Billy Kelleher (Cork North Central, Fianna Fail)

I apologise on behalf of the Minister, Deputy O'Keeffe, who, because of changes to the Seanad schedule, is unable to make the opening address. However, I am delighted to be back in the Seanad to discuss the issues that will be raised in this debate and thank Senators for making time available to discuss innovation and job creation.

As a Minister of State for Enterprise, Trade and Innovation, I am acutely aware of the distress the economic downturn is having on individuals, families and businesses. The negative consequences of the downturn, particularly where jobs are lost, cannot be overstated and our priority has been and will continue to be to respond to these challenging and difficult problems. I am glad to have this opportunity to outline to the House the decisive action being taken by the Government to underpin Ireland's recovery and future economic growth. As recognised by the OECD and other international bodies, significant progress is being made in addressing the challenges facing this country. We are committed to ensuring that Ireland will emerge in a strong position and be prepared for the next phase of global economic growth.

I believe the Irish economy has turned the corner. As long ago as his Budget Statement last year, the Minister for Finance, Deputy Brian Lenihan, referred to the fact that the most challenging period was behind us although difficult times still lay ahead. He stated at the time that Ireland was on the road to recovery. Being a small open economy, we all know our future economic growth will have to be driven by exports of goods and services. Improving our competitiveness will also help us attract more foreign direct investment. We already see a recovery in cost competitiveness with lower business costs, particularly wages and energy. We introduced an extensive package of measures to contain energy costs last summer and this is reflected in a much improved position relative to competitors. Data released recently show that electricity and gas prices fell for all types of energy consumers in the second half of 2009 and have moved closer to the EU average for most business users. We are reducing the administrative burden by driving better regulation. Local authority charges remain a great concern of the business sector and we are conducting an efficiency review of the whole local authority system at present to identify savings which will reduce pressure on small businesses.

Ireland's enterprise base can take some pride in the incredible resilience it has shown in the last two years. Although global exports in goods fell by around a third in the first quarter of 2009, Irish goods showed an increase of 1% for the same period. It is very significant that we acknowledge how Irish businesses and exports have responded in the prevailing challenging times in the global economy. When we look at major international exporters such as Germany, or other countries which had significant reductions in their exports, we see there is certain inherent resilience in the Irish economy. That should be applauded, acknowledged, fostered and encouraged in the longer term.

Commentary is also very important. When people speak and raise issues we must also acknowledge that these are significantly challenging times and there is a great deal of pressure on families and individuals. There has been a marked increase in unemployment and the labour market has shrunk significantly to approximately 1.85 million people but in the general context it is equally important we balance that with the fact we have become more competitive vis-À-vis our global competitors. Irish exports have held up and as a country we are very much open for business. If one sentiment is to emanate from this House in this debate it should be that Ireland is open for business, both in the context of bringing in foreign direct investment and, equally important, in the way our exporters are finding and retaining market share, being innovative, getting out there and responding to the very challenging times we face. That should be continually acknowledged. Negative sentiment can have a broader impact on the economy. It can also deflate the confidence of exporters and small and medium-sized businesses which are trying to establish themselves, access credit and create employment and opportunities. Continual negative commentary undermines the basic instinct of confidence. Confidence is about making sure people have a belief that we can get through these challenging times. I am sure Senators will acknowledge and highlight the difficulties facing businesses and will be balanced in their approach having regard to where Ireland is positioned globally in terms of innovation and job creation. While global services exports fell by approximately 20% over the same timeframe, Irish services declined by just over 2%, which is another significant statistic.

My goal is to maintain and enhance the policy environment that has facilitated this resilient performance and that will drive export growth. We know export-led growth can create the jobs required to reduce unemployment, fund public services and manage the national debt. We estimate that every 100 export jobs in Ireland support at least another 70 jobs in the Irish economy.

Looking to the future, we are striving to diversify our export profile, exploit our talents and opportunities and guard against over-dependence on any specific markets. Our track record on this is strong and is exemplified by the Asia strategy. That strategy is nearing the end of its shelf life and we are currently drafting a new trade strategy that will assist, encourage and promote Irish goods and services in markets throughout the world. As an open global trading economy, strong emphasis must be placed on finding markets that are amenable to our products and that are also accessible. The new trade strategy that is to be published will be of significance. With the co-operation of various Departments in promoting Ireland inc., and its exports, products and services abroad, we can target those markets in the years ahead.

