Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

Nobody on this side of the House is pretending that decisions that were made in yesterday's budget will not have a negative impact on people. This is the seventh difficult budget in five years and some of the decisions taken will have an effect on income and put some people under more pressure. I attended the meetings and we spent hours going through the options, trying to limit the pain and difficulty for people in the decisions we had to make, while at the same time looking to do positive things such as creating a stimulus for jobs and ultimately encouraging growth, which will solve our problem. That is as opposed to continuing cutbacks.

I hope this is the last significantly difficult budget that the country will face. People have demonstrated patience with the burden they have carried over the past five years because of a disastrous Government that collapsed and almost brought the country with it. At last the rebuilding process is now well under way, despite the difficult decisions that have been forced on us. I hope we will soon enter a new era of increased expenditure rather than continuing reductions year after year.

My job is to give political leadership to the agrifood, agriculture, fisheries and seafood sectors. My objective in this budgetary process is to build on the progress achieved in recent years in developing the agrifood sector and, in particular, to further contribute to the future growth and prosperity that the sector can achieve for Ireland, expanding its revenue base through growth in export earnings. In particular I am pleased to announce, in spite of the very difficult budgetary arithmetic, the introduction of the world's first national beef genomics scheme, which will result in further progress on the genetic quality of Irish beef and deliver world best practice in beef traceability.

The Exchequer contribution to the Vote of my Department will amount to €1.203 billion in 2014, which is comprised of some €1.0192 billion in current expenditure and €183.7 million in capital expenditure, although the figure will increase going into next year because we will have some carry-over from this year. This represents a modest fall in overall terms in 2014, reflecting the reality of macro-level budgetary constraints, but it is also worth noting that some agriculture schemes are coming to the end of their natural lives and, separately, my Department continues to reduce the administrative cost of delivering its programmes for farmers and the agrifood sector as part of its reform programme.

This year's budget is consistent with last year's in terms of priorities, which include supporting vulnerable sectors and protecting the incomes of family farms; supporting small farm holdings in disadvantaged areas; introducing taxation measures to restructure, modernise and promote growth in the agrifood and farming sectors; and providing support programmes in line with the targets of Food Harvest 2020. To the credit of the Fianna Fáil Party, that was designed during the last Government. A particular concern within that policy direction is job creation, but we are also looking to support the future of the sector through new research and development funding as well as investment in food safety and animal health and welfare controls. We also seek a continuing programme of reform within the Department and its agencies aimed at continued improvement in service delivery and reduced costs.

The agrifood and fishing industry is enjoying a period of strong success and all signs point to continuous growth for the sector, in spite of the difficulties in the marketplace. In 2012 food and drink exports exceeded €9 billion for the first time, which means that in the past three years these exports have risen by 28%, or €2 billion, in total. This trend is continuing; the latest CSO figures for food and beverage exports show a 7% rise in the first half of 2013 compared to the same period in 2012. That means that by the end of this year we will be close to exporting €10 billion worth of food and drink when less than three years ago that figure was considerably below €8 billion.

There is a parallel upturn in employment figures in the food and drink sector in the past two years, with Forfás estimating that job numbers grew by more than 1,300 in 2012. Some element of this trend can be attributed to the work being done by the Government and the Food Harvest implementation committee in supporting this growth in the sector which is the most important part of the indigenous economy, as any commentator may judge.

In regard to supporting vulnerable sectors, I am maintaining the current level of payments under the disadvantaged areas scheme, a key priority for which I have allocated €195 million in 2014. I have also increased the allocation for the grassland sheep scheme to €15 million in 2014. Although direct funding of €1.21 billion representing the single farm payment is not provided for in the Exchequer Voted expenditure in 2014, the associated administrative cost of implementing this important payment to farmers is funded through the Vote. The first instalment of the single farm payment is being paid to farmers from today, with some 108,000 farmers getting more than €500 million in the coming days.

