Mark Daly (Fianna Fail)
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I welcome the Minister of Finance, Deputy Donohoe, to the Chamber. He will speak for ten minutes, the group spokespersons will have ten minutes and all other Senators will have five minutes. He will be called to reply not later than 3.20 p.m.

Paschal Donohoe (Dublin Central, Fine Gael)
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I thank the Cathaoirleach for the opportunity to speak in the Seanad this afternoon on the economic outlook for our country. As a former Member of this House, it is always an honour to be here. Before I discuss the Irish economic outlook, it is important to underline the global environment we are in. As all Senators will be aware, uncertainty is now the dominant feature of the world economy. In particular, there is uncertainty regarding the rules that have, I believe, served us well with regard to trade. Recent developments in policies in that area represent a real shift away from economic integration. While we have become used to concepts such as friendshoring, that is, moving the supply chains of large companies to countries that are friendly to them, and de-risking, which is spreading how goods and services are made all over the world, the imposition of tariffs represents a real acceleration in a turn inwards.

Unfortunately, there is growing evidence of fragmentation and change in the global economy along political lines and there is a real risk to the gains we have made from cross-border trade and the greater flow of investment throughout the world. As Ireland is a major beneficiary from those kinds of dynamics, our economy is exposed to the changes under way.

As I have made clear on many occasions, the recent introduction of widespread tariffs is deeply regrettable. They are economically and socially harmful. They drive up the cost of doing business. They put upward pressure on prices for households, creating real difficulties for standards of living and they do all of this by then creating uncertainty for how companies invest their money. This is a lose-lose environment that could harm everybody.

I therefore really welcome the recent decision by President Trump's Administration to introduce a three-month pause in the implementation of widespread reciprocal tariffs. I know there has been a change in this approach to the EU in recent weeks but in recent days a further opportunity appears to have been created to allow engagement between the US and the EU. This is really important. Trade between the US and the European Union is worth billions of euro per day. A 10% tariff on that trade is something that not only would have a real effect on the economies involved in that trade, it would have a real effect on the performance of the world, from an economic point of view, in the time ahead. That is why we are making the case for all efforts with regard to negotiation. That is why Ireland will continue to pursue an outward looking, open, rules-based approach to trade policy. We have been in continued discussion at EU and US levels in this regard. That is how the world looks at the moment. Where does Ireland stand?

Overall, the latest data shows that we are currently in a strong position. There were 90,000 jobs created last year with a record high of 2.8 million people at work in our country. The unemployment rate stood at just over 4% in the first quarter of this year while the number of women at work in our country is at a record level. As expected, inflation continued to moderate and it is continuing to come down. I know prices are still high but the rates of increase are coming down. In the first quarter of this year we saw the growth of real earning beginning to accelerate. All of this, I hope and believe, will help with the pressures households and businesses face.

While I am encouraged by this resilience, it is also crucial we do not become complacent. The reasons for this risk were outlined in the annual progress report the Government published a few weeks ago. It showed that on the basis of modified domestic demand, which is a way of measuring our economy that strips out the influence of very big companies on our accounts, and if we assumed there were no transatlantic tariffs in place, our economy will grow by approximately 2.5% per cent this year and 2.75% per cent next year. We also published alternative scenarios in this document. One scenario, in particular, outlines the impact of 10% tariffs on our economy, which would reduce the rate of growth in our economy to approximately 2% this year and 1.75% next year, with the economy growing by approximately 1.5% less than we would have expected by the end of 2026. Unfortunately, that particular alternative scenario shows signs of being overtaken by events as we see debates about tariffs that are considerably larger than 10%. It goes without saying that if we ended up in a position that US tariffs on EU goods were to increase to 50%, the consequences would be very real and serious for the EU and Ireland. The EU response would also cause challenges and difficulties for the US. That is why the engagement that will happen after the discussion between President von der Leyen and President Trump is so important. Turning to our public finances, we expect a surplus of €8.7 billion this year. Nearly all of that is created by our corporate tax receipts, and many of those receipts are created by a small number of taxpayers. I have had the privilege of making the case for many years in the Seanad for running those budget surpluses. Having them in place now gives us a buffer in the event of any significant change in the taxes we collect here in Ireland. I sound a note of caution, however, that this buffer could be quickly used up if the more difficult scenarios being contemplated at the moment for the economy of our world and for the relationship between the EU and the US were to come to pass.

Thankfully, however, it is projected that by the end of this year we will have €16 billion set aside in our Future Ireland Fund and the Infrastructure, Climate and Nature Fund, giving us the money we will need to respond to any change in our economic outlook and to help with any transition that may be needed if the world or our tax receipts begin to change significantly.

The potential impacts on the Irish economy from a change in world trade are evident. That is why the negotiations happening now are so important. It is crucial that we redouble our efforts to boost the competitiveness of our economy. In the current environment, competition for inward investment is intensifying, and work is now under way across the Government to improve our attractiveness as a location for those decisions. Improving our energy and water infrastructure, boosting our transport and housing stock and making our regulatory environment a little simpler will all be necessary to achieve this goal while at the same time investing in our education, skills and training. We need to ensure we will have budget policies that recognise the more challenging environment we are in. Work is now under way in the Government on this because it is clear that we live now in a world full of more uncertainty and that uncertainty is creating a larger frequency for shocks.

To end on a positive note that I believe is justified, if we build on the work we have done, in turn we will build up the capacity to absorb these shocks and the ability to protect jobs and help with living standards in the country we are all privileged to serve.

