Martin Mansergh (Tipperary South, Fianna Fail)

The framework for economic renewal launched by the Taoiseach last December sets out our agenda over the next few years for how we will re-orientate and reprioritise the business of Government to achieve the goal of building a smart economy, which will help underpin our future.

An improvement in national competitiveness, which was mentioned by several Senators, is crucial if we are successfully to pursue a sustainable, export-led recovery over the next few years and maintain our position as an attractive destination for inward investment. In this regard I am pleased to note the statement from Intel today on its continuing commitment to locating in this country. This objective will be difficult to achieve in the current international economic situation, but it is all the more important nonetheless. As a member of the eurozone, changing our exchange rate is not an option. However, this does not negate the need to control the factors that we can influence, such as wages, the domestic cost base and lessening the regulatory burden on businesses. We must also take steps to improve productivity. This will obviously have a longer-term benefit to our competitive position.

The Government will continue to take steps to support competitiveness, including the maintenance of pro-enterprise systems of taxation. In the budget for 2009, the Minister for Finance reaffirmed the Government's commitment to the 12.5% rate of corporation tax and to maintaining and enhancing our pro-business tax policies. The Finance (No. 2) Act includes a number of very significant changes to the research and development tax credit scheme. A strong commitment to scientific research will be retained.

National competitiveness is a shared responsibility, not only of Government but also of all members of society and the social partners. We must each play our parts and work together to this end. It will be essential, now and in the coming years, to ensure that wage developments are sensible, linked to improvements in productivity and firmly aligned to the aim of regaining international competitiveness. A realistic approach will be needed to ensure that we are better equipped to deal with current challenges so that we can take advantage of the global recovery when it occurs. In addition, there will be a need to insist that where there are improvements in external factors — such as falling oil prices, interest rate decreases or a strong euro — these are passed on to consumers and business alike. This is no time to pursue narrow sectional interests or allow profit-taking at the expense of the consumer.

The Government recognises the cost that regulation places on business and has already made a strong, meaningful commitment to tackling the issue. The European Commission is conducting a programme to reduce the administrative burden imposed on business by EU regulations by 25% by 2012. The Government has established a three-pronged approach to identifying and reducing the cost of red tape on Irish business.

In 2007, the high level group on business regulation was established to act as a standing dialogue between business and Government and to consider how business costs arising from regulation can be reduced. The group's first report, published in August 2008, identifies €20 million in savings for business already achieved through streamlining the companies' annual return, raising the audit exemption threshold and a number of other simplification measures. The group will, through its work programme for 2009, pursue a further range of cross-governmental initiatives to simplify administrative requirements for business by reducing duplication, encouraging greater co-operation across different branches of Government and making greater use of technology and electronic solutions.

In March 2008 the Government agreed a 25% target to reduce the administrative burden on business by 2012, with a particular focus on small and medium-sized enterprises. All Departments are engaged in a process that involves the identification of information obligations imposed on businesses and arising from regulation. These obligations are being prioritised in consultation with the business sector and Departments are preparing simplification plans that will set out the ways in which these costs will be reduced by 25%.

The third prong of our approach deals with new regulation. The Government has decided to revise the approach to regulator impact analysis to include administrative burden measurement. The regulatory impact analysis guidelines are being revised to take this into account.

In recent years Ireland has undergone a transformation from a low wage-low cost economy towards a high value and knowledge-based one. The nature of manufacturing has changed and, accordingly, basic manufacturing functions are moving away from the country. Increased competition from emerging economies and the global economic downturn are having an impact on companies operating here. Unfortunately, we are all only too well aware of the sad human dimension to redundancies and factory closures to which several Senators referred.

Despite the stark deterioration in the global economic situation, there was a strong foreign direct investment performance last year and the number of investments from IDA Ireland-supported companies was up 14% on 2007. In excess of 8,800 associated new jobs were created. I accept, however, that there was a small net loss in employment. There was a 22% increase in research, development and innovation projects, while the number of new companies investing in Ireland for the first time was up 16% on the previous year. In all, investments in the region of €2 billion were secured.

IDA Ireland has developed a strong base of existing clients which make a vital contribution to wealth generation and the development of the economy. These companies have had a positive effect in Ireland and provide a solid basis for future growth. IDA Ireland is working strategically with its existing clients to deepen and further embed their investments in Ireland. It has an active programme of engagement with these clients which is aimed at identifying and targeting new investment opportunities.

The pipeline for future investments is good. IDA Ireland is confident that a number of high value investments can be secured for Ireland in the coming months and that there are further opportunities in existing key sectors. The latter will be augmented in the future by a number of emerging technologies and new business models. I will not go into further detail in this regard because I want to reply to a number of specific points raised by Senators.

IDA Ireland is expanding the number of its representatives based in the US and is opening new offices in Boston and southern California. It is keen to diversify the source of foreign direct investment and recently established offices in Mumbai in India and Beijing in China and expanded its operations in London. It continues to explore opportunities to market Ireland in other emerging economies such as China, the Russian Federation and Brazil.

It is obvious that we face an extremely difficult economic environment, both here and abroad. Difficult decisions will be taken. With the exception of the least well off, we will all be obliged to adjust to some fall in living standards. However, we must not lose sight of the need to plan our way out of the downturn. This is what we are doing.

Out of courtesy to the House, I wish to reply to some of the points raised by Senators. None of us — Ministers or the Government as a whole — is master of anyone; we are public servants. During the past 15 years we have not had a boom-bust economy; we have enjoyed one of the most prolonged periods of expansion in our history.