Enda Kenny (Mayo, Fine Gael) | Oireachtas source

This Government has just passed the half way point in its term of office. Yesterday's budget has advanced three vital goals for the Government in the remainder of its term: first, to continue to correct the public finances so that Ireland can successfully exit the bailout on 15 December, signalling the end of the bailout era; second, to continue to create more jobs and accelerate the reduction in unemployment by building on the 3,000 jobs currently being created every month; third, to support hard-working families on average incomes who have given a great deal since the crisis began.

The country is on track to achieve our commitment to the people to exit successfully the EU-IMF bailout on 15 December. The budget delivered yesterday by the Ministers for Finance and Public Expenditure and Reform was essential to reach this goal.

Some three years ago, on the eve of the bailout, it was a very different story for Ireland. We had a Government in denial, Ministers were misleading the public about the imminence of the bailout, the private sector had been losing 7,000 job a month in the previous three years and the banks had lurched from one crisis to the next. It was a time of despair for the people, the economy and the future. The new Government took office in March 2011 and was elected on the promise that it would sort out this crisis, ensure it could never happen again and bring a new and real prosperity to Ireland. In the past year we have made significant progress in undoing many of the mistakes made by the Fianna Fáil Party in government. In February we removed the millstone of the promissory notes from around the necks of the people and consigned the toxic Anglo Irish Bank to history. We all remember the €3.1 billion we borrowed for each of ten years to pay for Anglo Irish Bank. In lifting this unfair and invidious burden we provided breathing space for the economy to recover and grow. The deal reduced the State's cash borrowing requirement by €20 billion in the next ten crucial years. It also means that the adjustments to be made to meet our deficit targets will be less onerous than would otherwise have been the case.

In June, during a highly successful Irish Presidency of the European Union, we finalised arrangements with our partners to extend the maturity of the EU component of our programme loans, extending the weighted maturity of loans to Ireland by up to seven years. As we look to re-enter the markets fully, this will help to keep downward pressure on our borrowing costs which is important not only in regard to Government borrowing but also for our semi-State bodies, banks and large companies that raise capital on the financial markets. It will have a positive ripple effect across the economy and means an additional €9 billion in savings at a time when we need it most.

Securing these outcomes was possible thanks to skilful and painstaking negotiations by the Minister for Finance and his team, supported in his unceasing efforts by the Tánaiste and backed up with the creative energies of his officials and officials in my Department. It was a team effort. It was also a concrete reflection of the trust we have built with our partners and the extent to which we have been able to restore our reputation. People believe in the country again. After the huge sacrifices of the people, we are finally seeing light at the end of this economic tunnel.

It has not been an easy few years, nor could it have been owing to the economic calamity that hit the country. We still have much to do before it is back on solid foundations, but exiting the bailout in December will restore confidence in the country. It will not mean that our financial troubles will be over. We still have to get the public finances back in working order. The huge progress we have made in addressing the deficit is one of the reasons we have seen a return of confidence in Ireland. We will complete the job, as promised in 2011, to reduce the deficit to under 3% of GDP by 2015. The budget correction this year of €2.5 billion will leave us with a 4.8% deficit next year, ahead of the 5.1% required target, and within striking distance of our overall goal. Next year we will produce a small primary surplus, demonstrating that the national debt which has been rising for so many years is at last under control.

Restoring confidence in the economy will allow us to achieve our next vital goal, namely, to create more jobs and get Ireland working. As the Minister for Finance pointed out yesterday, this is the first budget since 2007 that has been delivered against a background of rising employment. The private sector is adding 3,000 new jobs every month. Irish exports have reached record levels and we can build further on this as the European economy starts to recover, some signs of which have begun to emerge in recent months. Previous budgets and capital plans were all designed to increase employment and it is encouraging that they are starting to show results, but more must be done if we are to reverse the crash pioneered by Fianna Fáil which saw 250,000 private sector jobs lost in the party's last three years in office. Budget 2014 is pro-jobs and pro-enterprise in its design. It avoided job destroying increases to income tax and corporation tax. In addition, the Government is introducing a €500 million jobs package, with 25 new tax measures to increase and accelerate job creation in the next year such as maintaining the 9% VAT rate for the tourism sector. It has already created 15,000 new jobs in all parts of the country since the introduction of the new rate and increased the number of incoming visitors to Ireland. An expanding and growing tourism industry has the capacity to create more jobs quickly. We have also reduced the air travel tax to zero from 1 April to encourage airlines to establish new routes into Ireland. I expect the airlines to respond to this incentive shortly.

