Wednesday, 19 January 2011
Export-led Growth: Motion
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.
The number of redundancies reduced by 24,000 in 2010. Senator Phelan has argued that the people have left but I will wait to hear his comments on where they have gone. There are still many people - some 1.8 million - employed in the country, which is a fact we should not forget. We should not all the time cry the poor mouth and poverty as there are many positive aspects to this country. We should be praising those aspects rather than running down the country. Our competitiveness has improved significantly in 2010.
I second the motion and cuirim fáilte roimh an Aire Stáit. I will continue the theme started by my friend and colleague about good news in the economy. Before it is dismissed as being of little relevance, those of us who have had the opportunity of travelling abroad or of reading international comment about Ireland over the past 12 months could not help being aware that all the comments coming from this country, from politics or other areas of Irish society, are picked up by international investors and those who see the country as a possible area of investment. Perhaps they have been influenced, sadly, in a negative way.
The current edition of Tourism Matters, produced by Fáilte Ireland, has comments from Shaun Quinn, its chief executive, in a wide-ranging review of the year and hopes for the coming year. He indicates that there is understandable apprehension about the season ahead, given:
[T]he continuing flow of negative economic comment, as well as the pressures now confronting our own economy. Yet there are straws of recovery in the wind which offer the prospect of the beginnings of a turnaround in our fortunes.
To continue in that vein, I suggest that this debate affords us an opportunity to speak about good news involving our economy. The message that has predominated, particularly in the political arena, is one of negativity and a certain cynicism about the country and its prospects for recovery, which are not helpful. I appreciate that political charge and counter-charge is the meat and drink of politics but over the past 12 months it has gone way beyond what might be termed, in legal parlance, fair comment in order to get a headlong rush for parties opposite to get into government.
For example, Deputy Joan Burton used the word "banjaxed" on one occasion in reference to the country, which I found offensive coming from someone for whom I have a great deal of respect and who has a long history and tradition of positive political debate in this country. She will more than likely be a senior member of the incoming Government. I would venture to suggest that when she does take her position in the Government, I doubt we will hear the word "banjaxed" coming from her at any stage. Whereas we face domestic difficulties caused by reduced consumer demand and the fall-out from the property sector, the export economy is performing at its highest ever level, with output at €161 billion. It has been suggested that the figure could go even higher in 2011.
The success of the multinational sector is well known but I would like to focus on the indigenous agrifood sector. This has become a key driver of the export expansion, especially during the final quarter of last year. This sector of the economy, which was regarded as a sunset industry by certain quarters a few years ago, is now a real driver of our recovery. There were clear signs throughout the year that the manufacturing and agrifood industries were repositioning themselves by shedding costs and moving up the value chain, exploiting renewed growth in global markets. The Irish agrifood sector grew by 8% and is expected to grow by as much again into 2011. The growth in this sector is due to global demand, improved commodity prices and changes in the EU policy on agricultural output incentives. The Irish Farmers Association, in a statement earlier today, indicated that farm incomes had shown a significant increase over the past 12 months, which all sides of the House would welcome.
There were clear signs throughout the year that manufacturing and agrifood sectors were repositioning themselves. The life sciences sector, which includes products such as chemicals, pharmaceuticals and medical devices, currently accounts for 63% of total Irish merchandise exports and it grew by 12% in 2010. It is expected that this sector will continue to grow as the growth has been phenomenal over recent years, especially since the financial tsunami of 2008.
Whereas world trade growth is expected to slow this year, the Irish Exporters Association is still projecting total Irish exports will increase by 7.2% this year, due to a weaker euro against sterling and the dollar, to a new high of €172.6 billion, which is an extraordinary sum of money in the current international environment. I suggest that this indicates a growth in the global economy which I hope can be fostered and encouraged, especially by the larger markets of the United States and the eurozone led by Germany.
There are some pertinent statistics in the foreign direct investment area. We are number one in the world for jobs created by foreign direct investment and figures released by IDA Ireland show that almost 11,000 new jobs were created in 2010, more than double the number created in 2009. I know that on the negative side some 9,000 jobs were lost in the sector, although we emerged from the year in positive numbers.
The message that should be conveyed from this Parliament and from the country in general to the international community is that Ireland is ranked ninth from 183 countries in the world by the World Bank in terms of ease of doing business. The 2008 to 2012 business environment ranking of the Economist Intelligence Unit placed Ireland 11th of 82 countries globally. The 2010 IMD World Competitiveness Yearbook ranked Ireland fourth for the availability of skilled labour and sixth for labour productivity. It is no wonder that international companies are increasingly looking to Ireland as a location for their business. Not only do we have a fine location on the periphery of Europe as part of the European Union, we also have a highly skilled workforce. A figure that astonished me indicated that in people aged 18 to 30, the percentage of those with third level education in this country was almost 45%, or double the European average. It is no wonder that Ireland is seen as an attractive location for foreign direct investment.
The recovery in Irish manufacturing has finally started to translate into jobs and I refer the House to a paragraph in the national recovery plan published before Christmas. It pointed out that from 1994 to 2000, we were an export-led economy. That was before property bubbles, tax incentives or anything of that nature after 2000. In that period the country demonstrated an increase in population and employment which was export led. It suggests that a successful model from that period can be harnessed, although I readily acknowledge that two separate Administrations delivered on that success. The Government has pointed out that we can repeat that performance with an export-led recovery.
A trickle-down effect ranging from 12 to 18 months, according to economists, can be seen from the point of improved export figures to the creation of jobs. It looks almost certain that from this year on, there will be a gradual decrease in unemployment figures. As Senator Carty has pointed out, there was a decrease of 30,000 people on the live register between August and December, with an unfortunate blip in December.
I hope momentum will pick up again in January.
One figure constantly bandied about is that 450,000 people are unemployed. I understand the number unemployed is closer to 288,000. The gap between the two figures is accounted for by a large number of people who are involved in a variety of Government initiatives, working part-time or receiving payments or subsidies of one type or another. Notwithstanding this, it is not acceptable that we have unemployment. This is the issue with which the Government's motion is concerned.
I move amendment No. 1:
To delete all words after "Seanad Éireann" and substitute the following
condemns the Government for creating an uncompetitive economy which has fallen from 5th in the world in 2000 to 29th this year in the Global Competitiveness Report; and
condemns the Government for failing to tackle high costs in areas such as energy and waste and for failing to open up to competition sheltered high cost areas such as the legal and transport sectors.
I welcome the Minister of State, Deputy Conor Lenihan. It would be churlish of me not to acknowledge the improvement in exports and the balance of trade in the past 12 months. The purpose of the amendment is to place recent improvements in exports in the context of the larger economy.
I concur with Senator Mooney that it is important to have debates on good news items and we had several such debates with the Minister of State, Deputy Kelleher, before Christmas. However, it is also important to be realistic. Figures for the rest of the economy are, to say the least, depressing, specifically those which show a disimprovement in competitiveness in recent years.
I note with interest Senator Carty's comments on the car scrappage scheme. While I support the scheme, given that Ireland does not manufacture cars, the more vehicles bought here, the greater will be the disimprovement in the balance of trade. Any increase in car sales may be good for Swedish, German and French companies, but it does not have much impact on the economy, other than on those employed to sell cars.