In 2005, we set specific targets to be achieved through concerted effort by the relevant Departments and agencies to develop links with eight key economies in that region. The success of the Asia strategy has been striking. Exports to the eight countries have risen from €4 billion in 1999 to €9.6 billion in 2009, well ahead of the target of €9 billion set at the time of drafting the strategy. The number of Irish companies with a presence in these countries has risen fivefold, from 54 to 272, well ahead of the 215 companies targeted at start of the period covered by the strategy.

In addition, growth has been achieved on other targets relating to tourism, specialist food exports, developing inward student numbers, academic partnerships and a range of other links and developments. These outcomes, together with progress in wider awareness-raising, have been greatly assisted by focused high level visits. During the past five years, Taoiseach-led trade missions have been organised to China, India and Japan and other ministerial-led trade missions have taken place to China, India, Japan, Malaysia and Singapore. In addition, the Department of Foreign Affairs has expanded its network of embassies and consulates in the region.

An example of our success is that Ireland now has a trade surplus with China, a dramatic turnaround from the position only three years ago when we had a trade deficit of €2.9 billion with that country. The Government is committed to developing and expanding this engagement, as the key Asian economies represent an exciting and continuously developing market for Irish goods and services. The Department of Enterprise, Trade and Innovation is both reviewing the achievements of the Asia strategy as well as working with other relevant Departments and the development agencies to prepare a new trade, tourism and investment strategy.

The new strategy will be broader in reach than the Asia strategy, focusing on key high growth emerging markets such as China, India, Japan, the Gulf states and Brazil, as well as on our existing key trading partners. The strategy will boost our exports, tourism and investment performance and bring further focus and coherence to Ireland's single-minded pursuit of our international economic and commercial interests.

Our recent export performance has been impressive in the context of the size of our economy compared to others and we will continue to incentivise enterprise to invest further in high value research and development to increase exports and create new employment opportunities in communities across the country.

We have seen in this recession that the companies that have invested in research and development and ensured their products or services have a competitive edge are the same companies that have held or grown market share and held or grown employment. This has reinforced our belief that our research and development strategy is the right one.

The Government's commitment to continued investment in research and development has been clearly articulated and demonstrated. The Department is determined that incentives for business to undertake research and development are strong and that Ireland continues to invest in building our reputation as a leading knowledge economy. A renewed focus is correctly being placed on stronger commercial outputs and the efficiency of investment.

The decision to create a single funding stream for the STI will greatly enhance the efficiency of the spend and the State's ability to reprioritise as economic circumstances change as the economy recovers. The Government is supporting companies with direct funding for research and development and through the recently enhanced research and development tax credit. Enterprise Ireland and IDA support companies ranging from innovation vouchers to large-scale research programmes.

We are funding collaborative research partnerships between companies and partnering companies with the strong science base we have built through PRTLI and Science Foundation Ireland. Science Foundation Ireland funded researchers now work with more than 300 companies. There are many more innovative companies being created and grown. Some 73 new high potential start-up companies, supported by Enterprise Ireland in 2009, are poised to create 900 jobs over the next three years and no doubt many more in the future.

Our wide range of enterprise supports are aimed at improving productivity, market knowledge, competitiveness and leadership and management capabilities so firms can compete successfully in international markets and grow their exports. To survive and thrive companies have to be lean, flexible and innovative.

Enterprise Ireland supported companies currently employ more than 133,000 people. Enterprise Ireland's objective is to create a further 40,000 new jobs over the next five years. Through the multiplier effect, this will lead to an additional 28,000 jobs elsewhere in the economy. In the last six months alone, Enterprise Ireland has announced 700 jobs in innovative companies such as Abrtan, VoxPro and Sysnet. Up to 10,000 new jobs could also be created in one year as a result of the Government's new employer job PRSI incentive scheme. This new scheme is a direct stimulus for the real economy by saving employers money and shifting the balance in favour of job creation. In addition, the Finance Act 2010 provided for the start-up company exemption to be extended into 2010 encouraging both entrepreneurship and economic activity.

We are also working hard to sustain existing jobs through this difficult period. Companies supported under the employment subsidy scheme and the enterprise stabilisation fund have committed to maintaining more than 100,000 jobs to the end of November 2010. This is significant information for Senators. When people ask if there is a jobs strategy in place or what the Government has done to retain jobs, it is critical that we acknowledge introduction of the employment subsidy scheme and the enterprise stabilisation fund. They have maintained jobs in those sectors in these challenging times.

