Conor Lenihan (Dublin South West, Fianna Fail)

It is clear that the future of the Irish economy lies in the continued development of the high value-added sectors of our economy. Sectors such as information and communications technology, biopharmaceuticals and the green economy, which are characterised by cutting-edge innovative developments, will be the key drivers of our future economic growth. The Government is committed to developing one of the world's leading knowledge-based economies. It introduced its framework for sustainable economic renewal, Building Ireland's Smart Economy, last December in response to the much more challenging economic environment. This document sets out a clear roadmap for Ireland's move back to economic growth and prosperity. Investment will focus on areas in which we can build on our existing strengths, address our weaknesses and make ourselves ready to grasp the opportunities that will be presented when the upturn in the global economy begins. The action areas and points within this framework are a combination of existing policies, on which the Government will build, and new actions that will drive the restructuring of the economy. This combination is important because a principal objective of the framework is to reprioritise the business of Government and refocus resources in a manner that will hasten economic renewal. The Cabinet economic renewal committee, which is chaired by the Taoiseach, is responsible for driving the implementation of the framework. We should be aware that the successful implementation of the framework will not merely result from the policy measures and investments that are put in place by the Government - a national effort will be required to meet crucial short-term challenges. The Government is working with the social partners on the implementation of this framework, which is consistent with the principles and visions that underpin Towards 2016 and uses the well established mechanisms of the social partnership process.

In view of the huge potential for the green economy to help Ireland to meet its economic and environmental challenges, the Government gave a commitment in the framework strategy to establish a high level group on green enterprise. I am glad this commitment has been achieved. The high level group that has been established is chaired by Mr. Joe Harford, who has a strong track record at the highest level in multinational and indigenous cutting-edge enterprises. The many opportunities for Ireland in the green enterprise sector are continuing to grow and develop. Therefore, it is essential that Ireland adopts a proactive approach to developing its expertise and realising its full potential in this area. The establishment of the high level group, which will map our Ireland's potential in this area and produce an urgent action plan, will greatly assist Ireland in accessing this lucrative market.

As Minister of State with responsibility for science and technology, I am particularly pleased that the rate of the research and development tax credit was increased from 20% to 25% in budget 2009. This tax credit provides an effective incentive to companies to increase research and development and complements the various direct research and development grant supports, which are also available through various agencies of the State. It is a signal success of recent years that in the past ten years the amount of money spent in this economy and society on research and development has tripled and represents 1.66% of our GDP. The hope and intention, notwithstanding the downturn, is to increase this figure to 2.5% of GDP by 2013. This will not be an easy target to achieve but it is one that is well worth striving for because it is only through research and development and growing the spend and the collaboration between the universities, industry and the State, through its various agencies, that we will provide secure and highly qualified employment for our citizens in the future.

The increase in the research and development tax credit means that Ireland is now an even more attractive location for research and development. This will encourage more firms to establish a presence here and it will also lead to the expansion of companies that have already located here. There is a direct substantial linkage between what we spend on research and development and what we get by way of inward investment. This year alone, 40% of the new IDA gains were research and development related or technology related. Last year, the figure was 43%. There is a clear demonstrable link between what we do and what we spend in terms of taxpayers' money but also private sector money. There is direct substantial link between that spend in research and development and our ability to leverage and gain more investment from overseas into Ireland.

Broadband is a key piece of infrastructure for the smart economy and is critical to the development of digitally traded services. At present, almost 90% of the small and medium-sized enterprise sector has broadband, but we need to increase this take up rate. The Government is committed to ensuring that Ireland has a comprehensive and high quality broadband network. We will shortly publish a policy paper which will set out the strategic framework for the development of high bandwidth networks. To date, the Government has taken several actions to further develop Ireland's broadband. These include the launch of the national broadband scheme which aims to provide broadband to areas not currently served by the end September 2010; Project Kelvin, which will bring international telecoms connectivity at competitive prices to the north west and Border counties by 2010; and the establishment of a working group to progress the requirement that new buildings install fibre connections at the construction stage, as fibre is currently the most future proofed way to provide high bandwidth networks and installation at the new build stage is much cheaper than retrofitting.

As Eircom is a private company which is currently undergoing a sales process, the Government has no direct involvement in this process but it recognises the continued strategic importance of Eircom to the telecoms sector in Ireland. My colleague, the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan, has stated that public ownership of Eircom is not on the agenda. In developing our telecoms infrastructure and transitioning to high band width services, investment in Eircom infrastructure will be key and any potential purchasers of the company should recognise the requirement for a long-term strategic approach to ownership with a focus on the high band width services required to support the digital economy.

Another central pillar of any modern economy is the availability of competitively priced energy. The Government is committed to exploring the cost of energy in Ireland and to reducing its cost where possible. However, it is important to acknowledge that significant progress has already been made in reducing the cost of energy in Ireland. For example, the Commission for Energy Regulation lowered electricity prices for all customers by 10% on 1 May and gas tariffs by an average of 12% for domestic and small and medium-sized enterprise gas customers from 1 May. All electricity users are currently benefiting from direct subsidies totalling €567 million. These direct subsidies were being used to prevent major increases in electricity prices in 2008 as international fossil fuel prices soared and to accelerate the delivery of the benefits of falling gas prices to consumers, ahead of the normal tariff decision due in October 2009.

The Government took a major step forward in increasing competition within our energy markets through the introduction of the single electricity market. This reform has led to a significant expansion of generating capacity by major international utilities. As a result of the single electricity market, we have witnessed the introduction of enhanced competition with the entry of two new suppliers, which has led to discounts ranging from 10% to 20% for companies in the small and medium-sized enterprise market who choose to switch suppliers.

The Government is currently exploring a variety of other measures to tackle the cost of energy in Ireland. For example, the North-South Single Electricity Market Committee, which governs the operation of the all-island wholesale electricity market, will soon publish for consultation a fundamental review of tariff methodologies. This review will present a number of options for discussion, which include modifying the tariff year to allow for more frequent price reviews and to allow energy suppliers greater flexibility in pricing. The annual review of regulated tariffs for the period 2009-2010 will commence in the summer, with the publication by the end of July of the Commission for Energy Regulation's proposed electricity and gas tariffs that will apply from 1 October 2009. The Commission for Energy Regulation is also about to commence work on a five-year review of network expenditure. This review will take account of prevailing economic circumstances and projections for electricity demand in assessing the capital investment programmes of ESB and EirGrid from 2011. The review will also drive ESB and EirGrid to make greater efficiencies in operational and capital expenditure, thus driving down costs to all consumers.

The Government has been proactive in ensuring that Ireland undergoes the necessary remedial measures so that we will be in a robust position to benefit from an upturn in the global economy. We have put in place the building Ireland's smart economy framework, which provides us with the necessary roadmap to guide our development over this turbulent period. Ireland continues to possess a pro-business environment, which is characterised by a highly skilled and flexible labour force.

The Government has put in place several measures to promote the development of the green sector of our economy, the continued roll-out of high-speed quality broadband and we are continuing to address our energy costs. I am confident that the measures highlighted by the Tánaiste and I this evening will ensure Ireland overcomes our current difficulties and that we emerge a stronger and more resilient economy in the future. Nothing more starkly demonstrates our ability to react and adapt to the new international circumstances than the figure which was pointed to recently by some economic commentators that we had experienced a 4% drop in wages and salaries in this economy. That indicates we have a flexible pro-market workforce and that we can adapt to the competitive challenge that lies ahead.

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