Mary Coughlan (Donegal South West, Fianna Fail)

At the outset, decisions which result in families having less disposable income each week are not taken lightly by Government. They are the product of the scale, depth and impact of current economic challenges. Indeed, it is a measure of the current unprecedented economic environment that the political consensus in this House over recent weeks has been that each of us who could would now have to pay more to maintain public services and secure our collective futures. I want to acknowledge those contributions of Deputies opposite that were constructive over recent weeks as we have worked to craft a budget to address this challenge.

The Government has listened carefully to those contributions and taken a number of them on board. I hope that the same Deputies will also acknowledge that in taking decisions, we have endeavoured to take the fairest and most progressive path possible in the current circumstances. I use the word, "progressive" here in two senses. I mean it in terms of the tax system - that those who earn more, pay more - and in terms of the spending choices made by Government. It is clear from the spending commitments outlined that the Government has prioritised investment in the most productive sectors of our economy and invested in the creation of jobs by cementing the foundations for export led recovery and growth.

The budget provision of in excess of €500 million for capital investment in enterprise through various Government initiatives administered by IDA Ireland, Enterprise Ireland, the county and city enterprise boards and Science Foundation Ireland is a clear statement of our priorities. The clear message that it sends out to the world is that Ireland is open for business, investment and job creation from both indigenous enterprise and foreign direct investment.

It is my challenge now, as the Minister accountable for that level of investment in a climate where spending on other Government capital commitments has been reduced, to ensure that the best possible outcome is achieved for every euro invested in enterprise by the State. I intend to do so through the mechanism of monthly meetings with the chief executives of the delivery agencies and by increased scrutiny of and continued evolution of the enterprise policies we have in place. In addition to the changes that I have already undertaken within my Department, more are to follow in the coming months to ensure that it is in the best possible position to drive the enterprise and job creation agenda across Government in the current changed economic environment.

The Taoiseach and Minister for Finance have both made it clear in their contributions on yesterday's supplementary budget that the restoration of competitiveness must form part of the foundation for export-led economic recovery. I have spoken extensively about competitiveness in the House over recent months, but in essence this means bringing our cost structure and price levels into line with our competitors, reassuring people involved in all sectors that Ireland is not only a good place to do business but a good value place for business, also. That is why we are taking a number of measures across Government to ensure we identify and address cost issues in our economy and I can assure the House that driving this work remains at the top of my agenda as Minister for Enterprise, Trade and Employment.

Last December, the Government introduced a framework for sustainable economic renewal, called Building Ireland's Smart Economy. This document sets out a clear roadmap for Ireland's move back to economic growth and prosperity, with investment focused on those areas where we can build on our existing strengths, address our weaknesses and position ourselves for the inevitable upturn in the global economy. The overall approach we have adopted in this budget builds further on this strategy, while dealing with the short-term measures needed to restore fiscal stability and economic activity, in line with a longer-term vision out to 2025, that we are currently working on.

We are taking decisive steps to implement our overall plan, addressing immediate issues of economic turbulence, steering ourselves towards the calmer waters of measured but sustainable economic growth. As a nation we have successfully addressed critical situations in the past, an experience which gives us confidence in facing the future. In the same way as Ireland benefited from global growth and the booms in the technology and financial services in recent decades, so too are we more vulnerable in the face of global recession. There is much we can do domestically, and the Government has not been slow to take action, even being criticised for being overly hasty at times. This budget continues that practice of getting things right at home in preparation for the global turnaround that will inevitably follow.

Given our dependence on trade and investment from abroad, however, we need Britain, Europe, the US and Asia to take the necessary actions to boost global recovery. That is why I warmly welcome the outcome of the last week's G20 meeting and urge the participants to deliver on their agreements as quickly as possible. Through the European Union and bilaterally, we will seek to encourage the participants to carry out their various actions in order to provide confidence and a financial stimulus to the world economy. The G20 global stimulus package of $1.1 trillion has led the way and will greatly benefit exporting countries like Ireland. The agreement to provide $250 billion in trade finance supports is critically important. The harsh reality around the globe is that the banking system has by and large gone into retreat. Excessive and ill-judged lending has been replaced by a policy of when in doubt, say "No". This impacts on the ability of large and small firms to do business and has a disproportionate effect on open economies such as Ireland's.