During the debates on employment before Christmas I recalled a discussion with the Minister for Finance, the other Deputy Lenihan, in which he had referred to a decrease of 30,000 in the number unemployed. When I challenged the Minister on this figure, he responded with a wry smile, the reason being that the decrease reflected the large number who had left the country. The single, greatest indictment of Fianna Fáil in government is that people are being forced to leave the country again for economic reasons. Politics has failed in the sense that another generation is leaving our shores not willingly but because they must do so to make a living. For this reason, Senators on the Government side should stop trotting out the figure that the number unemployed has decreased by 30,000. Reading through my list of contacts on my mobile telephone before Christmas, I was shocked by the number of those among them aged between 18 and 30 years who had left the country in the past 12 months. When one meets the parents of those who have emigrated, they are, correctly, angry and upset. They do not take comfort from the knowledge that the number on the live register has declined by 30,000 in the past 12 months.
The disimprovement in competitiveness reflects a number of developments in the economy in recent years. Senator Mooney is correct that the Celtic tiger had two distinct phases. The first lasted from 1994 to 2001-02, a period when the economy was largely export-led and a large number of foreign companies invested here and created substantial and sustainable employment. The second phase was the period following 2002 when economic growth was largely based on construction. As a result of buoyant Exchequer figures, the Government lost sight of the importance of exports to the economy.
Costs in certain areas of the economy have declined in the past two years. Pay costs, for instance, a major contributor to competitiveness, have declined in both the public and private sectors. Productivity, another important contributory to competitiveness, remains strong.
Education is another major factor in competitiveness. A recent OECD report on education showing a collapse in standards in science and mathematics was buried in other events over the Christmas period. According to the report, Ireland's position in terms of qualifications and standards of teaching in science and mathematics has plummeted in a short period. As a teacher of maths and science in a previous life, I have a particular interest in these subjects. If the smart economy and innovation are to mean anything, we must ensure educational standards improve. This will be difficult to achieve, given that resources will continue to be scarce for some years to come. That does not mean, however, that standards of teaching and learning cannot be improved. The next Minister for Education and Skills will have to tackle this issue head on.
Innovation and entrepreneurship are also important to competitiveness. Ireland has always had a significant number of entrepreneurs who have produced ideas in which they have been able to invest.
Infrastructure is another key aspect of competitiveness. I have acknowledged on a number of occasions that the lasting legacy of the Celtic tiger is our national primary road network which is second to none. Other than roads, however, our infrastructure remains sadly lacking in a number of areas. Broadband availability, for instance, is still a problem in my area, as well as others. During the previous election campaign I heard more complaints on the doorstep about broadband than about any other issue, apart from the health service. Broadband coverage has not improved significantly in counties Kilkenny, Carlow and other areas in the intervening period. It was a major mistake to privatise the network when Eircom was privatised. In so doing we gave away some of our capability to deliver a national broadband infrastructure. Significant investment is required.
Tax and regulation are also significant contributors to competitiveness. President Sarkozy and others, including some of our friends in Britain, recently attacked the Irish corporation tax rate. I share the Government's view on the importance of maintaining the current rate. My party recently introduced a Private Members' motion in the other House focusing on the need to maintain the rate at its current level.
Regulation is also a significant issue. While under-regulation of the banking sector has created major difficulties, certain economic sectors, including agriculture, are over-regulated. The Government has given a commitment to remove some of the needless regulations in this sector.
Not many people outside the House share Senator Carty's view that the Government's policies are clearly working. Nevertheless, I concur with the Senator on the potential of the agriculture sector and the increasing contribution it has made to the economy in the past 12 months. It is for this reason that I have significant problems with the Climate Change Response Bill, as currently worded. It would be a disaster if we were to jeopardise the potential of the agriculture sector. While climate change legislation is necessary and I do not deny climate change is taking place, the Bill sets unrealistically high targets.
I second the amendment. Cuirim fáilte roimh an Aire Stáit.
This is a timely and welcome debate. The Senators opposite are acting in a delusional manner in congratulating the Government. At a time when so many are unemployed or emigrating and so many businesses are closing down all we have from the Government is navel-gazing and an inability to govern.
Ireland faces challenges and opportunities. A myriad of issues confront people in indigenous business and the export market. Senator Phelan is correct in suggesting we must help to create employment and jobs, to restore our competitiveness and to return our global trading level to where it was. More importantly, we must provide jobs to the people at home. That is what people want. The next generation of employers and workers look to legislators like us for inspiration and policy. We must tackle the cost agenda, restore confidence in the business world and force the banks, of which we are proud owners, to lend, to allow liquidity to flow and to allow people in agricultural and small and medium-sized enterprises to have capital. This is not happening in the banks at the moment yet last week the Bank of Ireland awarded bonuses. The Minister for Finance must set up an investigation. We have public interest directors and we are the owners of the banks, with the Minister for Finance in charge.
As Senators Carty, Mooney and Phelan said, we must broaden our export base and open new frontiers. We must move away from the Americas and go to the Far East. Cork is twinned with Shanghai and this is bringing people to the city. It brings much-needed income and people to University College Cork, where there is a thriving international relationship. We must seek new opportunities and be open to new ideas while rewarding, enticing and attracting. This Government has adopted the wrong approach. It has abandoned examining the OECD report on education, to which Senator Phelan referred. The mantra from Government is about the smart economy. We hear great lines about adding points to maths and science in exams but we need action.
Senator Mooney cited figures and tables on trade. We are behind Malaysia, Qatar and other countries in other tables. Why have we lost our place in the economic competitiveness table? Senator Mooney referred to the period 1994 to 2000. How did it happen that those sitting around the Cabinet table could take their eyes off the ball so that we are now the poor relation of Europe? Last week President Sarkozy made a mockery of us. This week, in this House I made the point that he should stay away from telling us what to do in this country. We look after ourselves and our rate of corporation tax is very important. However, we need a Government that will lead but we do not have that.
We all recognise the central role exports will play in the recovery of the Irish economy. I agree with Senator Mooney that, while we may be down and in trouble, we are not banjaxed. We have great people, an intelligent workforce and a well-educated group of people who want to work. Hopefully they will come back when we have a change of Government. We are not banjaxed. We will not come back to the days of the Celtic tiger but perhaps we should not have aspired to be like that. We lost many of our values as a society. In the context of the motion, the Climate Change Response Bill raises questions about where we trade and how we do business. The food and drink exporters came out against the Climate Change Response Bill that the Government is so keen to pass before it leaves office. I do not know if the Government has a date to leave office. There is a commitment to a 50% increase above the existing carbon reduction target. These targets have been committed in Europe under the EU reduction plan.
Considering the international market, Fianna Fáil is very quick to blame international events for where we are. However, the party fails to mention the international situation as a key component of Ireland's export increases. Without being negative, the euro is weak relative to sterling and the dollar. This has an important role in allowing our exports to rise. It is not just Government policy that causes exports to increase. Due to domestic factors, the Irish Exporters Association, IEA, states that the growth projection of 7.2% for 2011 in Irish exports is well below what is necessary to meet the demand in the EU-IMF four year plan. That point has not been mentioned across the Chamber. The post-budget analysis from the IEA also highlights the flaws in the thinking of the Government in regard to the research and development centres. These need to be revisited so we can become a high-tech export economy. I welcome the investment by Intel and the fact that Apple and EMC are doing so well in Cork.