Mark Daly (Fianna Fail)
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Before I call the next speaker, I welcome the guests of Deputy James Geoghegan to the Distinguished Visitors Gallery: Isabelle Blum of AsIAm youth leadership, along with Liam Weeks of UCC. You are most welcome to Seanad Éireann.

Joe O'Reilly (Fine Gael)
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The Minister is very welcome. It is good to have him back in the Seanad, and I thank him for his management of the economy, which has left us in such a shape and position that we were able to cope with Covid; deal with the outcome of the Ukraine war in terms of inflation and the effect on families, etc.; and be in a strong position coming into the Brexit scenario. His management of the economy has left us in a strong position consistently, and that remains the case as we face new challenges. I acknowledge that and thank him for that.

As the Minister said in his opening remarks, we have a good backdrop here. As we begin a discussion today on the economic outlook and future, we have a good backdrop in that we have 2.8 million people in employment, 4% unemployment, which is effectively close to full employment, the easing of inflation and a surplus of €8.7 billion. Those are good, strong opening positions as we discuss and look to the future. We can be proud of those achievements. As a people, while it took the leadership from the Minister and his Cabinet colleagues, it also took a buy-in by the Irish people at all stages, and the Irish people are to be acknowledged for that. We are in a good, healthy position by way of backdrop.

Obviously, the immediate threat of tariffs creates a new reality and a new challenge. As the Minister said, it is good that it has been put on hold somewhat. There remains a 10% tariff, but it is good that there is a hold on the more severe impacts and that there are negotiations. Hopefully, common sense will ultimately prevail because the tariffs are not good for either the American consumer or the consumers here. That presents a challenge which we have to be ready for and it could potentially have impacts on employment or negative impacts on the public finances. Some of the opening position we are in helps to insulate us from that but, having said that, it is not to be welcomed or advocated and hopefully can be avoided.

It is important that we go on achieving foreign direct investment into the country. We have done well so far. It is a reasonable proposition that is what is here will stay in every scenario, given our educated workforce, our favourable environment relative to industrial peace and a good environment on every front. It is very probable that what is here will stay, but of course the challenge will be to attract new foreign direct investment into the future if there were the kind of environment that is threatened. That is a concern.

It was a very good initiative on the Minister's part to put in place in 2019 the National Reserve Fund or, as it is popularly known, the rainy day fund. It prepares us or leaves us ready for severe shocks, including natural disasters. In an Irish context, that could be something like foot and mouth disease, threats to agriculture, a whole range of climate events, another pandemic - who knows. It is important to be ready for all eventualities and that we are consistently consolidating that.

The pensions reserve fund is a necessary exercise too, given our demographic and ageing population. That is an important strategic weapon also. Critically, the strategic investment fund, future-proofing and ensuring the future of Ireland's strategic investment funding are very important. It is important that we keep a sharp focus on having infrastructure, including water infrastructure and Irish Water, efficient and working well and delivering to complement the need for housing and proposed housing developments. There is a huge need in that regard. I know it is a current debate but it is worthy of repetition in the Minister's presence that we need to get that linkage and the consistent investment and support of Irish Water but also that Irish Water must respond to housing needs and planning applications in a given area. We had a classic example of that for a long time - indeed, at the moment as well but it is being dealt with - in Virginia, County Cavan, where there were a number of proposed developments. It is extraordinary. It is one of the areas of County Cavan and that region that has the greatest demand. There is a great demand for housing, both private and social. There are many sites that have permission to build and have been designated but where the water and sewerage system needs to be upgraded and building is not being allowed because of that. That kind of thing has to be eliminated.Of course we need to be abreast of technological advancements. I will be interested when the Minister is summing up to see what he will say about our position vis-à-vis artificial intelligence and its onset and how we will be fit to be part of that revolution ourselves in an active sense and be recipients of its best qualities. We cannot allow a fear of what may be the bad side to keep us out of that race. It is like rural electrification, the industrial revolution or IT when it first arrived. We must be up there with it and using it for the best possible advantage.

Human capital is of course the great investment and something we have got right consistently in Ireland. I would like to think we will go on investing in education, the development of skills and apprenticeships and making them attractive. I mentioned AI. We must ensure our population is skilled in that sphere also. Our investment in education is important.

I have talked a lot recently in the Seanad about special needs and disabilities. That is an important part of our economic future. The Minister often says in his own remarks that our economic future and getting the economy right is ultimately only about getting life right for people and creating the right living conditions. I would be interested to know and to hear him say he is committed to investing in the disability sector, education for people with special needs and ensuring every citizen can fully participate in the economy and create wealth. There is no reason many people who may not have been getting the full chance could not do that.

Physical infrastructure regarding water, as I mentioned, is important, as are roads. One of the tragedies of our history, though understandable in the context of the times with emigration, the car industry, etc., is that we got rid of railways. We need to restore them across the country and to develop a rail infrastructure. We of course need a road infrastructure and, to be parochial, road infrastructure is very critical in my area which is very involved in food production, both in primary production and processing. That is necessary. Foreign direct investment also matters.

Tourism is a great Irish problem. We have tremendous potential for heritage tourism. It is a great driver of economic success. I would be interested in knowing if we will go on investing in tourism infrastructure. In our local town we are developing a plantation museum. It is plantation country in a very big way and there was a sizeable plantation there in the 1600s. Many of the diaspora in Canada and America, for example, want to come home to see it, as well as their family roots and the area. There is great potential to invest in tourism infrastructure throughout the country. I thank the Minister for being here and look forward to his response.