At EU level, a similar framework for renewal was adopted with the publication in December of the Commission's European economic recovery plan. From an enterprise perspective, Ireland has welcomed the competitiveness aspects of the EU plan, which build on such ongoing implementation of the Lisbon strategy as investing in research and development, reducing administrative burdens, improving broadband and other infrastructure, addressing access to finance and improving skills. We particularly welcome the decision by the EU to invest €100 million in our energy interconnector with the UK. This will bring additional security of supply as well as competition to the energy market.

At a national level, our package of measures was built on the recent publication of a framework for sustainable economic renewal. The package includes measures to secure the enterprise economy and enhance competitiveness. The framework addresses innovation, environment, energy and infrastructure issues, as well as seeking efficiency and effectiveness in public services and regulation.

While this week's budget has the central objective of restoring confidence in our economy, we continue to invest in our future through my Department's funding programmes. The Government has not stopped supporting enterprise nor has it ceased to invest prudently and strategically in our future. My Department retains its central strategic focus on supporting business and releasing the talent and potential of our people. The Department's indicative Estimate for 2009 is €1.938 billion, including €381 million from the national training fund. The fine details of this allocation will be finalised over the next week or two.

Supporting enterprise, innovation and research and development are vitally important to my Department and this year €501 million is being invested in these areas. Our intention is to send a strong signal by way of tangible financial supports to Irish business. The way forward lies in staying competitive and maintaining an innovative edge over our competition by developing new products and processes which will assist in winning new markets in the present challenging environment.

Our economy has benefited hugely in the past from our highly skilled labour force. We must continue to invest in our people to ensure that we have the skills and knowledge to support the vision set out in our programme for sustainable economic renewal. We must also support those who have lost jobs due to the economic downturn and provide them with opportunities to re-enter the workplace. To this end, €1.09 billion of my Department's budget for 2009 is targeted at labour force measures, including activation and training programmes for the unemployed, upskilling for those in employment and employment programmes. Many of these have been refocused to deal with the new labour market realities and the new profile of people signing on the live register.

In addition to these major programmes, the Cabinet committee on economic recovery has been working across the Government to deliver the best results for enterprises. I have received many letters from business people explaining the difficulties they face. The Government recognises that businesses need help to ease their cash flow at a time when money is very tight. We must acknowledge the difficult environment in which businesses are operating. The Government also recognises that in the current climate assistance needs to be made available to companies that are basically viable but are in need of additional supports to strengthen their business base.

With this in mind, the Government has approved the creation of an enterprise stabilisation fund with an additional budget of €100 million. The fund will provide targeted support for companies that trade internationally and will be administered by Enterprise Ireland. Approvals will be made on the basis of business plans submitted to the agency by applicant companies. Particular attention will be paid to viable small and medium sized enterprises. Assistance will be available to companies that meet particular criteria. They must not have been in difficulty on 1 July 2008 but may now be facing difficulties as a result of the global economic crisis. They must be judged by Enterprise Ireland to have sound, robust and sustainable business models and business plans that are financially viable in the medium term. They must also be judged to be capable of significant growth in a global upturn. It is envisaged that funding will be provided in a wide variety of forms and the details of these will be worked out in the coming weeks by Enterprise Ireland. However, it is likely that assistance will primarily be in the form of investment in preference shares. I am pleased to welcome this new support measure and I am confident that it will help sustain many Irish companies and their workforces through the current economic downturn.

Enterprise Ireland will also continue its regular supports for indigenous companies in 2009. The total capital funding available to the agency to support industry in 2009 will be €103 million. These supports will be complemented by the supports given to micro-enterprises by the county and city enterprise boards and funding for foreign direct investment through IDA Ireland amounting to €70 million in 2009. As part of our joined-up programme to assist enterprise, the Minister for the Environment, Heritage and Local Government has written to all local authority managers to ask them to be more flexible in the fees and contributions demanded from enterprises at local level.

We all wish to encourage economic activity and employment both at national and local levels. Local authorities are establishing business support units to act as a point of contact in ensuring a prompt and co-ordinated response to existing and prospective businesses and an interface with local authority systems and departments.

I already mentioned the importance of restoring competitiveness. Tackling costs is key in this regard. The proposed reductions in electricity and gas prices of 10% and 12%, respectively, from 1 May will help to reduce cost pressures on enterprises. We are working to identify and progress further strategic measures for energy, including micro-generation, development of the grid and increasing generation from renewable sources. These efforts will be assisted by a stakeholder round table later this month. The Government has already implemented an 8% reduction in professional fees for public service bodies from 1 March as part of the overall package of measures to reduce public service expenditure.