It has nothing to do with Batt; it is despite him. I hope to see a commitment to the Cork docklands project in the Finance Bill. This can act as a stimulus plan for Cork and the southern region to create jobs. There is no vision or plan for the creation of jobs. We must create conditions to ensure this will happen.
Senator Phelan is correct in stating that we are forgetting about broadband to the point where in many parts of the country, broadband is like being-----
Ireland's industrial growth, according to the innovation task force, has experienced two inflection points since we began to embrace the notion of Ireland as a country capable of industrial production and move away from an agricultural, agrarian society. That is not to say the agricultural economy is not absolutely critical to Ireland's future. The inflection points identified by the innovation task force were in the 1960s and 1980s. The decision in the 1960s was to invest in human capital, primarily through free education at second level. The country moved by a quantum into a new era of export led growth and industrial development in the 1980s with the decision to engage in social partnership. The deal provided for industrial peace in return for reduced levels of personal taxation and a low corporation tax rate. The innovation task force says we need a third inflection point at the start of the second decade of this new century.
I commend and recognise the merit of the Government motion, and will support it, but I can see that more needs to be done if we are to make the third step happen. This will make good on the key decisions of the 1960s and 1980s. This time, it will be more complex and less easily achieved than if there were difficult to implement but simple policy decisions. The context in the 1960s and 1980s was that the world was slow-moving. Ireland had a much lower base from which to grow as a well off economy within the European context. The challenge is much greater now and the complexity of the response that will be needed to maintain national wealth and personal wealth and take our place as an exporting nation at the forefront of exporting nations will be more complex and difficult. Nonetheless, it is happening.
I advise Senator Phelan that Senator Donohoe recently identified Innovation Ireland as probably the finest document to come from this current Government period. Having read it again, I tend to agree with him. It is the plan that Senator Buttimer said the Government does not have. It contains many alignments with the Fine Gael's NewERA. While there are divergences there are definite points on which the two documents touch. For Senator Buttimer to say there is no plan is trite and untrue.
The innovation taskforce report is an extraordinarily impressive document. It emerged as a result of a recommendation, among a key handful of recommendations, in the Smart Economy document that we drive innovation. This taskforce set out to show how that might be done. As I read through some of the recommendations, I note a number of them have been acted on in this term. I hope the next Government takes up the challenge of acting on more of the recommendation because I believe we can achieve this new inflection point in the early part of this decade. It is necessary that we do it. It is not only about regaining and maintaining competitiveness or of taking on board the lessons of the OECD report, which I agree were extremely worrying and are not only confined to mathematics and science but include the need for polylingual skills in this country. I argue that children need to learn Chinese, or whatever other languages become dominant in the international markets, in school from an early age. Education will be critical. If the additional points that are to be given for mathematics were extended to some of the key languages, I would have no complaints. That recommendation on the allocation of additional points is one that emerged from a report and is one on which the Government has acted.
I spoke recently to people in PricewaterhouseCoopers, PwC, about how Irish suppliers to big international companies are now under pressure to drive the carbon out of the products and services they supply abroad. It is becoming a pressure to which many of them feel they need to respond rapidly. In terms of accounting procedures, PwC is assisting many Irish companies in meeting that challenge.
The demand to drive carbon out of our export of goods and services will not stop. One need only look at Google's recent investment as the lead investor in a wind farm stretching 350 miles off the California coast to realise that it wants to be able to say of its data centres and service to its multimillion consumers that it is a company that is delivering its goods and services in a low carbon way. We need to monitor that kind of investment. Our small and medium sized enterprises in that sector need to be able to respond to that and keep the level of carbon as low as possible in the products they provide.
Such companies on investing here also examine Ireland's ability to work and provide power for their businesses in a low carbon way. There is great hope there and many Senators on both sides of the House have spoken about the potential of the renewable sector in Ireland.
It is interesting that we have managed to get to the point we are at today despite being poorly endowed in fossil fuel supplies. We did not have any discovered gas when we were trying to grow the country in the earlier decades, although we have discovered a certain amount now. However, when it comes to the old fuels, we are poorly endowed but yet we managed to develop as a strong economy, although I agree we need to regain that strength. However, we managed to do it in one cycle.
As we move away from a fossil fuel economy - that is not a wishful statement as we are in the early stages of doing that - to a post-fossil fuel energy era, we are a well endowed country. We have moved from being a country that has had to import its energy to one that ultimately will be an energy exporter. That will give us an enormous edge in terms of that inflection point and it will be a product that we will export. Our energy policy, investment in our grid and the investment that has been planned by the ESB, Bord Gáis and Bord na Móna, which will amount to €30 billion when it is totted up over the next decade, will effectively will drive energy exports, and that will be critical.
In terms of the message that has gone out from Ireland lately, I spoke recently to our man in Chicago, the IDA person there, with whom I go back a long way, about the impact of the stories of Ireland in the US press in terms of his job of trying to attract inward investment into Ireland in the form of foreign direct investment. He said it is hard to predict but he expects that 2011 will be a good year for investment from US companies into Ireland and that while there are negative messages there, Ireland is to the forefront of people's minds. The IDA is boxing clever in the United States at present and using the opportunity to speak to people to whom it has not spoken previously in parts of America to which it has not been previously. To use the old cliché, even this particularly dark cloud may have a silver lining if the IDA continues to use its influence and renowned skillset overseas in attracting foreign investment into Ireland. I am optimistic that prediction will come true. Such influence is being coupled with the work of Enterprise Ireland's network of offices all around the world. I have heard direct stories from very small exporting companies in my area - I am sure such stories are replicated throughout Ireland - of where Enterprise Ireland offices are fast-tracking and making it easier for companies that have innovative products and services to get into marketplaces in large cities around Europe and further afield. I am extremely encouraged when I hear those stories of direct care and concern for small Irish businesses by Enterprise Ireland in the way it makes it much easier for Irish companies to overcome language barriers, bureaucratic barriers and taxation issues as such companies begin to move into unfamiliar territories. I commend Enterprise Ireland on that engagement. Much of it is unseen because this does not involve a large number of jobs. It is not the stuff of Intel announcements, which I very much welcome, but it is critical.
In regard to the climate Bill and whether it will impair Irish growth, I appeal to Members to look at the facts. Under current commitments, by 2020 Ireland will need to reduce the amount of carbon dioxide it emits in its production of goods and services from 64 million tonnes a year, which is the current level, to 47 million tonnes. The climate Bill commits us to reduce our emissions from 64 million tonnes to 47 million tonnes a year by 2020. That means there is no difference involved, in that no additional burden is being put on the Irish economy in gross tonnage terms over the period than is already committed to under our 2020 obligations. Any attempts to present that Bill as being a dead hand on the prospects for the Irish economy are untrue. I have made the case already that we need to drive carbon out of our production. I believe that Bill will do that and make us more attractive to inward investment and our exports more saleable in a global market that is expected to reach a value of €5 trillion by 2015.