Sharon Keogan (Independent)
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I seek permission to share my time with Senators McCarthy and Clonan.

Mark Daly (Fianna Fail)
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Is that agreed? Agreed.

Sharon Keogan (Independent)
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The Minister is very welcome. I will jump right to the point. The most important issue facing our national economic outlook is the tariffs and the looming trade war between and decoupling of the US and the EU. However, first let us stand aside for a moment from specific governments, leaders and politicians shaping the relationship between the EU and the US. Let us stand aside from partisan considerations of their ideologies, histories and even personalities. Regardless of who is in power, certain considerations remain the same. In many nations through elections, old parties are swept out of power and new ones are brought in, but the fundamental geopolitical and economic interests of those nations remain unchanged. In geopolitics, for example, the current US competition with China for power and influence did not begin with Trump. It began 13 years ago under Barack Obama’s Administration, with his pivot to east Asia. Through the different administrations, though they confronted the issue with varying levels of intensity, this same policy has continued under both Trump and Biden. It is the same with economics. When Trump first announced his policy of a trade war with China, he was met with disbelief and laughter. Within the decade we now have the EU talking about the need to decouple from the Chinese market. When Trump announced his initial intention to have a trade war with Europe, it was met with exasperation and disbelief. The thinking was that they were the mad decisions of a madman. Yet, only three years ago, when the US was under the Biden Administration, which was supposed to signal a return to the norm, the EU once again found itself facing a potential trade war in response to Biden’s Inflation Reduction Act, which would have advantaged US companies with US state aid. The act is still in force.

That was all before we began to seriously deal with threat to our economy from the growing wave of protectionism. We have to throw out this deeply unserious mindset that prevails among too many in this House, in the Civil Service and in the Government, a childish mindset that assumes the tariffs and protectionism are just a bad dream and that, soon enough, we will all wake up and go back to the promises we were given in the nineties of global free trade, world peace and us all living happily ever after. Many in the EU are already embracing the mindset. The long-term economic interests of the US to onshore its industry and keep as much manufacturing as domestic as possible will not change. In this situation, Europe can only be competition and Europe is adjusting accordingly. Ireland can even stand to benefit from the coming circumstances, but we must first see the reality for what it is.

If we are to navigate this new economic reality we must stop acting like passengers and start acting like a nation with agency. Ireland is uniquely positioned to become a middleman between the great trading blocs, but to do that we must stop approaching Brussels on bended knee. Let us take Mercusor, for example. We could not even bring ourselves to signal opposition to a deal that would flood our markets with beef from countries with lower environmental and labour standards. Why? Because we are afraid of offending the Commission. That is not diplomacy; that is submission. We must also stop letting fear dictate our foreign policy. Taiwan is a global leader in semiconductor manufacturing, chips that power everything and which our island is uniquely placed to manufacture, yet we will not even hear them out or consider co-operation for fear of upsetting Beijing. That is not neutrality; that is cowardice.

If we want to be a serious player in the global economy, we must also invest in our people, which means real, targeted education in the technologies that will define the next century: artificial intelligence, quantum computing and advanced manufacturing. It means facilitating not just more degrees but the right ones; not just more funding but smarter funding. We need to stop pretending the world is going back to the way it was. It is not. The EU and US are adjusting and, if we do not adjust, we will be left behind. Let us be clear, strategic and, above all, let us be sovereign.

Aubrey McCarthy (Independent)
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I thank the Minister for being here. I will have to speak fast. When I heard about the 50% tariff threat, I was googling and I came across President Ronald Reagan’s warning on tariffs, how they affect the economy and how, while it may seem patriotic in the early stages and designed to protect industries, history has taught us it carries a steep, long-term cost. High tariffs bring about complacency for home industries and stifle innovation. Businesses grow dependent on the artificial barriers. In the meantime, foreign nations like ourselves retaliate and there is a big trade war, the result of which is markets contract, costs rise and jobs vanish. That has been a pattern since the 1930s. For Ireland as well as Europe, it is a hugely difficult time because we are a small, open economy and 80% of our output is destined for export. Millions of jobs across Europe and many in Ireland rely on the stable, rules-based economy the Minister talked about. As a small, open economy I fully support what the Minister said about a measured response. We must resist the short-term provocations, which seem to be a threat and then they back down and we threaten again. It is all about diplomacy here. History reminds us once again that, as Reagan said, protectionism will lead to higher consumer costs and job losses. The threat of a 50% tariff is not a negotiation tactic. It is like a grenade thrown into the room to get our attention. I agree with the Minister, Deputy Donohoe, that we need to stand firm, not to be reactive, to be measured but not passive. Then Ireland and the EU can be seen as voices of reason in this trade war. Let us have rules-based trade.

Tom Clonan (Independent)
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I thank the Minister for coming to the House. I thank my colleagues for sharing time with me. I hear in the Minister's remarks the alarm bells we have heard so many times before about impending economic shocks. He referred to them as shocks that may become more frequent. I entered the workforce in 1987, almost 40 years ago, so I have lived through recession, boom, recession, catastrophic economic collapse and then boom and here we are, perhaps on the threshold of another period of economic instability. In the 1980s we had mass emigration, and an intractable security problem on the island provided by the Provisional IRA and groups like the INLA. Ireland was an economic and social basket case. I remember the Jack Charlton years of the early 1990s when we began to recover. That in turn paved the pathway for the Celtic tiger with all of its intellectual and ethical failures. I recall the groupthink, the Gleichschaltung that accompanied that economic imperative. It is true that during the Celtic tiger we went off a cliff financially but I do not believe that anybody intended this country to experience the economic and social collapse that it did. I think it was a case, if not of negligence, then misadventure. I prefer to think of it as misadventure. However, the austerity years were a deliberate, planned, programmed attempt to inflict pain and suffering on the most vulnerable people in our society.

