Enda Kenny (Mayo, Fine Gael)

This Government came to office at a time of unprecedented challenges for the economy and the people. It took office with great ambition for this country and its people. It was voted into office, with the largest ever majority, by the people to restore our economic sovereignty, get Ireland working again, return our economy to growth and to radically reform our politics and public services. This week, we have taken another major step in delivering on this for our people. We will not stop until we have delivered on these objectives.

The Government has just announced its first budget. It is a jobs budget from a Government focused on delivering jobs. Since being voted into office, this Government has had jobs at its very heart. It has been the focus of the programme for Government and directed Government action. We committed to a major jobs initiative within 100 days of taking office and we delivered on it. The initiative included a range of actions across Government to stimulate the economy and specific sectors to help get people back to work. The key elements of the jobs initiative include reaffirming, as the Minister for Finance repeated yesterday, that our 12.5% corporation tax rate remains sacrosanct; a temporary reduction in the lower rate of VAT, from 13.5% to 9%, on restaurant and catering services, hotel and holiday accommodation and various entertainment services; the halving of the lower rate of employers' PRSI on low paid workers; shifting capital expenditure towards more job intensive projects in the areas of education, local and regional roads and sustainable transport projects; additional funding for energy efficiency schemes; the provision of an extra 20,900 activation places for the unemployed, including 5,000 work placements and 6,000 new training-reskilling places targeted at people who have lost jobs in sectors with high levels of unemployment, such as construction; a national internship programme, which has already placed 3,000 people, with many more posts currently advertised; the extension of the requirement for public bodies to pay suppliers within 15 days; and improvements to the research and development tax credit scheme.

The Government has now extended the 15-day prompt payment requirement beyond central government Departments to include the HSE, the local authorities, State agencies and all other public sector bodies. It has already started to deliver for the economy. Overseas tourist numbers for the first eight months of this year are up 11% on the same period in 2010. The number of visitors from mainland Europe and North America is up 13% and 12.6%, respectively.

In September the Restaurants Association of Ireland reported that almost 94% of restaurants had passed on the VAT reduction. Almost half of all restaurants have seen their business turnover increase in the past eight months compared with the previous year.

Figures published in September show that Ireland's slide in the global competitiveness ranking has halted. Our exports increased by 7.3% in the first six months of 2011 compared with the same period in 2010. Since 9 March, companies supported by the IDA have announced a total of 4,770 jobs.

The jobs initiative was only a beginning - a statement of intent. Jobs have been at the core of this Government since then. Ministers have been busy working on developing new schemes and policies to get Ireland back to work, including a new €10 million overseas entrepreneurs fund to attract mobile international entrepreneurs to start their businesses in Ireland and ensure that the world-leading companies of the future can come out of Ireland; a second call under the €125 million Innovation Fund Ireland which to date has announced three investments, including in the first high calibre Dogpatch Business Incubator Lab outside the USA, which I recently visited and where I met a number of young entrepreneurs; a Government cloud computing implementation strategy to ensure Ireland takes full advantage of the 8,600 job potential of this global industry; and new technology centres in energy smart grid and cloud computing aimed at turning good ideas into good jobs, in which sector there will be good a future for young people in the decade ahead.

Work on new jobs policies is continuing with budget 2012, another step in getting Ireland back to work. The Government will shortly publish a major policy statement on labour market activation, Pathways to Work. This will set out our strategy to reduce and prevent the drift into long-term unemployment to ensure people are assisted and incentivised to move off the live register as jobs are created. It will set out targeted measures and major institutional reforms to help people who are unemployed get the training and work experience they need. Furthermore, the Minister, Deputy Bruton, is preparing an action plan for jobs to be launched early next year setting out key actions to be delivered over the course of 2012 to target new jobs and sectors. Getting Ireland back to work cannot be delivered in one budget announcement but will continue to be the priority over the lifetime of this Government.

The priority on jobs is linked to the ultimate goal of rebuilding our economy and restoring faith in Ireland at home and abroad. We have taken necessary steps to improve our collective situation. Despite the naysayers we have significantly improved the terms of the EU-IMF programme and have delivered a reduced interest rate on our loans, resulting in a saving of €10 billion for the taxpayer over the lifetime of the programme. We have taken big steps to reform the banking sector so that it can begin to serve the people again. Recent private sector investment in Bank of Ireland is a reflection of renewed confidence in Ireland, something unimaginable this time last year.