The Government values the spirit of enterprise and entrepreneurship as we rebuild an economy based on exports, innovation and enterprise. To incentivise the unemployed to create their own jobs, we have established a new start-your-own business scheme for people who have been unemployed for 15 months or more by offering a two year income tax exemption for those who start their own unincorporated businesses. To promote entrepreneurship, from next year we are offering a capital gains tax relief to entrepreneurs who reinvest the proceeds from the disposal of assets in a new investment in productive enterprise. Some entrepreneurs might invest in one business and then in another. There is an incentive to continue to do so.

To help attract additional major film productions to Ireland, we are bringing forward the start date of the new film relief scheme to 2015 from 2016 and extending it to include non-EU talent. These productions can often involve thousands of temporary jobs and provide a significant boost for the tourism sector. The Minister for Arts, Heritage and the Gaeltacht, Deputy Jimmy Deenihan, raised this point on a number of occasions. I had the opportunity and privilege to speak to Mr. Steven Spielberg about it and the issue was non-EU talent being catered for in film production in Ireland. We are changing to allow it to happen where it can. Ireland holds enormous potential in this area.

To help small business, we are amending the cash receipts threshold for VAT from €1.25 million to €2 million with effect from 1 May 2014. This will assist cashflow and reduce administration in a larger number of SMEs. That is welcomed by business. Ireland has the best environment in the world for agriculture which is matched by an industry driven by world class standards. It has the potential to expand in the coming years and create even more jobs. The extension of capital gains tax retirement relief to disposals of long-term leased farmland in certain circumstances will encourage older generations to lease their farmland on long-term leases to new, younger farmers. This may apply in cases where farmers do not have children or do not have family members interested in continuing farming activities. To grow the industry, eligibility for young trained farmers relief is also being extended by adding three more qualifying courses to the list of relevant qualifications required for the 100% rate of stock relief and the stamp duty relief for the purchase of agricultural properties. This is becoming more important as we move towards abolition of quotas and fulfilling the potential of the agri-sector. Significantly for our capacity to create jobs, we are continuing the high support for the job agencies, IDA Ireland, Enterprise Ireland and the local enterprise offices, which have estimated that they will create nearly 50,000 new jobs in 2014.

In advancing efforts to get Ireland working again, the Government is acutely conscious that many of the 250,000 people who lost their jobs in the three years before it took office were working in the construction sector.

Just as the tourism sector fell below normal levels during the crash, so did the construction sector. Construction also requires attention to restore it to what one might call effective health. From having been wildly over-heated, where this was contributing 25% or 26% of GDP, the sector is now worth about 5% of GDP or half the European average, and clearly is much too low. In employment terms, we are significantly below the EU average of 7% of total employment and there is good reason to believe that the pendulum has swung too far.

We want to see a new and renewed construction sector, properly regulated and based on the highest international standards. Having met representatives of the Construction Industry Federation recently, it wants to have a sector that is built on integrity and trust and in which there will be no more Priory Hall type issues. This must be managed carefully. It must be done on a sustainable basis. We cannot go back to the boom-and-bust reckless approach, that went on previously and which had disastrous consequences for the country.

We recognise the importance of what good building contractors can do in a situation where the construction sector is right-sized and can play a strong supporting economic role in job creation in the country. Sustainable construction is a vital part of planning and providing for that future, whether in building vital economic telecommunications and energy networks, and educational infrastructure, including schools, or in providing the space for new commercial and industrial enterprises. I believe that the measures contained in the 2014 budget can be the catalyst for that recovery and spur on the wider economy.