Paschal Donohoe (Dublin Central, Fine Gael)
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No.

Tom Clonan (Independent)
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I see the Minister disagrees with me, but in our lived experience with a disabled child, we saw the entire collapse of all of his services, supports and therapies. That is a situation from which disabled citizens in this country have not recovered. That is why we have children unable to obtain proper diagnoses or surgical treatments on the spinal or urological waiting lists. It is why we have tens of thousands of children and family members who cannot get a school place. The situation for disabled citizens in this country is completely out of step with the rest of our European Union partners. It is abject. It is an echo and a direct consequence of the imposition of cuts in health and disability that took place during the austerity years.

I asked the then Taoiseach, Enda Kenny, for this assurance back in 2011 when he came into power. Will the Minister give us an assurance that notwithstanding any economic shocks that confront us, he will not impose further cuts, pain or austerity on disabled citizens? Will he commit to ring-fence the funding that is there for them and to assist and support them at a time of economic difficulty? I am all about socioeconomic rights for disabled citizens. I learn and read that, shamefully, during the referendum campaigns, advice was given to Government and warnings were given to the then Minister, Deputy O'Gorman, not to put a wording into the referendum that would give disabled citizens socioeconomic rights. It is an absolute moral and ethical imperative, which I know the Minister shares, that we give disabled citizens economic rights. I ask him to give us an assurance or guarantee that he will protect and ring-fence the funding for disabled citizens, come what may.

Pat Casey (Fianna Fail)
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I welcome the Minister to the Seanad Chamber. He has always made himself available to the House. I welcome the opportunity to discuss Ireland's economic outlook. We are at a critical juncture for our economy and global trade. It is essential that we approach these challenges from a position of strength and resilience. Over the past few years, Ireland has demonstrated remarkable resilience in overcoming various economic challenges. Since 2020, over 600,000 jobs have been created, bringing the total number of people at work to nearly 2.8 million, the highest level in our country's history. Despite the significant challenges and economic uncertainty we face in the short and medium term, we must respond carefully and responsibly at national and EU levels. Enhancing our competitiveness, supporting diversification and innovation in our enterprise sectors and investing in our national infrastructure are crucial to maintaining Ireland as an attractive location for investment.

The baseline forecast presented in the annual progress report was produced in March assuming no introduction of transatlantic tariffs. These forecasts, endorsed by the Irish Fiscal Advisory Council, indicated that modified domestic demand is set to grow by 2.5% this year, a downward revision of almost 0.5 percentage points from the autumn forecast, as the Minister pointed out. For next year, MDD growth of 2.8% is anticipated, a slightly downward revision of 0.2 percentage points relative to the IFAC forecast. Employment is expected to continue expanding, albeit at a slower rate than last year. The labour market forecast is to see employment increase by 1.75% this year and around 1% next year. This translates to approximately 25,000 fewer jobs compared with the baseline scenario by the end of 2026. While this is a cause for concern, it is also important to note that the labour market is resilient and continues to grow.

The most pressing economic threats are undoubtedly external in nature. The shift towards tariff barriers may not be temporary but could persist permanently, affecting Ireland's long-term growth prospects. Given the significant change in the global tariff landscape in recent weeks, the annual progress report included the scenario again, as the Minister pointed out, that attempts to incorporate the impact of these tariffs. In this scenario, while the domestic economy is still expected to grow, there is a downward revision of 1.5 percentage points by the end of 2026 relative to the baseline scenario. However, it is difficult to make confident predictions regarding trade decoupling and a weakening of transatlantic relationships. The Department of Finance is forecasting a general Government surplus of €8.7 billion for this year, equivalent to 2.6% of our national income. However, as the Minister pointed out, our public finances remain exposed to potential transient windfall corporation tax revenues. To prepare for the future, the Government has established the Future Ireland Fund and the Infrastructure, Climate and Nature Fund. These funds will help us plan for the future without relying on temporary revenues for permanent spending. The Government has also committed to using the funds from the recent EU court ruling to invest in infrastructure, particularly in housing, energy, water and transport. As Senator Joe O'Reilly pointed out, we have an ideal opportunity now to plan the future of our country but we must align water, transport and energy to where our housing is going to be delivered. Thanks to careful financial management, we are now in a strong position to face the upcoming challenges. It is important to continue with a balanced and sensible budget policy during these uncertain times.

The United States is a crucial partner for Ireland with deep ties that go back before both countries' independence. Our modern relationship includes a strong economic connection. However, the new US Administration's approach to global trade has created a lot of uncertainty. Ireland thrives on open and fair trade. We believe in a rules-based international order. Unilateral actions and tariffs are not the solution; dialogue is. Trade wars hurt everyone involved - those who start them, those who respond, consumers and businesses. The EU is a fair and reliable trading partner. If there are trade issues, we should resolve them through negotiations. We welcome the 90-day pause for talks and hope for a resolution. Recent events have shown how fragile global markets can be. Even if the current issues are resolved, things will not go back to how they were. Ireland has benefited from a globalised world and we must adapt to a more uncertain future. We will continue to support an ambitious global trade agenda. Trade brings economic benefits, lifts people out of poverty and contributes to a stable world. We will also work with partners to make the EU more self-reliant. The EU needs to take more responsibility for its welfare and prosperity, improve competitiveness and ensure security for its citizens. While Ireland's economic outlook has challenges, it also has opportunities. By managing our finances wisely, supporting fair trade and investing in our future, we can navigate these uncertain times and ensure a prosperous future for all.