Building on existing measures in the beef sector, I am announcing a budget package worth €40 million for the sector, comprising €23 million for a new beef genomics scheme which, when taken together with the beef data programme worth €10 million, will allow farmers to claim an equivalent payment of €60 per calf for an estimated 32,000 herds covering up to 550,000 suckler calves. In addition, I am continuing my commitment to the sector through the continuation of the €5 million beef technology adoption programme, or beef discussion groups as farmers will know them. Almost 5,500 farmers received an annual payment of €925 each under the 2012 programme. Separately, €2 million is being provided to cover remaining payments under the suckler welfare scheme. I am delighted we are in a position to fund these measures which together will result in an investment of €40 million in the beef sector next year.

The suckler cow herd is the seed bed for a quality beef industry, involving more than 100,000 farm families, employing almost 8,000 people in processing, sales and marketing, and driving exports valued at approximately €1.8 billion per annum. Harnessing technology in a way that improves efficiency at farm level and, ultimately, profitability is key and I am convinced the combination of measures announced today can make a major contribution to the expansion of beef output and greater market penetration. The establishment of a national beef genomics scheme is a world first for Ireland. It is no coincidence that this initiative which I announced yesterday dovetails very nicely with the aims of Food Harvest 2020, increasing output and the value added quotient from the beef sector, as well as offering traceability, improving animal health and welfare and further reducing the carbon intensity of the beef produced in Ireland.

I welcome the retention of key existing tax reliefs for agriculture and the food industry and the introduction of new incentives which will contribute to the implementation of the Food Harvest 2020 strategy. I am pleased to have secured agreement to the following changes to agri-taxation measures. Until now, retirement relief from capital gains tax was only available where a person had farmed the land for the previous ten years, except in the case of transfer to a child, in which case a long-term lease was permitted prior to transfer. This new measure extends CGT retirement relief to include farmers who lease their land on a long-term basis, namely, a minimum lease of five years, in the period prior to retirement and intend transferring their land to a person other than a child. The main purpose of the measure is to encourage older farmers who have no children to lease their farmland in the long term to younger farmers. This change builds on a number of measures introduced in the last two budgets to improve land access for younger farmers, including the reduction in stamp duty rates, improved incentives for long-term leasing and the restructuring relief from capital gains tax introduced last year in order to address the issue of farm fragmentation.

The farmers' flat-rate addition in VAT is being increased from 4.8% to 5%, with effect from 1 January 2014. The flat-rate scheme compensates unregistered farmers - that is, practically every farmer in the country - for VAT incurred on their farming inputs and is reviewed annually in accordance with the EU VAT directive. This is a very positive development as it puts money back into farmers' pockets. We estimated this measure will be worth approximately €10 million directly to farmers in terms of the rebate they will receive.

In addition to the new measures outlined, I have secured the retention of the key agricultural relief from CAT and retirement relief from CGT. The retention of these reliefs reflects the Government's commitment to generational change in agriculture. Taken together with the existing 100% relief available for young farmers in respect of stamp duty and stock relief, this means that almost all family farms can be transferred to young, trained farmers, with no tax liability arising. The 100% reliefs for young trained farmers in stock relief and stamp duty relief have been maintained and three new courses have been added to the list of qualifying courses for these reliefs.

I welcome yesterday's announcement by the Minister for Finance that there would be an independent cost-benefit analysis of existing tax reliefs in the agriculture sector - this will happen next year. The objective of the review is to redirect the existing level of tax expenditure towards activities of maximum benefit to the sector and the economy. In other words, like any sensible business, we will re-evaluate how we are spending money, how reliefs are working and what we might do to to change and improve. This will not be a cost-saving exercise, rather it will be about transferring reliefs across the sector to ensure we are consistent with our objectives under the Food Harvest plan.

The new capital gains tax relief for entrepreneurs will also be of benefit to start-up food businesses. This measure will complement Food Works, the inter-agency programme which was developed in line with Food Harvest 2020 specifically to target and accelerate the development of a new generation of high potential start-up food companies. The extension of the 9% VAT rate for the tourism and hospitality sectors will also greatly benefit rural tourism and food hospitality enterprises. Other announcements in the budget which will benefit existing food companies and encourage food and on-farm diversification start-ups include:a start-your-own-business employment activation measure and improvements in the research and development tax credit systems.

