Joan Burton (Dublin West, Labour)
Link to this: Individually | In context

Question 66: To ask the Minister for Finance his views on the elevated level of business closures and job losses in 2010 particularly in the retail and domestic services sectors, the continuation of these trends into 2011, and their likely impact on economic growth and on the public finances; if he will set out the expectations for employment trends, business closures and economic growth underpinning his budget day forecasts; and if he will make a statement on the matter. [1445/11]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

The challenging economic climate that has existed in Ireland and the broader international economy over the past three years or so has led to difficult trading conditions for many firms and significant job losses, most notably in the construction and retail sectors. This is in part due to the rebalancing of the Irish economy away from unsustainable growth dominated by construction in recent years. It should also be noted that, even during periods of sustained economic growth, there are always businesses closing and new businesses opening.

On a more positive note, after experiencing two years of significant falling output, it is now clear that growth returned during the latter part of last year and, for 2010 as a whole, GDP is expected to have stabilised. The strength of the corporate sector is also reflected in the performance of corporation tax receipts in 2010 which were marginally up on the 2009 level and almost a quarter greater than expected. The Government has been actively attempting to improve the business environment in Ireland and to foster the development of new and existing companies. Labour cost competitiveness has been improved as a result of the demonstration effect of the public service wage bill, the air travel tax has been cut, the commitment to retaining the 12.5% corporation tax rate has been reinforced and the business expansion scheme has been revamped.

Clearly, economic growth is essential if we are to have real improvements in living standards and get employment growing again. In this regard, growth will be achieved through an export-led recovery, driven initially by the mainly capital intensive manufacturing side but also by the more labour intensive services sector. As exports grow, domestic activity will gradually expand. Encouragingly, exports in the third quarter of 2010, as shown in the national accounts, grew by 12.9% for goods and 13.6% for services. Data released today by Bord Bia show that food and drink exports expanded by 11% in 2010 exemplifying the broad nature of the recovery. It is a recovery that is not confined to the multinational sector, but has taken place within indigenous exporting as well.

Indicators of activity, such as the Quarterly National Accounts and the Quarterly National Household Survey and soft data from sources such as the Purchasing Managers' Indices, indicate that economic growth patterns are in line with those contained in the budget. These indicators support my Department's forecasts that economic growth is expected to be 1.7% in GDP terms and 1% in GNP terms in 2011. My Department expects that this growth will be mainly driven by exports, with domestic activity continuing to contract, albeit at a much slower pace. The unemployment rate, which has shown signs of moderation in the final quarter of 2010, is expected to fall marginally to 13.2% this year.

The 2011 budget day growth forecasts take account of the impact of the consolidation in the public finances of €6 billion that was necessary to achieve a general Government deficit of 9.4% of GDP this year. In 2010, the Government stabilised the public finances and this year we will start to see the reduction in the deficit ratio, which is essential to meet the 2014 target.

Joan Burton (Dublin West, Labour)
Link to this: Individually | In context

I thank the Minister for his reply. Does he understand the levels of fear and despair in towns, cities and villages all over Ireland for businesses that are in very serious trouble, particularly in the retail sector, the hotel and licence trade, and businesses dealing with tourism? Does he know how many such businesses went to the wall in 2010, and how many are likely to go to the wall in 2011? Has the Government any proposals to assist such businesses?

Many of the retail businesses are closing. We heard the unfortunate story of the collapse of the bookie's business of a former Member of this House, Mr. Ivan Yates. That business was typical of many. The rents that businesses are paying on shops and the lease costs are such that they are not capable of being met under the current deterioration in trade. For the past two and a half years the Labour Party has asked the Government to change the upward-only rent review rule on existing leases so that businesses can renegotiate with their landlord a lower rent plus a profit share if profits return. There are many workable models in other European countries. Has the Minister any intention in the remaining months of the Government of doing anything to help the struggling businesses, many of which are dying, in every town, village and city in this country?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

A report last week by corporate restructuring specialists Kavanagh Fennell showed that more than 1,500 firms went into liquidation, receivership or examinership last year. A large proportion of these firms were in the construction sector and other related sectors. This is in part due to the rebalancing of the Irish economy away from unsustainable growth dominated by construction in recent years. On a more encouraging note, the business information firm and risk assessment agency Vision-net states that 14,015 companies were incorporated in Ireland last year, which was an increase of 5% over 2009.

The national recovery plan provides a blueprint for Ireland's return to sustainable economic growth. It identifies areas of activity which will provide increased employment opportunities as Ireland's economic recovery takes place. The plan sets out a range of specific actions and supports designed to improve competitiveness across all sectors of the economy, including the small and medium enterprise sector. There are measures to cut costs to business, the removal of barriers to employment creation and a range of sector-specific actions to increase exports and domestic demand. The specific issue raised by Deputy Burton is a matter for the Minister for Justice and Law Reform.

Joan Burton (Dublin West, Labour)
Link to this: Individually | In context

The Minister for Finance has a responsibility for the general economy. Businesses are being killed by problems relating to leasing rents and costs and the impossibility of breaking those clauses unless the business goes into liquidation and has a capacity, perhaps on a more reduced scale, to start elsewhere.

Brendan Howlin (Wexford, Labour)
Link to this: Individually | In context

Does the Deputy have a question?

Joan Burton (Dublin West, Labour)
Link to this: Individually | In context

The Minister did not mention that the other day tourism was reported as being back to 1998 levels. Does the Minister or his Government have any proposals in this regard? Not everybody will be a fourth level postgraduate worker in a multinational company doing information technology. We want people back working in shops, hotels and other tourism areas. Has the Government any proposals, such as graduate employment placement or business guarantee loan schemes? The Labour Party has made such proposals for two and half years in order to get business and people working again.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

Many of these schemes can be availed of by the tourism sector and I agree with the Deputy that the sector can see growth if the Government makes decisions. For example, the Government made a decision on the minimum wage which was bitterly opposed by the Deputy's party. That was primarily sought by the tourism sector. The recently announced budget involved a substantial reduction in the air travel tax, which is a cost the Exchequer will have to bear in order to ensure greater access of tourists to Ireland. I agree that tourism sector is very important and the Government is taking a number of initiatives in that regard.