John O'Mahony (Mayo, Fine Gael)
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Question 18: To ask the Minister for Finance if Ireland will take part in the EU Commission's €200 billion recovery plan, which aims to protect workers, households and entrepreneurs who risk being adversely affected as the financial crisis spreads into the broader economy; and if he will make a statement on the matter. [45213/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I welcome the Commission's Plan as an important signal to EU consumers and business that Member States and the Commission are working together to help boost demand and to support business in these difficult times. The Plan recognises, however, that not all Member States are in the same position to help by a further fiscal stimulus but it also says that for those that have such scope they should do so in a co-ordinated manner.

In common with virtually all the world's advanced economies, Ireland is facing substantial economic and fiscal challenges in the immediate future. Ireland, however, is particularly badly affected and our scope to have a further fiscal stimulus on top of what we are already doing is extremely limited. Our priority must be to stabilise and to restore the public finances to good order, to improve competitiveness and to maintain international confidence in Ireland as a place to work and invest.

While the first priority must be to bring our current budgetary position back to balance, thus once again funding current day-to-day spending from current resources, we are continuing to commit substantial funding to public investment to secure the future growth potential of the economy and maintain employment and competitiveness. We are maintaining public investment at about 5% of GNP which is equivalent to almost twice the EU average. We will be borrowing over €8 billion next year to continue to provide essential infrastructure such as roads, schools, public transport and water treatment projects. This investment represents a significant fiscal stimulus and it supports employment in the short term and increases our productivity in the long term.

For a small, open economy such as ours, sustainable increases in living standards can only be achieved by supplying goods and services to the wider global economy. Therefore, we must also ensure the economy is in a position to take advantage of the global recovery when this emerges. Among other things, this will require a greater focus on competitiveness. To support our competitiveness objectives, the Government is committed to maintaining a low burden of taxation on capital and labour and has implemented a range of policies aimed at improving competition in product markets and flexibility in the labour market.

In addition, the recently published Finance Bill sets out a number of measures that are targeted at the enterprise and environment sectors, such as the R&D tax credit changes and the extension to the categories of technology qualifying under the accelerated capital allowances scheme for energy efficient equipment.