Address by the Tánaiste Ms. Mary Coughlan, Dáil Éireann – Motion of Confidence

Policies

The policies being pursued by this Government are, I believe, the correct policies at a time of difficult policy choices. They are clearly not policies designed for short-term political gain. They are however policies that, in the medium to long-term, will result in Ireland’s course being righted. I believe that the public will recognise this, and, having been on the doorsteps over recent week, I know that many do already understand. However, if this Government has had any failing in recent months, it is a failing to communicate in simple terms to the wider public the steps we are taking, their rationale and the path on which they are taking us. In that context, while I consider today’s motion a distraction from the serious work required by the House, I do welcome the opportunity afforded by this motion to put on the record my work, and the work of this Government, to protect and sustain jobs, to assist those in search of work or in need of training and to sharpen Ireland’s job creation and entrepreneurial offering.

I also welcome the opportunity afforded by this motion to set out some of my work, and that of this Government, to support the vital SME sector, to get credit flowing to business, to get business paid quicker by government, to reform the public procurement process, and to support the expansion of Ireland’s green economy.

I only regret that I do not have the time to set out my work on many other areas, such as business regulation, competitiveness, the knowledge economy, workers’ rights, competition and consumer law.

Jobs Goal

All of these individual actions, together with many more that fall within the remit of my Department, are ultimately aimed at job retention and job creation. It is the singular goal behind my work and behind the work of this Government, as it is only through employment and enterprise and the income that it generates that we can fund so much else that this Government wants to achieve.

Actions

I want entrepreneurs, businesses, employees and those seeking work to know that this is my priority. I want them to know that I have listened to their concerns and that I have acted on them. As a result, over past months we have had initiatives such as:

• the Enterprise Stabilisation Fund to help protect jobs in our exporting companies hit by current difficulties;

• due diligence underway on a scheme for Export Credit Insurance to further assist our exporting companies;

• a Code of Conduct for Business Lending to SMEs enacted, so that our SMEs know where they stand in relation to the banks;

• a Credit Supply Clearing Group established to tackle the credit supply issue, establish the facts and take on the spin and the myths;

• a commitment by central government to pay its debts to business within 15 rather than 30 days;

• a revamp underway of our public procurement policy to make it more SME friendly;

• a Companies Law (Amendment) Act to toughen our company law regime against potential abuse;

• new tax changes to support job creation through the development of intellectual property assets in Ireland;

• an unprecedented level of training and activation measures put in place to assist those seeking employment;

• new and innovative programmes established to keep people in jobs deemed vulnerable and to get graduates work experience;

• the establishment of a high level group on Green Enterprise; and

• new FÁS courses to train people for jobs in the green economy;

• among many others.

Problem Sector

We have also not been slow to act and engage on particular problem cases, such as:

• with the loss of jobs at DELL in Limerick, where we have established the Mid West Region Task Force and are ready to submit our application for the European Globalisation Fund;

• at Waterford Crystal where we worked hard to find a buyer and salvage redundancy for the workers’; and

• at SR Technics, where we intervened to ensure that a skilled expertise is not lost to Dublin.

Of course, there are many other lesser-profile cases where we have also engaged to save jobs, support the resolution of problems and protect viable enterprises, but this work often, and often necessarily, goes unspoken of.

Finances and Banking

All of this work is being undertaken at a time of unprecedented challenges for Ireland and our economy. We all know in this House that stabilising our public finances and resolving the problems in our banking system is key to our economic recovery. While we have complete incoherence on the opposition benches as to how both these challenges would be met by an opposition administration, the Government have forged ahead and taken necessary decisions.

Without decisive corrective action, our public finances, already under strain, would quickly have reached unsustainable levels. A combination of taxation increases, expenditure reductions and efficiency gains were necessary and had to be put into place. More will also have to follow. Implementing these measures will not be without pain, but in the medium to long term, these, together with cyclical improvements in the economy will restore the public finances below the required 3% of GDP and protect the long term viability of our economy.

Credit Supply

Difficulties in the banking sector are also being addressed through a series of targeted responses which include:-

• guarantee of certain liabilities;

• nationalisation of Anglo Irish Bank;

• a Recapitalisation Programme;

• the proposed establishment of NAMA; and

• improvements in the regulatory regime.

Again, incoherence on the opposition benches leaves the public without any comprehension of a likely alternative to these decisive actions by this Government. Contrary to popular misconception, the Government’s measures are not about the shoring up of profits for banks and bankers. They are about maintaining a properly functioning and well regulated banking infrastructure, without which confidence in and the credibility of this country, as a place in which to invest and do business, would be lost together with tens of thousands of jobs. Opposition proposals risk the alienation of foreign direct investment and the international credit markets, ranging from the Icelandic extreme of nationalising our banking sector from Labour, to the creation of a zombie banking sector and their ultimate liquidation by Fine Gael.