I am grateful for this opportunity to speak to this motion. I recognise, as should Members on all sides of the House, despite the amendment tabled, that there is great hope in the export figures we received recently. Whether they were delivered by fluke, design or clever Government measures I am not sure, but they have happened and they are certainly a crutch for the Government in its hour of need. It is certainly no coincidence that a motion of this sort is tabled in Government time to grab at a straw which may turn out to be something quite significant.
I do not know, nor does anybody in this House, whether we will be able repay the IMF-EU the amount of money which we have borrowed from them. I do not know whether the growth figures are realistic. There are authorities on both sides, those who say one thing and those who say another, but I know we will be extremely lucky if we achieve that growth. Our dependence on multinationals for our export figures is extremely significant. I congratulate successive Governments for their steadfastness in holding to the decision to encourage multinationals to our shores; it was the great success of what was the economic boom. The construction industry pillar of the boom has collapsed while the multinational pillar was the unsung element. That element continues and we only need to look at the Intel announcement this week to see multinationals still have great confidence in the Irish economy and that is encouraging. There is an apologetic acceptance of that by many of us because we do not like to give the credit for future economic growth to investment from abroad because we like to feel that it is done by ourselves, and indeed some is being done by the food industry.
I ask the Minister of State and his senior Minister to consider one thing: if multinationals are to lead us out of trouble, which undoubtedly they are, could we look again at the 12.5% tax rate? Why do we attract so much employment from US multinationals, in particular, leading to so many spin off benefits to the community, to employees, to housing and to myriad other service industries? The principal hook that attracts them is the tax rate. There are incidentals, such as an educated population, but the main reason is the tax rate. If we are to encourage the export-led, multinational-led recovery, why can we not lower that rate further? Why is the Government so much in a straightjacket that it must stand by the 12.5% rate? It is constantly resisting the pressure from Europe to raise that rate. We had it from Mrs. Merkel yesterday and Sarkozy last week. People are constantly hectoring us that we cannot accept loans from Europe while keeping this tax rate. We are in charge of our own tax rates; as a nation we can do what we like with it. We are not beholden to Europe on that and we should not be subject to pressure on it. I suggest that the Government makes a unilateral decision to reduce corporation tax to less than 10% and stuff Sarkozy, Mrs. Merkel and their cohorts and let us see what will happen. The result will be that the message will go out across Europe and to the United States that Ireland is taking the initiative to improve exports even further. We should indulge in what they refer to so derisively as tax competition; let us do it. What is wrong with tax competition? Europe says it does not want tax competition but we should be tax competitive, we should go in and say we will use this weapon and we do not care too much about the lost revenue because it will be compensated for by increased employment and exports.
I am not anti-European but we must be careful about the balance in our relationships with Europe and America. During the negotiations, it was clear the IMF and the European Union took very different attitudes. It was the Europeans who screwed us, not the IMF; it was the Europeans who came down hard on us, telling us we cannot do this, that and the other. It is perfectly apparent now that the IMF said we could burn the bondholders; it had no fundamental problem with that. It was the Europeans, particularly Trichet and his boys, who said we would get no money if we did that. Why do we have to take that sort of diktat from Europe?
A funny thing happened in the European Parliament today. Joe Higgins and José Manuel Barroso had a set to. I would not normally be sympathetic with Joe Higgins but he said we should not be dictated to by European bankers, and that is what has happened; the bailout result pleased European bankers. He was right about that. The irony is that while Mr. Higgins said that and Mr. Barroso got all sniffy about it, I spent yesterday in London talking to hedge fund managers and they said we are bonkers and asked why we did not burn the bondholders, that it was what we were expected to do and what we should have done. On the one hand, Joe Higgins is saying we should do it while, on the other hand, fund managers and real market people are saying we should do it but in the middle the Government claimed it was completely in thrall to the European Central Bank and capitulated to it. Let us tell Europe we will look after our own tax affairs, that we will be export-led and we will do so by cutting corporation tax and not taking notice of its diktats.
I do not disagree with the Senator's notion of lowering taxes further but clearly at present we have severe Exchequer difficulties so it would not be realistic in the short to medium term to progress on a path of further reduction of corporation or other taxes. Most regular economists would be sceptical about the idea, although I understand the red in tooth and claw capitalism that lies behind the assertion and I have no objection to it.
The burning of the bondholders is a subject where Senator Ross and Joe Higgins are as one. We must distinguish, however, between bond market operators in London and elsewhere because London is sui generis.
There is a certain euroscepticism that is not only healthy but positively believed in the British capital that also makes good paying sense for hedge fund operators in that part of the world. When I lived there in the 1980s, I saw at first hand bond market and currency market operators making the most of their anti-European principles while making it a paying proposition from their own perspective of shorting the market or a currency. I would not take my views from them or from Joe Higgins on these matters.
We have bound ourselves to the European project and to a great extent, there is nothing we can do about that, short of the exit from the euro currency recommended by some people, a course of action I do not endorse; it would be most ill-advised. When David McWilliams urges that in his columns, it is the formal logic of the sort of scepticism expressed by Senator Ross. Most mainstream parties in this House would not suggest an export-led economy such as ours should leave behind one of its greatest benefits, that is, membership of a common currency. A common currency inflicts pain in difficult times, such as when hostile rate movements make it more difficult for us to trade, particularly with our nearest neighbour and largest trading partner, the United Kingdom.
Following sharp contraction over the past two years, let us welcome the fact that the latest data suggest the level of activity in the Irish economy has stabilised and that the Department of Finance now expects GDP growth of 1.7% this year and average growth of 3% over the period 2012-14. There is a strong consensus that growth will primarily be driven by the export sector over this period.
Our export performance in recent years has shown considerable resilience. In order to capitalise on the strength of this sector, the Government launched a new integrated strategy for the promotion of overseas trade, tourism and investment - Trading and Investing in a Smart Economy. It was launched last autumn and suggests that by providing the framework to maximise the potential for increased exports, tourism and investment, we can support well-paying jobs at home. It points to a series of reports and recommendations made to the Government by agencies and independent bodies suggesting we must go up the value chain. This proverbial value chain, which we must now climb against a background of international and domestic recession, is one we would have had to climb irrespective of whether there was a recession. It is important to execute this move much more quickly in the current climate.
It is important to emphasise that many of the jargon words associated with the smart economy tend to alienate people from the core concept. I do not like using the phrase "smart economy" and prefer to use "productive economy".
On foot of all the reports and our strategy, we are making an investment to exit recession. We are moving towards growing productivity in small and medium-sized firms. We are helping to make the operating environment more competitive for multinationals, which are present in great number and which must pay salaries that traditionally were higher than those paid elsewhere. We have addressed many of the issues in the past two years.
One of the achievements of the Government and the country – I hate to keep boasting on behalf of the Government - is that companies, managers, factory floor workers and staff in offices have made the necessary adjustments willingly in order to retain and safeguard jobs and to make companies and communities more competitive. There is a push-pull factor in terms of people's reason for making the adjustment. The people have made a remarkable adjustment in response to the very sudden recession, which was caused predominantly by an international banking collapse in our case.