The Government is also proactively supporting the development of the green economy through grants and other incentives and supports. Irish companies engaged in renewable energy, energy efficiency, water, waste, green building and related services have significant opportunities to grow and create stronger export businesses. Maximising the potential for Irish business and for job creation in the green enterprise sectors will be a key focus of current and future enterprise policy. Enterprise Ireland has a range of measures primarily targeted at the small and medium-sized enterprise market to aid the greening of businesses in that sector.

The Sustainable Energy Authority of Ireland is promoting improved energy efficiency and the use of renewable energy sources resulting in substantial savings for individuals and businesses, both small and large. The IDA has formed a dedicated clean technology division specifically to entice foreign direct investment flows into this sector. Across a range of sectors, international investment will continue to be a key driver of employment, exports and growth.

The issue of Ireland's corporation tax rate of 12.5% is constantly raised. The Minister for Finance emphasised this issue in his budget speech last December when he clearly and categorically stated that the corporation tax rate of 12.5% was here to stay, was a central plank of Government policies and was fundamental to attracting direct investment into this country and supporting and enhancing Ireland's global position as a competitor.

There were a few red herrings on this issue during debate on the Lisbon treaty, to which the people responded by endorsing the treaty. Ireland is competitive for many reasons, of which a corporation tax rate of 12.5% is only one. There are many other reasons companies look to Ireland as a place in which to locate. We have a very intelligent, highly educated and flexible workforce. There is also major investment in research and development, while we continuously have quality graduates coming out of our colleges. The critical mass of multinationals already located in Ireland gives us a competitive advantage that we should exploit to the maximum. Foreign companies directly provide 140,000 jobs and indirectly 240,000 jobs in total in this country. They account for 50% of the corporation tax take, 70% of national exports and 73% of all business research and development and innovation undertaken. They spend €19 billion in the economy, €7 billion alone on payroll costs. Many multinational companies are restructuring their global operations, leading to global rationalisation, which makes it particularly important that we work to retain current investment levels, stimulate expansion and secure new projects.

We will continue to market Ireland as a location of choice for newcomer and existing investors and this strategy is working. Despite the difficult global economic climate, last year Ireland won 125 foreign investment projects, half of which were in the areas of research, development and innovation, reflecting Ireland's strengths and attractiveness as a location for cutting edge activities. Around 4,500 new jobs were created, while the value of exports from IDA client companies increased to €110 billion in 2009. The links between foreign direct investment, research and development and innovation, industry and our colleges and universities represent a critically important factor in promoting Ireland as a location for research and development. In the last few days we have become aware that a bionic arm is being developed in the Tyndall National Institute in Cork. This is an example of collaboration between industry and a university in research and development for high end technology. This is very significant and attracts interest from elsewhere around the world. In the last six months the IDA has secured investments with the potential to create almost 1,000 high quality jobs in companies such as eBay, IBM, Hertz and Pay Pal. The pipeline towards job creation in the rest of 2010 remains strong. The new IDA jobs strategy sets new targets for foreign investment to be achieved up to 2014. We are aiming to create 105,000 new jobs - 62,000 direct and 43,000 spin-off jobs - through 640 new foreign investment projects, 50% of which will be outside Dublin and Cork. We aim to see an annual client investment of more than €1.7 billion in research, development and innovation by 2014.

The Government's focus is on building a solid foundation for future economic growth. Job creation is at the heart of Government policy. We are taking action to stimulate the economy and invest in our long-term prosperity and quality of life. This year we will invest €6.5 billion in capital projects. This public investment programme is expected to support approximately 70,000 jobs. A view has been promoted that there has been no capital investment by the Government. We will be spending about €5 billion on capital investment programmes which will have a knock-on effect in the economy. This has been acknowledged all over the world, yet people are critical of the fact that funding under the national development plan, under which we were spending €8 billion to €9 billion for many years, has been reduced. However, because of the reduction in construction costs, we are now getting strong value for money in our capital projects. The recent announcement on links between the Luas lines is another significant development in the heart of the capital. We also saw the roll-out of motorway projects across the country, investment in wastewater treatment plants, research and development at third level, the roll-out of broadband and so on. These are very significant in trying to build a modern economy, competing for foreign direct investment and allowing our exporting companies to become competitive. We are encouraging the business sector to invest, grow and create new jobs. We are investing in skills and training programmes for the workforce. We are developing the green economy to create new, quality jobs thousands of workers. Implementation of the recommendations of the innovation task force will also create the environment for more jobs to be created in new, innovative sectors of the economy.

