Mary Coughlan (Donegal South West, Fianna Fail)

Tairgim leasú a 1:

To delete all words after "Dáil Éireann" and substitute the following:

commends the Government on the prudent management of the economy in the face of difficult domestic and international trading conditions;

welcomes the continued job creation and confidence expressed in our economy by business investors and the number of recent investment decisions taken across a range of sectors in the regions;

welcomes the Government's commitment to a low corporate tax base and the positive contribution that Ireland's low tax base has had, and will continue to have, on our competitiveness;

recognises the Government's commitment to tackling inflation in areas over which it has direct influence;

supports the Government's commitment to make Ireland a leading knowledge and innovation economy through its implementation of the strategy for science, technology and innovation;

commends the Government for the continued training and upskilling of the workforce in accordance with the national skills strategy;

commends the Government's continued investment in critical infrastructure in the context of the national development plan, which will enhance the productive capacity of the economy;

notes that the current and prospective easing in inflation will be of benefit to consumers and will underpin an improvement in our competitive position;

welcomes the recent decision of the Commission for Energy Regulation not to increase the price of gas or electricity;

commends the Government on its target for reducing the burden of regulation on business by 25%;

commends the Government on its strategy of supporting the upscaling of indigenous Irish companies with a view to increasing our exports of goods and services;

welcomes the establishment of the special group on public service numbers and expenditure programmes, which will reduce our cost base and enable the Government's business to be conducted more efficiently; and

supports the Government's efforts in providing value for money for consumers and supporting the Irish retail sector.

I will share time with the Minister of State at the Department of Finance, Deputy Martin Mansergh.

In welcoming the opportunity to address the House, I wish to specifically mention three major themes, namely, prudent management of the economy, investing in people and reform where needed. The Government is managing the economy prudently, strategically and with foresight. We are investing in people and business by building up capacity, skills and business infrastructure. We are tackling reform where it is needed by cutting red tape, eliminating inefficiencies and giving better value for money to the taxpayer.

Despite the severe economic challenges we face, entrepreneurs and established businesses are making investments now which will provide significant jobs and growth potential for the future. Since the beginning of November alone, the IDA has made announcements which are expected to provide a total of 1,000 new jobs in a variety of sectors, across a range of skills and spread throughout the country. This is a strong, real vote of confidence in our economy. Investors see Ireland as a very good place to do business.

Much has been made of our cost structure. Ireland is no longer a low cost economy. We have come a long way and can now ensure that a high and rising standard of living can be achieved by our population. The United Nations human development index ranks Ireland fifth in terms of quality of life out of 177 countries. Achieving a good quality of life is ultimately the goal of our policies to maintain and strengthen our competitiveness.

A welcome factor has been the easing off in the inflation rate. Figures for November to be released shortly will show that this trend is continuing, with price pressures in Ireland levelling off. Ireland's cost competitiveness is also supported by relatively low taxes on labour and enterprise. Lowering costs and easing demand will assist the economy in regaining cost competitiveness, especially for our internationally trading sector.

We face substantial competition from other countries for everything. Competing on price alone is no longer an option. For this reason, we are moving to develop sustainable competitive advantage which reflects this reality. This is based on increasing productivity and stimulating innovation. In addition, there are other means of stimulating the economy. The Government is providing a long-term fiscal stimulus through NDP capital investment of approximately 5% of GNP, which is twice the average in the European Union. This fiscal stimulus will not only support jobs in the short term but will also add to our long-term productive capacity and competitiveness.

The Government is working with the social partners on the issue of inflation during this period of unprecedented change. All parties are agreed on the critical importance of tackling inflation and ensuring inflation rates are maintained at or below the eurozone average to secure jobs and protect living standards. I welcome the recent fall in our inflation rate and I am pleased to point out that in the October annual inflation figures from Eurostat, Ireland had the fourth lowest inflation rate in the euro area.

Concern with the loss of cost competitiveness in recent years should not obscure the fact that other factors which have underpinned our competitiveness and made Ireland an attractive location for investment during the period of rapid growth remain in place. Recent international rankings include the Lisbon Council's European jobs and growth monitor which ranks Ireland the second most competitive economy in Europe in 2008. Ireland ranks 11th out of 82 countries in the Economist business environment ranking for the period 2008 to 2012 and seventh out of 181 countries in the World Bank's ease of doing business 2009 ranking.

