Statement on the Budget by Minister of State Jan O’Sullivan T.D.

Statement on the Budget by Minister of State Jan O’Sullivan T.D.

Dáil Eireann, 7 December 2011

The Irish people have given the Government a strong mandate to rebuild our economy and our society, to restore confidence in Ireland at home and abroad, and to support the protection and the creation of jobs. As Minister of State for Trade and Development, these priorities are central to my work.  And they are the clear focus of the measures announced in this Budget.

No-one would wish to have to take the difficult decisions required in this Budget, across all areas of Government policy.  But we have a duty to the Irish people to take the necessary action, to do so with the greatest degree of fairness possible, and, in the process, to ensure that the most vulnerable people are protected.  I believe that we have managed to strike this balance.

The promotion of Irish exports and the strengthening of our international aid programme are central elements of the Government’s foreign policy approach.  From the start, the Tánaiste and I have taken an active role in promoting our economic and trade interests.  We are re-engaging actively with our international partners and opening up new opportunities for Ireland on the world stage.  In October, the Tánaiste visited Seoul for the annual meeting of the Asia Pacific Ireland Business Forum, and had a series of economic and trade-related meetings in Korea and in Japan.  Last month, he led the Irish delegation to our Joint Economic Commission with the Russian Federation in Moscow.  I have led Enterprise Ireland trade missions to Saudi Arabia, Qatar and South Africa, as well as a trade event in London. 

The Tánaiste has visited our aid programme in Tanzania, and co-hosted two major international meetings on global hunger and undernutrition with US Secretary of State Hilary Clinton – one in Tanzania and another at the UN General Assembly in New York in September.  I have visited our aid programmes in Malawi and in Mozambique and have just returned from a visit to Vietnam, focused on development and on building trade links.  I also visited Busan in Korea for the major international meeting on aid effectiveness.

There is no doubt that Ireland’s international reputation has suffered in recent years.  But one area in which it remains stronger than ever is our contribution to international development and the fight against global poverty and hunger.  There is very strong cross-party support for our aid programme, which reflects both the true values of the Irish people, and our sense of our long term interests globally.  Ireland’s aid programme is recognised internationally as one of the very best in the world.  It is strongly focused on the fight against global poverty and hunger, especially in the poorest countries of sub-Saharan Africa.  It is recognised by the OECD as “cutting edge” and a champion in making aid more effective.  Last month, in the run-up to the Busan conference on aid effectiveness, the Centre for Global Development in Washington rated our programme as one of the three most effective in the world.

Over recent years, in response to the economic crisis, funding for the aid programme has been reduced by about a third.  The Programme for Government contains a clear commitment to supporting the aid programme, and to the UN target of providing 0.7% of GNP for Official Development Assistance.  Against the most difficult of backgrounds, we have acted on that commitment in this Budget.  For 2012, the Government will provide a total of €639 million for ODA, which, on current projections, will represent over 0.5% of GNP.

There has been some comment on the extent of the reduction in ODA which is involved.  The total reduction on the projected outturn for 2011 is €20 million – a reduction of €10 million in funding for Vote 27 (International Cooperation) of the Department of Foreign Affairs and Trade and an estimated fall of €10 million in ODA provided from other sources, notably as a result of an expected lower allocation of Ireland’s share of the EU Development Cooperation Budget.

This overall allocation represents a strong, positive statement of our continuing commitment to the world’s poorest people and communities.  And of Ireland’s determination to build on many years of voluntary effort, and of the aid programme, to end extreme poverty and develop more mature links with countries in Africa and elsewhere which have not until recently been seen as potential political and trading partners.  We have launched a new Africa Strategy for the Department of Foreign Affairs and Trade, recognising that development is about more than just providing aid.  It also involves empowering people to drive their own development, and building mutually beneficial economic and trading links.  In Africa, for instance, the Economist has predicted that over the next four years, four of our priority countries, where extreme poverty and inequality persist, will also be among the world’s fasted growing economies, averaging GDP growth of some 7%.  These are Ethiopia, Mozambique, Tanzania and Zambia.

In Vietnam, I saw how Ireland’s development programme is responding to the remarkable ongoing transition of that country from conflict and poverty to lower middle income status.  Ireland is providing vital assistance to poor and marginalised rural and urban communities, while at the same time assisting in private sector development, and, at the request of the Vietnamese Government, sharing our own development experience.  In Vietnam also, there is also strong cooperation between Irish Aid in the Department of Foreign Affairs and Trade and Enterprise Ireland, which is highlighting important economic opportunities, especially in the areas of IT and education.

Over the next seven months, we will be reviewing the 2006 White Paper on Irish Aid in order to set priorities for the aid programme for the coming years.  We will engage with members of the Oireachtas, with the public, with Ireland’s development NGOs and with our partners in the developing world.  I believe the review will confirm our fundamental focus on poverty and hunger and on putting policy into practice with the poor communities where we work, especially in Africa.  I also believe that it will help strengthen public support for the aid programme, as the right thing for Ireland to do in the world, in the interests of the world’s poor, but also of the Irish people.

Ireland’s economic recovery is export-led, and it is essential that we make a concerted, system-wide effort to maximise the opportunities in the global marketplace.  The Department of Foreign Affairs and Trade now has a key role in implementing the Government’s integrated strategy for the promotion of overseas trade, tourism and investment.  The Tánaiste has established the Export Trade Council, which he chairs, bringing together the relevant Ministers and State Agencies, to drive this strategy forward, with the private sector participating in its work. One example of this work is that the Council is examining progress in realigning our visa regime with our economic priorities.  This will build on the visa waiver programme announced in June and represents the kind of joint-up action required of Government if we are to meet the challenges of export-led recovery.

The transfer of certain trade promotion functions to the Department of  Foreign Affairs and Trade has sharpened the focus of our Embassy network in the promotion of Ireland’s economic and trading interests abroad.  Our Embassies are taking a leading role in the promotion of a coordinated “Team Ireland” approach with the State Agencies in local markets and in the management and operation of the Global Irish Network overseas.

Arrangements for a programme of trade missions in 2012 will take account of the reality that the balance in the global economy is shifting markedly and that emerging economies are assuming ever-greater importance.  They currently account for a relatively small proportion of Ireland’s exports, but their share is increasing rapidly.

Budget 2012 prioritises the promotion of international trade.  It introduces a Foreign Earnings Deduction to support our export drive by aiding companies seeking to expand into emerging markets.  This targeted deduction will apply where an individual spending 60 days a year developing markets for Ireland in Brazil, Russia, India, China and South Africa – the so-called BRICS countries – and the Minister for Finance will be providing details of these measures in the Finance Bill.

Small and medium enterprises are making, and will make, a vital contribution to our export performance and our economic recovery.  They will be eligible to avail of the new Foreign Earnings Deduction when they expand into the BRICS markets.  Measures such as this will provide a stimulus for SMEs, and I would encourage them to take full advantage of the opportunities now on offer.

This Budget emphasises our determination to build growth and employment, to restore confidence and to rebuild Ireland’s international reputation.  I know from my discussions with our international partners that that sense of determination is increasingly understood and appreciated internationally.  I commend the Budget to the House.

7th December 2011