Through the raising of additional funding from the sale of State assets, the Government has organised an additional €200 million capital programme for 2014. While supporting a reviving construction sector, the package will also support local economies nationwide. The package includes major developments, such as the Cork city events centre, restoring heritage buildings that are at risk, the national sports campus, additional sports capital grants, 5,700 housing adaptation grants for the elderly and the disabled, social housing construction recommencing for the first time in a number of years and maintaining the current network of local roads. In addition, the home renovation incentive and the extended living city initiative, in particular, will help the residential construction sector. The latter, in respect of the living city initiative for buildings that were constructed prior to 1914, many of which are in Dublin between the canals, the Synge Street area or wherever, will certainly stimulate much opportunity, and that is being extended to other cities where the take-up will be significant. In the home renovation incentive scheme for those who want to build little extensions and make repairs or improvement of their homes, provided that the contractors are registered, the tax relief is available on expenditure of up to €30,000 and will be reclaimed over two years. This should get many smaller contractors and smaller builders and tradespeople back into the business of assisting in the construction sector, that is effectively managed and properly controlled, and has trust and integrity about it.

However, there is absolutely no point in creating new jobs unless we can get people off the dole queues and into employment. We cannot rely on economic growth alone to reduce the dole queues, as might have been done in the past. We are in a dynamic labour market within the Union of 500 million citizens and we need to make every jobseeker as "work ready" as he or she can be. Through the Pathways to Work scheme, we are fighting back against long-term unemployment and youth unemployment. I have commended the Minister for Social Protection, Deputy Burton, on her efforts in this regard already. We cannot allow a situation where young people are incentivised to graduate from school onto welfare. To do so would to be to accept the massive long-term social and economic consequences of a generation of welfare dependants. We have too many jobless households in Ireland, away above the European average, and that is not good for society. We already have one fifth of households categorised as jobless, double the European average.

A whole new approach to work activation and welfare reform is required to break that cycle of welfare dependency. Our young people should have the opportunity to be in education and training, not languishing on dole queues. This is the context of yesterday's changes to the jobseeker's allowance rates. These budget changes will ensure that young people will be at least €60 per week better off in education, employment or training than in claiming welfare. For example, those under 26 years who participate in a back-to-education course will have their jobseeker's allowance increased to €160 per week. As I stated during Question Time here, if it is on JobBridge or other schemes, it is even higher than that. That means that, in addition to the enhanced career and job prospects from improving skills and education levels, there is a significant financial incentive for young people to participate in education, employment or training, and have the opportunity to get a real job. These actions are part of a much bigger strategy to address the problem and should not be viewed in isolation.

We are in the process of rolling out the youth guarantee, which was negotiated as part of the European Presidency and which will aim to provide adequate further training and education places for unemployed young people. Budget 2014 has allocated an additional €14 million to increase the number of places available for young people - specifically, 1,500 new places on the JobsPlus scheme and amending the criteria for under 25s to only six months unemployment to become eligible; and another 1,500 places under the JobBridge scheme for under 25s. A further minimum of 2,000 training places will be ring-fenced for under-25s who are out of work in 2014, at a cost of €6 million. These places will be provided under a follow-up to the successful scheme, which is called the Momentum programme, that operated in 2013. Next year, the Department of Social Protection will spend €1.08 billion on work, training and education places and related supports for jobseekers - an increase of almost €85 million on the projected spend this year. The changes relating to jobseeker's allowance for young people are being made in this context - to place a greater emphasis on work, training and education supports rather than merely income supports. At the end of the day, work must always be seen to pay and the Government will continue to implement its Pathways to Work strategy to ensure that our system supports work over welfare.

While Sinn Féin has been populist on this subject, the soundbite statements by the Fianna Fáil Party simply remind everybody of inactivity during that party's period in government and its lack of understanding of work activation policies. While in government, they operated a social welfare system that did not introduce any single reform related to work activation which saw Ireland fall further behind other countries.

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