Other advantages which we have developed over the years include favourable demographics; a skilled and flexible workforce; a business-friendly taxation regime; a "light touch" regulatory environment; a developed capacity, arising from the openness of our economy, to identify and exploit opportunities in international markets; and agility and flexibility in responding to global conditions and business needs. I am aware, however, that we must develop new sources of competitiveness, particularly in the accumulation and exploitation of knowledge and enhancement of our skills base. To this end, we are looking to the longer term and have made unprecedented levels of investment in science, infrastructure and skills.

The competitiveness model Ireland has to follow is one where innovation, talent and flexibility are our acknowledged core competences. We have a number of key policies which I will outline, drawing particular attention to our investment in research and development, successful foreign direct investment policies and supports to foster export led growth, improving the business environment and widening and deepening the skills of our people. I will also propose to discuss the services sector as it is one of the success stories of recent economic growth.

Ireland continues to be one of the world's leading service exporting countries and is currently ranked the tenth highest exporter of services in the world. In the years immediately ahead, innovation in services will be a key driver of performance and competitive advantage not only in services industries, but in the economy as a whole. The very size of the services sector means services innovation can have a greater leveraged value across the entire economy. Higher productivity and product quality can act to counterbalance costs for firms. The enterprise development agencies under my Department — Science Foundation Ireland, Enterprise Ireland, the Industrial Development Agency and the county and city enterprise boards — have a capital allocation of €495 million in 2009, which will be spent on productivity enhancing investments such as research and development, innovation, better use of ICT, and training and management development.

I will now discuss our work, through IDA Ireland, in fostering the growth and development of business and employment. Over the past decade our success has consistently demonstrated that Ireland's peripheral geographical location was not a barrier to attracting foreign investment and we continue to punch above our weight in attracting the highest value new foreign investment, even in the current economic climate. The strong flow of substantial new research and development investments by knowledge-based multinational companies demonstrates that Ireland is a major global competitor for research and development and services innovation activities.

The IBM global location trends annual report in October 2008 ranks Ireland tenth overall for attracting foreign direct investment and fourth for attracting service jobs. Ireland is also one of the top performers, at third place, for attracting research and development investment. There have been several announcements of strong investment by firms in recent days. Today, Aon Corporation announced a significant first of its kind research and development investment for Ireland in the financial services sector, which will create 100 highly skilled jobs. Synopsys announced on 8 December that it will expand its research and development operations at its Blanchardstown facility by adding up to 50 new high level software and electronic engineering positions over four years. Option Wireless Limited announced on 4 December that it will, in an addition to its manufacturing and services facility in Cork, add 145 new high quality production jobs over the next three years and undertake leading edge process development activities in that period. Renishaw in Dublin announced on 30 November that it will establish a new research and development function with 60 new jobs to research and develop expertise in the treatment of neurological disease.

On indigenous sectors, the Government is focused on the needs of manufacturing and the services sector. We have strategies in place to deliver growth, strengthened productivity and improved competitiveness. The report of the high level manufacturing group launched earlier this year contains some 26 recommendations directed at key areas of innovation and productivity, leading to transformational change, reskilling and management development, which will ensure Irish manufacturers can continue to compete successfully on international markets and provide high value sustainable employment. These recommendations will be actioned by a new manufacturing forum I will shortly be establishing. It will bring key representatives from the manufacturing industry together with the relevant Government people and employee representatives and will also act as a strong champion and advocate for the evolving manufacturing sector.

The services sector and the growing services element within manufacturing companies are vital to the next stage of our economic performance. We recently carried out an evaluation of the specific needs of the services sector. The report of the services strategy group, Catching the Wave: A Services Strategy for Ireland, was published on 12 September 2008 and will guide the development of our services strategy into the future to exploit the opportunities this sector presents.

As well as growing and diversifying our internationally-traded services, the report also recognises that locally-traded services are a powerful source of wealth creation and employment in their own right, and play a pivotal role in determining the performance of the economy. It 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 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, which are technologically advanced and prove a better fit with the competitive characteristics of our economy. Yesterday I announced a €24 million investment by Diageo over the next three years to expand its research and development activity across an extensive range of innovative project areas. This project makes the Dublin operation the innovation core of Diageo's research and development activity within the global beer technical centre, and signals the very high value the company places on Ireland for its innovative capability.