The goal of this Government is to get credit flowing to viable businesses again. A further initiative in this regard is my decision to establish a Credit Supply Clearing Group. This Group will identify patterns of events where the flow of credit to viable businesses appears to be blocked and will seek to identify credit supply solutions relating to these patterns. Representation on the Group includes the key banks, business organisations and State agencies as well as Departmental officials.

The Banking sector is the recipient of substantial State support not for its own benefit, but for the benefit of the wider economy. I expect the Banking Sector to behave responsibly and to play a constructive role in providing credit to viable businesses.

Payments

As further support to small business, I recently introduced formal arrangements to reduce the payment period by central Government Departments to their business suppliers from 30 to 15 days. Departments have been encouraged to give priority to processing their payments and will report on their progress in complying. The commitment will have effect in respect of all valid invoives received on or after 15 June 2009. This measure should help ease cash flow difficulties for SMEs doing business with central Departments.

I am also looking at what regulatory changes might be required in the area of company law to address concerns that have recently come to light in the banking sector.

ODCE

On foot of recent revelations about directors’ loans at Anglo Irish Bank, I asked the Director of Corporate Enforcement (ODCE) whether he considered any amendments were necessary to the Companies Acts. His proposals are captured in the Companies (Amendment) Bill, which is currently at Report stage in the Seanad.

In relation to the Director’s ongoing investigation of certain activities at Anglo Irish Bank Corporation Ltd, I am providing additional staff to the Director from my Department for this complex investigation. The Director has said that the investigation is progressing satisfactorily and that his Office is working constructively with the Bank, the Financial Regulator and other relevant parties in this matter.

Enterprise Stabilisation Fund

The new Enterprise Stabilisation Fund is further evidence of this Government’s commitment to supporting business in the current challenging environment. The Fund is targeted at vulnerable internationally trading companies to help them survive the current global downturn by supporting their drive to reduce costs and gain sales in overseas markets and to sustain employment.   Sustainable economic recovery will be driven by enterprises focused on increasing their exports of innovative products and services in global markets.

Since the launch of the Fund in April 2009, there have been discussions with a wide range of companies to consider if they are interested in developing business plans and in applying for the Fund. Initial feedback from the companies is that Enterprise Stabilisation funding will enable them to continue to operate and sustain and build their businesses and ultimately grow in a very difficult operating environment.

Companies from all sectors are seeking support with the main issues of concern being the Sterling exchange rate, loss of sales, funding from the banking sector, competitiveness, construction industry and energy prices.

Several hundred companies have been engaging with Enterprise Ireland regarding the Fund, of which 60 companies are now being intensively worked on to develop definitive project applications to the Enterprise Stabilisation Fund with a view to releasing such funding as soon as practicable.

Export Credit Insurance

Due to a degree of Market Failure for some companies seeking Export Credit Insurance, I asked Forfás and Enterprise Ireland, working with my Department, to undertake an analysis of the issue. An additional factor is the fact that two other EU Member States (Luxembourg and Denmark) have recently taken steps to introduce short-term State-backed export credit insurance schemes.

The Forfás research established that the difficulties in obtaining commercial export credit insurance are closely related to the wider problem of credit availability for business generally. This latter issue is being pursued as part of the Review of Bank Lending, being undertaken (with assistance from Mazars consultants) as part of the banks recapitalisation programme, and the issue of trade finance is also covered by the terms of reference.

In addition, the new Credit Supply Clearing Group that I referred to earlier will identify patterns where the flow of credit to viable projects appears to be blocked, should help to address issues around trade finance and working capital, which are all part of the problem.

Following the Forfás research, which assessed the extent of the problem and associated issues, we have decided to initiate an accelerated tendering process to carry out forensic due diligence on the credit insurance market in Ireland. This tendering process is already underway and the due diligence will include an in-depth examination of the client databases of the main credit insurance providers operating in Ireland and will assess the extent and nature of market failure.

The due diligence will also assess the costs and impacts of possible intervention of the State in this area. I would like to stress that while this is a significant and necessary step in the process, it is not, of itself, a decision to introduce a scheme.

On completion of due diligence, the matter will be considered furher. Issues such as default risk, exchequer exposure to costs, value for money and the impact of any such scheme on business will be part of the exercise in hand, and will inform any future Government decision on whether to introduce a State-backed top-up export credit insurance scheme.

Green Enterprise

Ireland has a significant opportunity to secure a central position in the global environmental goods and services sector and has a growing company base to realise the same. The sector is expected to grow due to a number of factors including: increasing waste generation; increasing cost of waste management; legal and environmental requirements; increasing demand for raw materials; and resource depletion.

