the broader expectations of consumers, and encouraging research and development in processing and primary production and capital investment in the food processing sector.

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