John Deasy (Waterford, Fine Gael)
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Question 74: To ask the Minister for Finance if he plans to play a leadership role in addressing the emerging problems of the competitiveness of Ireland's exporting sectors. [18421/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Restoring and enhancing national competitiveness is a key priority for this Government. The Government is keenly aware of the importance of Ireland's exporting sectors to investment and jobs and in turn of the importance of competitiveness for these sectors. However, it must be remembered that we cannot control some variables which affect our competitive position, such as our exchange rate. In these circumstances, we must seek to control those key determinants of our competitiveness which we can influence.

The maintenance of competitiveness requires that wage increases remain in line with that justified by productivity growth. Sensible income policies and a greater role for competition in the economy are vital in delivering this. Wage increases must be limited to those negotiated under Sustaining Progress.

The rate of inflation is another important determinant of competitiveness. In this regard, the moderate rate of CPI inflation over the last year is a welcome development. Notwithstanding the fact that our inflation rate is largely determined by external factors over which we have no control, we can seek to ensure that our domestic cost base does not add to it. My decision not to increase excise rates in the budget will help support low inflation this year.

It is also important to maintain public spending growth at levels that are sustainable over the medium term. This will help to maintain the low burden of taxation, which in turn will protect competitiveness and maximise our economic potential.

We are maintaining capital expenditure at the current high levels relative to GNP in order to reduce the existing infrastructural deficit. This will support future competitiveness and ensure that Ireland creates the right environment for foreign investment and continued export growth.