Billy Kelleher (Cork North Central, Fianna Fail)

After an unprecedented period of economic success, when Ireland caught up with, and surpassed, many of our fellow European nations, we are now facing an unprecedented set of unfavourable international factors, including the ongoing crisis in global financial markets, faltering economic growth in almost all the major economies, exchange rate shifts and the sharp changes in commodity prices. These conditions are placing the Irish and other economies under considerable pressure. Domestically, we are also facing contraction in the construction sector, which has suppressed the rate of economic growth.

These current economic circumstances are not exclusive to Ireland but are a feature across the European Union and the globe. These changed economic circumstances represent major challenges for Governments, the European Union and businesses, particularly small and medium enterprises. Ireland has actively engaged with our EU partners in developing co-ordinated responses.

The scale of the economic, fiscal and environmental challenges facing the country required the Government to take necessary decisions to ensure stability in the financial sector and to curb the public finances, while at the same time giving firm support to those aspects of the economy which continue to perform strongly. In this way we can ensure that Ireland benefits as early, and as fully as possible, when any improved international economic conditions arrive.

As my colleague, the Minister for Finance, has already mentioned, the first action needed was to safeguard the Irish financial system. Decisive Government intervention through the guarantee scheme ensured the continuation of our banking system. Intervention was necessary and justified given the pivotal role of the financial system in the economy and in the day-to-day lives of businesses and ordinary people. The aim was to ensure that we have a banking system that as a whole works effectively, efficiently and competitively in facilitating all the daily economic transactions of commercial, business, family and social life.

A second priority was to address the budgetary situation quickly and in bringing forward the budget for 2009 the Government again showed itself to be decisive. Tough decisions were taken to control public expenditure while also ensuring that priority sectors, including business supports and infrastructural expenditures, were adequately financed. Through sensible and balanced management of the economy, the Government has ensured that the people of Ireland enjoy living standards that are among the highest in Europe. The Government will protect the gains that our country has made by ensuring responsibility in the public finances. Public expenditure continues to be scrutinised and further actions will be taken when necessary.

Our economic growth will be dependent on our ability to compete in international markets. The challenge now is to ensure that the economy is sufficiently competitive to enable further export growth. For this reason maintaining our competitiveness is now more important than ever.

Ireland's competitiveness model is one where innovation, talent and flexibility are our acknowledged core competencies. We have been seeking to grow our innovation capacity and will continue to explore opportunities where innovation can be better exploited. Through the national development plan, our taxation policies and investment in innovation the Government is fully committed to putting in place an enterprise environment that remains among the most favourable in the world.

We are fully committed to strengthening the competitiveness and productive capacity of the economy. Our priority remains the creation of high quality, sustainable employment, driven by companies with higher profitability, that are technologically advanced and prove a better fit with the competitive characteristics of our economy. We have a strong support system for developing the capabilities of Irish companies to compete in international markets with innovative products and services. In terms of enhancing productivity growth, which is the cornerstone of our competitiveness, the Department of Enterprise, Trade and Employment has a capital allocation of €495 million in 2009 which will be spent on productivity enhancing investments by our agencies, namely Science Foundation Ireland, Enterprise Ireland, the IDA and the county enterprise boards.

To underpin long-term competitiveness, the Government's objective is to ensure that we build up the productive capacity of the economy though investing in people. We are doing this directly through the science, technology and innovation strategy and through our skills strategy. I am confident that the areas we have chosen to focus on are paying dividends and working well in terms of attracting and maintaining investment and growing jobs.

Ireland is now a critical international gateway to markets in Europe and beyond. Globalisation provides major opportunities for companies with international ambitions but it is also presenting unprecedented competitive pressures. Our strong outward looking enterprise culture has been built up in recent years and will help us through the more challenging times that we now face. We are a small, open trading nation, exporting all over the world. We rely on new market openings to extend the reach of our exporters and give them new market opportunities. Although most of our exports are to the EU, compared to other EU member states Ireland trades more with the rest of the world. The enterprise development agencies provide specialised assistance to Irish exporters to focus on developing into the euro area and emerging markets to win new export sales.

