Speech by the Minister for Enterprise, Trade and Innovation, Batt O’Keeffe TD, in the Dáil on the EU-IMF Programme and National Recovery Plan

1 December 2010

A Cheann Comhairle.

I welcome the opportunity to discuss the EU-IMF Programme and the Government’s National Recovery Plan in the House today.

The two are inextricably linked.

As was outlined earlier, the provision of €85 billion of international financial support to Ireland is on the basis of a specified programme whose details closely reflect the key objectives set out in the National Recovery Plan published last week.

As Minister for Enterprise, Trade and Innovation, I will focus my contribution on the areas of the plan most pertinent to our enterprise sector.

For me, the plan has three critical factors.

The first of those is certainty.

The plan is an extensive document containing a detailed blueprint of measures that will put the public finances in order, drive growth and support jobs.

We are clear about the nature of the task facing us, the strengths we can bring to that task and the actions we are going to take to bring about stability and growth.

Secondly, the plan solidly establishes the credibility of our proposed actions as a Government and as a people.

The plan has been endorsed by our international colleagues as a credible and appropriate set of actions to make the necessary savings of €15 billion and reach the broadly accepted deficit target of 3pc of Gross Domestic Product.

So by bringing forward the plan, we have presented to domestic and international audiences a credible set of actions to bring us to where Ireland needs to be.

Thirdly, the plan underpins our commitment to export-led growth and recovery.

I especially welcome the acknowledgment and commitment to continued investment in the enterprise sector.

The capital investment of almost €2.2 billion in the enterprise sector, and the maximum support and protection afforded to businesses throughout the period of the plan, is incredibly important.

So are the measures to tackle high input costs for businesses, action to remove barriers to jobs and the enhanced activation measures.

In addition to the benefits of improved infrastructure and direct jobs from construction, the new four-year capital expenditure programme in the plan recognises the critical importance of the work supported by my Department and its agencies in achieving economic growth.

That is obvious from the allocation of €2.2 billion to enterprise over the next four years.

Many often ask where investment, growth and jobs will come from.

The multi-billion investment by the Government in the plan means we will continue to win new foreign direct investments, grow indigenous exports and tourist numbers, further our ‘smart’ economy objectives and create 300,000 new jobs by 2016.

It is expected that unemployment will fall to below 10pc by 2014.

Today, we have further cause for optimism on growth, trade and employment.

Activity in the manufacturing sector was steady in November with output and new orders rising.

The NCB Purchasing Managers Index is rising, with new business boosted by a strong increase in new export orders.

New figures for redundancy claims for the first 11 months of the year show a drop of nearly 17,000, or 23pc, on the number filed for the same period last year.

Today’s live register numbers show the lowest monthly total since December 2009.

Although the live register has risen in November in each of the past five years, this November we have seen a fall.

The numbers are almost 42,000 lower than at the end of August - further evidence that the labour market is stabilising and our targeted investment in growth is working.

We will continue to invest for further growth under this plan.

IDA Ireland’s investment efforts to embed, transform and grow the foreign-owned firm base in Ireland have been completely protected.

The total sales of these companies was €119 billion last year and their value-added was equivalent to over 47pc of Gross National Product.

Enterprise Ireland will receive a 7pc increase in its capital allocation for activity in science, technology and innovation.

That increased funding will be used to enable Irish firms to develop the important competitive advantages that innovation will deliver.

Under the plan, we will make multi-million euro investments to encourage collaboration between industry and higher education institutions.

That will include the allocation of almost €8 million to create new high-tech competence centres that will undertake an industry-led research agenda.

The target is to double the number of competence centres to 16 by 2015.

The increased allocation to Science Foundation Ireland next year sends a strong message nationally and internationally that the Government’s focus on driving the ‘smart’ economy is on track.

That investment has been critical to IDA Ireland’s capacity to secure research and development-related investments running at €500 million every year.

The allocation will allow projects approved under PRTLI Cycle Five to move ahead.

It also supports indigenous firms relying on knowledge for growth and job creation.

In addition to the significant investment in growth, jobs and innovation, the plan sets out clear measures to further improve our competitiveness.

These measures will reduce energy costs and drive down waste and transport costs.

Under the plan, we are committed to appropriate State investment in next-generation broadband where the market fails to deliver.

There are a series of actions to reduce the cost of professional services.

Property costs will face more downward pressure.

When it comes to Government-influenced costs, we will extend the 15-day prompt payment rule to the wider public sector, avoid increases in government administrative charges and fully examine the scope for reductions.

Since 2007, measures we have implemented have saved small firms almost €53 million in red-tape overheads.

We will expedite work to achieve the targeted 25pc reduction in the regulatory burden on businesses.

We will minimise local authority charges based on the Local Government Efficiency Review Group.

On labour costs, we will reduce the minimum wage by €1 per hour.

I note that Fine Gael has signalled its intention to reverse the proposal if the party finds itself in power - totally ignoring the research showing that a reduction in the minimum wage would result in an increase in employment in the medium term.

Totally ignoring the needs of the sectors where the wage is most concentrated.

Crucially, we will review the other sectoral pay agreements - EROs and REAs.

I am determined to reform any agreement that constitutes another form of labour market rigidity by preventing wage levels from adjusting.

I want to mention briefly the welcome labour activation measures set out in the plan.

We have already provided 165,000 places this year to train and provide work experience for the unemployed.

The enhancements in the plan are an important element of our overall approach to recovery and growth and they will further ensure the proper functioning of our competitive labour market.

It is worth noting that the plan has been especially successful in balancing new taxation measures.

While taxation will contribute €5 billion to the overall €15 billion adjustment, it will be done in a way that is least harmful to enterprise.

Our competitive 12.5pc corporation tax rate will not change.

Our marginal tax rates will not disimprove and our tax wedge will remain competitive.

To conclude, a Cheann Comhairle, the EU-IMF Programme and the linked National Recovery Plan are important steps on Ireland’s road to recovery.

Along with the upcoming Budget, I urge members of this House to take a close look at what it contains - the certainty, credibility and hope it offers and base their assessment on the facts, not on short-term political considerations.

Thank you.

ENDS

Bernard Mallee, Press Adviser to Minister Batt O'Keeffe, Department of Enterprise, Trade and Innovation, on Tel: +353 1 631 3944, Mobile: +353 87 9173022, Email: bernard.mallee@deti.ie