Conor Murphy (Sinn Fein)
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I welcome the Minister and apologise for not being here for his opening statement. Like many other Members here, I am juggling committee responsibilities with speaking in the House. In that regard, I know we will have an opportunity to speak to him at the committee later on today. I have had an opportunity to read his remarks and I just wanted to make a few remarks in response to them.

Clearly, there is a growing recognition of the vulnerability of the Irish economic model and the prospects there are for fiscal returns in relation to that. That has long been recognised. We are not just hitting economic shocks now - I am not suggesting the Minister is saying that - but really we have been experiencing them since Covid. The economic shocks brought by that were followed by the war in Ukraine, the onslaught in the Middle East and now the advent of a new administration in America with very destructive trading policies. There has been one economic shock after another. Increasingly, this economic model which the Minister draws attention to - I know other documents have drawn attention to it - shows our reliance on a lot of eggs being in the one basket in terms of foreign direct investment. Evermore, that vulnerability is being highlighted. While that has been highlighted for some time, the requirement for committed action to look at the economic model itself and that vulnerability around it is growing and the need to take steps to try to address that becomes evermore imperative in the immediate future.

The uncertainty will not go away, regardless of where we are with tariffs. They have been up and they have been down. Different propositions have been withdrawn and others have then been floated with even more irrational outcomes. I agree with the Minister's assessment that this idea of tariffs and that type of war with tariffs is disruptive for everyone. The EU and Ireland have been taking the correct approach of preparing for the worst while trying to negotiate a more sensible approach to all of this. Nonetheless, that volatility will continue; not just with the American Administration but also with other geopolitical events and developments.

It is one thing to look at the narrow tax base but there have also been concerns raised about the narrowness of the enterprise mix in Ireland. A lot of focus is either on those large foreign direct investment companies or the companies that feed off them and provide services to them. The enterprise mix has been identified as being too narrow, in terms of sector but in terms of geography as well. There is much more that can be done in the time ahead to support our indigenous businesses, encourage them into exporting, encourage them to be more productive and more competitive - I know that has been a feature of the discussion so far - and to try to make sure that is replicated across the country.

On competitiveness, the Minister highlighted the Future Ireland Fund and the Infrastructure, Climate and Nature Fund in his remarks. Of course, it is necessary for our own competitiveness. It is not a problem unique to Ireland. It has been seen across Europe. In comparison to other competing countries, there has been a considerable lack of investment in infrastructure and a subsequent and consequent reduction in competitiveness. Clearly, that is something that needs to be critically addressed, not just here but across Europe. It is not simply a matter of adding more funds to that - obviously, funds are very welcome - but of analysing what has caused infrastructure delay, restriction, overspend and all of the associated problems we are all very familiar with in relation to significant infrastructure problems here. As well as money being applied, there will have to be a look at the system and how we deliver infrastructure as well.

One other point that is worth making but is not mentioned in the Minister's remarks - I know from my own engagement in a previous role that he is very enthusiastic in engaging in North-South work - is the trade between North and South and South and North, which has gone up sevenfold since the Good Friday Agreement was signed. It offers a way to create more diversity in how the economic model works, to create more opportunities and more prosperity across the island, and to see what areas are ripe for growth. The further north and the further west you go, you see that there is growth potential there. It also offers a way to encourage that support which is not just in terms of allowing and encouraging more trade. The Minister will know we invested more in InterTradeIreland, and that was supported by the Government here as well, to try to give them more resources to do the work they need to do.

Through things like the Shared Island Fund, there is also an opportunity to invest more in skills and in people. Investment in infrastructure is one way to improve competitiveness but we have to invest in people. It is important at the high level that we have PhDs, and research and development and innovation needs support, but those who are economically less active need support to get the requisite skills to make a contribution to the economy as well. It is a balance between ensuring that investment. There are opportunities right across the island. There is a lot of collaboration between the academic institutions and colleges, and there are training opportunities there as well. In terms of investing in competitiveness and getting a more reasonable balance and more of an economic mix in terms of the enterprise right across the island, all of those factors are very necessary.

I look forward to continuing the discussion at committee level, both today and into the future, about that. The warning signals that have been there for some time are now entering red alert territory. The time for action has long passed. There are some ideas in this for doing that but we need to move with haste and consider the all-Ireland potential, not just for the sake of doing that but also given that the all-Ireland economy is already developing. It is something that with more encouragement and support can become a very significant factor and assist what needs to be done with the economic model on this part of the island but across the island more generally.

Seán Kyne (Fine Gael)
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Before we move on to the next speaker, I welcome the guests of Senator Goldsboro, who are students and teachers from Lisnamrock National School in County Tipperary. They are very welcome and I hope they enjoy the day. I also welcome Karen and Grahame Cotterill, guests of Senator Mark Daly. I hope they enjoy the Senator's hospitality during the course of the day.

