Good morning everyone.
It is a pleasure to be here at the National Economic Dialogue once again.
I would like to thank Minister Donohoe, Minister McGrath and their officials for their work organising the Dialogue.
And many thanks to our Chair, Professor Alan Barrett, for taking on the responsibility once again, as he has done so ably over the past few years.
Cuireann an tIdirphlé Eacnamaíoch Náisiúnta príomhfhóram ar fáil dúinn chun teacht le chéile agus na dúshláin eacnamaíocha atá amach romhainn, na roghanna atá ann ina leith agus mar is féidir linn bogadh chun cinn a phlé.
Inniu, tá na saincheisteanna sin chomh tábhachtach céanna is a bhí riamh agus tá an-áthas orm go bhfuil an oiread díbh ag glacadh páirte, ag déanamh ionadaíocht ar an oiread codanna éagsúla den tsochaí, agus ag saibhriú ár gcuid cainteanna le bhur gcuid tuairimí agus eispéiris éagsúla.
The story of the last few years has been one of great change and disruption. Brexit, the COVID-19 Pandemic and now the re-emergence of war in Europe have been major catalysts for change, presenting new challenges and opportunities for our economy and society.
Today I want to talk to you about what this means for the path ahead and how we can navigate that path together.
Developments in the past year
I would like to begin by first looking at the journey we have travelled since we met, virtually, in June last year, and the progress we have made.
COVID-19 brought huge disruption to our economy and society.
Extraordinary, unprecedented steps were taken by Government to protect people’s jobs and livelihoods.
During the Pandemic over €45 billion was made available by Government, with more than €20 billion of that provided in direct support for workers and businesses.
This was expensive, but necessary and appropriate given the challenge faced and the needs of our people.
As a result, our society, economy and jobs were protected, and we were primed to rebound quickly as the Pandemic receded.
The effect of this can be seen today, with over 2.5 million people in employment, a phenomenal turnaround from the worst days of the Pandemic when almost 1.2 million people were dependent on the State for income support.
Unemployment has fallen back to pre-Pandemic levels, reaching 4.7 per cent in May.
We have also seen the participation rate improve to the highest levels in over a decade, driven by a significant increase in women in the labour market.
Progress to date
Alongside managing the COVID crisis, this Government has also made progress on our ambitious social and economic agenda.
As I have made clear, the housing crisis in our country is the single more important social issue we face as a nation.
Our housing plan, Housing for All, launched last year, is a serious and coherent plan to get houses built. It’s the largest ever housing investment programme in our history and it has launched a new era in housing policy.
I share everyone’s frustration at the problems in housing, especially the high cost of rent, but progress is being made.
In 2021 there were over 20,000 new dwelling completions, despite COVID restrictions. There is a strong pipeline indicated for 2022, with over 32,000 commencements in the 12 months to April 2022.
The Ukraine invasion and supply chain pressures are obviously adding to the challenge, but the policy and resources are in place for Housing for All to deliver.
We have revised the National Development Plan, raising investment levels to amongst the highest in the EU. Under this Plan we will invest €165 billion in new and upgraded infrastructure to meet the needs of our growing population – enabling delivery of our national priorities including housing, health, education and climate action.
Our ambitious climate action agenda is progressing. Wide-reaching Climate legislation is now in place, hawse have introduced the new Marine Planning Framework, and adopted the Carbon Budget programme.
Our next challenge will be to adopt sectoral emissions ceilings for the next ten years which will cut our emissions by 51% below 2018 levels by 2030.
I’m sure everyone here realises the profound change this will require across every aspect of our economy and society – and we have to achieve these changes in a way ensures public buy-in.
We have made considerable progress advancing our ambitions for digital and innovation reform. We have introduced a new national digital strategy - Harnessing Ireland: The Digital Ireland Framework and a new national AI Strategy.
We have published a new National Strategy for Research and Innovation – Impact 2030 and five new Technological Universities are being established.
We are also stepping up the delivery of skills and training - already seeing very positive developments in terms of apprenticeship numbers, for which we have provided new and additional supports.
We are also pursuing a very ambitious set of employment rights reforms.
This includes new statutory Sick Leave entitlement, the right to request remote working, the right to Carers’ Leave for parents and carers, and that carers will have the right to request flexible working arrangements for caring purposes.
In healthcare, significant progress has been made implementing the Sláintecare Strategy, including the opening of nine new Primary Care Centres. Work is also continuing to reduce waiting lists, to advance the six new Regional Health Areas, to roll out of digital and eHealth solutions, and to implement the National Elective Ambulatory Strategy.
There has been significant progress on pensions, with Automatic Enrolment on track to launch in 2024. Minister Humphries is also working on a response to the Commission on Pensions report.
We have also introduced a new Wellbeing Framework which is a theme for one of today’s workshops. This assesses Ireland’s performance across eleven different dimensions – over time and relative to other countries. It shows, for example, that Ireland performs poorly on climate action and biodiversity. I believe this focus on wider measures than economic growth can help us to better understand people’s quality of life and how it is evolving over time, and shape public policy in response to that.
While as a country we rebounded strongly from the challenges of the Pandemic, in recent months it is increasingly clear that the international economic outlook is very serious.