The Government's strategy for economic recovery, building Ireland's smart economy, renews Ireland's commitment to better regulation and undertakes to develop a consolidated inspections programme to reduce the number of inspection visits to businesses. Enforcement will in future be based on risk so as to minimise the burden on citizens and businesses. The Government has already set a target of a 25% reduction in red tape by 2012 and work is progressing strongly across all Departments. Officials are identifying the most burdensome aspects of red tape for business with a view to introducing simplifications to reduce business costs.

We should not forget that Ireland has a number of critical advantages in realising our potential to return to real long-term growth. We have a well educated population, with one of the highest numbers of graduates in the 25 to 34 age group of any country in the EU, and the youngest working population in the EU. We have made significant investments in skills development over the past several years. Our services sector has grown significantly to the point where we are now the 11th largest exporter of services in the world. Investment in research and development has increased and the number of enterprises doing significant research and development has doubled in the past four years. We remain the 14th largest exporter of goods and the eighth largest exporter of services to the US and we receive the third highest share of US investment into Europe. Finally, we have substantial potential for developing renewable energies. All these advantages position us for a robust recovery to one of the most competitive successful open economies in the world.

The best evidence of how this is working for us even through these tough times is the confidence expressed in Ireland by investors. Foreign direct investment has played a pivotal role in Ireland's economic growth and will continue to do so in the future despite the current difficulties. The level of FDI relative to the size of the economy is one of the highest in the world. Almost 1,000 overseas companies have substantial international operations in Ireland, employing in the region of 136,000 people. These include many of the leading companies in information and communications technologies, life sciences and globally traded business and financial services. The strong client base developed by IDA Ireland makes a significant contribution to wealth generation and the development of the Irish economy. Furthermore, the positive impression these companies have taken from Ireland provides a solid basis for future growth.

In the current global economic climate, the restructuring by multinational companies of their global operations is leading to global job cuts. Ireland inevitably will be affected. The IDA, however, is working with its clients, on a daily basis, making every effort to keep these companies operating in Ireland while minimising the job losses encountered.

Traditionally, the IDA concentrated on four sectors - life sciences, incorporating pharmaceuticals, bio-pharmaceuticals and medical technologies; the information and communications technologies area; financial services; and globally-traded businesses, ranging from professional services to engineering and digital media. The agency is now targeting three new sectors - convergence, particularly convergence in technology between the life sciences and the IT sector; cleantech, the environment, environmental services and goods, the green agenda and others; and innovation and services. The agency is strengthening its technical expertise in the area of international financial services and has a clear and strong focus on this sector.

Despite global difficulties, 2008 was a good year for inward investment with a total of 130 foreign direct investment projects being won and 8,800 new jobs being created in IDA-supported companies. There was an increase in the number of new companies setting up in Ireland for the first time, with names like Facebook and Zimmer setting up here during the year. There was a 22% increase in research, development and innovation projects with 56 projects, involving a projected investment of approximately €420 million, announced by IDA-supported companies. This is a testament to the fact that our increased focus on research and development is translating into jobs on the ground today.

Even in turbulent economic times there is still foreign direct investment, FDI, to be won and our competitors will not be slow in targeting opportunities. A firm focus and a positive attitude by all stakeholders in team Ireland in our ability to win FDI are key ingredients to a successful outcome. The ability to think beyond the present and reposition our competitiveness will ensure that Ireland will continue to win significant FDI from a large number of the world's leading companies.

Enterprise Ireland is the agency with responsibility for supporting the development of Irish companies with ambitions to grow in world markets. Many of its client companies are small to medium in size. Enterprise Ireland recognises the varied challenges facing such companies in the context of the changing economic environment and partners with companies to address their needs in aN holistic manner. Indigenous internationally trading companies supported by Enterprise Ireland employ as many people as do IDA-assisted overseas companies operating in Ireland. Their focus is very much on the high-skill, knowledge intensive sectors in the smart economy.

There has been a significant cultural change in Ireland over the past couple of decades. Some 20 years ago it was widely held that economic growth here was seriously inhibited by the lack of an entrepreneurial culture. However, Enterprise Ireland and the city and county enterprise boards have focused help on supporting entrepreneurs and encouraging a grassroots culture of entrepreneurship in Ireland. In recent years, Ireland has been rated by the global entrepreneurship monitor as one of the most entrepreneurial countries in the EU. The success of our pro-enterprise strategies has been reflected in the high level of business start-ups in recent years, the number of small businesses having increased by about 50% over the past decade or so. There are now almost 2,800 individuals starting new businesses in Ireland every month. In the current economic environment, entrepreneurship and the growth and development of small Irish businesses are central to economic recovery and it is essential that Irish enterprises continue to be supported.

