Ladies and Gentlemen,
I am delighted to be here with you this evening to celebrate the 50th anniversary of IBI Corporate Finance.
Established in 1966, IBI was born at a time when the Irish State choose to move away from its failing protectionist economic policy. Our young State was beginning to reach out, to work with others and come to realise the benefits of free trade and foreign investment.
IBI helped those early Irish industrial leaders like Smurfit and CRH to raise capital and take advantage of new opportunities further afield.
Since then the transformation of Irish society and our economy has been extensive to say the least. IBI is to be commended for its services to Irish business across these transformative decades.
I know that over the years IBI has been an important entity in some of Ireland’s most important business transactions. IBI’s business embraced the open nature of the Irish economy with more than 75% of the transactions it advised having an international element.
I wish to use this opportunity at the celebration of IBI’s contribution to Ireland’s economic past to set out this Government’s support for maintaining an open economy, the upcoming challenges we face, and our response in Budget 2017.
An Open Economy Supporting Jobs & Investment
It is fair to say that the recent global economic upheaval has led to very difficult times in many countries.
For some it has led to the questioning of our economic model and whether other paths should be taken. For others it has seen a dangerous rise of populist political movements taking advantage of a wave of public disenchantment for their own narrow and ideological goals.
Around Europe, and the world, many countries are struggling to maintain a cohesive political centre.
The model of free trade and breaking down borders between peoples, goods and services is under attack like no other time in recent memory.
I can say for certain that Ireland’s decision to open itself to the world in the mid part of the last century was responsible for the unprecedented transformation of our society and our economy.
While we have still have many social problems to solve and too many people out of work, we have never witnessed a mass improvement in poverty levels, education, health, equality and employment in the history of this island such as what we experienced in the past 50 years. Our job in Government is to make sure no-one gets left behind and to continue to improve the situation for all our people.
I am proud that Ireland is an open, modern and European society. Our people are proud to be Irish but understand what it means to be part of a European and global community.
In the same way many foreign companies have established major operations in Ireland, Irish companies have also spread across the world employing hundreds of thousands of people at home and abroad.
At a time when it’s becoming popular to blame free trade for all our the ills in our economy, I believe we need to redouble our efforts to break down barriers and win back the support of those critics by creating more high quality jobs, and use a stronger economy to provide world class services to our people.
In a world where shouting someone down is starting to replace reasoned debate or where online conspiracy theories displace fact we need to stand up for what we believe in and bring people with us.
The upcoming EU-Canada Comprehensive Economic and Trade Agreement, known as CETA, will be a major milestone for free trade.
This Government fully supports the provisional application of CETA at the earliest opportunity. When fully in force it will remove over 99% of tariffs between the EU and Canada. CETA covers virtually every aspect of economic activity and will offer significant opportunities for Irish enterprise.
The CETA opens up public procurement markets in the Canadian provinces giving Irish firms increased access to Canadian public sector purchasing. Ireland also gains unlimited tariff free access for most of our important food exports. Irish firms will also benefit from the recognition of product standards and certification, saving on ‘double testing’ on both sides of the Atlantic. In addition, Ireland successfully campaigned for a low beef import quota from Canada to the EU thereby safeguarding our important EU market in this area.
With a long history of cultural, economic and political ties, Ireland’s enterprises are particularly well placed to take up opportunities to trade more easily with Canada. The opportunities presented by this CETA will be especially valuable for Irish SMEs, given that trade barriers tend to disproportionately burden smaller firms, which have fewer resources to overcome them than larger firms
For this reason the Government at its meeting this week gave its approval for the signature of CETA and, following the completion of other European discussions, to agree to the provisional application of CETA on behalf of the EU. As it is a mixed trade agreement it will require national ratification in due course. I would hope that all responsible parties in Ireland who want to see a positive future for our country will support the agreement.
The outlook for the ongoing TTIP -- or Transatlantic Trade and Investment Partnership -- negotiations is clearly more difficult, including against the backdrop of the US electoral cycle.
However we remain firmly in favour of pressing ahead to make as much progress as possible this year, consistent with the negotiating mandate settled under the Irish Presidency in 2013. Like the trade agreement with Canada, TTIP provides an opportunity to shape the trade rules of the 21st century while continuing to defend our values in public services, labour rights and environmental protection.
Brexit
As an open economy the recent UK vote to leave the EU is of course a huge concern. It presents major challenges for Ireland with strong economic ties to the UK, not to mention sharing a land border with our closest neighbour.