Of course, we have our own weaknesses. An Opposition Senator stated Fianna Fáil is always saying it was international rather than domestic factors that caused our very sharp adjustment and descent into recession. I do not agree with this view. I am one of a number of colleagues, including the Taoiseach, who have openly acknowledged the mistakes we made and who contend that, now that we have the benefit of hindsight, we should have slowed down the expansion of the property market earlier than we did. There is no doubt we should have curtailed at an earlier stage some of the reliefs we curtailed in the last budget and the one before it. However, when this issue was raised at the time in question, there was a great deal of opinion, from Government and Opposition sources and from some well-respected international and domestic companies, to the effect that we should not do so and that we should pile on more incentives. That is the context and we need to be balanced about it. It is not just that the Government made mistakes.
The Government did make mistakes in this matter and it is glad to acknowledge that. We are glad to be in a position to rectify them if we can and set the platform for further expansion and growth.
This new Government strategy and action plan, which was prepared by the Minister of State responsible for trade, Deputy Kelleher, is the result of co-ordination with all of the relevant Departments and State agencies. It replaces the Asia strategy, it is global in scope and covers both existing and new high growth potential markets. It has set a number of ambitious targets to be achieved by 2015. Its objective is to create 150,000 new jobs in manufacturing, tourism and traded services. The jobs total figure of 150,000 direct new jobs is from agency estimates based on their growth targets over the strategy period, which ends in 2015. The IDA has set a target of 75,000 additional jobs, Enterprise Ireland is pinning its colours to the mast in respect of 60,000 new jobs and 15,000 jobs are pencilled in for the tourism sector.
The new strategy foresees the creation of an additional 150,000 jobs, to be created indirectly through the very aggressive trade strategy. The strategy is focused very much on creating a new and more visible presence for Ireland through agencies and embassies, and through direct marketing and promotion in markets in which we have not had a great footprint heretofore.
Forgetting for a minute Brazil, Russia, India and China, the fabled BRIC countries, Members should note that two thirds of the worlds GDP is generated between the Middle East and Far East. Any companies, countries or individuals who hope to be exporting entrepreneurs that ignore those markets do so at their peril. The region to which I refer is where the growth of the future will be and where most of the world's population is located. We need a new strategy.
There will be a considerable challenge for Ireland because traditionally its trade, tourism and investment footfall has been very much in the United Kingdom, other parts of Europe, the United States and in what we might broadly describe as the English-speaking parts of the world with which we are familiar culturally and otherwise and with which we have connections. It will present a big challenge for the current Government and its successor to penetrate the new regions, become very relevant and encourage Irish businesses to enter the new markets. That is the primary purpose of our agency push and why I, as a Minister of State in the Department of Enterprise, Trade and Innovation, am proud to say that, over recent years, there has been a significant redistribution of financial resources within the Department to the agencies that encourage indigenous companies to trade in export markets. This is precisely because the challenge is so great, particularly in respect of the markets of the Far East.
The new strategy foresees the creation of new indirect jobs. This figure I referred to in this regard takes into account the various impacts from new jobs in manufacturing and services based on the number of projects, job intensity, purchase of raw materials and services, re-spending of salaries and impact of taxation.
The overall objective of Trading and Investing in a Smart Economy is to marshal and co-ordinate the resources of the State in a way that best supports firms of all sizes and in all parts of the country that are trying to trade and grow their business overseas. This new strategic approach recognises above all that it is critical that we, as a relatively small player in the global marketplace, work as a coherent team when promoting our economic interests abroad. This joined-up approach is even more necessary when trying to gain or increase our foothold in new high growth potential markets. It is a remarkable feature that I witnessed on some of my visits abroad as a Minister of State. It is precisely in the new markets, be they in Singapore, China or elsewhere, that our agencies are best organised on the ground. New markets force agencies that would have operated semi-independently in more settled markets to collaborate.
When one considers the size and population of China and the wealth being generated by it, one notes intense collaboration and co-operation between the embassy and agency staff, precisely because the Irish footprint on the ground is very small relative to the size of China and to the number of cities with over 1 million people in that country. It is a great challenge to be represented significantly in China.
One of the key messages in the Government's national recovery plan is that export-led growth will fuel domestic recovery. It recognises that the implementation of the strategy and action plan set out in Trading and Investing in a Smart Economy will ensure that our trade, tourism and investment sectors are well positioned to respond effectively to emerging opportunities as the global economy recovers.
The national recovery plan has set out specific actions to spur further improvements in competitiveness across all sectors of the economy, including measures to cut costs in respect of energy, waste, transport, broadband infrastructure, professional fees, property and labour.
Wages and other costs have adjusted to the change in labour market conditions. Government policy has aided in this competitiveness adjustment. Public sector wages have been reduced by an average of nearly 15%, sending a clear demonstration effect to the traded sectors, and the minimum wage is being reduced. IBEC surveys have found that one quarter of companies cut basic pay rates by an average of 12% in 2009.
Trading and Investing in a Smart Economy recognises that our favourable taxation environment has been a key strength. The Government's recovery plan commits to maintaining the 12.5% corporation tax rate which the new trade strategy identifies as a key component of our industrial policy. It is no accident that, in recent weeks and months and in light of the four year plan and the agreement reached with the EU, the European Central Bank and the International Monetary Fund, significant Ministers, including the Minister for Finance and the Taoiseach, have often stated how the rate is at the core of promoting Ireland. We are not for changing.
Ireland is not isolated in this regard. We stand alongside many European countries, most notably a number in central and eastern Europe. Although it is always difficult to say in an Irish context, our nearest neighbour and historical enemy of many years-----
-----has been a great ally to Ireland in the tax debate at European level. Not only are we locked into our commitment to a 12.5% tax rate, we are in an alliance with other European countries. We have allies and friends on this issue, most notably our neighbour, the British Government.
Driving and monitoring the implementation of the strategy is a new foreign trade council chaired by the Minister of State, Deputy Kelleher, through his responsibility for trade and commerce. The role of the new council is to strengthen co-operation and co-ordination across all key State agencies, including by providing strategic guidance and direction to trade, tourism and investment committees in each key market. It has also had discussions on how to strengthen Ireland's profile abroad, for example, by maximising the impact of integrated trade missions, promoting Ireland through St. Patrick's Day and making better use of our current joint economic commissions with China, South Korea, the Russian Federation, Saudi Arabia and Libya. At the council's most recent meeting, the Department of Justice and Law Reform briefed it on the new mechanism the former has set up to align our visa regime with the priorities set out in the strategy.
Trading and Investing in a Smart Economy has the distinction of being the first integrated strategy to promote overseas trade, tourism and investment and the first to have concrete targets for trade, tourism and investment up to 2015. The overall objective of the strategy and action plan is to marshal and co-ordinate the resources of the State. One of the follow-up actions in the plan is to ensure that the many Irish businesses which do not engage directly with any of the State enterprise agencies are informed as to the initiatives and actions set out in the strategy which would benefit them.
