Michael Noonan (Limerick City, Fine Gael)

Defining wealth as a fixed asset and saying €5 million in a pension fund is not wealth is a long way from reality.

I thank everyone who contributed. It was a good and interesting debate. Members met it fairly. It was negative on the afternoon of the first day, but it improved as the week went by. Yesterday parts of the debate were constructive and good ideas came from all sides of the House. Choices must be made and the new Government faced the choice of doing nothing about the state of the country, particularly unemployment, or trying to attack it. We tried to attack it. Of course, this is only a first step. To accuse us of not doing everything we intended to do in a five year period in the first couple of weeks is not valid. It is not a fair argument. I draw Deputies' attention to the economic thinking underpinning what we are doing. We do not believe it is possible for a Government to create jobs directly. It is not the role of the Government to rely on huge capital injections to create jobs right across the economy, first, because the huge capital injections are not available and, second, even when it is approached in that way, one does not get sustainable jobs because when the roads are built, the workers become redundant and the JCBs sit there with no work happening. We have to re-examine the economy and approach it in a different way.

We know what happened in regard to the way the country was run and we know that business model has failed, so we must look at a new business model. In the new model, I have a very simple philosophy. Rather than inventing everything from the beginning, let us look at what is working and build on that. Then, let us look at what might work and build on that. Following that, let us look at the people involved and do something specific for those most hit by the recession and the most vulnerable. That is the thread of thought that underpins what we have done.

What is going well in the country? Manufacturing industry is going very well and exports are driving forward. Exports from multinational companies increased last year by approximately 9% and they continue to do very well this year, although the activity has changed somewhat because it has moved from the foreign investment multinationals into the indigenous sector. Many of the Irish owned and based companies are now exporting as well, which is particularly true in the agrifood area. Members will be familiar with literature which shows emerging middle classes in China, India and across east Asia, with family ambitions to have more protein and dairy products for their children. This has resulted in a huge demand for Irish agrifood products and there are now huge sales into south east Asia of dairy and meat products, which is creating employment at home. This is why it is very important to keep saying we will not move from the 12.5% corporate tax rate, which is one of the main planks of our set of incentives which attracts industry and drives the economy forward.

We want to tweak this process a little more, and there were two proposals in this regard. One related to research and development, which Fianna Fáil welcomed and Deputy O'Dea commented on when expressing his understanding of how that works, so there is no need to go over that ground again. The second proposal is a reversal of a measure in the last budget which I believe was a mistake, namely, where employers' PRSI was imposed on the value of share options. Many of the multinationals enhance their remuneration packages by giving share options or share offers as well as salary. As soon as one puts employers' PRSI on top of that, it is an immediate disincentive to the company. Worse, when it was presented initially, it was announced as if it would be retrospective. The way these matters work, if a person had been offered a share option four years ago and exercised it in 2011 or 2012, the idea was that the person would pay retrospectively the PRSI for the entire period. However, the Revenue Commissioners then redefined the impact of the measure and stated it would only apply going forward, which took away most of the yield, so we abolished it.

Even though this seems a very small issue, one would be surprised at the concern this has caused in the corporate headquarters in the United States, where companies were considering projects for Ireland. I could name projects that were at the point of announcement but were held back because of this. I hope they will now be announced.

Overall, this is an area where modern Ireland will continue to drive forward, particularly in regard to the IT, pharmaceutical and agrifood industries, so many of the bright young people coming out of the universities will get jobs in those sectors. It is amazing how balanced the process can be at times. There are already skills shortages in the IT area, in particular shortages of software engineers, for example, where a person would require four or five years experience to be the architect of a particular piece of software development. It is hard to find people with such skills now, which is a situation that must be addressed.

The next issue we are examining concerns the areas with potential. The biggest potential area of job creation and investment I can identify is the tourism industry. Tourism is really an export industry, except those that buy the goods and services bring their money here to do so, and it has the same value as manufacturing industry. The big hits over the past three years have taken their toll. It is not just that tax breaks drove the building industry with the result we have all these under-used five-star hotels and golf courses throughout the country - that is only half the picture. In addition, the number of visitors to the country declined by up to the 30% over the past three years, the number of visitors coming from the UK has declined by 32% and the spend has declined by some 35%. These are extraordinarily big figures. If we only recovered the ground lost, it would be a huge shot in the arm to the economy.

This is why we are focusing on the tourism industry, and it is an opportune time to do so. Many Members have referred to the forthcoming visits of the Queen and President Obama. We will get huge publicity across the world. The Irish brand will go out and, if it is presented cleverly as background to the visit, Ireland will be seen for the very attractive country it is. However, we must also incentivise the industry. When we began to examine our commitment to reduce VAT from 13.5% to 12% and went into the detail of that, we decided this would have very little economic effect, so we decided to concentrate on the tourism-related activities, where the rate could be brought down to 9% with a cut of 4.5%. This changes the arithmetic and might have some effect. While the industry will have to do its share also, hotels and restaurants have already been cutting costs.

In addition, we will provide some marketing funds and, arising from the visit of the Queen, we will focus on particular regions of the UK. Many people will dismiss this and say it is too late in the year to do anything but that is not the case. If we were marketing in America, it would be too late in the year because Americans tend to arrange their holidays 12 months in advance. People in the UK are like ourselves in that they could decide today they were coming to Dublin on Friday week and then check on a website for a cheap flight and a value hotel. It can be done quickly when it is a case of Europe or the UK, which is where we will try to put in some marketing resources. We hope we can bring people back again. When we combine that with the changes to PRSI, given that many working in the hospitality industry are not paid very well, this will encourage an uptake of workers.

The changes the Minister for Justice and Equality, Deputy Shatter, is making with regard to visas will also help. Members will remember, although not all are as old as myself, that 25 or 30 years ago if a person visited London, one of the risks was that a Japanese citizen swinging a camera would take out that person because the Japanese were everywhere, taking photographs. More recently, Chinese tourists have been coming in numbers and if one visited London in the past year, the number of Chinese tourists is quite obvious on the streets. Some of them want to come to Dublin but they cannot make the add-on trip for four or five days because they must get a separate visa which could take up to 12 months to obtain, certainly six months. What will happen now is that anybody travelling from the set of countries announced by the Minister, Deputy Shatter, including China and India, who produces a UK visa in Dublin Airport can enter and stay for the term of the validity of their visa, and we will not undertake a second check. As soon this scheme becomes slightly more developed and various security measures are put in place, this will be retrospective so a person will be able to come to Ireland first before travelling on to the UK.

It is a series of small ideas but I want to give the House a flavour of the thinking. Capital projects are a further issue. In my area, the people who are most obviously unemployed are those who used to work in the building industry, such as electricians, carpenters, plumbers and plasterers. Therefore, we are trying to progress the shovel-ready projects. We are trying to get them to build school extensions, all with their pitches and playgrounds, to do painting and decorating, retrofitting for energy conservation purposes, and so on. That is the direct job area targeting for people who have many skills but who cannot get work at present. We are doing this to keep their skills going and keep them in Ireland in order that as the economy turns, there will be a natural pick-up and they will again find private sector employment.

I wanted to give Deputies a flavour of the thinking concerned lest they think this is simply a checklist of separate initiatives. The intention is that it is joined-up thinking with a pattern to it. Will it work? I hope it does but it is only the first initiative and we will continue to try other measures. The alternative is to stand still, do nothing and wait for the truck to hit. This way, one starts doing things. Not all of them will work but some will and, in doing this, there is nothing like activity to build up confidence.

See this speech in context