Together we have started to turn the tide to recovery
The Government is dedicated to working with the people to build on the progress achieved in the last two years
Two years ago, Fine Gael and the Labour Party were given a clear mandate by the Irish people – to take the necessary decisions to achieve economic recovery and to get Ireland working again.
While I acknowledge that we still have a long way to go, it is clear Ireland is headed in the right direction and there is light at the end of this tunnel. Our international integrity and respect for our country have been restored and there is now a clear incentive to build on the progress made.
Two years ago, the economy was in freefall, jobs were being lost by the thousand, our banking system was on the brink and Ireland’s reputation was in tatters. We set out our clear plan for economic recovery and have been working hard to deliver it. Working in partnership with the Irish people, we brought a new stability to the economy and to our public finances.
That plan is working.
The sacrifices of the Irish people are beginning to pay dividends. Confidence is returning. Foreign direct investment by firms is at a 10-year high. The economy has returned to modest growth for two years running. Irish exports are at all-time highs. The flow of investments in new jobs by multinational companies is strong. We have seen the first annual increase in employment since 2008. Long-term Government bond yields are now at less than 4 per cent, down from a peak of more than 14 per cent.
The new stability and confidence have been hard won. To get interest rates down and attract more investment into the economy, we have had to rebuild our international reputation for responsible financial management. Ninety per cent of the fiscal consolidation is complete and borrowing is on target to fall to below 3 per cent of GDP by 2015.
We renegotiated the interest rates on the bailout loans to reduce the long-run cost by €9 billion. By getting rid of the promissory notes and by liquidating Anglo Irish Bank and Irish Nationwide, we have cut our borrowing requirements by €20 billion over the next 10 years.
Other banks have been recapitalised and restructured, with new boards and management teams. The bank guarantee has been ended, some stakes in the banks have been sold, deposits are flowing back and emergency central bank funding is no longer needed.
At the core of the Government’s strategy is the creation of jobs for our people. While the unemployment problem has stabilised, I acknowledge that far too many people cannot find work, or have had to leave the country to get a job. Our aim is to make Ireland, by 2016, the best small country in the world in which to do business and to create jobs.
We protected our 12.5 per cent rate of corporate tax, and cut employers’ PRSI. We have driven implementation of the Action Plan for Jobs designed to make it easier to protect and create jobs, and have recently published a further 330 actions for 2013, including a new subsidy for employers who hire people who have been long-term unemployed.
Banks have been set ambitious lending targets and the Government has put in place a loan guarantee system and micro- finance fund for small businesses that would not otherwise have access to credit. We announced a €2.25 billion stimulus in job-rich public infrastructure projects.
This strategy has started to turn the tide. From a position where Ireland lost 250,000 private sector jobs in the three years before we took office, new figures last week have shown that private sector employment has grown on average by 1,000 jobs a month in the past 15 months.
We have also taken actions to protect the most vulnerable. We reversed Fianna Fáil’s cut in the minimum wage to make sure people are better off in a job than on welfare. We kept our promise to protect primary weekly social welfare rates. We enacted new personal insolvency legislation to help families in mortgage arrears, and other distressed borrowers, reach a fair settlement with their lenders while staying in the family home. We excluded 330,000 of the lowest paid from the universal social charge.
We are also reforming the political system and public service to make it more effective and efficient, and to make sure politicians and top public servants share in the sacrifices being made by the entire country. We have cut politicians’ pay and expenses. The number of TDs will be reduced at the next election, the Dáil has increased its working days by 30 per cent and the people will have their say on the abolition of the Seanad later this year.
We are overhauling the local government system, including cutting the number of councillors by more than a third. The Constitutional Convention has been established to look at other changes needed to modernise our system of governance and rights.
Despite the necessary budget cuts, we are protecting key services, including the health service, by improving productivity, cutting costs and squeezing out waste. Approval of the new public service agreement by union members will be an important step in achieving this objective. Twenty-one State bodies have been fully rationalised and many others are on track.
The economic recovery cannot be allowed to bypass those families most hurt by the collapse. In the year ahead a number of priorities stand out.
We will do more to help people back to work, including through further reforms to the welfare system to activate jobless households and by establishing NewERA and the Strategic Investment Fund on a statutory basis to invest €6 billion in strategic sectors.
We are working closely with the banks and the financial regulator to accelerate the work-out of the mortgage crisis. We will exit the IMF-EU programme, while sticking firmly to a path of reducing borrowing and debt to sustainable levels. This is essential if investor confidence is to be copperfastened.
This year will see the introduction of a local property tax to fund local services. This is a fair and jobs-friendly way to raise revenue needed to close the Government deficit because, unlike income tax, it does not penalise work and effort.
Throughout this crisis, the patience and support of the Irish people have been instrumental in turning our country around. As I travel the country I am always enthused by the energy and commitment of the communities and businesses I encounter to move out of the crisis we inherited.
I am committed to continuing to work in partnership with the people as we build on the progress we have achieved in the past two years.
Together we will get Ireland working again.
Enda Kenny is Taoiseach