Are the new strategy and all of the initiatives taken by the Government to support exporters delivering the desired results? While the Central Statistics Office, CSO, will not have its estimates of merchandise and services exports for the full year 2010 until the end of February and March 2011, respectively, all of the indications from trends in the first three quarters of 2010 are that the value of Irish exports for the full year will be well ahead of 2009's approximately €151 billion and could be our highest ever annual total. We need to be mindful of this extraordinary statement.
Not for one minute would I criticise the Opposition for being excessively negative. In particular, Fine Gael is trying to be as positive as possible. Senator Phelan and others sent a positive note by emphasising what has been a successful element in these past two years. I am not talking about the Government, but about the country. That we managed to squeeze out these export figures in the most hostile and difficult trading period in our history bar perhaps the economic war is an extraordinary feat, one that has largely been achieved by foreign direct investment and agile, competitive domestic companies that are trading across international frontiers. We need to praise such companies more. To a large extent, Fine Gael and Fianna Fáil are ad idem in this regard. A new Government that punishes exporters through higher costs, taxes and State entanglements is not required. We need to remove the shackles from these companies and make it easier for them to do their business overseas and repatriate their profits to Ireland. We need to encourage a culture of innovating and growing Irish companies.
A number of Senators referred to the innovation task force report. As Minister of State, I have been proud to play a part in the task force's deliberations and recommendations. Some Senators have stated it is it yet another Government report lying on a shelf, but it is not. To date, more than 51% of the recommendations have been implemented. The document is predicated on the notions of action and implementation. Give us a recommendation and we will implement it. The task force's recommendations continue to be implemented. We created a steering group to ensure this. The group is not composed of bureaucratic or administrative patsies. Rather, it is composed of people from industry who want to hold our feet to the fire in terms of the report's implementation.
The report is not an arid document lying on a shelf. It is living, breathing and being pushed through the Government process. It is a great tribute to the Taoiseach that he championed this initiative as a follow on to his creation of the smart economy framework, which he published towards the end of 2008. It is also a great tribute to him that the actions are being taken. For years, the public and certain people in politics have rightly been cynical about reports that are trumpeted with great fanfare, glossy brochures etc. but are not implemented. That was an unfortunate part of our history during and prior to the boom years, but this report is being implemented. Despite the chuckles being deployed by Senator Phelan, he will find this document useful if he finds himself in government.
Some 50% of the recommendations have already been implemented and any Government that follows us will merely need to complete the remaining 50%. Some of the actions will not be easy.
The report has two fantastic core elements and I recommend that Members note them. The first is the idea of creating an innovation fund of €500 million to encourage companies. It is not all about start-ups, in that it is also about scaling companies upwards. Traditionally, Irish companies have found it difficult to survive upon reaching an annual turnover of approximately €100 million. They tend to be taken over or amalgamated, change their direction or switch their headquarters. The key challenge is not only to encourage a culture of start-ups, but also to encourage a tradition of serial reinvestment by successful business people and entrepreneurs so that when they cash out of business, they come back in and start again. This can only be done if we create a popular venture capital culture.
The €500 million fund has been greatly admired abroad and we hope it will be a magnet for attracting American venture capital into the European marketplace. Traditionally, US venture capitalists have been conservative in their approach to European capital markets and reluctant to make the journey across. Ireland is in a good position to attract that venture capital and to see it invested in Irish and European companies. The fund is a successful part of the report and is already up and running on a pilot basis. It is going well and has made its first investment.
When creating the administrative arrangements around exploiting, developing and commercialising patents, new discoveries and copyrighted material, it is important that we get our ducks in a row. Issues exist. For example, I attended the Seanad some weeks ago following a particular High Court decision concerning current copyright arrangements. We will adjust our rules accordingly to ensure that challenge is addressed.
In terms of how we treat intellectual property, it is important to position ourselves as a location of choice for people to commercialise, exploit and register their patents and discoveries. Our universities comprise a fantastic infrastructure in terms of research and development. It has been built up over ten years by tripling the level of spending devoted to research and development. The road construction projects of the past 14 years have seen the completion of vital connections between our large cities, reducing journey times. Alongside that physical infrastructural investment of the past 14 years, there has been a fantastic rolling out of investment in the intellectual or human capacity of our people through the investment in research and development in the universities. There are hopes for the future and we can turn the corner and come out of recession-----
-----and it will be because of investment both in research and development in export-led companies and the creation of new export companies from our own intellectual capacity. I apologise if I have exceeded my speaking time.
I feel like the man who came to scoff but stayed to praise because I came to vote and have stayed to speak. I understood there was to be a vote, as usual, at 7 p.m. but it is a tribute to the rather chaotic way the business of this House is run which is very bad and I enter a protest. Already today, a significant-----
I am speaking to the principle of the motion. I am talking about this precise debate and the way it is handled. I could not be more central if I tried, as I am sure the Acting Chairman will see because she is a woman of broad imagination and sympathy. I remind the House that important legislation was rushed through all Stages in the House this morning. I think this is frightful and disgraceful.
I am glad I was here to catch some of the Minister of State's contribution because he spoke with characteristic verve and a positive attitude and without endlessly reading from a script so he knew what he was talking about. I can agree with some of what he said but when he talked about certain areas of innovation and said we have 50% of the work done and all the incoming Government has to do is finish the other 50%, I wish that was all the incoming Government had to do. On the contrary, the incoming Government is faced with a horrendously difficult economic situation, as the Minister of State is perfectly aware.
This may be taken as an aside but it is an extremely relevant aside. I was thrilled as I walked down to the Royal Irish Academy this evening to the launch of a book which is relevant to this area. It was to be launched by Vincent Browne but I had to leave before he arrived. As I walked, I heard on RTE radio Joe Higgins MEP speaking in the European Parliament. He said something that I have been saying in this House and naturally I agree with it because I agree with myself. He was asking how it was possible to create a just civil society and a proper economy based on principles of injustice and immorality, that every single economic commentator acknowledges now that it is wrong and a mistake to inflict the bill for the gambling habits of the banks on the innocent Irish taxpayer. I refute absolutely the idea that we are responsible for the situation from which the Minister's innovative proposals are trying to get us out. This has to be addressed. I was delighted to hear, from the instant and hysterical response, that Joe Higgins had rightly got under the skin of José Manuel Barroso.
With regard to the question of innovation, the Minister of State comes from a very talented family and he will know about the creative imagination, the capacity for lateral thinking, the inventiveness of Irish people. I have recently written a foreword for a book on the subject of who are the Irish. It is written by a fellow who has been involved in all kinds of different things. The writer, Mr. Moran, was involved in the building, catering and entertainment businesses. He lives in London. He took people from every one of the 32 counties, not just from the areas of literature and the arts - but also from business, banking, science, invention, law. We have that raw material of the creative imagination; what we need is to move it further on to the development of those incentives in a proper way.
The Minister of State spoke about patents. I did a James Joyce show in Munich some years ago in order to raise funds for an Irish charity and at the invitation of some members of the Irish community who were working in the European Patents Office. They asked if something could be done to harmonise the patent system throughout Europe. There is not sufficient time for this Government to do anything but we need to do it in order to encourage people.
