John Carty (Fianna Fail)

I move:

That Seanad Éireann welcomes the Government's initiatives to support export led growth.

I welcome the Minister of State, Deputy Conor Lenihan. The key message that should be sent from this House is that, according to the Irish Exporters Association Year End Review 2010 issued on 5 January 2011, in 2010 exports reached their highest level ever at €161 billion. This is especially encouraging in the wake of figures released by IDA Ireland that show that Ireland continues to attract significant inward investment.

These statistics, combined with other economic indicators such as car sales, etc. provide hard proof that our policies are working and the real economy, which is based on the business environment, is forging ahead. The extremely difficult economic climate that has existed both in this country and abroad during the past three years has led to difficult trading conditions for many firms and to significant job losses. After two years of significant falling output it is now clear that growth returned during the latter part of last year. The strength of the corporate sector is reflected also in the performance of corporation tax receipts in 2010 which were marginally up on the 2009 level and almost one quarter greater than expected.

Although employment remains stubbornly high, the economy shows signs of a return to growth and the Government's four year plan is the only credible road map for economic recovery. Our Exchequer returns, a high level of foreign direct investment and improving competitiveness are helping Ireland to create high quality jobs and return to sustainable growth. While it is vital and right that our focus is on job creation, recent strong export performance is very encouraging as it provides the bedrock upon which future employment growth will be based. To capitalise on this, the Government launched a strategy for trade, tourism and investment, Trading and Investing in a Smart Economy. The new trade strategy identifies wider systemic challenges around our cost competitiveness and our information technology infrastructure which are being addressed in order that we will be in a position to capitalise on the opportunities that will present themselves as the global economy recovers. This provides the framework to maximise the potential for increased exports, tourism and investment that can support well-paying jobs in this country.

Clearly, economic growth is essential if we are to have real improvements in living standards and increase employment again. In this regard, growth will be achieved through an export led recovery driven initially by the main capital intensive manufacturing side but also by the more labour intensive services sector. As exports grow, domestic activity will gradually expand. The Government has been actively attempting to improve the business environment in Ireland and foster 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 being cut, the reinforcement of the commitment to retaining the 12.5% corporation tax and the revamping of the business expansion scheme.

As a result of our policies our export performance in recent years has shown considerable resilience. Encouragingly, exports in the third quarter of 2010 increased, by 12.9% for goods and by 13.6% for services. Food and drink exports expanded by 11% in 2010, exemplifying the broad nature of the recovery. This recovery is not confined to the multinational sector but has also occurred within the indigenous exporting sector. Exports to our traditionally strong markets such as the United Kingdom and the United States continue to be strong but, encouragingly, exports to new high growth markets such as India and China are also up and those to Brazil and Russia have increased by 12%. Exports to north America were particularly strong, with sales to our largest market, the USA, up by 18% in the year and sales to Canada up by 27%. Germany, the largest of the EU markets, provided a much needed boost to eurozone exports with Irish exports to that country increasing by 42%. This is all very welcome news.

Indicators of activity, such as the quarterly national accounts and national household survey and soft data from sources such as purchasing managers' indices, show that economic growth patterns are in line with those contained in the budget. These indicators mean that economic growth is expected to be 1.7% of GDP in 2011. Last year the value of Irish exports reached €161 billion, the highest figure ever recorded for exports. Approximately three quarters of these exports were from the multinational sector, which is significant when one considers that IDA Ireland associated firms created almost 11,000 direct new jobs last year, considerably more than twice the number of jobs generated in 2009. As set out in the National Recovery Plan 2011-2014, exports will be a key driver of economic growth over this period. Accordingly, the improvement in price competitiveness will provide crucial support to sustain economic recovery and job creation.

The Irish agrifood sector grew by 8% and is expected to grow by as much again in 2011. The growth in this sector was due to global demand, improved commodity prices and changes in EU policy on agriculture output. The life sciences sector, which includes products such as chemicals, pharmaceuticals and medical devices, currently accounts for 63% of total Irish merchandise exports and grew by 12% in 2010. It is expected that this sector will continue to grow in 2011 but perhaps at a more moderate rate. Although world trade growth is expected to slow this year, the Irish Exporters Association, IEA, is still projecting total Irish exports to increase by 7.2% in 2011 to a new high of €172.6 billion owing to a weaker euro against sterling and the dollar. Exports of goods will grow by 5% in 2011 with services forecast to grow by 10%, giving an overall growth forecast for the year 2011. Those IEA figures were issued in early January.

Food and drink exports increased last year by 11%, or €800 million, reaching €7.9 billion according to a Bord Bia report published on 13 January 2011. Bord Bia states the sector was a major contributor to the economy's strong export performance in 2010 and that this performance was helped by a more stable consumer environment, reduced exchange rate pressures, improved competitiveness and rising global prices for most agricultural commodities. This will continue to be the case. I have information, which I do not believe can be contradicted, that at present there are only 26 days' food supply in the European Union. There is tremendous room for this country to produce and export agriculture products. We have the very best people in this country at this time, producing high quality ingredients such as meat, milk and dairy products. One can name any product and the farming community and the co-operatives and other parts of the industry will be up to speed with it. All the major sectors recorded increases. Dairy exports jumped by more than €300 billion, a leap of 17%. The meat and livestock exports were almost €200 million higher and beverage and prepared food exports were also up significantly. Overall prospects for this year remain positive and a survey of manufacturers shows an agreed optimism.

The other important economic indicator for our growth and exports comes from IDA Ireland which has stated that Ireland is number one in the world for jobs created. Figures released by IDA Ireland show that almost 11,000 new jobs were created in 2010, more than double the number created in 2009. Last year the car scrappage scheme was reintroduced in January and provided a major boost to the motor industry, far exceeding expectations. New car sales in 2010 jumped by 55% to 88,373, according to the Society of the Irish Motor Industry, SIMI. The increase in sales last year delivered an extra €109 million in Government revenue and an increase of 3,500 people employed in the industry. The scrappage scheme has been retained and I have little doubt that these benefits will be sustained.

When I began I stated that the unemployment figure is still too high, although it is stabilising. Senator Buttimer is smiling and although the live register increased in December, this was due to seasonal factors. The figure is still 30,000 lower than in August 2010.