Introduction
This Government came to office at a time of unprecedented challenges for the Irish economy and the Irish people.
And we came to Office with great ambition for this country – and for the people of this country.
We were voted into Office with the largest ever majority by the people in order to do a job:
to restore our economic sovereignty;
to get Ireland working again;
to return our economy to growth; and
to radically reform our politics and public services.
This week we have taken another major step to delivering on this for our people. We won’t stop until we have delivered on these objectivities.
Government’s Priority on Jobs
We have just announced our first Budget. A Jobs Budget from a Jobs Government.
Since voted into Office this Government has had jobs at its very heart. It has been the focus of the Programme for Government and directed Government action ever since.
We committed to a major Jobs Initiative within 100 days of taking office and we delivered. The Initiative included a range of actions across Government to stimulate the economy and specific sectors in order to help get people back to work.
The key elements of the Jobs Initiative included:
reaffirming, as the Minister for Finance repeated yesterday, that our 12.5% corporate tax rate remains sacrosanct;
A temporary reduction in the lower rate of VAT (13.5% to 9%) on restaurant and catering services, hotel and holiday accommodation and various entertainment services;
The halving of the lower rate of employers’ PRSI on low paid workers;
Shifting capital expenditure towards more job intensive projects in the areas of education, local and regional roads and sustainable transport projects;
additional funding for energy efficiency schemes;
the provision of an extra 20,900 activation places for the unemployed, including 5,000 work placements and/ 6,000 new training/reskilling places targeted at people who have lost jobs in sectors such as construction with high levels of unemployment;
A National Internship Programme which has already placed 3,000 people with many more posts currently advertised;
the extension of the requirement for public bodies to pay suppliers within 15 days; and
improvements to the R&D tax credit scheme.
The Government has now extended the 15-day prompt payment requirement beyond central Government Departments to include the HSE, the Local Authorities, State Agencies, and all other Public Sector Bodies.
It has already started to deliver for the economy.
Overseas tourist numbers for the first eight months of this year are up 11% on the same period in 2010. The number of visitors from mainland Europe was up 13% and visitors from North America were up 12.6%.
In September the Restaurants Association of Ireland reported that almost 94% of restaurants said they have passed on the VAT reduction. Almost half of restaurants have seen their business increase turnover in the last eight months compared with the previous year.
Figures published in September show that Ireland’s slide in the global competitiveness ranking has halted.
For the first 6 months of 2011, our exports increased by 7.3% compared with the same period of 2010.
Since 9th March, companies supported by the IDA have announced a total of 4770 jobs.
The Jobs Initiative was only a beginning… A statement of intent… Jobs have been at the core of this Government since then. Government Ministers have been busy working on developing new schemes and policies to get Ireland back to work.
Schemes such as:
A new €10million overseas entrepreneurs fund, to attract mobile international entrepreneurs to start their businesses in Ireland and ensure that the world-leading companies of the future can come out of Ireland;
A second call under the €125million Innovation Fund Ireland, which to date has announced three investments, including in the first high caliber Dogpatch Business Incubator Lab outside the USA;
A Government Cloud Computing Implementation Strategy, to ensure that Ireland takes full advantage of the 8,600-job potential of this global industry
New technology centres in energy/smart grid and cloud computing aimed at turning good ideas into good jobs.
Work on new jobs policies is continuing with Budget 2012 only another step in getting Ireland back to work.
The Government will shortly publish a major policy statement on labour market activation "Pathways to Work".
This will set out our strategy to reduce and prevent the drift into long term unemployment – to ensure that people are helped and incentivised to move off the Live Register as jobs are created again.
This will set out targeted measures, and major institutional reforms, to help people who are unemployed get the training and work experience they need.
Furthermore, Minister Bruton is preparing an Action Plan for Jobs to be launched early next year setting out key actions to be delivered over the course of 2012 to target new jobs and sectors.