The second part of my argument is to highlight the number of new, fresh and original creative ideas in this country. For instance, a multinational company based in Waterford closed its plant and repatriated the research and design ideas to America. Our ingenuity and creativity was stifled because although that plant was making a profit, the American home base was in some financial trouble and perfectly legally they took our ideas. We should try to keep our creative talent here.
Last week I attended the Young Scientist Exhibition at the RDS. If anyone wants to see innovation and ideas at work, this is the place to go. For instance, a lad from Belvedere College explained his invention in a most magisterial manner. He has designed a cyclist's helmet which monitors head movements. The movement of the cyclist's head to right or left sets off a flashing rear light direction indicator. There is no need to take one's hands off the handlebars. Even better, another young lad from another school has invented an application for a mobile phone or a BlackBerry which can turn the phone into a defibrillator. Many wonderful young athletes have collapsed on playing pitches or have died from sudden adult death syndrome. I am aware that defibrillators have been installed in clubhouses but every telephone could be turned into a defibrillator by means of this invention. I advised the young man to take out a patent for his invention and he has done so. Last year's winners of the competition were from Clonakilty. They invented a test for enzymes in milk. It was a simple but fantastic invention. We can lead the world. What young people need is the encouragement to do it and that Young Scientist Exhibition is just marvellous. My old friends, the young women from Clonakilty, were there this year. One of my good news stories concerns them. A group of transition year young women students in the Sacred Heart school did a project on the problem regarding the drainage of rich nutrients from farmland which had caused a stink on the shoreline. It was awful for the locals and a disincentive for tourism. The girls identified the problem and they collected samples. A chemical analysis showed that this material could be compressed and turned into briquettes that burned for twice as long as peat briquettes and had the same heat co-efficiency. This is a fantastic development. The mother of a dyslexic daughter created an aid which helps those with dyslexia by cutting the back off a cornflakes box and taking a triangle out of it, all to focus the eye. She went to the Fingal enterprise centre and the invention is being manufactured in plastic with different coloured lenses. She told me she appeared on "Dragons Den" and she was thrashed by one of the mouldy old lions. The cowardly lion mauled her but the three other dragons invited her to talk to them after the programme because they thought her product was brilliant and they will help her with the manufacture and world-wide marketing. It is not a language-dependent product. One could read Hebrew backwards, read Chinese upside down. We need such ideas but they require investment. I spoke at an event in-----
I will end on this point. We need to invest. I know these are difficult times and everybody is in the queue such as hospitals and schools. I spoke at the Institute of European Affairs. A wonderful young woman came up to me to say she was really worried about the country. She is now studying law but had previously completed a high technology degree in some third level institution in Dublin. Three years ago she was one of a class of 220 students, but when she returned this year, there were 12. That is not good.
I congratulate the Minister of State for his clear description of what we are doing to take advantage of export opportunities in Asia and various other parts of the world. The past three years have been the worst period of our history since the 1930s. In addition to a crisis in the financial sector and the world economy, the construction industry has collapsed. This has forced Irish industries to find new ways of competing. Most would agree that we were overpaying ourselves. Our wage bill was far too high. To give a simple example, a bricklayer who previously demanded €3 to lay a brick is now happy to do so for 60 cent.
That example demonstrates how a fine industry was brought to its knees by overvaluing the various services being provided. Land was also exploited. A site in a normal area which should have cost €30,000 was being traded for €100,000. That gives a hint about why the construction industry collapsed. Raw materials and labour became too expensive and when that happened, Joe public could no longer afford to buy a house.
There has been an adjustment in the private sector because people had to accept lower pay. That made our exports more attractive. The euro has decreased in value against the dollar and sterling, which also helps industry to create employment. We have to be led by the export industry.
President Sarkozy and other European leaders should not worry about the Irish because we will look after ourselves when it comes to exporting and attracting companies. Our attractive corporation tax rate of 12.5% should be the bottom line. I agree with Senator Ross that we form our own tax policies and that if we want to expand inward investment, we need an attractive tax regime. We have seen the success our tax policies.
The Minister of State has outlined how we will go about expanding exports to China and other Asian markets. We have a great opportunity in the education sector because we have some of the finest educators and best accommodation on offer in the world. We should attract a larger share of this market. We are earning approximately €800 million from students coming here to learn English, compared to a figure of €12 billion in the United Kingdom and €4.5 billion to €5 billion in Australia. Everybody wants to learn English which is the medium for most business transactions. We should seek to ensure our schools teach Chinese and Japanese students. We need a forward looking education system. We could easily earn a further €800 million from students coming here to learn English. That would give a huge boost to our letting industry and other sectors. Each student would spend in the region of €22,000, a colossal amount of money. For very little investment, we could create a considerable number of jobs.
We should pay attention to where opportunities arise. While we cannot create jobs, we can develop the climate to promote job creation in exports and services.
Our economic recovery will be hindered until we sort out our banking problems. Certain bankers still cannot tell the truth. It is not good enough to give misinformation to the Minister for Finance when one considers what the taxpayer has done for the banks. The people whom we have put on the boards of the banks should be obliged to report to the Minister on a weekly or monthly basis to ensure he will be kept up to date on what is happening in the banking sector. We should break the banks into commercial, retail and investment sections and reduce them in size because they became too big to save in many cases. We have saved most of the banks and it is important to restructure them in a way that sufficient credit will be provided to maximise the export industry.
I welcome the opportunity to speak to the motion, particularly in the light of the amendment tabled to it. The motion provides the House with an opportunity to unite behind our export success story, but, unfortunately, the Opposition has not responded to it. The amendment condemns the Government for not being competitive enough. I find that deeply hypocritical, given that we have listened to bellyaching from Opposition Members about the necessity to make Ireland more competitive and reduce the national minimum wage. We have the absolute opposite in terms of a condemnation of the Government for our loss of competitiveness. If Opposition Members are honoured by being elected to govern, they will quickly learn they will have to be consistent and coherent. I also advise them not to be hypocritical.
-----visited Intel more than four months ago because we are concerned about energy costs. It is one of Intel's big problems with Ireland. We heard that costs were getting out of control and that we needed to do something about it, which we did. The fact that Intel has indicated it will reinvest in this country is such a good indicator. What would we have done if it had not done so? It shows the Government is doing the right thing and that the country is regaining its competitiveness.
Apart from energy costs, construction costs are down 40% so people can now afford to do business here and to expand. We need to keep an eye on that and I am sure Fine Gael will do so if the people decide to put it in government. If one is to curtail costs, it means making adjustments.
We cannot be complacent. Previous speakers asked how hard is it to do business here. How difficult is it for businesses here to expand? We heard about patents earlier and we must make things easier for people. The Minister of State, Deputy Kelleher, has been in the House to address the red tape. We must streamline things for small and medium sized enterprises in particular. We are in danger of throwing the baby out with the bath water. There is this notion that we had no regulation and that is what got us into trouble but that we will now have far too much regulation. There needs to be a happy medium.
It is vital the message that Ireland is good and open for business is made very clear to people. That is why we must ensure we keep an eye on whatever constraints there are on business. The Minister of State spoke about strategies that have been adopted and that this is the way to go. Everybody acknowledges the successes which have been achieved. However, we need to be careful and hear what small businesses are saying, such as, how difficult it is to get paid, in particular, by the State, or whatever. We need to keep an eye on that area.
