Conor Lenihan (Dublin South West, Fianna Fail)

I thank the Tánaiste for sharing time with me.

The European Union had a vital part in our national development in the past 20 to 30 years. It is important that we nail some of the familiar fallacies which infest the speaking and thought processes of those who opposed the EU in almost every referendum since we joined in 1973. First is the idea that the EU has materially diminished our sovereignty. This is not the case. In fact, our sovereignty could not be more strong. Since joining the European Union we have de-linked from the sterling area. At one period we had our own currency and now we have harnessed to a much stronger and more stable currency at a global and European level. The other fallacy is that we have been de-industrialised by the European Union. Technically, this is correct. We have had two waves of de-industrialisation because of our membership of the EU. Initially, in the 1970s some low value added industries, tanning being a typical example, left. We were forced to compete and produce more sophisticated and competitive goods and services to compete in the large single European market. This de-industrialisation, which occurred in the 1970s and again with the introduction of the euro, has forced us to be more competitive and to look at the competitive factors which underpin our economic national performance. The competitive pressures of being part of a European market have been extremely good for Ireland. The figure that demonstrates this fact most illustratively is a simple one, namely, 80% of what we physically produce is for export. This is a far cry from our situation in 1973 or the situation faced by the late Seán Lemass in 1959 when people predicted the disappearance of the Irish race and Ireland itself in a post-independence fog of economic underachievement. Our sovereignty, economic outcomes and material welfare have improved significantly since joining the EU.

Most importantly in terms of the morale and self-esteem of the people, we should consider how we and our place in the world are considered. In terms of foreign policy and other areas, Ireland was so minor and insignificant a place globally prior to our EU membership that larger powers could have blocked us from joining it. At one stage, we were blocked by larger powers from joining the UN. Far from that situation, Dublin as our capital is frequently the destination of choice for great statesmen to lobby Ireland, which can express its opinion at the EU table. Most notably, the Secretary General of the UN, Mr. Ban Ki-moon, visited yesterday. He was not in Ireland because he had a marvellous opinion about the country and what it does in international matters. Mainly, he visited because he knows that we are a part of the most influential economic bloc in the world, the EU, which acts as a good global citizen and is multilateral in its approach to the resolution of international problems.

The character and commitments we convey through the Department of Foreign Affairs and our commitment to neutrality, development aid and multilateral resolutions of global conflicts make Ireland a respected country. One could argue that this respect would exist none the less, but no one would bother to visit us were we not a member of the EU, irrespective of our views. I do not want to mention countries that, while not member states, have similar attitudes towards multilateralism. They are not lobbied and are ignored. They are in a cul-de-sac or backwater in foreign policy terms. We are in the global mainstream because Ireland is a member of the EU.

It is important to remember that Ireland gained disproportionately from the famous Delors package of 1985. Places like Greece, Portugal and Spain were demonstrably poorer and should have gained more from the 1985 allocation of structural funds. They did not get more because our officials and politicians negotiated a good package that assisted us in upgrading our infrastructure. People discuss the economy's boom years, but the 0.5% added to our GNP by the 1985 Structural Funds was critical because the Exchequer could not have afforded such an infrastructural spend. Therefore, the package's commitment to our economy is greater than the 0.5% attributed to it in purely statistical terms.

In my area of science, technology and innovation, Framework Programme 7 is giving the same type of impetus to our enhancement of economic productivity through its financial contribution. It is a telling story of how Ireland is achieving in the multilateral bloc called the EU. Since the programme's commencement two years ago, we have gained €104 million to help scientific and academic research institutions to co-operate with industry and enhance what they produce. Some €1 million per week since the programme's commencement is not a small amount of money. We have an overarching target of gaining €600 million over the programme's duration to 2013. Every €1 million gained will add to the productivity of the economy and the country, moving us to a position championed by the Taoiseach since he assumed office, particularly in his smart economy document. We must move to a higher order of goods and services. We must be more productive and harness technology and science to aid small businesses and inward investors. Some 41% of the new businesses won by the IDA last year were in the research and development and technological fields.

We have a two-fold challenge. In terms of the small to medium-sized enterprise, SME, sector, how do we harness more sophisticated forms of technology to enhance productivity and the ability to compete and trade domestically and externally? Most importantly, how do we retain internationally mobile capital in the form of the foreign direct investment attracted through the work of the Tánaiste on her many visits abroad on behalf of the IDA and the State to bring large, high-profile investors to Ireland? They will stay for a while if we can produce quality graduates, be they scientists, technologists or otherwise, but we cannot depend on that situation. We must ensure that those investors sink more than just a plant, facility or 200 or 400 jobs here or there. We must ensure that they embed their presence by investing heavily in research and development.

Some 40% of the investments made this year, compared with 41% last year, fall in the technology and research and development areas. While the capital will remain mobile - we must be competitive - it will be more anchored in Ireland because people will be prepared to make world class research and development investments. Typically, such investments have longer payback periods between the research's origination and the final payback, that is, five to seven or, in some cases, ten years. This depends on the industry. For example, there are quicker cycles in the ICT area and longer cycles in the large pharmaceutical area, the so-called big pharma, from the time when investment is sunk in research to when a product, service, drug or innovative technological solution is commercialised and produced. We must continue to invest if we are to ensure that foreign direct investment flows into and stays in Ireland.

It is beneficial that our small companies live in a wider market of 350 million people. In recent years, we have tripled our research and development spend because the EU has assisted us as part of a wider European research agenda. There are jobs involved and it is inconceivable that we should contemplate isolating ourselves from the EU, which is what we did by rejecting the treaty. I suspect an element of national hubris in the original decision, in that we were at the top of an economic cycle. Given this difficult recession, I suspect that people are rapidly reviewing the hubris that infected or influenced their decisions.

The main difference between then and now is that we have significant legal guarantees on the issues of major concern. There is no point in dwelling on them but the most important is on tax. Most people, particularly those in the business community, rejected the last referendum because of the serious concerns surrounding tax. We have become comfortable and happy with our low tax status, particularly in terms of corporate taxes. If we keep with this programme, we will succeed in overcoming the recession, but we need and should stick with our friends in Europe. They continue to provide us with money and assistance in every way possible. I include the President of the European Central Bank, Mr. Trichet, who has been of significant assistance to Ireland in weathering the storm of recent months.

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