Brian Cowen (Laois-Offaly, Fianna Fail)

I apologise. The script is on the way.

The Irish workforce has adapted to the international economic crisis and the very changed circumstances at home. In many cases, work practices have changed, working hours have been altered, pay rates have been reduced, especially premium earnings of various kinds. Employers and workers have got together at local level to agree how to adapt and to preserve jobs.

As a result, the unit labour cost of production in Ireland has reduced while it has continued to rise elsewhere. That improvement in cost competitiveness is already being reflected in the more positive way in which operations in Ireland are being viewed by international companies.

The Government has been also taking a range of actions to help return the economy to the path of sustainable growth. In December 2008, we published our economic plan, Building Ireland's Smart Economy. It identified five action areas as the basis for the Government's response to the crisis. Since then, we have been assiduously implementing that framework.

We have acted aggressively in all these areas to tackle short-term difficulties while laying the basis for future recovery. We have introduced supports for business, for example, the enterprise stabilisation fund and the employment subsidy scheme, while seeing large gains in international competitiveness.

We have acted decisively to stabilise the banking system in very difficult circumstances and ensured a continued flow of credit to business, albeit not yet back to its optimum, and work continues in this critical area. We have begun to re-position Ireland as a global innovation hub, based on the work of the innovation task force, notably through the establishment of Innovation Fund Ireland and improvements to our research and development and intellectual property tax regime. We have invested heavily in renewable energy infrastructure, while developing new market opportunities in areas like electric vehicles and the SmartGrid. We have sustained high levels of capital investment to support economic activity during the past two years, completing the inter-urban motorways and delivering new projects at reduced cost.

The decisions we have already taken, and the reforms we have already introduced, will greatly benefit this country in the years ahead, and there are many reasons to be hopeful and optimistic about the future of our country and her people. Our mission now is to translate our economic strengths into economic recovery. We must be hopeful, optimistic and energetic, and yet we must be clear-eyed, realistic and thoughtful. Hope and optimism are the essential ingredients of our future, but they do no blind us to the realities of the present.

We must recognise that the rapidity of the recent economic decline and the scale of our budgetary deficit have created real doubts about the State's capacity to pay its way. These financial problems have overshadowed our real economic and competitive strengths. The reality is that we must convince those who lend to the State, who fund our banks and who do business with Ireland that we have a credible plan to close the gap between Government income and expenditure, and to meet the cost of servicing our increased debt. There is no other choice, it must be done and the Government is determined that it will be done.

We are entering a crucial period. Together, we will have to make some of the most significant decisions in our recent economic history. Those decisions will shape the future for all of our people for many years. If we shirk the necessary decisions, or if we make the wrong judgments, the consequences are very difficult to contemplate. That must not happen, and I do not believe it will happen.

When the Government presents its budget, it will set out the specific adjustments, in terms of income and expenditure, which will demonstrate progress towards our 2014 target. Achieving budgetary balance will require difficult decisions, based on a clear view of economic and social priorities and, crucially, on the principle that the burden must be shared.

As I have outlined, we all have a part to play in contributing to recovery. The gap between what we are spending and what we are collecting in revenue is too big for anyone to escape sharing the burden of adjustment but the society that we have built has at its core a commitment to help the less fortunate. The Government is determined that the major gains in social protection and support for the vulnerable in recent years will be maintained as far as is possible in present circumstances.

For example, between 2005 and 2010, the contributory State pension rose by 37.7%, the lowest rate of welfare payment rose by 45.4%, the qualified child benefit increase rose by 77.4% and the national fuel scheme payment rose by 122.2%. Inflation in the same period was just 10.3%. Those gains are real and substantial. There have also been major improvements in public services such as health and education, in care for our elderly and in support for people with disabilities.

Given the budgetary crisis we are now in, I do not believe that we can protect every aspect of health, education and social welfare spending. Unfortunately, that is impossible given the scale of spending in those areas relative to the reduced Exchequer resources that will be available. However, many, if not all, of the gains of recent years can and will be preserved, and once financial stability is restored and sustainable economic growth achieved, we can improve our living standards again also. Every measure we consider over the coming weeks will be assessed with this in mind.

We must aspire to the goal that all of our citizens have an opportunity to work and to be valued in our society, to be well-educated and to be properly cared for when needs be. To do this, we must get more from less, and not to be afraid to change things around to get the best possible outcomes for the resources we now have available.

The four year plan is about demonstrating how we will achieve a return to growth and jobs in line with the capacities and ambitions of our people so that we can meet our social objectives on a sustainable basis. While this is a national plan, to be presented by the Government and containing a range of measures requiring the approval of the Oireachtas, we will also seek support for it from the EU institutions. That is prudent and it recognises the reality of the international situation, as well as the support we have already received from those institutions.

A viable plan, with the approval of this House and the support of the EU institutions, is the surest way forward to economic recovery. Responsibility lies with the Members of this House and ultimately, the Irish people. We all need to understand and believe that we can have a powerful influence – as we have had before – on our own economic fortunes.

As a small open economy we have to pay our way in the world through trade and exports. This means we must ensure our costs are not out of line with our competitors, focus our investments and energies on sectors and activities with scope to secure more jobs and organise our business and industrial relations practices in a way that unleashes the full potential of the economy.

We will continue the process of reducing the costs of doing business. While we have seen significant improvements in many areas, some significant costs are out of line with our competitors. This is true of parts of our sheltered domestic economy which are not exposed to international competition. We will look, in particular, at the costs of professional services and charges levied by public bodies of all kinds. We will adopt a focused and determined approach to drive down costs which are unreasonably out of line with those of important competitors.

Many employers, including the public service, have had to take steps and sometimes unpalatable decisions to reduce payroll costs. Labour costs in the economy, like other costs, cannot be sustained at a level which is out of line with our international competitors when account is taken of productivity and other relevant factors.

I welcome the fact that a framework for engagement between employers and trade unions in the private sector was agreed between IBEC and ICTU. Negotiations have also produced adjustments in a small number of sectoral agreements which are underpinned by the institutional machinery of the State. It is time to look closely at the terms of some of these agreements to ensure they are fair by reference to what has happened in the rest of the economy and appropriate to the task of sustaining and growing employment.

As part of an overall competitive economy, there are sectors where specific opportunities arise at this time if we focus particular effort on taking advantage of them. These have been identified in a series of strategic initiatives on the part of the Government over recent months. For example, we are determined to ensure the environment for innovation in existing and new businesses is as positive and productive as possible. This is as important for Irish SMEs as it is for the high-tech sector.

Our economic policy framework is not only about new industries and high-tech capabilities. It applies just as much to what we might regard as our traditional businesses of agrifood, tourism and construction. These industries have the benefit of involving people right across the community and all around the country. They are sustaining communities and families and have the potential to do so for many years ahead as they evolve in line with market realities. They face challenges but their potential for further growth and development is significant. We must ensure those capabilities are fully realised in order that these traditional sectors can also play their part in growing jobs.

The four year plan will, therefore, set out concrete and tangible ways in which key sectors of the economy are being supported and mobilised to grow our economic base in the period ahead. Their vitality will build the credibility of our overall economic and fiscal commitments. Achieving our budgetary targets will, in turn, build a better business environment for investment in these sectors. This can result in many thousands of new jobs which, in turn, can facilitate a much less severe budgetary adjustment. This virtuous circle of budgetary performance, competitiveness and economic development is the dynamic which will drive a successful economic future for our country.

See this speech in context