Maintaining the competitiveness of the enterprise sector in Ireland is a priority issue for my Department and our development agencies. To sustain and grow the manufacturing sector, Irish-based manufacturing enterprises will be encouraged and assisted to continue the progression to high value added sectors and activities, and continue to increase productivity through investments in human capital, technology and innovation. The productivity gains that flow from innovation are the new foundations for competitiveness.

The report of the high level manufacturing group, which was launched earlier this year, contains 26 recommendations directed at key areas of innovation and productivity leading to transformational change, re-skilling and management development which will ensure Irish manufacturers can continue to compete successfully on international markets and provide high value sustainable employment.

The social partners agreed, as part of the recently concluded review of Towards 2016 — I remind Members of the House who were not aware of it that it includes a pay pause for public sector workers — that a manufacturing forum should be established, in line with the recommendations of the high level group on manufacturing. This matter will be progressed by my Department in consultation with the Department of the Taoiseach and the social partners.

We continue to be one of the world's leading service exporting countries and are currently ranked the 10th highest exporter of services in the world. In 2008, the Tánaiste launched the report of the services strategy group, Catching the Wave: A Services Strategy for Ireland. This report sets out new policy proposals on how we can ensure the continued development and growth of Ireland's services sector and outlines how to maximise the future returns to the country from services activities in all enterprises, both current and potential. The implementation of these recommendations will enable Irish service companies to exploit new and exciting opportunities, such as e-learning, business and financial services, professional and consultancy services and others. My Department is working in conjunction with other Departments to progress the implementation of these recommendations.

We fully acknowledge the vital role that the services sector itself and the growing services element within manufacturing companies will play in Ireland's future economic performance. Last Wednesday, the Tánaiste launched Enterprise Ireland's strategy for internationally traded services, which sets out priority initiatives that Enterprise Ireland will focus on for the growth and development of the services sector. This strategy will focus on maximising the performance of companies already active on export markets, encouraging companies trading locally to expand their markets abroad and fostering a new breed of start-up services companies with exporting potential. Enterprise Ireland has analysed the needs of service companies and is responding by aligning its resources with these needs.

We are clearly focused on the needs of both manufacturing and the services sector and have the strategies in place to deliver growth, strengthened productivity and improved competitiveness. We recognise that many companies are under pressure. Slowing growth is also an opportunity for the public and private sectors alike to improve efficiency, productivity and adaptability. Growth of exports is conditional on sustaining the competitiveness of tradeable goods and services in global markets. A range of domestic factors are influencing our inflation performance, which can be influenced by national policy.

The Government is emphasising the correct economic priorities for this time; seeking low inflation, reducing red tape, promoting competition and promoting consumer awareness, managing labour costs and tackling a range of specific cost categories, including property costs, utility costs and waste management costs, are all important factors. We have recently witnessed a welcome easing in energy prices and I hope this will feed through to the end user. Moderating consumer prices will help to ease inflation pressures, while, in the mid to longer term, the introduction of the services directive and the cost benefits that will arise from the eventual conclusion of the world trade talks will strengthen competition in the Irish market.

The SME sector is critical to our economic prosperity. More than 250,000 small businesses operate in our economy and employ more than 800,000 people. The policies outlined above and the activities of the enterprise agencies directly support SMEs. The agencies have a clear focus on small and medium enterprises and offer a range of direct supports. The specific importance of the small business sector was clearly recognised in the report of the Small Business Forum. In implementing the report's recommendations, the Government has again confirmed the central importance of the small business sector and its commitment to promoting that sector.

I welcome the opportunity to address these issues. The Government is conscious of the importance of SMEs and of the necessity of ensuring they have access to credit. The decisive manner of the introduction of the guarantee scheme is an indication that we take seriously our responsibility in these challenging times to ensure there is stability in the banking sector. I support the Government amendment to the Private Members' motion. Members on this side of the House will explain, in the course of the debate, precisely what the Government is trying to achieve in the context of supporting SMEs.

See this speech in context