Dara Calleary (Mayo, Fianna Fail)

I thank the Labour Party for moving this motion. I did not expect to receive advice on milking cows but when Deputy Penrose stands up to speak, one never knows what he will say.

The difficult economic and financial situation that Ireland and much of the world faced in the past two years is often referred to as a banking crisis but of course it is much more than that. The interactions between housing, banking and financial markets, flows of credit, Government finances, consumer spending and the real economy have been complex and unprecedented in many ways. The situation facing the Government in the autumn of 2008 was quite unlike anything an Irish Government had faced previously.

Despite what some commentators would say, there are no quick, cheap or easy solutions. In dealing with this multifaceted crisis the Government has been careful to listen to advice and examine the actions taken by other countries in earlier crises. The Government's aim at all stages has been to minimise the harm to the economy and the cost to the taxpayer.

Without minimising what some people have suffered in this crisis through unemployment or reduced income, it is important to recognise that positive signs for the economy are appearing. Unemployment shows signs of stabilising, retail sales have picked up and there have been improvements in credit levels.

The first transfers of loans to NAMA have taken place and it is clear that the NAMA evaluation process has demonstrated a rigour and thoroughness that augur well for success in this vital task. We have seen the Financial Regulator's assessment of the balance sheets and capital requirements of the banks, and the clear targets he has set for them. The process of getting Ireland's banks back to where they ought to be and where they can make their proper contribution to the sustainable development of the economy is well on its way. The very positive news on Monday about Bank of Ireland's recapitalisation is further independent evidence that events are moving in the right direction.

There is no doubt that we are experiencing some of the most challenging economic circumstances, nationally and internationally, that we have had to face for many decades. We have had to meet these challenges by taking tough decisions to help stabilise our budgetary position, repair the banking system, regain Ireland's international competitiveness and invest in new jobs. Every aspect of Government spending has had to contribute to the adjustments necessary to restore order to the public finances. These changes have undoubtedly been difficult and I would not for one moment underestimate their impact. We have to recognise, however, these budgetary adjustments would have been necessary even if there had been no banking aspect to the economic developments of the last two years.

In spite of the difficulties, it is important to look to the future and how we can expect to fare as the crisis recedes. The Government is aware that it is vital for us to continue to invest in our key infrastructure so that we can best position ourselves for the recovery when it comes. We are identifying the capital projects and programmes that best contribute to economic recovery, including an ongoing assessment of what can be done to support both long-term and direct labour-intensive employment in the delivery of economically valuable infrastructure. For this reason our Exchequer capital allocation for 2010 amounts to €6.4 billion. At 5% of GNP, our investment programme remains proportionally high by international standards and in comparison to those of the EU-15 member states. Some of the highlights of our capital investment programme for 2010 include €1 billion for improving the national roads network; €414 million for local and regional roads improvement and maintenance; €615 million for investment in public transport; over €890 million for social housing; €507 million for the primary and second level school building programmes, which will be further augmented by €72 million in funds carried over from 2009; €444 million for HSE capital investment; €141 million investment in higher education capital, including €46 million for the promotion of science and innovation; and €160 million for investment through the enterprise development agencies. Over the period 2010-16, Exchequer capital investment will amount to over €39 billion. This Exchequer capital programme will be supplemented by projects part-funded by private investment in the PPP programme and the investment programmes of the commercial State-sponsored bodies.

The core rationale for our capital investment programme is to ensure that we have the requisite public infrastructure to facilitate a return to growth, which will in turn assist sustainable job creation into the longer term. In addition, the physical construction activity will in itself help to maintain employment in this sector. The activity this level of investment can sustain is considerably higher than would have been the case two or three years ago. The downturn has led to a more competitive construction sector market and we have the opportunity to obtain greater value for money from our capital programme.

This Government places a high value on investment in science, technology and innovation, STI. Earlier today, I had the pleasure of attending the opening of a new laboratory for the centre for research on adaptive nanostructures and nanodevices at Trinity College Dublin. Nanoscience accounted for €15 billion worth of exports in 2008 and 48% of incoming investment sponsored by the IDA in 2009 was from companies specialising in research and development. The smart economy framework prioritises investment in STI. Science Foundation Ireland, which alongside the Higher Education Authority pioneers much of this work, will receive €274 million in 2010 for enterprise related elements of STI. This expenditure will be complemented by investment in research capacity under the programme for research in third level institutes, which has greatly improved our science infrastructure.

There will continue to be a high level of capital investment through the enterprise development agencies to facilitate a return to enterprise led growth driven by a vibrant exporting sector. Prioritised investments will help to develop the national skills base, put in place critical infrastructure for a return to growth, help to realise greater economic return from existing infrastructure and make Ireland an attractive location in which to do business.

The network of major interurban routes, which will be completed this year, is a significant achievement by this Government. While each of these routes contributes to improving transport efficiency, the impact of the network as a whole will enable us to make a step change in this regard, with decreases in travel times and costs benefiting industry, national competitiveness and quality of life for our citizens.

Water services investment has been identified as a core area for prioritisation and this year alone €508 million has been allocated for capital investment. Besides the public health and potential economic benefits, investment in this sector will improve environmental sustainability, assist in meeting various environmental compliance specifications and provide 4,000 jobs.

