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A Cheann Comhairle,

Yesterday Ministers’ Noonan and Howlin delivered this Government’s second budget.

This is not an easy Budget for the people of Ireland nor could it have been... but it is a necessary step as part of our long term plan for economic renewal.

This Budget is about supporting jobs, and about ensuring that the burden of the adjustment is fair.

To fulfil our potential as an economy and as a country we have to restore our public finances to a healthy condition. That’s our real challenge as a country.

This Budget will deliver the necessary fiscal adjustment, but it will also provide extra support for job creation and for small Irish businesses.

Our role is to build the supportive environment so that the private sector can deliver the jobs that our people and our economy need.

I do not accept that we have to be saddled indefinitely with:

- current high rates of unemployment,

- slow growth and

- a squeeze on disposable incomes.

These are neither inevitable nor tolerable.

Our ambition is to move beyond the progress achieved to date, and to tackle these key issues head on.

Without the difficult action taken by this Government, our economy would not be on a solid pathway towards recovery and growth once again.

Dealing with the Economic Crisis

Since taking office less than two years ago this Government has worked to address the economic crisis we inherited from the last Government.

Some commentators attribute all of our economic difficulties to the banks and the enormous bail-outs given to them by the previous Government.

The reckless behaviour of banks and the equally reckless bank bail-outs of the previous Government remain, indeed, a major burden on the Irish people - and one which our European partners have now promised to reduce through re-negotiation of the bail-out deal.

But reducing the burden of the bank bail-outs will not, by itself, keep our economy on a sustainable path back to prosperity and full unemployment.

This requires that we tackle with equal determination the two other economic legacies of recent Fianna Fail-led Governments - the damage done to our export- and FDI-led economic model during the credit-fuelled property boom, and the massive underlying deficit we inherited in the public finances.

Even if the Irish State had no banking-related debts whatsoever, we would still be dealing with an unprecedented gap between Government revenues and spending - the legacy of the reckless, unfunded spending commitments of the previous Government and their "when we have it we spend it" philosophy.

Even if the Irish State had no banking-related debts whatsoever, we would still be dealing with the massive job destruction legacy of the property- and construction-crash - the legacy of the "Galway tent" school of economics that has left hundreds of thousands of our people without work and in need of re-skilling for the more sustainable, enterprise-led economy that we are now trying to recreate.

Since taking office less than two years ago the Government has worked hard to address the economic difficulties we inherited.

We have prioritised fixing our public finances, restoring the banking system to some sense of normality, and supporting job creation and economic growth.

Our economy finally returned to growth last year with GDP increasing by 1.4 per cent, the first annual increase in GDP since 2007.

We anticipate further modest growth this year.

It proves that the Irish economy can grow even during a period of necessary and difficult budgetary consolidation and in a very challenging international environment.

The labour market has shown encouraging signs of stabilisation in recent months.

While unemployment is still unacceptably high and its effects felt far too wide, the most recent quarterly figures show that the employment situation has stabilised.

The pro-job measures in this Budget aim to build on these tentative steps to encourage greater job creation and investment.

Over the past year 20,000 new private sector jobs have been created following the loss of 250,000 jobs in the private sector during the previous three years. The package of measures in this Budget aimed at the small business sector will encourage businesses throughout the country to start expanding and hiring again. They will restore a much needed measure of confidence to the job creation sector.

This Budget is a building block in the transition from the old failed economic plan based on property speculation and debt to a new competitive Irish economy based on enterprise, exports and innovation. That competitiveness is absolutely crucial for continued investment so that jobs can be created.

We have also seen signs of stabilisation in other parts of the economy, such as the property market.

Residential property prices show a modest increase over the most recent three month period, and the pace of annual decline is at its slowest since September 2008.

While we have some way to go before the market returns to more normal levels the latest surveys show the last quarter having the largest volume of mortgage loans issued since the end of 2010.

Budget 2013 also sees Ireland continue to face up to its economic challenges. Ireland and its people are recognised internationally for its sensible and pragmatic approach in dealing with our financial difficulties.

This has greatly helped the Government in its important work of restoring Ireland’s international reputation, which as we all know had been badly damaged under the previous administration. We continue to make very significant progress and there are very many clear signs that Ireland's reputation has steadily improved.

In recent months the country has taken it first steps to restoring its economic independence by returning to the international markets for funding. Both pillar banks have raised money in the markets without state guarantee.

Last year saw exports reach new heights with a record €173billion, 10% higher than in 2007, the highest pre-crisis figure. A good export performance is expected again this year. Nobody can deny the importance of that.

Budget 2013 will build on this progress by reducing the transport and export costs of small and medium sized businesses. Export transport is provided by hauliers, the majority of whom are small businesses themselves. I am pleased to note the introduction of a rebate on diesel with effect from the middle of next year.

This will also benefit the export orientated foreign multinational sector. Over the past year we have seen a strong line of investment decisions from new and existing multinationals creating thousands of new jobs.

Important job announcements from both indigenous and foreign companies, including Kerry Group, Voxpro, Paddy Power, Paypal, Mylan, EA Games and Arvato Finance.