Getting Ireland back to work cannot be delivered in one budget announcement but will continue to be the priority over the lifetime of this Government.
Rebuilding International Confidence
This priority on jobs is linked to the ultimate goal of rebuilding our economy and restoring faith in Ireland at both home and abroad.
We have taken necessary steps to improve our collective situation.
Despite the naysayers we have significantly improved the terms of the EU IMF Programme and delivered a reduced interest rate on our loans resulting in a saving of €10 billion for the taxpayer over the lifetime of the programme;
We have taken big steps to reform the banking sector so that it can begin to serve the people again. Recent private sector investment in Bank of Ireland is a reflection of renewed confidence in Ireland that was unimaginable this time last year.
We have largely rebuilt our international reputation through constructive engagement with our European partners and with other friends further afield.
We are now known internationally as a country that is serious about its economic recovery efforts and one that is very much open for business.
This message came across very clearly to me in my conversations with participants at the Global Irish Economic Forum in October.
It is also reflected in our continuing success in attracting Foreign Direct Investment.
This confidence has been reflected in bond yields – which clearly differentiate us from other programme countries.
The Irish economy has returned to growth this year after three years of contraction.
And the forecasts confirmed by the Minister for Finance yesterday are for that growth to continue next year.
Our exports continue to perform well.
This strong performance is expected to continue, despite the slowdown in global markets.
However, given this growing uncertainty in the global market, we have to focus all our efforts on sustaining this fragile recovery.
The objective of Budget 2012 is to build on these achievements and set out a clear, consistent pathway forward for the Irish economy.
Budget 2012
My Government has been unwavering in its commitment to return our public finances to good health and to bring our debt below 3% of GDP by 2015.
Returning the public finances back to good health was the ultimate legacy of the former Rainbow coalition. It created the solid base from which the Celtic Tiger emerged before it was high jacked by "show time" irresponsible economic policies.
Our ultimate goal now is to regain our national sovereignty by maintaining our fiscal commitments in the years ahead.
Jobs in Budget 2012
Creating new jobs will at the core of correcting the public finances and restoring sovereignty.
This is why this Budget had jobs at its core.
The Government values work.
We are delivering on our promise not to increase taxes on incomes from work.
We came into Government determined not to repeat the disaster of the Universal Social Charge, which was a disaster for consumer confidence, spending and the incentive to work.
That is why we are now exempting from the Universal Social Charge 330,000 people with incomes of less than €10,000. This is a statement of the value that this Government attaches to work.
That is why we have ditched the previous Government’s plans to further cut take-home pay from all those at work, including the lowest paid. High taxes on work kill jobs.
The more you tax something, the less of it you get. This is supported by evidence both international and Irish.
That is why we will not repeat the mistakes of the past by killing off investment and entrepreneurship through penal tax rates. The top marginal income tax rate is already 52% for PAYE workers and 55% for the self-employed. Increasing it further would have a very damaging effect on indigenous entrepreneurship and on the flow of jobs from Foreign Direct Investment into Ireland.
That is why we have chosen instead to tax wealth rather than work. We have found ways to ensure a fair distribution of the burden of adjustment that does not put at risk our core objective of growing our way out of this debt crisis.
Protecting the take-home pay of those at work will ensure that work continues to pay, and make it affordable for people to move off welfare and into jobs when opportunities arise.
I said at the 100 day anniversary of the Government that there would be no increases in income tax and yesterday that promise was delivered.
It was essential for people and families to plan for the future knowing their take home pay in December will be the same as in January.
Therefore, it is vital that in the coming years that tax on work will be kept to a minimum which is why future increases in income taxes will be avoided.
Capital expenditure
Despite the very difficult financial circumstances we find ourselves in there is still a significant capital expenditure programme provided which will deliver real jobs.
We are maintaining a Capital Investment Programme of approximately €17bn in the coming year. This plan is based on what the country can afford. We have prioritised the investments that are most needed. Some other, very good projects have to be changed, or put on hold until the public finances have improved.