Patricia Stephenson (Social Democrats)
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I thank the Minister for coming in. I apologise for missing his introduction. I know we are all trying to split ourselves in two at the moment. I will also miss his response as I am going to a committee but I will watch it back afterwards.

I read the Minister's opening statement and as he said, along with most of the other Senators here, we are obviously facing unprecedented challenges and a lot of global instability. We had more remarks last week from Trump about the imposition and threat of tariffs. We all know the consequences if those tariffs were put in place on our economy and the impact it would have on the high-quality jobs we have here at home. I welcome the Minister's remarks around keeping a level head. U-turns have happened before so I do not think we need to necessarily panic. Having said that, the implications of the tariffs are quite extreme if they were to come in. I recognise the work the EU is doing and the Government is doing in supporting the negotiations over the next few weeks and keeping Irish interests, in particular, at the heart of those negotiations and making sure the Government is leading on that.

I welcome the Government's work on continuing that partnership and really strengthening that aspect of European unity in light of the US threats. Equally, we need to mitigate, prepare and think of the worst case scenario if the tariffs are introduced and what supports we can put in place. I hope the Government is putting plans in place for supports for workers and businesses and these things are being planned as contingencies for the worst case scenario. My colleagues, Deputies Gibney and O'Callaghan, have both called for the EU to repurpose the European Globalisation Adjustment Fund, which was originally set up to deal with job losses as a consequence of globalisation. Are there different mechanisms that exist in Europe that we can use to think about the uncertainty of tariffs and the impact that might have on employment?

The threat of tariffs also exposes the deeper structural vulnerability we have in our economy, which is our over-reliance on multinational corporations and global trade. Obviously, we live in a global world but if we continue on the path and fail to diversify - Senator Murphy already talked about the need to diversify as well - we risk being caught in more crossfire of trade wars and the general geopolitical upheaval that faces us in the years to come. We need to focus on building a resilient and equitable economic model that supports our amazing indigenous industries and specifically strengthens workers' rights and prioritises, above all else, sustainability. We do have excellent and strong indigenous businesses in Ireland. The Government should be supporting them in identifying new markets for them to grow and prosper in. I want to emphasise the point about preparedness and response mitigation planning by the Government to ensure we have economic resilience to deal with the external shocks. Some might be to do with tariffs or economic shocks but they could also be climate related. We do not know where the road lies ahead relating to climate shocks. Our over-reliance on one key trading partner puts us at great risk, so diversification is key.

My colleagues and I in the Social Democrats want to see an economic model that prioritises Irish interests and indigenous businesses first and foremost and, as such, the challenges we are seeing around CETA and the Mercosur deal are concerning. Many components of the CETA deal are in place but we would challenge the taking-away of the sovereignty of the Irish courts through the dubious investor court system, on which there has been a Supreme Court ruling. With Mercosur, we are effectively reducing the competitiveness of our beef on the international market. That will reduce both food and environmental quality standards, thus putting our farmers on the back foot compared with South American exporters. There has been debate about this and we had a Mercosur briefing last week by Commission staff, but that briefing did not alleviate any of our concerns. I know I am not alone as an Opposition Senator in that. Some Government Senators and TDs shared those concerns. I do not know whether there is even space to do anything, given that I believe the deal will be signed off at Brussels level in a few weeks, but the farming, rural and agricultural community does not feel that its concerns have been listened to or responded to in respect of Mercosur. That is deeply disappointing.

At home, we are grappling with our own crisis, the housing emergency. CSO data shows housing supply has completely failed to meet demand, pushing up property prices while rents are at a record high. Without immediate and sustained action, we risk having another generation completely locked out of home ownership or, indeed, having anywhere to live. That deepens inequality and constrains economic growth. The housing emergency has left us vulnerable and we are relying heavily on institutional investors, which has led to a reduction in the housing supply. We need urgent State intervention to provide housing infrastructure if we are ever to achieve a sustainable economy.

Senator Murphy touched on the point around large-project capital spend. Some projects have been less successful in terms of value for money and we need to crack down on that. We cannot have wasted spending on capital projects that may not have been planned out properly. In that context, I would suggest a reimagining of Ireland’s economic policy. We need to rebalance towards public investment in housing, healthcare and education. In his opening remarks, the Minister spoke about not using windfall on ordinary spending. I agree with that but we need a lot of substantial investment in ordinary, everyday things and we should be exploring reinvesting in those and, of course, in climate resilience, which the Minister mentioned in his opening statement.

I add my support to Senator Clonan’s remarks about the rights of people with disabilities in this country and how they have been excluded, disenfranchised and disempowered. We all know – it is not news – that they have had their rights in this country systematically undermined and violated.

Cathal Byrne (Fine Gael)
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I welcome the Minister to the Chamber. This is our first interaction in this House. I wish him the best of luck for the term ahead. His success will be the success of the country and he very much has my support.

I was struck by some of the comments on the economy made by previous speakers, particularly around the uncertainty we face. Over the years, the Irish economy has experienced the 1920s and 1930s and the Economic War, industrialisation in the 1960s and the changes that brought to the economic outlook, on to the Celtic tiger, which was fuelled by credit, and the impact of the crash that came afterwards. While I do not doubt the sincerity of Senator Clonan’s beliefs, I do not share his view that a decision was taken by the Government in that period to target the most vulnerable, and I am sure the Minister does not share it either.

