Noel Ahern (Dublin North West, Fianna Fail)

I am pleased to speak in favour of the Government's counter-motion. In particular, I wish to restate the Government's firm commitment to position the economy for sustainable development during the years ahead while adapting to the reality of more moderate growth in the future. I also wish to put firmly before the House the Government's strong commitment to progressive public sector reform and to confirm the Government's objective in entering talks on a second pay agreement under Towards 2016 to achieve a sustainable pay deal compatible with improving competitiveness and productivity. It is also the Government's intention to inform the Oireachtas fully as appropriate about progress in this regard.

I record the Government's progress in enhancing the delivery of infrastructure on time and on budget and the measures put in place by the Government to speed up the delivery of vital strategic infrastructure. I repeat the Government's firm commitment, as set out in the national development plan and as underpinned by the provision in the Exchequer multi-annual capital envelope, to spend an annual average of 6% of gross national product on capital projects to address infrastructure needs. I reiterate the Government's firm commitment to continued support for the development, enhancement and modernisation of Ireland's education sector and Ireland's science, technology and innovation sector.

While the economy is facing into its most difficult and challenging period for some time, with domestic and external factors likely to restrain short-term growth prospects, it is important to put this lower economic growth into context. GDP expanded at an annual average rate of 6.5% over the period from 1997 to 2007. This has facilitated a substantial improvement in living standards, as evidenced by the fact that income per capita is now among the highest in the EU. The number of people working in Ireland today has increased by more than 700,000 since 1997. Unemployment has fallen from more than 10% in 1997 to approximately 4.5% last year, which as Senators stated is among the lowest in the EU.

At budget time, GDP growth of 3% was projected for 2008, a lower growth rate than in recent years, due primarily to lower new housing output this year. However, once new housing output returns to more sustainable levels, growth is expected to pick up in 2009 and 2010. This owes much to the fact that the underlying fundamentals of the economy remain strong, facilitated by appropriate economic, budgetary and social policies as well as the fostering of a business-friendly and pro-enterprise culture.

We are now seeing a re-balancing of growth away from domestic demand, new housing construction in particular, towards more sustainable, export-led growth. A renewed emphasis on enhancing competitiveness is required to ensure this re-balancing is achieved in a smooth manner. Improving our productivity is vital and it is good to hear Members on both sides of the House speaking on it.

It is important to note the key role played by fiscal policy in terms of supporting the economy. Current spending will rise by approximately 8% this year while revenues will grow by only 3.5%. Despite this, only a modest deficit is in prospect. Capital spending will rise by approximately 12% as full implementation of the national development plan is given priority. This will help boost the productive capacity of the economy and lay the foundations for future growth.

General Government surpluses in ten of the past 11 years are solid testimony to the Government's sound management of the economy. We also have one of the lowest levels of public debt in the EU, which is important in terms of dealing with future pressures on the public finances, especially those stemming from the ageing of the population.

Recent years have seen significant improvements in the overall quality of the public service. These include better financial management, more professional human resources management, regulatory reforms, e-Government initiatives and a sharper focus on service delivery.

A major challenge for the public sector over the next ten years will be to sustain recent progress and build on it. The moment is opportune to review our public services to see if they are ready for the challenge. With this in mind, the Government asked the OECD to carry out a review of the public service. It will benchmark the public service in Ireland against other comparable countries and to identify appropriate measures to compare the productivity and effectiveness of the Irish system against comparable international best practice. It will make recommendations on future directions for public service reform which will support the Government's drive for delivery of world-class services within existing resources. It is hoped the OECD will deliver some clear messages to guide us.

The efficiency review announced by the Tánaiste and Minister for Finance in the Budget Statement is a practical demonstration of the Government's commitment to improving the delivery of public services and achieving value for money. The review requires Departments to come forward with specific proposals to maximise administrative savings in their area. Such proposals should not jeopardise the maintenance of front-line services. In short, it should yield administrative cost savings which will help meet overall Government priorities.

A large element of the costs of public service is pay provision. It is important we get value from what we pay to staff to deliver such services. Public service pay must develop in a manner consistent with competitiveness, price stability and budgetary policy. The public service should be in a position to attract and retain its fair share of good quality staff at all levels. It should neither lead the market nor trail it.

Pay developments must reflect the more challenging economic and competitiveness scenario we face and be more directly linked to changes in productivity. It is crucial wage expectations are kept in line with the rapidly changing economic environment in which we are operating. Over recent years, wage increases have exceeded productivity growth with a resulting loss in competitiveness. Regaining market share will require an approach to wage determination which takes greater account of productivity developments as well as labour cost developments in our major trading partners. We are favoured with a dedicated public service that many other countries would wish to have. The Government appreciates and values this commitment. We need to build a wages policy that develops public services.

Members will appreciate that, as is the case with any negotiations and especially with pay negotiations, there is a need to retain a level of confidentiality regarding developments in the proceedings. However, the Oireachtas will be kept informed, as appropriate, of progress made.

As regards the overall framework agreement, Towards 2016 provides for a formal review during 2008. This will provide an opportunity to take stock of outcomes achieved for the overall goals and to consider any opportunities arising to refocus and reprioritise. The Taoiseach announced the commencement of the review process at last week's plenary meeting with the social partners. This review process will be separate to the pay discussions.

Investment is the key to future growth and prosperity. We are in a position, fortunately, to deliver the quality and range of infrastructural services our people deserve and which for a long time we could not afford. The bulk of capital projects are being delivered on or below budget and, in some instances, ahead of schedule. Two key Government initiatives, the value for money effort and the Planning and Development (Strategic Infrastructure) Act 2006, are specifically designed to help the delivery of infrastructure in a cost-effective and timely manner.