These are all strong signs of confidence in Ireland and show that our considerable efforts to rebuild our reputation are bearing fruit.

Of course, a huge amount remains to be done, and the challenges before us are great.

We will continue to work to enhance our international reputation. Our EU Presidency will give us another opportunity to demonstrate our strengths as a nation.

But the one thing that no money can buy is a reputation for hard work, for creativity, skill and strength of character.

The Government is not complacent about the challenge ahead and we acknowledge the sacrifices and hard work of the Irish people to get us to this position. They know there are no easy answers to restoring this country’s prosperity and future progress.

Fiscal Responsibility

A Cheann Comhairle, despite the many changes made, as a country we continue to spend more than we collect in revenue.

This has to be addressed.

Fixing our national finances and putting them back on a sound footing is a prerequisite for job creation and economic growth. It’s absolutely necessary for confidence and certainty in our economy.

To this end the Government remains fully committed to the 2013 deficit ceiling of 7.5% of GDP and to reducing our deficit to below 3% of GDP by 2015.

For 2012 we will be well within our deficit target agreed with the Troika.

In May the Irish people voted overwhelmingly to ratify the Stability Treaty.

This much needed reform will help ensure that Governments now and in the future will manage the public finances appropriately and sustainably.

In recognition of mistakes made by previous Governments this budget has broadened the tax base.

For too long, successive Governments have relied on a narrow source of revenues.

The introduction of a fair, progressive and proportionate property tax will help us address the budget deficit, and will help avoid additional taxes on income.

Increasing income taxes at this time would only serve to destroy jobs and hit working families.

These families and their futures are the central focus of this budget.

As the Minister for Finance again reiterated in his speech, in order to underpin the high levels of foreign direct investment, and to sustain indigenous enterprise and job-creation, we will maintain Ireland’s 12.5% rate of corporation tax, which is a long-standing and core element of our enterprise strategy.

Ireland’s corporation tax regime is transparent, easy to navigate, and is very close to the effective rate of 11.9%.

Jobs and Growth

This is to provide certainty to Irish businesses so that they can plan for the future with confidence and create more jobs.

Obviously, this Government is not satisfied with the high level of unemployment throughout the country.

For this reason we have deliberately focussed on job creation, and are committed to ensuring that our policies support strong and sustainable employment growth.

We are committed to adding 100,000 jobs to the economy by 2016 and to have 2 million people in employment by 2020.

To achieve this I repeat that I want Ireland to be recognised as the best small country in the world to do business by 2016.

Earlier this year we launched a comprehensive and detailed Action Plan on Jobs.

The action plan is about taking incremental and necessary action right across Government to support enterprises to grow, and to create and retain jobs - quarter by quarter, reform by reform, step by step.

In tandem with our Action Plan we launched Pathways to Work - a fundamental reform of the way we support jobseekers.

The recently launched new integrated service ‘Intreo’ transforms the way we support job seekers back into jobs, to treat people looking for work as real contributors to our society and not as mere statistics. This new service is already working well, offering new hope and new opportunities.

We have looked to maximise private investment in much needed infrastructure.

Last year we announced the establishment of NewERA and a Strategic Investment Fund.

NewERA is a key commitment in the Programme for Government and is central to the Government’s plans for job creation and investment and for reforming how the Government manages its semi state companies.

In August Minister Rabbitte published a National Broadband Plan which sets ambitious targets for the roll-out of high-speed broadband throughout the entire country. 200 secondary schools are currently being connected throughout the country as part of that plan.

To improve the availability of credit for business the Credit Guarantee Scheme commenced in October of this year.

Initially, the scheme will facilitate up to €150m of additional lending per annum to SMEs, in addition to the lending targets set for the pillar banks.

It will provide a 75% State guarantee to banks against losses on qualifying loans to firms with growth and job creation potential.

A Microfinance Scheme also opened for business in October.

This will provide loans on a commercial basis for start-up businesses and micro-enterprises.

Over a ten year period, it is expected that over €90million in additional lending will be provided to 5,500 micro-enterprises with the potential to support the creation of an anticipated 7,700 jobs.

Budget 2013 - Supporting Jobs and Business

A Cheann Comhairle, this Budget is about building on the progress of the past 18 months to create more jobs and to support small Irish businesses.

It introduces further measures to support Irish business and to sustain our economic recovery.

As in our first Budget we have not raised income tax. We want to make work pay for families. We don’t want to add extra taxes onto jobs and investment which will be a step back in our path of national recovery.

Supporting small and medium Irish businesses who have a presence in every townland across the country is essential if we are to get Ireland working again. Therein lies the key to Ireland’s future prosperity.

The 10 point tax plan for small business is a central pillar of this year’s budget.

This Plan includes a series of measures that taken together will make a real difference to SMEs. New measures include:

A 25% increase in the threshold for VAT cash receipts basis accounting, to improve cashflow for SMEs. The threshold will be increased from €1million to €1.25million;

Doubling the amount of expenditure on R&D by SMEs eligible for tax credit, to support more innovation by businesses. The threshold has been increased from €100k to €200k;

Extending the Employment Investment and Incentive Scheme, which was due to run out in 2013, to 2020. This supports investment in businesses by providing tax relief of up to 41% on investments up to €10million in companies;

Measures to reduce the burden of tax compliance for start-ups and small businesses, including an extension of the 3-year Corporation Tax Relief scheme and moves to look at ways of reducing costs of compliance for micro businesses; and

An extension of the Foreign Earnings Deduction scheme, to support exporting companies putting “boots on the ground” in 8 more countries which will help our agricultural sector in particular to export more.