Turning to the future, I am thinking of the economic diversity we see, between the pharmaceutical and technological industries and the finance sector. My children are aged four and one. I think of the jobs they might have when they enter the workforce and how we plan for the economy of the future because the days of the agrarian and industrial economies, or even the financial economy we see now, will soon pass and a new economic model will be required for Ireland. The question is how we balance the need for foreign direct investment with supporting our own indigenous businesses and the local economy that supplies so many jobs in rural and regional areas.

I applaud the work being done by the Minister for enterprise in seeking to attract the AI companies of the future and the chip manufacturers. I am struck by the work he has put into the silicon island initiative, which seeks to increase the number of jobs in the sector by 2030 to 34,500. I can foresee a situation where unless we get the key infrastructure, including allowing data centres to be constructed in Ireland, those jobs and the AI-driven economy of the future will simply not be available to our country. I am struck by the need to invest in the infrastructure that can create the opportunity for that investment into the country, including the upgrading of the electricity grid and making sure the data centres that are built have a renewable option that ensures the energy taken to enable them to do their work comes from both wind and solar. It is so important that in the economy we are trying to build towards 2040, those factors be combined to ensure progress and sustainable growth.

On tariffs, €4.5 billion of trade on average takes place every day between the US and the EU. I applaud the Minister for the work he has done as President of the Eurogroup in making sure an approach that is firm and resilient but not reckless has been adopted so far by the EU in its response. It is very important the US be aware of the significant financial resources in the EU when it comes to retaliatory tariffs but, while they are seen as a threat, they should not be put on the table as an initial reaction or response. That must be commended. The fact that the tariff list of retaliatory measures has been published shows they are serious without making it an initial response.

I will make three specific points on tax policy. It is very important that in the next budget and subsequent budgets during this Dáil, we support generational renewal of farmers. Some 30% of farmers are aged over 65 years and only 5% are under 35. I come from a farming background and have two siblings, my brothers, and none of the three of us are directly farming. My father is still farming and he will turn 66 this year. We come from a generation in which, historically, it would have been anticipated that one of us would take up the farm, but that has not proven to be the case. It is crucial that our tax policy address the need for generational renewal. Second, on the critical issue of infrastructure, I spoke earlier about data centres and EirGrid. I welcome the fact that Uisce Éireann is coming before the infrastructure committee today. I support its call for extra funding but only in the context of ensuring additional resources it gets leads to the direct supply of additional capacity to build houses. Third, when we look to the future, it is important that we support indigenous businesses and make it a little easier to get entrepreneurial relief at start-up stage.

Sarah O'Reilly (Aontú)
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I thank the Minister for coming to the House. Ireland risks fines of between €8 billion and €26 billion if we fail to meet the EU climate targets. I believe we were set up for a sure fail on unreachable targets and our Government obediently and knowingly signed us up for inevitable failure. In 2008, when the economic crash came, the Government incentivised farmers to produce more so we could export more.Farmers were encouraged to invest and turn out more produce. In many ways, farmers helped to get Ireland on the road to financial recovery. Now, after heavily investing, they are being told to reduce and restrict herds. Farmers and Irish citizens cannot be scapegoated for the Government's failure to meet EU climate targets. People warned at the time that this would negatively impact on the Irish economy but no one would listen. We now see the same with CAP funding. If Ursula von der Leyen gets her way, CAP will be moved to a single-stream funding model and will no longer be ring-fenced. This is a direct threat to the livelihood of thousands of farmers and to the rural economy. Mercosur is also a threat to Irish farmers. Any attempt to remove ring fencing of CAP funding would put a knife through the very heart of the policy.

I plead with the Minister to act to prevent the decimation of our rural economy. With looming threats of tariffs, we need economic resilience. Now would be an opportune time for the Government to invest more in indigenous businesses. In my area, there is no funding for local enterprise parks. Funding should be directed through the local authorities to enable them to buy land and develop fully serviced sites to give local businesses the space to develop and grow. There are major hurdles at the moment in the areas of water, sewerage, electricity and planning. If local authorities are able to provide serviced sites for local businesses, we will see a massive uptake. Businesses want to build and expand but there is nowhere for them to go. We are incredibly innovative people who can easily compete with the rest of the world but we are bound by so much red tape and bureaucracy. We must collectively look for a way through on this issue.

Paschal Donohoe (Dublin Central, Fine Gael)
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I have taken careful note of all the points Senators made. I will deal with each of them in turn and offer a few thoughts in response.

Senator Joe O'Reilly made the important point that anything achieved by this Government or previous Governments, let alone the Oireachtas, is nearly entirely due to the buy-in of the Irish people. I go a stage further and say it is nearly entirely due to their hard work. Whatever resilience we have in our economy, which I believe is real, is a reflection of a number of things. One of them is the quality of the entrepreneurs and workers within our economy.

The Senator gave his view that it is likely we will keep what we have from an FDI point of view. While I very much hope he is correct, and we certainly are working to represent our country as best we can in the trade negotiations that are under way, to keep what we have is not enough. The success we have had is because our larger companies have managed to win additional investment across the world at each point in their history. What we must consider is how we can prepare ourselves such that if the global economy is changing in the way Senator Keogan suggested, our larger companies will still be in a position to prosper and do well.

I entirely agree with the Senator's point regarding artificial intelligence. There is a lot of focus on data centres and where we are with the grid. The larger factor in how our country will respond to AI is the distribution and dispersion of AI within households and businesses. If I were to do a quick hands-up survey in the Chamber asking how many Members use artificial intelligence every day and how many have AI on their phones, the answer to the question will have a bigger impact on how we deal with AI than will the availability of data centres within our country. It is about the use of the technology, not just where it comes from, in terms of the impact it can have on our country's future.