The Government has put in place a firm framework for achieving value for money in infrastructure delivery. Measures include better appraisal of all capital projects; full cost benefit analysis for all projects more than €30 million; a central evaluation unit to verify compliance with best practice requirements; a clearer focus on what we get for this investment; and a more strategic approach to procurement and the use of public private partnerships to deliver value for money.

We must strive to ensure the delivery of infrastructure on time and on budget. This is crucial to the further development of our economy and the enhancement of our quality of life. The Government recognises the importance of having in place a dynamic means of meeting our infrastructure deficit which also safeguards the traditional central principles of our planning system and ultimately delivers investment ahead of demand. The Planning and Development (Strategic Infrastructure) Act provides this means and has introduced major changes to the way large infrastructure projects of national importance are handled. Some of the most important infrastructural developments in the history of the State will go through this new streamlined process. Some are already being dealt with by the board. More than 75 requests for pre-application consultations have been received and six full strategic infrastructure applications are on the board's books.

The Act provides an enhanced service for all stakeholders, infrastructure providers, State bodies and the public by enabling the planning code to meet efficiently with the demands of a modern State. We are confident it will help ensure continued economic development takes place in a sustainable manner. The new process is designed to be robust and transparent while delivering the right decisions within reasonable and defined timeframes.

The national development plan, NDP, plays a significant role in our strategy. It sets out a comprehensive investment framework of the Government's investment priorities over seven years in the areas of economic and social infrastructure, human resources, social inclusion and enterprise, science and innovation. NDP investment in infrastructure will be crucial for enhancing our economic competitiveness and delivering a better quality of life. It is an ambitious investment programme on a scale not before seen in the State. It is a priority for the Government and its commitment to its implementation is underpinned by the Exchequer capital envelope published with the budget in December. Over the next five years total Exchequer capital expenditure will average 6% of gross national product, twice the rate of other EU member states. The NDP will transform the State and secure our future growth.

Like the NDP, developing the education system is at the heart of strategic growth policies with great strides already made. In the past three years, more than €2 billion has been invested in educational infrastructure. Much-needed progress has been made in improving the existing stock of school buildings. A sum of €4.5 billion has been provided for the schools building and modernisation programme under the NDP. The priority for educational expenditure in 2008 is to provide additional new accommodation to cater for the 13,000 additional children who will seek a school place this year while also facilitating school modernisation and expansion in primary and post-primary schools in other areas. There will also be a large increase in third level capital expenditure.

A comprehensive new information and communications technology strategy is being finalised by the Department of Education and Science. Its aim will be to develop an e-learning culture in schools to ensure ICT usage is embedded in teaching and learning across the curriculum.

Supporting the education of children from disadvantaged communities will be a key objective of the delivering equality of opportunity in schools, DEIS, initiative. The initiative is addressing the educational needs of children and young people from disadvantaged communities from preschool to upper second level education, from three year olds to 18 year olds. This initiative is motivated by a desire to ensure no one is left behind, that every child gets the supports he or she needs to reach his or her potential and that a culture of high expectations is at the centre of our actions locally and nationally.

Up to €900 million will be spent this year on education for students with special needs, double the amount in 2004. More than 19,000 staff in our schools work solely with children with special needs, including approximately 10,000 special needs assistants compared with just 300 in 1997. More than 7,800 resource and learning support teachers are in place compared with 2,000 in 1998. More than 1,100 other teachers support children in our special schools, while hundreds more work in special classes.

Advanced research and development and the availability of highly qualified people is crucial to the success of Ireland's economy. The Strategy for Science, Technology and Innovation 2006-2013, SSTI, was launched in June 2006. This builds on key Government investment over recent years, such as the programme for research in third level institutions, PRTLI, and the creation of Science Foundation Ireland, SFI, which have been successful in developing our research capability. The implementation of the strategy forms a central plank of the NDP and will involve expenditure of €8.2 billion over the period of the plan, €3.2 billion of which will be allocated to the higher education sector. The SSTI relies on the development of a higher education system of the best international quality with advanced infrastructure and skilled researchers. The strategy also addresses the vital international and all-island dimensions of research and innovation.

Without high level research we cannot hope to be a success in the future. This is why we have consistently prioritised research and development policy during our time in office. The Government is committed to leading the delivery of a knowledge-based economy in Ireland. The world university rankings recently published by the prestigious Times Higher Education supplement shows that universities in this country are reaping the benefit of the increased investment from the PRTLI, SFI and other funding sources. Trinity College has moved up to 53rd place, while UCD has broken into the elite 200 for the first time at 177th place. Meanwhile, UCC and DCU have risen more than 100 places, entering the top 300. Progress is not confined to the SFI or schemes funded by the Department of Education and Science. IDA Ireland and Enterprise Ireland are actively encouraging companies located in this country to undertake research and development activities in Ireland.

I have given a fully comprehensive review of all that is being done to keep us ahead of the curve. Senators will agree the Government is making good progress on the key issues that face Ireland as we strive to enhance the national competitiveness and productivity on which our living standards and quality of life depend. We are pursuing economic and fiscal policies that will continue to promote sustainable economic growth as they have done over the last ten years. We will continue to pursue the critical public service reform agenda. We will strive for a pay agreement that enhances our economic environment. We will continue to secure the best value for money in infrastructure investment while promoting the speedy delivery of critical infrastructure provided for in the national development plan. We have demonstrated our ongoing commitment to supporting the education sector and promoting the science, innovation and technology sector. Taken together, these measures should help ensure our continuing economic success, which is the basis for the improved living standards and better quality of life we all want.