Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

The story of insolvent Ireland is familiar to all our people and the sacrifices people have made in recent years are well known. Reckless policies were pursued by the Fianna Fáil-led Government. This continued until Ireland was no longer able to borrow on the international markets and the Government had to turn to the lenders of last resort. The help from the IMF and the European authorities came at a high price. Hundreds of onerous conditions were attached to the loans; Ireland lost its sovereignty and the troika came to Ireland. The Fianna Fáil-led Government collapsed in a shambles and a Fine Gael-Labour Party Government took office, with a mandate to sort out the disaster, stabilise the economy, get people back to work and restore the sovereignty of this republic.

The new Government immediately set about this task and renegotiated the bailout programme. Among the more notable achievements were the extension of the maturities and the reduction in interest rates on the European loans, the promissory note changes, the liquidation of Anglo Irish Bank, the restoration of the minimum wage and an agreement that half of the proceeds from the sale of State assets would be used for capital investment. The Government has reduced the deficit and controlled the national debt. We have reduced interest rates to levels below those that pertained during the so-called boom, the economy is in its third successive year of growth and 3,000 net new jobs are being created each month.

The purpose of this budget is to continue the progress we have made, reinforce policies that grow the economy, establish the conditions which will create jobs and prepare for exiting the bailout programme. To this end the Government has designed this budget. We will bring in a deficit of 4.8% in 2014 and a small primary surplus, demonstrating that our national debt which has been rising for so many years is under control. We will achieve these targets by an adjustment of €3.1 billion, €2.5 billion of which will consist of expenditure cuts and tax increases.

As W. B. Yeats said at Easter 1916, “too long a sacrifice can make a stone of the heart”. I know there is a view that the consolidation should go further, but people have already made many sacrifices.

One of the primary tasks of this budget is to lay down the conditions for a successful exit from the bailout programme at the end of the year or, to put it another way, to fund ourselves fully through the international markets in a sustainable way at competitive interest rates. We are well on course to do this and as the economy continues to grow and jobs continue to be created, we have a fair wind at our backs to achieve our objectives and restore our sovereignty.

Focus on Employment

While the Government was in the past two and a half years focused on implementing and ultimately exiting the EU-IMF programme, we have also been following another parallel programme. This parallel programme took the economy sector by sector and the Government built on the strong sectors of the economy and repaired those sectors which were damaged. The objective of this parallel programme is to support businesses to create jobs and get people off the live register and back to work.

For example, in the tourism sector I reduced VAT to 9% from 13.5% within the first 100 days of this Government, an initiative that boosted the tourist industry. I introduced a number of measures to support farmers and help those farmers who were preparing for the ending of milk quotas in 2015. Last year I introduced a ten point tax plan to support the SME sector. I introduced over 20 measures in Finance Act 2012 to support the financial services sector, while a range of initiatives were introduced in the past two years to support the recovery in the property and housing market.

I have also introduced measures to enhance the attractiveness of Ireland as a destination for foreign direct investment and we have continually defended our 12.5% corporate tax rate.

While many of these initiatives on their own may be small, taken together they have played a significant part in the recovery and in the jobs market. In this budget I will follow the same approach. Creating jobs is the primary objective and today I am introducing 25 pro-business and pro-jobs measures. The total cost of the tax elements is in excess of €500 million in a full year. This very significant investment is designed to help businesses in key sectors achieve their full potential growth and create jobs.

Pro-Jobs Tax Measures

This Government continues to focus its policies on creating and maintaining jobs in all sectors of the economy. I will now set out the tax measures that will support job creation and then the Minister for Public Expenditure and Reform, Deputy Howlin, will set out the public expenditure measures that will support job creation.

Tourism

In recognition of the importance of the tourism sector to the overall economy and as a major source of jobs, I reduced VAT in this sector to 9% in the jobs initiative of May 2012. As I outlined earlier, this initiative has proved to be a major success, helping to create more than 15,000 new jobs as well as protecting existing jobs. As Deputies will be aware, the rate of VAT for the tourism and hospitality sector and the other sectors to which it applies is due to revert to 15.5% at the end of this year. However, it is important that we reinforce success when possible, so I have decided to continue the 9% rate of VAT for these vital sectors.

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