Bernard Durkan (Kildare North, Fine Gael)
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Question 241: To ask the Minister for Jobs, Enterprise and Innovation the extent to which he has identified competition faced by Irish manufacturers and service providers; his proposals to address these issues; and if he will make a statement on the matter. [21384/11]

Richard Bruton (Dublin North Central, Fine Gael)
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A competitive economic environment is essential if businesses are to grow and create jobs. It is in this context that my Department is focusing on three specific areas where progress can be made – reducing the costs faced by businesses, improving access to finance, and encouraging innovation.

Ensuring that Ireland is an excellent location and environment for business is a critical element of the Programme for Government. As Minister for Jobs, Enterprise and Innovation I am keenly focused, in conjunction with other Government colleagues, on having the conditions right for businesses to create jobs. Addressing the loss of competitiveness in the economy has been one of this Government's top priorities since taking office. There are signs of improvement in the competitiveness in the Irish economy such as: · Wages and costs have adjusted downwards. The European Commission estimates that Irish unit labour costs decreased by 6% in 2009 and 2010, compared to a rise of 3% in the Euro area generally. · Ireland currently has the lowest growth rate in inflation across the EU and our prices are now back to levels last seen in 2003. · Most local authorities have frozen or decreased their Annual Rate of Valuation again this year. · The cost of broadband services in Ireland also compares favourably with the EU average.

Since this Government came into office, it has sought to reduce costs and improve the environment for businesses to retain and create jobs. The reduction in labour costs has been helped though measures in the Jobs Initiative with the halving of the lower rate of employer's PRSI as well as helping the jobs intensive hospitality sector by the introduction of a new temporary, second reduced rate of VAT. Efforts in my Department to cut red tape and reduce the administrative burden for business have resulted in an annual saving achieved of €187 million.

As regards access to finance, a targeted, temporary partial loan guarantee scheme will be announced later in the year to complement, rather than substitute for existing bank lending, where specific market failures have been identified. In addition a micro-finance fund will provide funding for small loans to start-ups.

We recognise that the recovery will be driven, in part, by businesses which start up during the recession but many start-ups lack the small amounts of finance that can be the difference between success and failure. This commitment on a micro-finance fund is the Government's contribution to filling this particular gap in the enterprise finance gap in the market.

It is clear that Government can also play a key role in improving cash flow to businesses, and from 1st July last all government bodies (excluding commercial semi states) are required to pay suppliers within 15 days of receipt of a valid invoice.

Of course, competitiveness is also influenced by the companies themselves, for example, in the strength and quality of a company's business model, the value created for their customers, and how ably they compete with companies internationally in getting their goods and services to market.

My Department and the State Agencies under its remit are clearly focused on the development and support of internationally trading manufacturing and services firms in Ireland in this regard. Specifically, Enterprise Ireland (EI), the agency responsible for the development and promotion of the indigenous business sector, is focused on the growth of world-class Irish companies to achieve strong positions in global markets. EI support is targeted primarily at exporting companies, delivered by working directly with businesses, and the research and investment communities in Ireland to build sustainable competitive advantage for our economy.

In line with the Programme for Government, I will continue to work closely with Enterprise Ireland, in developing a successful export-led enterprise base in Ireland, and with my colleagues in Government to explore options for further reducing costs to business.