We have largely rebuilt our international reputation through constructive engagement with our European partners and other friends further afield. We are now known and seen internationally as a country that is serious about its economic recovery efforts, one that is very much open for business, which is reflected in international business and political comment in Europe and beyond.

This message came across clearly to me in my conversations with participants at the Global Irish Economic Forum last October. It is also reflected in Ireland's continuing success in attracting foreign direct investment. As for investment from the United States in particular, business and investment interests there were happy to have clarity and decisiveness on the part of the Government in respect of Ireland's corporation tax rate. This confidence has been reflected in bond yields, which clearly differentiates us from other programme countries. The economy has returned to growth this year after three years of contraction and small though that growth may be, it is heading in the right direction. Moreover, the forecasts confirmed by the Minister for Finance yesterday are for this growth to continue next year. Our exports continue to perform well and this strong performance is expected to continue despite the slowdown in global markets. However, given growing uncertainty in global markets, we must focus all our efforts on sustaining what is a fragile recovery. The objective of budget 2012 is to build on these achievements and set out a clear, consistent pathway forward for the economy.

The Government has been unwavering in its commitment to return the public finances to good health and bring the debt below 3% of GDP by 2015. Returning the public finances back to good health was the ultimate legacy of the former rainbow coalition. It created the solid base from which the so-called Celtic tiger emerged before it was hijacked by the "show time" of irresponsible economic policies. The Government's ultimate goal is to regain our national sovereignty by maintaining its fiscal commitments in the years ahead.

Creating new jobs will at the core of correcting the public finances and restoring sovereignty, the reason the budget has jobs at its core. The Government values work and what it means for people and, therefore, is delivering on its promise not to increase taxes on incomes from work. We came into government determined not to repeat the disaster of the universal social charge, which was disastrous for consumer confidence, spending and the incentive to work. That is the reason for the decision of the Minister yesterday to exempt 330,000 people with incomes of less than €10,000 from the universal social charge. This is a statement of the value the Government attaches to work. Moreover, this decision will affect a great number of part-time workers to their benefit. This is the reason the Government has ditched its predecessor's plans to further cut take-home pay for all those at work, including the lowest paid.

High taxes on work kill jobs; the more one taxes something, the less one gets of it. This is supported by evidence, both international and Irish, and the reason the Government will not repeat the mistakes of the past by killing off investment and entrepreneurship through penal tax rates. The top marginal income tax rate is already 52% for PAYE workers and 55% for the self-employed. Increasing it further would have had a very damaging effect on indigenous entrepreneurship and the flow of jobs from foreign direct investment into Ireland. That is the reason the Government has chosen instead to tax wealth rather than work. It has found ways to ensure a fair distribution of the burden of adjustment that does not put at risk its core objective of growing our way out of the debt crisis. Protecting the take-home pay of those at work will ensure work continues to pay and will make it affordable for people to move off welfare and into jobs when opportunities and career opportunities arise. At the end of the first 100 days of the Government, I indicated there would be no increases in income tax and yesterday that commitment was delivered on. It was essential for people and families to plan for the future in the knowledge that their take-home pay in December would be the same as in January. Therefore, it is vital that in the coming years tax on work be kept to a minimum, the reason future increases in income taxes will be avoided.

Despite the difficult financial circumstances in which we find ourselves, a significant capital expenditure programme has still been provided that will deliver real jobs. The Government is maintaining a capital investment programme of approximately €17 billion over the period of the programme ahead. This plan is based on what the country can afford. The Government has prioritised the investments most needed. Some other very good projects have had to be changed, put on hold or deferred until the public finances have improved. There will be an increased focus on delivering work-intensive local projects such as schools, health care centres and local job supports. The Government has also delivered on its commitment to establish NewERA and created a new strategic infrastructure fund which will support further investment in Irish infrastructure, in particular through the semi-State companies. All of these investments will play a vital role in getting people back to work. When I met representatives of ICTU with the Tánaiste, one point stressed by them was the Government should encourage and do whatever it could to induce pension funds that had invested abroad to invest in infrastructure in Ireland. This is an issue to which the Government intends to apply itself in the new year.