There will be an increased focus on delivering work intensive local projects such as schools, healthcare centers, and local job supports.
We have also delivered on our commitment to establish NewERA, and have already created a new Strategic Infrastructure Fund. This will support further investment in Irish infrastructure, in particular through the semi-state companies.
All these investments will play a vital role in getting our people back to work.
Supporting Enterprise to Create Jobs
The Budget does support business to create new jobs.
IDA, Enterprise Ireland and the County Enterprise Boards have maintained their high budgets despite pressure to reduce spending across Government and they continue to provide essential financial and soft support to businesses.
The capital budget of the Department of Jobs, Enterprise and Innovation will hit its highest ever level with €1 billion being provided over the next 2 years. This is solid evidence of where our priorities are…
Yesterday Minister Noonan announced new initiatives to attract new investment and new high value jobs.
The changes to the R&D tax credit provided by the Government will be welcomed by dynamic domestic and international businesses.
In addition, we are introducing a new Special Assignee Relief Programme to help businesses attract key people to locate in Ireland.
This will be of particular benefit to the International Financial Services industry, and there will be further measures in the Finance Bill to help create jobs in this sector.
There is also good news for small business with the corporate tax exemption for new start up companies being extended for the next three years and will be available for companies that commence trading in 2012, 2013 and 2014.
To support our new exporters taking their first tentative steps on the world market selling Ireland to growing new markets the Government has announced that smaller companies will be able to avail of the planned foreign earnings deduction where they expand their export markets into the BRIC countries.
I have met businesses all over the country since coming to office and these are some of the supports that they need to grow and prosper.
However, a recurring problem that has risen time again has been a difficulty in accessing credit.
Minister Bruton has therefore recently announced specific measures to address this including:
a Micro Finance Loan Fund which will generate up to €100 million in additional micro-enterprise lending benefitting over 5,000 businesses over the next 10 years;
a Temporary Partial Credit Guarantee Scheme to assist commercially viable businesses who are having difficulty securing credit but due to particular market failures cannot secure this credit.
Along with the Tánaiste, I will be meeting with the banks again early in the New Year to ensure that they deliver on the targets agreed for SME lending.
Supporting Jobs in Agri-Food
This Budget also builds on the fantastic growth of our agri-food sector which is reaching new heights in exports.
Ireland is good at agriculture. Building on this success will sustain jobs in every townland across the country. The sector currently exports to some 170 markets worldwide.
This year Irish food and drink exports are expected to reach an all time record of €8.9 billion. This is an increase of almost €1 billion, or 12% over last year's levels.
5 of the top 20 exporting companies located in Ireland are in the agri-food sector and agri food companies’ account for 60% of manufacturing exports by indigenous firms.
New actions by this Government will encourage the development of the next generation of farmers focused on exploiting the opportunity to export more Irish food around the world.
Protecting the vulnerable
Preparing the Budget that supported jobs but respected our goal to restore the public finances was not easy. It involved long and often complex debates at the Cabinet table.
But I believe with this Budget we have struck the right balance…. not just for 2012, but in the decisions we have taken for the period to 2014.
And we have taken some very difficult decisions in order to cut public spending and reduce costs.
Some of the measures we are introducing will cause hardship for our citizens.
I wish that this was not the case.
But 80% of our current expenditure is on social protection, healthcare and education. It is not possible to reduce spending without affecting these areas.
However, we have focussed our limited resources on those with genuine need.
The lowest paid, 330,000 income earners, will no longer be liable for the Universal Social Charge.
There are no changes to core social welfare payment rates or State Pension Rates in this Budget.
We have protected the take-home pay of workers by avoiding any increases in income tax.
We are assisting vulnerable homeowners by increasing mortgage interest relief to 30% for first-time buyers between 2004-2008. This meets a core commitment of the Government to help the generation worst affected by the collapse in property values.
We are providing additional funding to develop community mental health teams and services.