We are working hard at creating the right conditions for the development of a new wave of entrepreneurial activity and employment opportunity in this growth sector. Unlike the proposals from across the House, we are working with the private sector entrepreneurs to achieve this. That is why I have established the High Level Action Group on Green Enterprise under the chairmanship of Joe Harford tasked with advising on the right mix of policy measures necessary to ensure the development of a viable and sustainable green economy in Ireland. There is huge potential for the green economy to help Ireland meet its economic and environmental challenges. The latest estimates put the size of the global environmental goods and services market as exceeding €950 billion by 2010. This is a market from which Ireland must take a significant share and we can only achieve this by working closely with those enetreprenures at the cuttting edge. We do not want to create state run monoliths, as proposed by the party opposite, in such a vibrant sector, which would crowd out private sector ingenuity, create deadweight and displace private sector investment to other jurisdictions. What we want to achieve is a comprehensive set of intutative and flexible policy measures and supports that are responsive to the needs of a sector that has the potential to create much employment.

Training and Activation

One of this Government’s key priorities is to respond to the challenge of the rapidly increasing unemployment levels. The Government are determined to provide those who are unemployed with the necessary support services and training to enable them get back into employment as soon as possible.

By providing these individuals with the opportunities to improve their skills and competencies we are not only increasing their employability but we are also improving the skills level of our entire labour force, which will benefit us all in the years ahead.

Since the end of last year the Government has taken a variety of actions to help those who are unemployed back to work. For instance in recent months we have doubled the capacity in the job search support, training and work experience programmes.

In particular, the capacity of the job search supports system provided by FÁS Employment Services and the partnership-based Local Employment Service has been doubled to 150,000 places per year. As well as this the number of people who can be offered training places under the auspices of the Department of Enterprise, Trade and Employment has been doubled to 128,000 places.

This includes a quadrupling to 92,000 places in short training courses, which are occupation-specific and will give individuals specific skills so they can compete for specific job vacancies.

In addition, I have launched new initiatives such as the Work Placement Programme, which aims to provide participants with six months work experience and the Short Time Training Programme, which trains people who are on short time working. In both cases, participants are allowed to retain their social welfare allowances while participating in these programmes. We are also working, in consultation with the social partners, on proposals to promote job retention and aim to implement increased supports in this area.

The Government is continuing to explore all possible initiatives and measures that will further increase employment opportunities and enhance the provision of training and education activation places.

I think it is clear from the range of initiatives identified above that this Government has been proactive and positive in addressing the concerns of buisiness as it seeks to weather the current turbulence in the global economy.

Smart Economy

Last December, in response to the much more challenging economic environment, the Government introduced a Framework for Sustainable Economic Renewal, called "Building Ireland's Smart Economy".  This document sets out a clear roadmap for Ireland's move back to economic growth and prosperity, with investment focused on those areas where we can build on our existing strengths, address weaknesses and make ourselves ready to grasp the opportunities when the inevitable upturn in the global economy begins. The "Framework for Sustainable Economic Renewal" includes measures to secure the enterprise economy and enhance competitiveness; address innovation, environment, energy and infrastructure issues, as well as the pursuit of greater efficiency and effectiveness in public services and regulation. Our past success has been built on our agility as a small open economy to trade our way to economic success our policies are directed at assisting enterprises to be primed to take advantage of renewed growth among our main trading partners including Britain, Europe, the US and Asia.

Conclusion

Ceann Chomhairle, the World Competitiveness Yearbook 2009, out of 57 countries ranks Ireland:

• 1st for real corporate taxes,

• 1st for investment incentives,

• 1st for foreign investor freedom

• 1st for skilled labour,

• 3rd for flexibility and adaptability of people, and

• 4th for labour productivity.

Let us not forget these fundamental strengths. This Government is building on these strengths and is committed to assisting enterprise and workers navigate their way through the current global economic downturn:

• We are continuing to support the enterprise sector through prudent and strategically focussed investment strategies;

• We are committed to a central and strategic focus in support of business and in releasing the talent and potential of our people.

• Supporting enterprise, innovation and research and development will see invest over €500 million this year through my own vote. 

• We continue to invest in our people to ensure that we have the skills and knowledge to support the vision set out in our Programme for Sustainable Economic Renewal.  In particular, we are investing over €1 billion of my budget to support a range of labour force measures which will assist those who have lost their jobs.

• We have launched an Enterprise Stabilisation Fund with an additional funding of €100 million to support existing enterprises through their current difficulties.

These factors and the policies being pursued by this Government are positioning us for a robust recovery when the upturn comes. Ireland will, under this Government’s leadership, again become one of the most competitive and successful open economies in the world, creating many new jobs for our people.

This is the goal of this Government and it is a goal to which we remain robustly committed for the months and years ahead.

Thank you.

ENDS/ETE2057