I have a strong commitment to supporting a capital programme across the agrifood, fisheries and forestry sectors again in 2014. In the marine sector I have provided an increased capital allocation of €10 million to maintain the infrastructure at the Department's fishery harbour centres and local authority fishery harbours which make a valuable contribution to Ireland's marine sector. That €10 million represents a significant increase on this year's budget.

The capital allocation to the Marine Institute is being increased to €10 million to cover the cost of its ongoing research programme, as well as to upgrade its research vessels, while capital funding to BIM will be increased to €6.5 million to assist in the implementation of the new Common Fisheries Policy which is challenging but exciting for the sector. Significant capital funds will be allocated again in 2014 to the forestry sector, which will allow us to maintain the forestry planting programme of approximately 7,000 hectares per year and the premiums at the current rate.

A provision of €4.2 million has been made for the horticulture sector, which is approximately a 25% increase in terms of capital investment in the sector. The sector has the capacity for significant growth in the short term, but it needs capital investment to do this.

I have continued to provide capital funds in support of on-farm modernisation, most specifically in 2014 in favour of the investment needed to support the dairy sector through its expansion plans ahead of the removal of milk quotas in 2015. The ending of quotas provides the best ever opportunity for dairy farmers to rapidly increase output volumes and enhance the earning potential of the sector. As the final year ahead of quota abolition progresses, I expect to see an increasing level of investment in farm level infrastructure in line with investment already commenced at processing level. The latter half of this year has been a very good period for dairy farmers. They are making money and now is the time for them to consider capital investment in their yards to prepare for the expansion opportunities in a few years time. We wish to support them in that regard next year, which is why we have €15 million in capital funding allocated to the targeted agricultural modernisation, TAM, scheme for next year, on which I hope we will build.

In terms of public sector reform, I am committed to a continuation of an active programme of reductions in the cost of running the Department and State agencies which has fallen by more than €100 million since 2008. Enormous reform has taken place in recent years as my Department's staffing level has fallen by some 1,600 since 2005, from 4,800 to 3,200, a reduction of 33%. Since 2010 there has been a 22% reduction in the staff of non-commercial State bodies, down to 1,463 from 1,865 at the beginning of 2010. The total Department spend on non-commercial State agencies, NCSAs, has fallen from €247 million in 2008 to an estimated €190 million in 2014, a reduction of 24%. I acknowledge the work of my Department and its civil and public servants, and also the State agencies linked with my Department. If anything, their workload has increased in recent years and they are dealing with it with a significant reduction in staff numbers. Many staff are also on less pay. It is important to recognise, in particular, the job they did in the first half of this year in terms of securing both the Common Fisheries Policy, CFP, deal and the Common Agricultural Policy, CAP, deal during the Irish Presidency. I am very lucky to be working in a Department and with State agencies that have phenomenal people working in them. The salary cost of running my Department and the State agencies will be some €8.5 million less in 2014 and I intend to continue to drive a change management programme across the Department and its agencies, while ensuring the proper resourcing of front-line services, in particular, those directly responsible for food safety, animal welfare and programme delivery.

The outlook for the agrifood sector remains very bright and the sector will continue to contribute strongly to national economic recovery. There is a new awareness of the vital economic importance of the sector and a strong recognition that it has a fundamental role in the broader rebuilding of the economy. We will continue to pursue the objectives and targets in the Food Harvest 2020 plan. I chair an implementation group every month where stakeholders meet to assess progress on a monthly basis. I am confident that the measures introduced yesterday for next year will allow the Food Harvest plan to develop and grow. I am also confident that our budget for next year will complement the new Common Agricultural Policy and the new Common Fisheries Policy which will also be finalised before the end of the year for implementation from the start of 2015 in the case of the CAP and from the start of next year in the case of the CFP. I look forward to working with all stakeholders to ensure we maximise the potential of both the seafood and agriculture sectors as we are at the start of what I have described as a golden period of growth and expansion in both sectors. The food industry was taken for granted for many years, which is not the case anymore. We have much work to do to deliver on the extraordinary potential for the growth and expansion of these sectors. The budget we announced yesterday is a reasonable start.

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