And we have made sure to safeguard our children and young people from the brunt of the cuts.
the basic rate of child benefit has been maintained
schools in disadvantaged area will continue to be prioritised for targeted supports
the overall number of resource teachers and SNAs is being maintained
we have committed to building the National Children’s Hospital
Public Sector reform
But this economic crisis should not be wasted. It presents an opportunity for Government to fundamentally reform the manner in which our public services are delivered.
For too long reform of Government was ignored and sidelined. Lack of political leadership at the top stood as a barrier to delivering an efficient public service that met all the needs of its citizens.
A leaner, smarter and better public service is one that promotes job creation, is more flexible to the changing needs of citizens, and plays a central part of Ireland’s recovery story.
The establishment of a new Department of Public Expenditure and Reform, with Minister Brendan Howlin, is a clear sign of intent from the new Government that reform will be a priority across the entire Government.
My Government is a reforming Government. We have shown that change must be led from the top.
Since coming to office we have reduced my pay and that of Ministers, halved the cost of Ministerial transport, introduced new pay ceilings for senior public servants, and published legislation to significantly reduce future Public Service pension costs.
Former Taoisigh are having their staff and phone entitlements withdrawn with effect from 1 January 2012.
Next year we plan to reduce the public service by 6,000.
This will mean a real saving of over €400 million in the Public Service pay bill.
We are targeting a reduction of a further 23,500 staff by 2015 over what was planned by the previous Government.
When delivered, this will have reduced our gross pay bill by over €2.5 billion (or 15%) since 2008.
We have introduced a new and expanded programme of State Agency rationalisation.
This will rationalise 48 bodies by the end of 2012, with a further 46 to be critically reviewed by June 2012.
We have cancelled the costly, opportunistic and misguided decentralisation programme announced by a previous Government.
The Government has high expectations for what can be delivered through the Croke Park Agreement.
It must facilitate this reduction and restructuring of the public services with minimal impact on frontline services.
It will be also used to deliver significant further savings through reduced overtime and allowances.
The fiscal challenge we face next year, and in the period to 2015, requires the public service to deliver change in a way it never has before.
These reforms are essential if we are to keep costs to a minimum and avoid additional tax increases which would only serve to act as a disincentive to job creation and investment.
Budgetary Reform,
An essential part of public sector will be to change the way we manage our national budget to ensure that mistakes of the past cannot be repeated again.
The truth is that our budgetary systems were not fit-for-purpose.
This year has already seen significant reform of the Budgetary process.
We have established an independent Fiscal Advisory Council and a Fiscal Responsibility Bill will be published shortly.
We will be building on this with further reform of the expenditure/estimates process.
We will ensure that all programmes are regularly evaluated to ensure they deliver value-for-money. Where they are not delivering, that must be exposed to full public scrutiny.
There will also be an enhanced role for the Oireachtas.
Because my Government recognises that every-one must play a part in our journey to recovery.
Conclusion
We have a very important few days ahead in Europe.
The Irish Government will play its part – constructively contributing to solutions which will restore stability to the financial markets, while safeguarding the legitimate rights of the Irish economy and people.
Our ability to effectively represent Ireland on the European stage is greatly enhanced by the actions we have taken at home and abroad.
Since taking office, and in this Budget in particular, we have been clear about our economic strategy.
We have set out a clear pathway to overcoming the fiscal, banking and employment difficulties we inherited.
We have been honest and open with the people about the challenges this country faces - and how we will overcome them.
In keeping with the Government’s philosophy, this Budget is fair, balanced and focused on jobs.
I told the nation on Sunday night that this Government is determined that now; the necessary decisions and changes are made to ensure that an economic crisis on this scale is never allowed to be inflicted upon the people of Ireland again.
That right now, our most important responsibility is to do what must be done to get our economy back on its feet.
A Cheann Comhairle, this budget delivers on that responsibility.
I commend it to the House.
ENDS