In 2009, the CEBs will continue to assist micro-enterprises throughout the country both by direct grant aid to businesses and through the provision of a range of other important business supports such as business training and advice designed to help stimulate indigenous enterprise creation and boost employment creation. The boards have been allocated a capital budget of over €20 million to invest in Irish businesses this year.

In a small regional economy like Ireland, economic prosperity ultimately depends on our ability to sell goods and services abroad and therefore on our competitiveness. Building and maintaining competitiveness is a ceaseless and dynamic process. We constantly have to improve, upgrade and change because our competitors are doing exactly the same. Companies are increasingly under pressure to offer products and services and to use production techniques and skills which are better than those of our competitors.

Ireland is a small, open economy and, as such, we depend on our capacity to export to the rest of the world in order to grow and prosper. We are one of the most open economies in the world and, because of this, have already seen that we are vulnerable to sudden changes in the world economy, with our domestic rate of growth being very dependent on developments in the outside world. Because of our small size, we also have limited scope for influencing that change directly, although we are constantly active behind the scenes. We export more, as a percentage of GDP, than some of the major players on the world trade stage, including Australia, Brazil and Denmark. Problems with the global trading system and reductions in the availability of trade credit are issues of grave concern to us and the measures announced by the G20 to tackle these issues are welcome.

Ireland's trade performance in recent years has been a key driver in our economic success. It contributes significantly both to economic growth and helping Irish companies to develop their capability and broaden their expertise by helping them to obtain access to new markets abroad. The proof of this lies in the official trade data. I am pleased to see that in 2008 the country's total exports were €153.8 billion, a fall of less than 1 % on 2007. In addition, our trade surplus was a healthy €21.4 billion. These statistics disprove the frequently made suggestion that Ireland's exports have suffered a significant decline.

Preliminary data indicates that Ireland's export performance over recent months has been comparatively resilient. Our share of global trade is actually growing. Ireland's share of EU 27 exports increased from 2.15% to 2.25% in the fourth quarter of 2008. With our slight increase in January 2009 as the EU 27 declined by an average of 35%, our position should have improved further. Our balance of payments position will also have improved in January, as Ireland's share of goods imports in the EU27 declined from 1.58% to 1.36%.

This outcome was an impressive performance when account is taken of the global recession and the adverse exchange rate between the euro and both the US dollar and Sterling, as the US and Britain are our two largest export markets. In addition, we have achieved considerable success in developing new markets with significant export growth realised to China, Malaysia, Saudi Arabia, the United Arab Emirates, Brazil and some of the new EU member states.

We now need to bring the focus of our economy as a whole to a return to export-led growth and increase our levels of trade in order to increase the money flowing back into Ireland. For its size, Ireland has a disproportionately large share of world trade markets, particularly in services. I see the ability of the Irish for seeking out new market opportunities, exploiting niche sectors and charming potential customers as a key asset in terms of our export-led recovery.

To build on our existing performance, the Government is committed to maintaining its long-standing initiative of undertaking a wide range of ministerial-led foreign direct investment and trade missions. I will be leading a foreign direct investment mission to the United States next week, and a trade mission to Saudi Arabia and Qatar later this month. Having taken the necessary steps to stabilise our public finances and our economy in this budget, it is essential that we now sell that message abroad and let the world know that Ireland is open for business, investment and, most particularly, job creation.

Our commitment to research and development is essential in that regard. The decision by the Government to retain such high levels of investment in this area for enterprise should send out a signal to the R&D community, and those enterprises looking for a base in which to expand their R&D activities, that Ireland is committed to the R&D-led smart economy path. That path dictates that a strong science base, matched by a paradigm shift in the capacity of our enterprise sector to create knowledge, as well as innovating and exploiting new knowledge across global markets, is critical.

Without innovation and even a modest element of research and development, few businesses will grow in today's markets. The key to the success of a new innovation and technology-based business is the ability to sell and secure the all-important first international reference sale. I firmly believe that creating a continuous positive loop between innovation and market knowledge will be the key competitive advantage firms must acquire just to survive. Innovation will prove commercially successful if it is genuinely customer driven. Commercial success, in turn, leads to stronger profitability and a stronger enterprise base across the country.

Ireland is doing well in innovation; we are above the EU average and are the best improving EU country within our peer group. In the European innovation scoreboard for 2008, which was published in January, we performed particularly well on innovation in throughputs, at fourth place, as well as on human resources and economic effects, both in fifth position.