As Prime Minister May has now given the deadline of March 2017 for triggering Article 50, we are intensifying the communication of our priorities as part of a 27-member-state European Union, highlighting Ireland’s unique position in terms of its relationship with the UK.
Yesterday I had the opportunity to meet with the European Commission's Chief Brexit Negotiator Michel Barnier. During our discussions, I took the opportunity to emphasise Ireland's unique set of priorities with regard to Brexit, and the many complex issues relating to Northern Ireland, the Common Travel Area and the depth of our economic and trade relationship with the UK. We will be working closely with the Commission team in the months ahead, as we all address the particular challenges posed by Brexit.
The European Council, the Heads of Government of the 27, will ultimately make the political decisions arising from the Commissions deliberations.
Budget 2017 & Brexit
The Budget this week was the first budget since the UK decision was taken.
While the Government is continuing to revise and implement its Brexit response plan in light of emerging positions, we are taking steps in this Budget to ensure that the country, its businesses and its people are better equipped to deal with what lies ahead.
Enterprise Ireland, the IDA and Bórd Bia will continue to work closely with our SMEs and other businesses to help them manage the many practical implications.
We are taking action by putting extra resources and new staff into the enterprise agencies based in Dublin, the UK and in other target world markets. They will support businesses to maintain sales, to develop new sales opportunities by diversifying markets and to attract overseas investment in response to Brexit.
The Government has been implementing a strategy to reduce overall reliance on the UK and to support companies expanding into new international markets. Over 40% of Enterprise Ireland client companies are now exporting to more than five countries, a clear indication of progress but more still needs to be done.
I intend to ensure Irish exporters continue to have the support to help them both deepen their presence in the UK and diversify globally.
The Government is aware of the need to adjust existing schemes and to introduce new schemes to help Irish businesses at a difficult and uncertain time. The Minister for Jobs, Enterprise and Innovation and the Minister for Finance are working to deliver on new these schemes related to risk sharing in the coming weeks.
To help farmers deal with the fallout of Brexit the Minister for Agriculture, Food and the Marine has announced a new, highly flexible, low interest loan fund of €150 million. It will be available to livestock, tillage and horticulture farmers. These loans will enable farmers to improve the management of their cash flow and reduce the cost of their short term borrowings.
In response to Brexit we recognise that competition for new investment will be very strong and as such we have to continue to be very competitive and attractive for new business.
Reducing the high rates of personal income taxes has been identified as essential to make work pay for all workers and to attract home skilled emigrants.
Budget 2017 is the next step in a now three-year process of reducing income taxes, with a particular focus on alleviating the tax burden for low and middle-income earners.
Since January 1st we reduced marginal tax rate on middle income workers to 49.5%, the first time since 2009 that this rate has fallen below 50%. This marginal rate will now fall again from January 2017 to 49%, as the 5.5% USC rate is being cut again to 5%.
The Programme for Government commits to the continued phasing out of the emergency USC tax in the lifetime of this Government in order to make work pay.
We also took another step in improving the tax regime for approximately 150,000 self employed taxpayers by increasing the Earned Income Credit. In line with the Programme for Government we will finish the job of matching this credit with the PAYE credit by 2018.
As part of our goal to make Ireland more attractive to entrepreneurs and starts ups we are also reducing the capital gains tax rate down to 10% that will apply to the disposal in whole or in part of a business up to an overall limit of €1 million in chargeable gains. The relief will represent a simplified and upfront benefit for individuals who propose to sell their business and start new enterprise challenges.
We are also maintaining the Start Your Own Business relief up to end 2018, enhancing the Foreign Earnings Deduction relief and extending the Special Assignee Relief Programme to end 2020.
The Government has also decided to maintain the special reduced VAT rate for the tourism sector in order to help a vital source of local jobs in the post-Brexit world.
More generally the Budget this week reflected the issues that are most important to our people and the future of our country. It won’t jeopardise our recent economic progress by taking reckless risks. We have to ensure that the right decisions are taken so that the benefits of a strong economy and a fair society can be felt by everyone. This approach was not without its populist critics but as Minister for Public Expenditure Paschal Donohoe pointed out it is a Budget that demonstrated that the middle ground of politics can cooperate and deliver for Ireland at a time of international uncertainty.
Conclusion
For these reasons I am optimistic that Ireland’s best days are still ahead.
And I’ve no doubt that IBI will continue to play an important role in our economy for the next 50 years.