Michael Noonan (Limerick East, Fine Gael)

When this motion was drafted there was quite a lot of speculation that the intervention by the IMF, the ECB and the European Commission would force Ireland to increase its corporate rate of tax. This would be damaging for Irish industrial policy because the 12.5% tax rate is a key element of Ireland's attractiveness for inward investment. It is particularly important for the United State of America, which wants a gateway into Europe. The US wants a highly educated English speaking young population as a potential workforce. It also wants its corporations to be highly profitable and does not want to pay very much tax overseas.

The low corporation tax was a deliberate incentive put in place by the Irish Government. There used to be a 10% corporation tax rate. That came under pressure in the 1990s when the rainbow coalition, under the Taoiseach, Deputy John Bruton, was in Government, and the Minister for Finance, Deputy Ruairí Quinn, negotiated the 12.5% rate. It was subsequently put into effect by the incoming Government. Therefore, the origins of the 12.5% rate are shared by Fine Gael, Labour and Fianna Fáil. When the tax rate came under pressure, I thought it would be important to reaffirm our commitment, across party lines, to the 12.5% rate.

I would like if Sinn Féin would also commit to the 12.5% rate. Their 2007 election manifesto, in the section that dealt with reform of the taxation system, proposed to raise the corporation tax rate from 12.5% to 18%. I believe that was a serious mistake, arising from a lack of understanding of how Irish industry works and how the incentives work in attracting foreign investment into Ireland.

When the motion was drafted and the Fine Gael Front Bench agreed that it would be tabled tonight, it appeared as if the corporation tax rate was under threat. Now, I believe there was no such threat. It was an invention by the Minister for Finance, who has just left the Chamber, so that a victory could be claimed by the Government when the 12.5% was not touched. When I met Commissioner Olli Rehn in Dublin, I asked him a direct question. He quoted the law and said, "Rates of taxation are matters for the sovereign Government", which indicated that the Commission was not putting any pressure on.

We know what the United Kingdom position is, although some of their media personalities would lay the charge that our 12.5% is unfair and that corporate headquarters of UK companies are being switched from London to Dublin because of the low tax regime. The British would protect our 12.5% rate and combine with us to do so for different, quasi ideological, reasons. In Britain, and particularly in the Conservative Party, there is a strong commitment to maintaining sovereign control over tax rates and tax matters. The UK Government would be one of the last in Europe to concede anything there.

We were told the Germans were out to get us, but Chancellor Angela Merkel made a statement recently saying she was not putting the 12.5% rate on the agenda if a bailout was being organised for Ireland. She was quite emphatic about it. This was followed by a less categoric but quite clear statement by President Nicolas Sarkozy of France. All of those were reputed to be out to get us on the grounds of the 12.5% rate, but it is quite clear they are not.

I think I understand Deputy Brian Lenihan's motivation. The IMF has always been seen as the bogey man of Irish politics. When we are trying to get the children to go to sleep at night we tell them the bogey man will come or Santy will not come, or whatever the threat might be. Deputy Brian Lenihan's bogey man was the IMF, which would come if we did not do the right thing on the fiscal side. After threatening us with it so often, he had to explain why the IMF was arriving. In a very creative and novel way, as only the Minister could invent, he told us the IMF would protect the 12.5% rate, because being Washington based it would understand the significance of the 12.5% rate and how important it was to attract American investment into Ireland.

I do not believe there is a real threat. However, it is still worthwhile having all-party agreement on it at this time to make a clear declaration that we stand united on this important issue.

It is also important to stress that whatever the fiscal correction may be on budget day and whatever is in the four year plan tomorrow, we cannot cut or tax our way out of our difficulties. If we cut and tax sufficiently and have a parallel growth and jobs strategy there is a possibility that we might work our way out of them. The 12.5% is a symbol for jobs, growth and secure employment. There are 180,000 people working in American companies that were attracted into this country largely by the 12.5% tax rate, and they are on the cutting edge of the economy.