Tourism has massive potential but it has been quite damaged. We have bad statistics because of the perception that Ireland is too dear. Why is it too dear? We are in danger of killing the goose which laid the golden egg. We now hear there is a lot more value in restaurants and so on than ever before. That is a good thing.
After the changeover to the euro, many people decided it was cheaper to bring their family for a two week holiday to Spain than to remain in Ireland. That was terrible. My family holidays were always in Ireland. We kept the money in the town, spent locally and developed the indigenous economy. We did not have that tradition of going abroad. Besides it cost a fortune to get a flight in those days whereas now it is so much cheaper to go to Spain. That is something on which people in the tourism industry need to keep an eye. People enjoy themselves when they come to Ireland but it is expensive.
I am tired listening to people say that lowering the tax rate was a bad thing. As soon as we lowered the tax rate, the money came in. People will pay fair taxes. The cost of things is very transparent and if we want people to do business here, we should make it affordable for them. It is better to serve food in a bar which is full and a little bit cheaper than to serve more expensive food to fewer customers. People recognise that now and costs are coming down. That is where we are regaining our competitive position. I am glad to see that because it is a good news story.
I agree totally with what Senator Norris said about the young scientists and how we need investment. He spoke about bankers and about what happened in the European Parliament this afternoon. However, he needs to recognise that if we are to invest in those young scientists and young geniuses of the future, we need a working banking system. Whether we like it or not and whatever happened in the past, Ireland had no choice but to support the banking industry. Investment only comes through the banking sector and that is why we need a coherent banking structure. I am glad our competitiveness is improving. Long may the good work by the Government in this area continue.
I have always felt there was a very strong link between exports and tourism. For that reason, it is very important to ensure we continue to promote Ireland abroad wherever opportunities arise, which we have been doing exceptionally well. There is always a temptation in times of economic constraints to cut back on expenditure to develop and expand on the goodwill which exists abroad.
If people have a particular loyalty to a country and if they see one of its commodities abroad, they will buy it despite the competition which exists. There was one great example of that, namely, Aer Lingus. Over the years people who travelled from abroad and who were of Irish extraction invariably sought to travel with Aer Lingus when it was the national airline. When that ceased to be the case and when it cut certain routes to Shannon Airport, which had a major impact on Shannon, I do not know how many people I met in America who said their loyalty to Aer Lingus was gone and that they saw no difference between it and any other airline if it could pull a service and harm a whole region.
The same applies to any Irish goods on sale abroad. We obviously have a very good name in terms of the product we provide and we are able to compete. More important, the brand we have is strong and holds on to that loyalty about which I spoke.
Looking back at some of the debates we have had, in particular around St. Patrick's Day when Ministers travel abroad to represent Ireland, the view has been expressed that should not happen - in other words, we should cut back on that expenditure. That makes no sense whatsoever. The people inviting representatives from Ireland are the prospective customers for the products we are selling. There are 40 million people of Irish extraction in North America. That gives us an inroad and a degree of exclusivity in that market. However, if one does not service that market in a small way by sending representatives abroad, it brings us back to the example I gave of Aer Lingus. The very same thing will apply to the customers who show loyalty to us from that market. We need to be very careful that we sustain and develop the loyalty we have and that we recognise the global network at our disposal through our diaspora. Above all else we should try to maintain the qualities we have had in the past in the context of tourism. In other words what we have is our strength. If we try to copy and ape other countries with something different, then we lose the very market to which we have access.
I wish to address some of the points made in the debate. The suggestion that block layers being paid too much was the cause of the collapse in the construction industry is a first. I have not heard that before, but I have heard it here. What about the building of so many houses, a policy that was encouraged by Government? What about the greed of developers? What about the disgraceful and, indeed, criminal activities of the banks, with no one held accountable yet? These are the reasons the construction industry collapsed, not that block layers were paid too much. Senator O'Malley said that if one is to curtail costs, it means making adjustments. Of course, when costs need to be curtailed, adjustments are required, but it was at the time when we had the Celtic tiger and money was flowing in from construction and other sources that the Government should have been suggesting curtailing costs and making adjustments rather than pumping money here, there and everywhere, resulting in us being in the position in which we find ourselves of needing to ask the IMF for a bailout.
That is the result of the policies of the Government. I know it hurts, but it needs to be said. Past taoisigh said we needed to fight for our freedom, but they also stressed the need for economic freedom. It is a pity that under this Government we have lost our freedom for the coming years as a result of the activities in the past 13 years of governments led by the party of which Senator Butler is a member.
The Senator can reject it all he likes, but the people are waiting in the long grass to tell his party what they think of it. I agree with the policy of low taxes referred to by Senator O'Malley and we need to do everything possible to keep our taxes as low as possible. I also fully agree with Senator Ó Murchú on St. Patrick's Day which represents an opportunity that any country would love to have to sell itself. If we want to have a Government representative in the White House or anywhere else, however, the sooner the Taoiseach calls an election to get a proper Government in place, the better. I know what is happening. The Taoiseach's idea is to run along up to 10 March, tell the Green Party to go to hell with itself at that stage, go to New York, Washington or wherever, and whenever he comes back, call the election. That is the plan at the moment. He would be better off going to country as soon as the finance Bill is passed. Let us have the finance Bill. It should have been on its way to being passed, but the Government is not doing that. We know what it is at. It is trying to delay the Bill to get to St. Patrick's Day and call an election afterwards. I believe even the Green Party Members are waking up to what Fianna Fáil is up to at this stage.
We have discussed our amendment on export-led growth and given our policies on it. We had two similar motions prior to Christmas and yet we have another self-congratulatory motion coming up again as if Fianna Fáil was responsible for the increase in exports. Does the Minister of State think-----
The Seanad Divided:
For the motion: 21 (Ivana Bacik, Paul Bradford, Paddy Burke, Jerry Buttimer, Ciarán Cannon, Paudie Coffey, Paul Coghlan, Maurice Cummins, Frances Fitzgerald, Dominic Hannigan, Fidelma Healy Eames, Michael McCarthy, Nicky McFadden, Rónán Mullen, David Norris, Joe O'Reilly, Joe O'Toole, John Paul Phelan, Eugene Regan, Shane Ross, Alex White)
Against the motion: 29 (Dan Boyle, Martin Brady, Larry Butler, Ivor Callely, James Carroll, John Carty, Donie Cassidy, Maria Corrigan, Mark Daly, Mark Dearey, John Ellis, Geraldine Feeney, Camillus Glynn, John Gerard Hanafin, Cecilia Keaveney, Terry Leyden, Lisa McDonald, Paschal Mooney, Niall Ó Brolcháin, Brian Ó Domhnaill, Labhrás Ó Murchú, Francis O'Brien, Denis O'Donovan, Fiona O'Malley, Ned O'Sullivan, Ann Ormonde, Jim Walsh, Mary White, Diarmuid Wilson)
Tellers: Tá, Senators Maurice Cummins and John Paul Phelan; Níl, Senators Niall Ó Brolcháin and Diarmuid Wilson..
Amendment declared lost.