The budget supports business to create new jobs. IDA Ireland, Enterprise Ireland and the county enterprise boards have maintained their high budgets, despite pressure to reduce spending across government, and will continue to provide essential financial and soft support for businesses, which is extremely important. The capital budget of the Department of Jobs, Enterprise and Innovation will hit its highest ever level, with €1 billion being provided in the next two years. This is solid evidence of where the Government's priorities lie. Yesterday the Minister for Finance, Deputy Michael Noonan, announced new initiatives to attract new investment and new high value jobs. The changes to the research and development tax credit provided by the Government will be welcomed by dynamic domestic and international businesses. In addition, the Government is introducing a new special assignee relief programme to help businesses attract key people to locate in Ireland. The point is often made by international companies that when people with particular expertise of exceptional quality come to Ireland, it often leads to further research, whereby others work with these persons to make further advances. For this reason, a special assignee relief programme will be available to such companies for people who have yet to come to Ireland. This will be of particular benefit to the international financial services industry and there will be further measures in the finance Bill to help create jobs in this sector.

There is also good news for small business, with the corporate tax exemption for new start-up companies being extended for the next three years. It will be available for companies which commence trading in 2012, 2013 and 2014. Moreover, to support new exporters who are very important to take their first tentative steps in the world market to sell Ireland to growing new markets, the Government has announced that smaller companies will be able to avail of the planned foreign earnings deduction when they expand their export markets into the BRICS countries, that is, Brazil, Russia, India, China and South Africa. This means that special exemptions will be given to young people given responsibilities to sell new products in new markets in the BRICS countries, once they have spent 60 days selling for Ireland. It will be a real challenge for young people to be involved in these new markets with obvious potential for further exports and production here in Ireland. I have met business people all over the country since coming to office and these are some of the supports they need and for which they have asked to grow and prosper.

There is, however, a recurring problem that has arisen time and again, that is, the difficulty in accessing credit. All Deputies will understand this and have heard how people cannot get credit or a loan. The Minister for Jobs, Enterprise and Innovatin, Deputy Richard Bruton, therefore, has recently announced specific measures to address this problem, including a micro-finance loan fund which will generate up to €100 million in additional micro-enterprise lending and benefit at least 5,000 businesses in the next decade. Another measure involves a temporary partial credit guarantee scheme to assist commercially viable businesses which are having difficulty in securing credit but which, owing to particular market failures, cannot secure this credit. Having attended a range of financial meetings recently, what people really want is a banking system they can trust, that operates properly and effectively in the economic interests of the country and for which people should have respect. However, all of this has been lost for a variety of reasons. The variety of people working in these banks did not have anything to do with this but have taken the brunt of the hit. There has been a rebalancing in this regard. I note Bank of Ireland secured its remaining core tier 1 capital recently, a sign of direct investment into the bank from abroad. Together with the Tánaiste, I will meet the banks again early in the new year to ensure they deliver on the targets agreed for SME lending. We will discuss lending principles and structures, access to credit and so on.

The budget also builds on the fabulous growth figures for the agrifood sector which is reaching new heights in exports. Ireland has been exceptional in agricultural production and building on this success will sustain jobs in every townland across the country. The sector exports to approximately 170 markets worldwide. This year Irish food and drink exports are expected to reach an all-time record of €8.9 billion, an increase of almost €1 billion, or 12%, on last year's levels. There is additional capacity, of which young farmers are gearing up to avail when quotas are abolished on foot of CAP reform. Five of the top 20 exporting companies located in Ireland are in the agrifood sector and agrifood companies account for 60% of manufacturing exports by indigenous firms. New actions by this Government will encourage the development of the next generation of farmers focused on exploiting the opportunity to export more Irish food around the world for which there is constant demand now because of the brand of quality and excellence Irish food and its reputation has gained around the world.

Preparing the budget that supported jobs but respected our goal to restore the public finances was not easy. It involved long and often complex debates at the Cabinet table. The production of this budget was very different from the years of the so-called Celtic tiger when the question being asked of Ministers was how much can one spend, not how much can one cut. However, I believe with this budget we have struck the right balance, not just for 2012 but in the decisions we have taken for the period to 2014. We have taken some very difficult decisions in order to cut public spending and reduce costs. Some of the measures we are introducing will cause difficulty and hardship for some our citizens. I wish this were not the case but to deny it would be not to speak the truth.

Some 80% of our current expenditure is on social protection, health care and education. It is not possible to reduce spending without affecting these areas. However, we have focused our limited resources on those with genuine need. The lowest paid, 330,000 income earners, will no longer be liable for the universal social charge. There are no changes to core social welfare payment rates or State pension rates in this budget. We have protected the take-home pay of workers by avoiding increases in income tax in the budget.

