Thank you very much. I would like to thank Financial Services Ireland and your Chairman, Fergus Murphy, for inviting me tonight.
I would also like to take the opportunity to thank FSI for its work – the organisation has been a strong and constructive partner in the work of my Department. I know in particular that over the last year Brendan Bruen played a pivotal role in delivering the IFSC Strategy that was adopted by the Government in July.Developments in Europe
This dinner tonight takes places against a backdrop of continued uncertainty about the future direction of the European Union and the stability of the single currency.
As workers in the financial services industry, at the forefront of the unfolding crisis, you don’t need to be reminded about the seriousness of the situation.
To navigate these choppy waters we need a strong sense of direction and leadership to deliver us safely over the horizon.
It is essential that European leaders make and implement clear decisions quickly to prove our shared determination to protect our currency, to support Member States that are working towards economic recovery, and to introduce strong rules to ensure fiscal discipline into the future.
Let me be clear – Ireland supports the creation of stronger economic governance throughout Europe, and particularly throughout the Eurozone.
The Irish people are paying the price now for the absence of such rules in the past. I am determined that we will never go back to the practices that drove our economy off a cliff – reckless spending, poor oversight of banks and over-reliance on property-related tax revenues.
I look forward to the proposals for stronger governance in the Eurozone to be presented by the President of the European Council which may include limited changes to the EU treaties. We will engage positively in the debate on these proposals.
However, to tackle the immediate crisis, the first priority must be to use the existing instruments and decisions to their full potential so that the markets can be convinced that European leaders are fully committed to defending and protecting their currency.
The Government has been consistent in arguing that the only way to overcome a financial market panic like this is to deploy overwhelming financial firepower to support countries pursuing sound economic policies.
That is why I believe that the ECB needs to play a bigger role in resolving this crisis. Promoting financial market stability and combating inflation should not be viewed as inconsistent goals.
It is clear that the markets have viewed recent agreements to bolster up the EFSF as unsatisfactory in dealing with Europe’s debt crisis. It is quite evident now that even Eurozone members with unquestionable economic fundamentals are being targeted by the financial markets because of the absence of any credible back-stop in the Eurozone.
The ECB can and should play this role as a credible back stop in the Eurozone.Budget 2012
Irrespective of the search for a solution at European level, it is essential that the same determination and sense of direction needed abroad is applied at home as we continue to implement our plan to fix our budget deficit, while still investing in job creation.
Our guiding principles for next week’s budget will be the creation of jobs, meeting our fiscal targets and protecting the most vulnerable. This budget will be tough on everyone. That’s why we started with the political system itself through cutting Ministerial pay and transport, and reducing the number of Oireachtas Committees.
Over recent weeks, we have published segments of the budget package. Our new €17 billion capital investment programme honestly sets out what projects the country can afford in current economic circumstances. It’s focused on jobs, education and health.
Our radical reform of the public sector will tackle waste and duplication and sees the merger or abolition of at least 48 quangos, and a definite end to the ill-judged decentralisation programme.
We have also introduced pay ceilings and retirement arrangements for senior public servants and semi-State executives. This week we have taken further steps to reduce the top tier pensions of the highest paid former public servants.
Last week, Minister Richard Bruton published details of the first elements of a major government focus on jobs –a new partial loan guarantee scheme and a micro finance scheme for small start-up enterprises.
These and other plans to be announced in January are aimed at creating 100,000 new jobs for our people.
While the remaining elements of the budget will entail very difficult spending cuts and revenue raising measures, we are determined to achieve the very large budgetary correction in a way that best protects jobs and the most vulnerable in our society.
That’s why Minister Michael Noonan has already made it clear that he intends to raise the necessary additional tax revenue in the budget through indirect taxes, rather than by increases on taxes on work. We believe that increases in income taxes would be damaging to jobs.The Banking Sector
The budget will encapsulate the Government’s new approach of managing the economy. A similar new approach in the management of our banking crisis was introduced in the first few weeks of the new Government.
We stabilised the banking sector, welcomed new private sector investment in Bank of Ireland, and we are beginning to see some small net inflow of deposit funds - both retail and corporate - for the first time. The restructuring of the banks took place ahead of schedule and the recapitalisation of the banks to satisfy the stress tests were achieved on time at the end of July 2011.
Unfortunately, it has to be recognised that many banks played a pivotal role in the making of the Irish crisis. The consequences of which will be with everyone for years to come.
Twin failures, to run businesses properly, and to regulate properly, have cost this country dearly. We will ensure that those who have a case to answer do so before the proper authorities, and that will continue without fear or favour.
The support given to the banks was not for the sake of banks, it was for the State. That support must be repaid in kind. The Government’s strategy for the future of the Irish banking system is designed to fit the needs of the Irish economy.
The change of management at the highest levels was essential and is almost complete. We have new leaders in our critical institutions who have the skills to deliver results for the country.
I know that just as there are many within our banking system whom were not at fault; that almost all of the financial services firms operating in Ireland have done nothing but run their businesses responsibly.
It is time to start looking forward again – learning from the past and planning for the future.
A strong financial services industry is a vital part of a stronger economy and renewed growth in employment.
In terms of regulatory reform, it is essential that Ireland is recognised as having world-class prudential supervision which is necessary to undo much of the reputational damaged caused by recent failures in regulation.
I have every expectation that this can be achieved without creating any unnecessary regulatory burdens on firms which play by the rules. What we need is a regulatory environment that encourages investment, and is responsible, robust and reliable. I believe that both industry and the regulatory authorities will come out of this process stronger.Financial Services Jobs
The result will be that financial services will play a key role in creating new jobs. Employment in the totality of the industry in Ireland, international and domestic, is close to 100,000.
In July, I had the pleasure of launching the Strategy for the International Financial Services Industry in Ireland 2011-2016, setting a target of growing employment in the sector by 10,000 over 5 years.
Of course that is ambitious and challenging. But less than 12 years ago, the IFSC employed only 8,500 people; it now employs 33,000. We are building from a position of far greater strength than we were then.
Among the hundreds of firms operating here are the biggest names in global finance. They have chosen Ireland and continue to invest here. In return, we are promising to maintain our sacrosanct and transparent corporate tax rate and ensure a fair and effective regulatory environment.
Ireland has to play to its strengths and ongoing work to better exploit new opportunities in green finance and Islamic finance are examples of that.
Before I finish, I would like to mention and commend a programme that is operated by FSI under the Government’s Springboard programme. It supports 160 jobseekers in building the skills and the network to find work in financial services firms. Participants receive specialised training and work placement opportunities with leading firms.
I was asking Brendan about it on the way in, and he told me about one participant - a man in his forties who had been let go a few years ago. He had so much experience, that when he went for jobs he kept getting told that he was overqualified. He lived off his savings rather than sign on. Through the programme he finally got a placement with a top firm and he has a great chance of a gaining a long-term position.
His story is replicated across the participants. People are out of work in this economy despite having skills that can make the difference for companies.Conclusion
There are positive stories and signals out there. With all the recent focus on doom and gloom it is important that we do not fall into a collective state of fatalism.
I firmly believe that we will successfully navigate these choppy waters together. Cool heads and strong leadership from everyone from the top down will see us safely through to that better place on the horizon.
With that, I’d like to thank the FSI again, and I wish you all an enjoyable evening and every success for the coming year.