The courage and decisiveness the Government has shown in taking the necessary measures to stabilise the public finances and fix the banking system send a strong, clear message to the international community that Ireland will not hide from the challenges it faces and that we are making the right decisions to position ourselves for future growth. This debate is about innovation and job creation. We have had a simplistic discussion about impaired banks and the support provided for them. The two reports by Professor Honohan and Mr. Regling and Mr. Watson on the banking crisis highlight the deficiencies and inadequacies in the areas of oversight and governance and explain how a bubble developed in the property market. At the same time, we have spent huge sums of money in developing our infrastructure and rolling out a capital investment programme that has ensured efficiencies in the economy about which we could only dream 20 years ago. The only reason the Government is supporting the banks is that a systemic failure of Anglo Irish Bank would have a knock-on effect on the other two major banks which could have catastrophic consequences for the banking system and also the broader economy. As highlighted in the reports, it could have major implications for society also. The main focus of the Government's support package for the banks is not on the banks but clearly on job creation and innovation. Whether we love or despise the banks, we have to have a functioning banking system to make sure we get credit flowing.

The directors of the banks must now realise that there is a new relationship between the banks and the people who through the Government guarantee and through the recapitalisation programmes stand foursquare with them. It is obligatory on the banks to make sure there is liquidity in the market and that there is a flow to small and medium-sized business and that the current credit squeeze is brought to an end. I have read the Mazars reports from cover to cover on several occasions. We have heard commentary from the banks that they are open for business and that they are willing to make sure credit flows to small and medium-sized businesses. However, we still have major concerns that they are not functioning in the way we want them to work to make sure they analyse and assess a business plan and lend according to the needs of a business.

The banks must acknowledge they have not been playing their full part in supporting the small and medium sized business sector, which is of huge significance to the Irish economy. It is the backbone of driving exports and domestic job creation. For all these reasons, it is important that Senators highlight any inadequacies they feel exist with regard to the banking system making credit available to the small and medium sized business sector. Our two major banks have a role to play in this. The credit review group under the stewardship of Mr. Trethowan has received a number of queries and complaints from people refused credit. It is fundamentally critical that the banks realise they must impair their balance sheets through whatever banking and accounting systems they put in place. Equally they have an obligation to make credit available to viable but struggling small and medium sized businesses to try to get them through the recession.

I look forward to the debate. I was in the House a number of months ago for a broader debate on the economy. I apologise if I strayed slightly into the broader issue but it is inextricably linked to this subject matter. Without the availability of credit, competitiveness and all other parts of the Government's policy, job creation and innovation would be lethargic. For all of the policies we pursue, we acknowledge we must stay focused on ensuring we are competitive and invest in the areas we are good at, which are entrepreneurship and high quality graduates.

Another important factor is that we brand Ireland internationally. There is a huge well of acceptance that we are a creative, innovative and flexible people. This is internationally recognised and sometimes we do not acknowledge this at home. We should promote it because if we promote positive views of Ireland internationally it will be easier to attract foreign direct investment. In my speech I referred to the spin-off jobs created directly and indirectly through foreign direct investment and they are very significant. They build up a critical mass of expertise. Throughout Ireland, multinational companies came and stayed for a number of years. Perhaps they have scaled down and are now involved in research and development only. The embryonic spin-off from these companies is that high quality graduates and people with expertise in those fields have gone out and spawned small and medium sized businesses. There is a continual churning of jobs through foreign direct investment.

With regard to domestic consumption, Irish companies are in an international whirlwind. We must get right all the underlying costs that affect our competitiveness. If we continuously talk down the positive aspects of what our exporters achieve it deflates their confidence in going out to find markets in the broad international world. We are very committed to supporting small and medium sized businesses stepping off the island and trying to find markets elsewhere. Perhaps for a time we were going for the low-hanging fruit at home. That is something we must address in the context of future growth in the economy. We must keep focused, regardless of our domestic economy, on ensuring that Irish companies are fit for purpose, internationally competitive and in all the markets worth pursuing, such as Russia, India, Brazil, China and the Gulf states. The devaluation of the euro gives us an added advantage at this juncture and we should seize these opportunities.

Ireland is going through a very difficult time as are its people. The reports outlined by the Governor of the Central Bank and by Mr. Regling and Mr. Watson highlighted inadequacies in governance, oversight and regulation throughout all sections of Ireland and in some policies that were pursued. However, a little rewriting of history is taking place with regard to policies that were pursued. Many of the policies generated large tax revenues which were invested in health, education, infrastructure and throughout the broad ambit of what was required by the Irish people at the time.

We must remember that more than 2 million people worked in Ireland in 2007. That is hugely significant. It was a milestone that was crossed when we look at where we came from historically.