We are assisting vulnerable homeowners by increasing mortgage interest relief to 30% for first-time buyers between 2004 and 2008. This meets a core commitment of the Government to help the generation worst affected by the collapse in property values. The Minister for Finance has outlined that there will be other announcements in regard to mortgages and mortgage distress in the near future.

We are providing additional funding to develop community mental health teams and services. I am glad to note that the Minster for Health and the Minister of State, Deputy Kathleen Lynch, have secured specific funding for the mental health area to make it central to the normal part of the delivery of health services.

We have made sure to safeguard our children and our young people from the brunt of the cuts. The basic rate of child benefit has been maintained. Schools in disadvantaged area will continue to be prioritised for targeted supports. The overall number of resource teachers and SNAs is being maintained despite all the controversy about that some weeks ago. We have committed to building the national children's hospital. As I announced this morning, the chairperson of the Advisory Group on Taxation and Social Welfare is examining the question of the issue of the domiciliary care for a specific cohort of young people.

This economic crisis, however, should not be wasted. It presents an opportunity for Government to fundamentally reform the manner in which our public services are delivered. For too long, reform of Government was ignored and sidelined. Lack of political leadership at the top stood as a barrier to delivering an efficient public service that met all the needs of its citizens. A leaner, smarter and better public service is one that promotes job creation, is more flexible to the changing needs of citizens, and plays a central part of Ireland's recovery story. The establishment of a new Department of Public Expenditure and Reform, with the Minister, Deputy Brendan Howlin, is a clear sign of intent from the new Government that reform will continue to be a priority across the entire Government.

This Government is a reforming one. We have shown that change must be led from the top. Since coming into office we have reduced the pay of the Taoiseach and that of senior Ministers, halved the cost of ministerial transport, introduced new pay ceilings for senior public servants and published legislation to significantly reduce future public service pension costs. We have reduced the cost of advisers by 30%. Former taoisigh are having their staff and phone entitlements withdrawn with effect from 1 January 2012. Next year we plan to reduce public service numbers by 6,000. This will mean a real saving of more than €400 million in the public service pay bill. We are targeting a reduction of a further 23,500 staff by 2015 over what was planned by the previous Government. When delivered, this will have reduced our gross pay bill by more than €2.5 billion, or 15%, since 2008.

We have introduced a new and expanded programme of State agency rationalisation. This will rationalise 48 bodies by the end of 2012, with a further 46 to be critically reviewed by June 2012. We have cancelled the costly, opportunistic and misguided decentralisation programme announced by a previous Government.

The Government has high expectations for what can be delivered through the Croke Park agreement. It must facilitate this reduction and restructuring of the public services with minimal impact on front-line services. It will be also used to deliver significant further savings through reduced overtime and allowances. The fiscal challenge we face next year, and in the period to 2015, requires the public service to deliver change in a way it has never done before. These reforms are essential if we are to keep costs to a minimum and to avoid additional tax increases which would serve to act only as a disincentive to job creation and investment.

An essential part of public sector reform will be to change the way we manage our national budget to ensure that mistakes of the past cannot be repeated again. The truth is that our budgetary systems were not fit for purpose. This year has already seen significant reform of the budgetary process. We have established an independent Fiscal Advisory Council and a fiscal responsibility Bill will be published shortly. We will build on this with further reform of the expenditure and Estimates process. We will ensure that all programmes are regularly evaluated to ensure they deliver value for money. Where they are not delivering, that must be exposed to full public scrutiny. There also will be an enhanced role for the Oireachtas because this Government recognises that everyone has a part to play in our path to recovery.

There are a few crucial days ahead in Europe. The Irish Government, which I am proud to lead, will play its part and will constructively contribute to solutions which will restore stability to the financial markets, while safeguarding the legitimate rights of the Irish economy and the Irish people. Our ability to effectively represent Ireland on the European stage is greatly enhanced by the actions we have taken at home and abroad. Since taking office, and in this budget in particular, we have been clear about our economic strategy. We have set out a clear pathway to overcoming the fiscal, banking and employment difficulties we inherited. We have been honest and open with the people about the challenges that this country faces and how we will overcome them. We thank the people for their continued patience and understanding of the difficulties in which our country finds itself and their co-operation, challenge and comments in respect of decisions being taken by Government.

In keeping with the Government's philosophy, this budget is fair, balanced and focused on jobs. I told the people on Sunday night that this Government is determined that the necessary decisions and changes are made to ensure that an economic crisis on this scale is never allowed to be inflicted upon the Irish people again.

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