In response to Senator Keogan, I was at pains in my contribution to acknowledge that the world is changing. She outlined the different reasons for that change and fairly made the point that the theme we are now seeing from a trade point of view from President Trump is one we saw in earlier Presidencies. I think she is right about that but it also fair to say that what is really different is the degree to which the current American President is challenging all elements of the global trading system. Other US Presidents have made the case for their views on the impact of Chinese trade but this is the first time we have seen America consider that nearly everybody it trades with in some way creates a difficulty for it. That is a really big difference.

Senator McCarthy talked about the need not to overreact and to be careful. I entirely agree. Having that tone is right for many different reasons. The Commission, particularly Commissioner Šefovi, has worked hard to maintain that tone at difficult times. It is the right thing to do.

I agreed with much of what Senator Clonan said until he reached the middle of his contribution. He is of the view that the wrong decisions that were made were never made with bad intention. I agree with him. Now that I have had the privilege to hold office, I am one of a small few who know what it is like for those who have gone before me with the many competing demands they faced. When decisions were made that we now know in retrospect were not right for the long term, I am certain that as those people were making those decisions, they did not do so with a view to causing any harm in the future, let alone at the time they were making them. The very best of intentions can still lead to terrible outcomes in the long run. The great responsibility we all have is to try to get that balance right.

Where I totally disagree with the Senator is in his suggestion that any of the decisions made then were made with a deliberate intent to harm people. I am not sure even he believes the idea that any former Minister, including Brian Lenihan and Michael Noonan, who were in the very middle of trying to get our country back to a safer place, made any decision to cause deliberate harm. Those kinds of allegations steadily erode an assumption of good faith in politics and I fear we will all reap a bitter harvest from them over time, even colleagues like Senator Clonan who are making those points for the right reasons.

It is good to see Senator Conor Murphy again and I wish him good luck in his term in the Seanad. He made a point about the vulnerability of our economic model and the need for action in that regard. The point I would make back to him is that approximately two thirds of the jobs within our economy come from the small and medium-sized enterprises sector. At times, we underestimate how many jobs are in the small and medium-sized part of our economy, which we must make further efforts to support.

I entirely agree with his concluding point that the strengthening of trade on a North-South basis will be a cause for economic diversification in the future. I can see that myself, particularly when I meet with owners of small and medium-sized businesses located in the north west of the country and in County Louth. I see the trade that is now happening there and the efforts and collaboration under way between our universities. How we harness that will be really important. I met with the Senator's successors in the Northern Ireland Executive via video conference a few weeks ago. We were trying to understand what would be the impact of the tariff decisions on North-South trade. Since then, I am really pleased to say, particularly with the announcement made between President von der Leyen and Prime Minister Starmer, that we now have the policy tools available to us to make the most of trade on this island. On his point about how we can use the shared island fund to invest in education, this is something to which the Taoiseach and Tánaiste, because of their commitment to higher and further education, are fully committed. Senator Stephenson is 100% right that the situation is changing globally. I agree we need to support local industries if that change happens.

In fairness, the Government's stance on Mercosur has been reasonably clear in that we have grave concerns about it as it is being negotiated and presented. With regard to the Comprehensive Economic and Trade Agreement, CETA, though, the Government has made the decision to bring forward legislation related to it. We do need to have this debate. We cannot on the one hand make the case for the need for greater economic integration and greater diversity and, on the other hand, say that in a free trade agreement with a country such as Canada, which is so aligned to us from a values point of view, we are willing to shy away from looking at how we can deepen our trade. I will certainly make a case for that, along with the Tánaiste, very shortly.

With regard to Senator Cathal Byrne's points, I noted the three priorities he concluded with. On generational renewal, the Minister, Deputy Heydon, has a commission under way on that issue, which he thinks is very important. I completely understand the point the Senator made about the age profile in farming and what that means for the sustainability of farming, so I look forward to receiving that report. In regard to infrastructure, nearly every Senator touched on this issue during his or her contribution. Senator Casey referred to the external threats and how, in many ways, the way in which we can try to build resilience to those external threats relates to how we can invest in our own infrastructure. I support Senator Byrne's final point, on domestic businesses, a subject in which Senator Casey also has a great background. We need to look at ways in which we can make their environment within simpler and try to support them more. That does not just relate to the spending of money. I have never met anybody who has gone into business to maximise or get grants. Anybody who sets up a business wants to stand on their own two feet. We need to step away from thinking about it like that to thinking more broadly about how we can have an environment whereby, if somebody is brave enough to set up their own business to employ somebody else, we help them and recognise them in that work.

I thank Senators for the opportunity to be here. It is always very valuable to be in the Seanad. I look forward to returning to continue this debate and to be back in the Seanad soon with legislation. I thank Senator Kyne for the invitation.

Seán Kyne (Fine Gael)
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I thank the Minister for being here and accepting the invitation and for his contribution.

I welcome the guests of Senator Aubrey McCarthy, Paul and Cheryl Fox and Brenda Lawlor from the Euromovers association. I hope they enjoy the Senator's hospitality for the rest of the evening. I also welcome Deputy Richard O'Donoghue and his guests to the Chamber. Finally, I welcome the Cathaoirleach and his guests to the Distinguished Visitors Gallery and wish them well for their day here.