As we all know credit is the lifeblood of business and this is recognised in this Budget. We have provided for the delivery of a range of new and improved supports for companies in need of credit. The Government is using resources to leverage funding from the private sector to provide credit for all business sectors.

Among the new initiatives is a €700million seed and venture capital scheme. €175million exchequer funding is expected to leverage a further €525million in private sector funding. I expect over 100 innovative Irish companies will benefit, with thousands of jobs created and hundreds of millions of euros in additional exports expected.

An additional exchequer allocation of €25million under the Development Capital Scheme will now provide a total of €225million in funding to mid-sized indigenous firms, to target the development of a strong indigenous companies.

The National Pensions Reserve Fund is also developing a range of support funds for the SME sector, initially ranging in size from €100million to €400million, to provide equity, credit and recovery investment.

Another area where I see great potential for Irish business and especially the tourism sector is the extension and reform of the Irish film relief.

The decision to extend the Film Tax Relief Scheme to 2020 will put Ireland on the map and make us even more attractive for foreign film and TV productions.

I want to see Irish agencies proactively promoting Ireland in major production centres around the world. We have the talent, the support services, and a land and cityscape that should be attracting new business and productions.

Fairness

This Budget is fair because at its very heart is a plan to create new opportunities for jobs and income growth for struggling low- and middle-income families.

There is no doubt that this is a difficult budget, and it will impact on families across Ireland.

But it is as fair and equitable as possible.

We have ensured that those who can afford to contribute most will do so.

Primarily, we are supporting hard working families struggling to make ends meet by not increasing income taxes. We are providing an additional 6,000 after school childcare places to help hard pressed working families balance working and family life.

We are ensuring that everybody makes a contribution to the national effort by widening the tax base and introducing a property tax including a higher rate for houses worth over €1 million.

While it is true that this Government wants to encourage those on average incomes to save for pensions, we can no longer allow pensions of the scale previously accepted to be accumulated at the expense of taxpayers.

In this regard tax relief on pension contributions will only serve to subsidise pension schemes that deliver income of up to €60,000 per annum. Tax relief on pension contributions will continue at the marginal rate of tax and the Pension Levy announced as part of the Jobs Initiative will not be renewed after 2014.

While it will only contribute a modest amount to the total fiscal adjustment we have introduced new reforms to political pay, expenses and allowances. It was an overdue step to introduce vouched expenses for politicians. We have also ended the practice of severance payments for officeholders and introduced proper auditing of the Leaders Allowance following a cut of 10%. In the New Year I expect to appoint a referendum commission on a permanent basis. Next Autumn will see the people decide on the future of Seanad Éireann by referendum and consideration given to recommendations put forward by the Constitutional Convention.

Focus for economy in 2013

A Cheann Comhairle, this Budget is a building block in the transition to a new enterprise focused economy.

It will ensure we reduce our deficit towards a more sustainable level.

It has introduced a number of targeted measures to support business, job creation and growth.

We will do everything we can in 2013 to make sure that Government policies support job creation and growth.

The measures announced in this Budget are only the first steps in this effort.

Work is well advanced on our Action Plan for Jobs 2013 which will be published early in the New Year.

We will continue to work with our European partners to address banking debt issues.

Our Presidency of the Council of the European Union commences formally in January.

Conclusion

A Cheann Comhairle, I would like to acknowledge the severe and damaging impact on people of Ireland as a result of the economic crisis.

The scale of the cumulative budgetary adjustments to date – though necessary – has been difficult and painful.

Every day I speak to people who share their experiences of hardship, whether by losing a job or impacted by changes to valued public services.

My Government is committed to making sure that we do everything in our power to restore this country’s economic prosperity.

Just as I expect our country to emerge from our Troika programme next year, so too do I intend to put an end to austerity budgets and while this will not be easy it is achievable.

A Cheann Comhairle, we must not forget or neglect the many strengths of this country.

We have faced a very serious and destabilising economic crash, unprecedented in its scale.

We have done what has been necessary to do.

I see a bright future for this country of ours.

We have already seen many positive signs:

- renewed private sector job creation

- sustained and significant foreign investment

- strong exports

- restored access to international funding markets

I acknowledge that these developments may not yet translate into visible improvements at the local and community level.

We are on a difficult journey, but we are travelling with a sense of purpose and with a clear goal.

My vision of Ireland is one where those who are unemployed can find jobs.

Where rising incomes reward hard work.

Where the most vulnerable in our society are supported by reformed and reinvigorated public services.

Where we can grow old with dignity.

A Cheann Comhairle, this is a fair, equitable, and pro jobs budget.

We have set the country on the path to recovery.

We will get Ireland working again.

I commend this Budget to the House.