The retail sector continues to play a pivotal role in the Irish economy and employs more than 200,000 people. I recently met a cross-section of retailers and we had a good exchange on the preliminary findings of the Forfás study on the relative cost of doing business North and South. The preliminary findings of that study show that higher operating costs for labour, property, energy and other utilities in the retail sector here would justify a price differential of approximately 5% with Northern Ireland for grocery items and 7.5% for goods in department stores. The actual gap, however, is far greater in many cases, even for goods such as foodstuffs where there is no difference in VAT rates between North and South.

I can understand that there are concerns regarding the recent VAT reduction in Northern Ireland which has resulted in calls for a similar reduction here. Although the reduction in the UK standard VAT rate will have an impact on the price differential on some goods between the North and the South, the UK has increased excise on alcohol, cigarettes, petrol and diesel to offset the 2.5% reduction in VAT on those items.

Approximately half the value of goods and services purchased in the State are not subject to the standard rate of VAT and are unaffected by the change in the standard rate. All Government services, local authorities, hospitals and schools are exempt from VAT. The majority of foodstuffs, oral medicines, books and children's clothes and shoes are at the zero rate of VAT. Housing, electricity, gas, domestic fuels, restaurant services and labour-intensive services such as hairdressing and shoe repair are applicable at the 13.5% reduced rate of VAT.

Where retailers are imposing significant differentials in the price of goods in the South vis-À-vis the price of such goods in their retail outlets in the North, the UK or elsewhere, they have a duty to their customers and to the Irish economy to explain why they are charging such price differentials. I will continue my engagement with retailers over the coming weeks and my primary objective remains having a strong and vibrant retail sector that secures jobs in Ireland.

We are entering a new stage of economic development when we will again become dependent for growth on successfully competing in international markets. We embark on this juncture with an enterprise base that has been greatly expanded, strengthened and modernised over the last decade. We are focussed on policies which will provide a competitive operating environment for our key exporting sectors and will place us in the optimal position to benefit from the eventual upturn in the international economy as well as from our longer-term investments.

We are working consistently and successfully, despite harsh global economic circumstances, to build Irish exports in world markets. Our export promotion policies are exerting a direct and positive influence on the ability of Irish exporters to grow their overseas business. Last week I was in Dubai leading the Enterprise Ireland trade mission where contracts worth €40 million in new export sales were signed by Irish companies. Enterprise Ireland has also made a number of recent announcements which will create 584 jobs in Norkom Technologies, Glanbia and Houghton Mifflin Harcourt, formerly Riverdeep, 880 new jobs in high potential start-ups and €50 million in regional enterprise funding through the institutes of technology.

The issue of banishing red tape has been raised by all Members of the House. We have historically been regarded as a lightly regulated, good place to do business, but we can do better and make ease of doing business one of our key competitive advantages. It is important to encourage dynamism and innovation in the enterprise sector with a responsive regulatory regime that maintains Ireland's reputation for sensible and prudent regulation.

The Government and I are committed to cost efficiencies, responsiveness and the ability to facilitate innovation, competitiveness and growth, embedded in the Irish regulatory approach. I am committed to reducing the administrative burden on Irish business by 25% by 2012. It is a demanding target but is a key priority to keep costs for enterprise under control. The high level group on administrative burdens is focusing on concrete measures in specific policy areas, including taxation, statistics, environment, health and safety, employment and company law. Its first report sets out a number of instances where procedures have been simplified, making it easier for business to deal with Government. A consequence of this is a saving of approximately €20 million to Irish businesses in administrative costs.

Responding to current challenges requires action on many fronts. The Government is emphasising the correct economic priorities for this time and I highlighted some of my policies designed to support the future growth of high value employment and development of the enterprise sector. These policies are essential for the future competitiveness 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. The range of investments made recently by companies proves that the strategic choices which we have taken to ensure our long-term competitiveness were the correct choices and are working well in terms of attracting and maintaining investment and growing jobs.

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