There is a good story to be told about Ireland as well as all the doom and gloom. Part of the good story is that we are about to get into a balance of payments surplus. "Ireland Incorporated" is solvent. Whatever about the banks and the Government, the country as a unit is solvent. One of the tests of a country's solvency is that it is exporting more than it is importing. We are just about to go into a balance of payments surplus in the first quarter of next year. That is very good news. In the last quarter for which returns are available, exports went up by 11%. Manufacturing industry is roaring along in Ireland. One can see the evidence on the roads, where container trucks head for the ports every day. They represent the hard work of Irish people in exporting businesses in factories all over the country. We have a productive workforce who work hard and their jobs are secure.

There is a change in the type of jobs that are most attractive and that Ireland is best suited for. In my city, Dell is often used by the media as a benchmark for failure. We are often reminded of job losses and redundancies in Dell, but it is now becoming a benchmark for success. In Limerick, over 1,000 people are employed in Dell and the company intends to hire another 150. Jobs in the company are all at the higher end of the market. Dell's financial centre for Europe and the Far East is now in Limerick. Its logistics section is in Limerick. Not a single truck goes out of the industrial estate in Limerick but the experts on logistics organise supply to their factories all over Europe and Asia. We know the concept of just-in-time delivery. That is all done through the Dell plants out of Limerick. Of course, those workers are highly paid. Dell has a huge research and development unit there. Suddenly, the company is being reconfigured.

Anyone who knows the Apple story, especially people from Cork, will remember when Apple downsized to a couple of hundred people and it looked as if it was going to disappear. The company changed its business model and it grew in a different direction, with more highly skilled and valuable jobs. Deputy Clune will know the company now employs more than 3,000 people in its plants in Cork. The nature of work is changing in Ireland. There is much more high-tech, highly skilled and highly paid work. Our future lies in the manufacturing area and the corporation tax rate of 12.5% is crucial to it. It is vital, be it in the IT, pharmaceutical or investment sectors, or any other sector.

It is essential to focus on the financial services industry, which is creating and maintaining a very significant number of jobs in Dublin. It employs skilled people, the majority of whom are graduates. Much of their work involves back-shop activities, including the processing of data and accounts for others, but, increasingly, they are becoming involved in the real financial services business of trading. People are trading from Dublin now and this is very significant. We should be concentrating on this area. Any jobs policy that accompanies the four-year programme to be published tomorrow should have a section on the financial services industry to determine where it can be tweaked, adjusted and made more attractive. Many of the people who work in that industry are emigrating. We could create extra jobs in Dublin. Former Taoiseach Mr. John Bruton was recently appointed as the main promoter in this area. I hope the sector will thrive.

We should not forget indigenous industry. We have a great food industry in this country. Our farmers are producing food of the best quality. As the processing industry develops, as it has done over recent years, it will continue to comprise a very significant area. Not only are companies such as Kerry Group doing very interesting work in Ireland and providing very good employment, but they are reversing the historical trend and have invested very significantly in the United States. Ireland is now a bigger investor in the United States through its multinationals than China. It cuts both ways. We need not portray the image of the mendicant with the begging bowl any more across the Atlantic because there is major investment by indigenous Irish multinational companies in industry in the United States. There is two-way traffic and I do not believe the tax rate of 12.5% will be under threat from the United States because we are a major contributor to its economy. Long may it last.

There is a good story to tell and I hope it is capitalised on in the four-year plan, which is to be issued tomorrow. If it is all doom, gloom and cutbacks, it will not do the trick, provide certainty, build confidence or encourage people to believe they have a future in Ireland using their talents to work. I sincerely hope the initiatives we all take will be successful.

I will end on a sour note. The motion proposed is a perfectly good motion that covers the ground and which should have been supported by the Government. Instead, the Department of Finance, through the Minister, told me it had to file an amendment. The amendment was cleared by the Cabinet. The Government is looking for support in the very difficult decisions it is making and the Taoiseach rang the leaders of Fine Gael and the Labour Party last night stressing the importance of what is to happen on budget day, and explaining how essential it is for the country that the budget be passed, yet, in the usual churlish, tribal mode, Fianna Fáil could not agree to support the Fine Gael motion tabled in the interest of the country. It felt it had to table its own version so Fine Gael would be forced to support a Fianna Fáil motion. We will see how that plays out in the vote tomorrow night. If the Government is looking for co-operation and help from the Opposition, it should support our perfectly good motion tomorrow night and withdraw its amendment.

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