Competitiveness in the economy- Budget 2007
Posted on December 05, 2007 at 12:26 PM
A Ceann Comhairle
In recent years November has been one of the best months of the year for the Minister for Finance.
Today, of all days, will tell a different story.
The serious decline in the housing construction market clearly confirms
the continuing fall in exchequer receipts from taxes such as stamp duty.
The Exchequer figures for November show that total tax receipts are
almost €2 billion behind the target set out in last year's Budget.
And The Department of Finance had signalled last Friday that taxes
collected this year would be around €1.75 billion below target.
So what will today's Budget bring and what will the Minister's priorities
for the economy be for the year ahead?
With inflation currently running at 4.8%, among the highest in the EU, it
limits the scope for an expansive budget.
Today's Budget is very relevant to the FG Motion.
There is not a lot in the FG motion that I disagree with. The key issue of
competitiveness and rising labour costs are key drivers for any economic
outlook and today's budget will determine whether the calls within the
FG motion will bear fruit.
My colleague Deputy Penrose last night outlined some fundamental
points relating to the lack of investment in infrastructure and issues of public sector pay.
It is true that our infrastructural spending is well below par. There may
have been serious spending on inter-urban routes such as, between Cork
and Dublin, but there are still regional disparities which have not been
sorted out.How long does it take a train to get from Dublin to Sligo?
If a burst water pipe can turn Dublin's principal motorway into a car park
for eight hours, then what can we seriously expect from a government
that is lunging from one crisis to another?
There are secondary and non-national roads throughout this island that
are rarely travelled by Government Ministers and that imminent "back-
bencher" from South Kerry himself admitted that if there was a pot-hole
to be filled in the absence of the ceann Comhairle, he would look after it!!
Well, I ask you one question???? Should we be living on an island as prosperous as
this with even one pot-hole to our name in this day and age.
The fact that they exist at all is a testament to the lack of investment in
non-national roads throughout the country!!!
And, Broadband...
There are parts of North Cork where people are still dialling-up to access the Internet!!
Dialling up in 2007. What a joke!!!
Data published by the by the European Commission, shows that in 2007,
74% of households in the Netherlands have broadband access compared
with 31% in Ireland.
Who is responsible for ensuring that Ireland meets its goal of becoming a,
to use the government's own words, "world-class knowledge economy"
in just over five years.
How can we compete on a global scale if the roll-out of Broadband is at such a paltry level!!
The FG motion calls on the Government to take "necessary actions" on
Public Sector pay. It is difficult to comprehend just exactly this means.
The vast bulk of both public-sector and private sector workers are operating at a wage levels that keeps them and their family's heads just above the water-line.
1.5m people have salaries worth less than the €38,000. To survive on a
wage of 38,000 in today's terms is a difficult task.
Real people operate and survive within this bracket. But they are under
pressure within this society.
Their mortgages have increased. They are over borrowed to meet the
demands of day to day living; overworked dealing with the increasing
cost of living, overcharged for childcare and overstretched and stressed in trying to afford to buy a home.
Their average basket of food items is increasing at a rate of 4 to 5% per annum.
People on this income bracket can ill-afford to absorb such increases.
And yet they are the back-bone of this economy!!
Today the Minister will present both the usual budget of tax and social welfare changes.
The Minister must look at this income bracket and provide some measure
of relief to increase real income to offset the increasing cost of living in
this country.
Fianna Fáil made generous election promises in relation to health,
education and justice with more teachers, more guards and more consultants promised.
Today will tell whether the Minister intends to fulfil those promises.
There is a nervousness about Ireland's economic prospects, and much talk of a tight budget.
This motion largely addresses those concerns.
There is a school of thought that says we should not play politics with the economy.
I do not wish to score points. But I do wish to remind this Government
that their handling of the economy has a bearing on people's jobs and
their mortgages and how they provide for their families.
We, in supporting the spirit of this motion believe it is the role of an
opposition to contribute constructively to how to maintain economic
prosperity and further economic development.
There are serious issues about our competitiveness and we have to face
up to that in a serious way.
But there is also a lot that is positive about the Irish economy.
In that respect, as a nation we need to focus on opportunities.
The Economic Review and Outlook produced by the Department of
Finance last month predicted that the economy will grow by about 3% next year.
It is not what we would want but it is growth and we should acknowledge that!
Let's focus instead on the possibilities, and what we can achieve.
Growth in the economy is no longer driven by exports of goods. However growth of services exports is very healthy.
We need to continue the focus on sectors such as sales and R&D, and high-value traded services.
We may not be able to make things in the future, owing to competition from the east
But there is no reason why we can't design and sell things ourselves.
The way to enhance our competitiveness will be to embrace innovation
and seek a competitive advantage in Intellectual Property and Education.
We need to ensure, not just that we invest in research in our universities,
but that the knowledge being generated is turned into commercial
activities and young indigenous companies.
Over the last twenty years, we have relied too much on the Construction industry.
This was a low-risk activity. We need to move to high-risk investment.
A recent review of investment in Commercial property oversees stated
that there was an outlay of €8.21 billion. That is expected to increase to
between €9 billion and €9.5 billion in 2008.
The Government needs to works on trying to ensure that incentives are
provided to keep investment at home on our own island!!
We need to get better at ensuring that technology, entrepreneurs and
venture capital come together in the same place and time.
We must look to indigenous companies that will provide high-value
added high-paying jobs, and help to drive growth in other sectors.
The agricultural sector is a mainstay of our economy. Food and Drinks
exports account for over €8 billion euro. We must also look to our rural economy and the agri-food sector.
We ignore the potential of the rural economy at our peril.
And we must continue to ensure at the same time that we can attract
foreign investment. The picture here is less rosy than it was, but there is
still €171 billion in foreign investment in this country. We need to retain
it, and attract more.
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