The work of IDA Ireland, Enterprise Ireland and Science Foundation Ireland, together with the research and development tax credit introduced in the October budget, puts Ireland to the forefront of research and development regimes globally. As well as increasing our attractiveness as a location for research and development activity, it will provide a stimulus for value-added activities. Research and development has expanded dramatically in recent years, reflecting the Government's massive injection of funding in the sector. In the past five years, IDA Ireland client companies have invested €1.31 billion in new research and development activities.

In this budget we have taken a further important step to drive the development of a smart economy through the introduction in the forthcoming Finance Bill of a tax deduction in respect of the holding and exploitation of intangible assets. This has the potential to establish Ireland as a hub for companies engaged in the ownership and development of intellectual property assets. The taxation of these assets plays an important role in Ireland's attractiveness as an investment location. The introduction of a tax deduction will provide an important additional pull factor for this type of investment to Ireland, with resulting job gains. It will also act as consolidator for key high value activities in Ireland.

The budget also includes additional provision for important training and activation measures for those who find themselves in search of work. It is vital that we keep jobseekers motivated, appropriately skilled and as close to the labour market as possible. If I include the additional measures contained in the budget, we are now providing, through FÁS and my Department, a total of 128,000 training and activation places for the unemployed this year. This is a substantial increase on the approximate figure of 66,000 places taken up last year and is indicative of the seriousness with which we are tackling the current challenge and the scale of activity being supported by the Government to ensure people are best positioned to get back into employment.

In addition, the job search-national employment action plan referral capacity has nearly doubled for 2009, from 6,500 cases to 12,250 per month. This constitutes an unprecedented increase in capacity for this programme, which is being undertaken by FÁS. I increased the number of places on short courses provided by FÁS by 51,000 in February, bringing the total to 78,000. The additional 12,015 places announced in the budget brings the total number of training places available to 92,000.

For redundant apprentices we are now providing in the budget an additional 700 places on a new institutes of technology training programme. This means approximately 3,400 redundant apprentices in total will now be able to progress their apprenticeships. Further, an additional 400 places provided for in the budget will increase the number of places on community employment schemes to 22,700 this year.

We have also introduced in the budget a new work experience scheme, which will provide 2,000 six month places to individuals who are unemployed and will include the placement of graduates. A pilot training programme of 277 places is also to be undertaken at a cost of €1 million and is to be introduced for sustaining vulnerable employment. Under this programme, workers who are placed on a three day week and receiving social welfare payments for the days they are not working will receive two days training per week for a period of 52 weeks. Together with the Minister for Education and Science, I will provide 1,500 third level places on a part-time basis to the unemployed in order that they may pursue a third level qualification.

These new measures will allow my Department to provide an additional 16,525 activation training places at a cost of €55.9 million, with the joint initiatives with the Department of Education and Science costing my Department €5.5 million. While these initiatives represent a substantial reallocation of resources within my Vote, in particular from training for the employed, it is essential that we concentrate available resources on helping those without jobs to best position themselves to return to the labour market.

My aim is to prevent the creation of a new cohort of long-term unemployed, while simultaneously improving skills and qualification levels across our labour force. This, in turn, will be of considerable benefit to the individuals who receive this support over the remainder of their working lives and assist them in overcoming their present difficulties.

Yesterday's budget sets out the short-term measures required to address the current economic climate and steers us on a credible medium term path of recovery to 2013. Having established this path of recovery, I am conscious of the need to consider the longer term and ensure short-term decisions are taken with a long-term perspective. The magnitude and scope of the changes facing the country are significant, as are the policy responses required by Government in balancing the need to manage existing pressures with the need to prepare for future challenges. This is a time for leadership, courage and vision, all of which the Government demonstrated yesterday.

I am convinced that the key to sustained prosperity, social justice and quality of life for the future is dependent on having a competitive, highly productive and innovation driven enterprise base that provides fulfilling and rewarding jobs for our people. Our overall strategy must be to return confidence to the business sector, continue to take the necessary action to ensure an adequate flow of lending to the productive sector, get the fiscal position and cost competitiveness under control and invest wisely in infrastructural needs for the future.

There is undoubtedly a readjustment taking place in the economy compared to the heady days of record growth. This adjustment will serve to make us leaner and better positioned to resume a sustainable growth pattern over the medium term. The range of measures I have presented addresses the real needs of the economy, future job growth and those seeking work. It is essential that we proceed to implement these measures and put Ireland back on track for sustainable future prosperity.

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