Complementing our Exchequer investment programme, the Government continues to seek investment through the public private partnership programme. A number of key infrastructural projects have been earmarked for public private partnerships including the N17-N18, Gort-Tuam scheme, the N11, Gorey-Enniscorthy scheme and the combined N11, Arklow-Newlands Cross junction project. PPPs have been used to deliver landmark projects such as the Cork School of Music, the new criminal courts complex and the new Dublin convention centre which is due to open later this year. The Government remains committed to PPPs as a procurement option for appropriate projects.

While economic circumstances have required us to curtail our allocation for infrastructural investment, we still retain proportionally one of the larger infrastructure investment programmes in the EU and this is augmented by PPP investment. By strategic prioritisation of capital investment, coupled with the fact that more can be achieved for our money than heretofore, we can focus on achieving the best results from our investment.

As I have outlined, substantial investment in infrastructure continues to take place. This is being funded through the normal mechanisms of direct Exchequer provision and PPPs. It is not clear how the proposed strategic investment bank, SIB, would make a significant difference in this area, unless it was conceived as a device to change how spending is presented in Government accounts. If the proposed SIB were to fund Exchequer investment, borrowing from a State-run bank would be no different from borrowing from a private sector bank, in terms of its impact on the Exchequer's overall position.

The Government already has a mechanism available through which infrastructural investment can be channelled in the National Pensions Reserve Fund. Infrastructure, as a long-term investment, is a natural asset class for the NPRF and the commission is keen to access PPP investments where the risk and return characteristics satisfy its statutory commercial investment mandate. Potential investment opportunities for the NPRF are expected to arise later this year. The question of NPRF participation in funding models is entirely a matter for the NPRF Commission in accordance with its statutory investment remit. The NPRF is committed to offering funding on competitive terms that will meet both its investment objectives and assist in providing the necessary capital to fund the country's infrastructural requirements.

There has been discussion in this debate about unemployment. The Government has a policy focused on unemployment. We have arranged a number of initiatives in the past number of months and we are particularly concerned, as referred to by Deputy Penrose and Deputy Morgan, about the rising levels of male youth unemployment and the growth in long-term unemployment. The refocusing of Departments such as in the Departments of Education and Skills, Social Protection and Enterprise, Trade and Innovation, will further co-ordinate Government strategy to ensure these vulnerable groups are equipped with the necessary skills for employment as the labour market recovers and grows. With the economy expected to return to growth later this year, the predictions are that employment will gradually recover in 2011.

The Government introduced the enterprise stabilisation fund in 2009. This fund aims to support viable but vulnerable companies experiencing difficulties and accounts for an investment of €100 million over two years. The employment subsidy scheme will invest €135 million, creating a subsidy of up to €9,100 for each subsidised job. The Government is also encouraging employers to create new jobs through reducing the costs associated with employment. The employer jobs PRSI incentive scheme, will allow an employer to create a new job by taking on a person who has been unemployed for six months or more. The employer will be fully exempted from the liability to pay PRSI for the first year of that employment. Between these schemes the Government is investing €265 million directly into enterprises and safeguarding thousands of jobs and securing our enterprise capability in the process. In addition the Government is also investing substantial resources in tackling our unemployment problem through the investment of over €1 billion in the provision of a range of labour force measures. This year, the total number of training and work experience places funded by the Government is expected to increase by around 26,000 to over 180,000 places in total.

Credit for viable businesses is vital to economic recovery and the Government has taken a range of measures to deal with the issue of access to credit for SMEs since the advent of the banking crisis. The Minister for Finance has recently announced a number of actions to assist the credit situation in relation to SMEs, including the requirement for €3 billion lending plans for each of the next two years for the two largest banks; the requirement that the two largest banks provide €20 million each for seed capital to Enterprise Ireland-supported projects; and the requirement that the two banks each set up a €100 million fund for environmental, clean energy and innovation projects. In addition, the requirements are that the banks commit to working with Enterprise Ireland and the Irish Banking Federation to develop sectoral expertise in the modern growth sectors and to explore with Enterprise Ireland and the IBF how best to develop the range of banking services so that Irish SMEs trading internationally can meet the new challenges. The banks will need to develop expertise and credit products in areas where cash flow rather than assets is the basis for lending. We hope that this will help develop a banking style that is more effective and more supportive of Irish business.

These measures build on earlier initiatives such as the 2009 commitment by AIB and Bank of Ireland to increase lending capacity to small and medium enterprises by 10%; the introduction of the code of conduct for business lending to small and medium enterprise; the establishment of the credit clearing group, including representatives from the main banks, business interests and State agencies, which in turn identifies specific patterns of events or cases where the flow of credit to viable businesses appears to be blocked and, in turn, to seek to identity credit supply solutions.

The NAMA Act has established the credit review process to ensure that SMEs, sole traders and farm enterprises will have recourse to an independent, external review of decisions of credit refusal by the NAMA participating banks. The review process is now available and the first requests for review are beginning to be submitted.

Mr. John Thrugold has been appointed to monitor this process. I would encourage Deputy Penrose as Chairman of the Joint Committee on Enterprise, Trade and Employment, to invite Mr. Thrugold to attend the committee and for that committee to take on the job.

I have outlined the unprecedented set of interlinked problems the country has faced and also outlined some of the actions the Government has taken to tackle these problems. I have shown there is evidence that the policies are working. I have given an account of how the Government has addressed the need for infrastructural spending and of the steps it has taken to help ensure credit for viable businesses. These measures meet Ireland's needs at the present time and the Government will keep them under review. I commend the Government motion to the House.

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