Bernard Durkan (Kildare North, Fine Gael)
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Question 100: To ask the Minister for Finance the steps he has taken or proposes to take to improve the competitiveness in the economy; and if he will make a statement on the matter. [12743/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The economy's competitive position has deteriorated in recent times. This deterioration has been driven by wage increases in excess ofproductivity and a rate of inflation above our euro area peers. Notwithstanding the fact that for most of the last 12 months our rate of inflation has been lower than the euro area, our price levels are still some 20% above the euro area. Regaining our competitive position — which as a small open economy is critical to our economic success — will require each of us to play our part and work towards this end.

For its part, the Government has, and will continue, to support competitiveness. To this end, the Government is committed to maintaining a pro-enterprise environment, and has implemented policies aimed at improving competition in product markets and flexibility in the labour market. For example, last October in Budget 2009, I re-affirmed the Government's commitment to the 121⁄2 per cent rate of Corporation Tax. The subsequent Finance Act contained a number of very significant changes to the R&D tax credit scheme aimed at encouraging further R&D activity here. In addition, the Government is continuing to prioritise productivity-enhancing investment under the National Development Plan, subject to available resources. This applies to both infrastructural investment as well as investment in education and skills.

The Government introduced the Framework for Sustainable Economic Renewal, called "Building Ireland's Smart Economy", in December 2008 which sets out a clear roadmap for Ireland's move back to economic growth and prosperity. The Cabinet Committee for Economic Renewal is driving this strategy and we will continue to pursue policies that will build on our strengths, address our weaknesses and maximise economic activity and employment.

In addition, the public service pension-related deduction recently instituted in the light of the pressures on the public finances should have a demonstration effect in the private sector which will have a beneficial knock-on effect for competitiveness.

Finally, the Government has announced plans for a Supplementary Budget on 7th April in order to ensure stability in the public finances. This will have a positive impact in terms of restoring confidence in the Irish economy and, in turn, boosting our attractiveness as a location for inward investment. I would also point out that, by undertaking the necessary adjustments now, the Government will avoid having to take more injurious action in the future. In this way, Government action is supporting the long-term competitiveness of the economy.