Through our efforts over the last two years we are positioned in a better place than many others.
That is not to say however that the coming period ahead will not be challenging.
With the uneven receding of the Pandemic around the world we saw the emergence of inflationary pressures.
This situation was subsequently exacerbated, to an enormous degree, by the illegal and reprehensible Russian invasion of Ukraine – with, in addition to the terrible humanitarian impact, its effect on international energy and commodity flows.
With this invasion, inflationary pressures became a very real challenge for households and businesses in Ireland – bringing with them great concern and worry.
The impact of the war is very broad and is being felt around the world. The sharp rise in commodity prices it has brought is impacting the supply of critical inputs into global food production, including wheat and fertilizers. This threatens not only economic growth but also global food supplies, especially in the developing world.
The war also threatens existing patterns of international trade – we have seen more and more countries raise barriers.
This marks an acceleration of the trend, which we also saw during the Pandemic, towards on-shoring and reshoring and will impact future global trade and investment flows.
Recent steps by the UK Government in relation to the Protocol can only add to uncertainty at this time.
Most recently the European Central Bank has reduced its growth forecasts and raised its projections sharply for inflation. Interest rates will begin to rise in a graduated way from July. Meaning the cost of borrowing for households and businesses will also rise.
The truth is we don’t know what might unfold in the global economy over the coming months and years – but there are clear dangers already apparent within the eurozone, and across other developed economies.
These trends carry significant risks for an open, trading economy, such as ours. As a country we have gained enormously from globalisation, allowing us to become a successful producer and exporter of knowledge-intensive goods and services, by both our indigenous and foreign direct investment firms.
Having benefited greatly from international trade and integration into the global economy, we will not be immune to international pressures and developments.
Our Budgetary Approach
In looking ahead to Budget 2023 we have much to ponder.
We must ensure that our people are supported in the face of rising costs of living, that the services they expect are effectively delivered and enhanced, and that we are making the investments necessary to ensure a prosperous future.
Our resources though are not limitless, nor is our capacity as a small country. We need to prioritise and manage carefully our resources, while ensuring we protect those most vulnerable.
Above all the choices we make must be sustainable, not just next year but for the years to come, for our society, for the economy, for the climate, and also fiscally.
This Budget will be a cost of living budget, and it will also be framed against, and must contribute to, a larger perspective, of medium and longer-term challenges, including climate, demography, housing and public service demands, and economic changes.
Addressing these challenges is not easy and will require sustained and consistent efforts over many years.
That is not to say there are not immediate challenges at hand.
As a Government we have and we will continue to act in response to the challenge rising prices are having on households and businesses.
We have already taken steps to help through grants to households for energy costs, temporary reductions in excise duties and VAT on fuel, and through substantial targeted supports for those most vulnerable in receipt of the fuel allowance.
As during COVID, the Government wants to work with trade unions, employers and other stakeholders in responding to these unprecedented challenges.
More than ever, we need to work to develop shared approaches to navigating these dangerous times. These shared approaches can be supported by regular social dialogue, ensuring we understand each other’s perspectives, and the benefits of stability at this time of great uncertainty.
The Government is disappointed that talks on public sector pay haven’t yet reached an agreed outcome. The Government is determined to strike the right balance and to achieve a deal that is fair and affordable to both taxpayers generally and public service employees.
I believe this remains both possible and desirable. I hope that we can find a basis for renewed negotiations under the WRC soon and I believe it is in all our interests to find a formula which works for everyone.
More broadly, the Government is also talking to employers and trade unions, through the Labour Employer Economic Forum, exploring the potential for developing an agreed approach to managing and responding to the pressures we face in the labour market in a strategic and sustainable way.
Again, this is an initiative we want to strengthen and deepen in the coming weeks given the difficult period which lies ahead for the economy.
We are also engaging with the wider community of stakeholders, including here today, to make sure that in charting our way forward we reflect the wide range of perspectives and insights that you can offer.
As we turn to preparations for Budget 2023, we will maintain a carefully calibrated and targeted response to the inflation challenge.
While the Government can, must and will continue to help, it cannot mitigate the entire burden of inflation.
Our priority will be to balance addressing the rising cost of living against the risk of exacerbating these same inflationary pressures.
Ensuring, to the greatest extent possible, measures are focused on those who need them most.
That we continue sustainable investment, prioritising strategically important investment, in housing, in our public services and in climate action.
That we manage carefully the risks we face, including the outsized importance of corporation tax receipts to our exchequer returns,
And that we avoid taking decisions, in such an uncertain international economic climate, which might undermine the sustainability of economic success of recent years.
Despite the difficult period ahead, I am confident we are well placed to manage the coming challenges, if we act responsibly.
The strength of our recovery from COVID-19 has positioned us better than many countries to weather the turbulence ahead.
Our careful management of our national resources has placed us on a solid footing.
I believe Ireland’s reputation as an outward looking, reliable and trade friendly economy, within the EU, with a highly skilled workforce, is now more important than ever in a world of geopolitical tension and uncertainty.
As we saw during COVID, we also benefit from an enormous sense of social cohesion and fairness within our country – something we must not take for granted and must nurture carefully.
In increasingly uncertain times, these are key strengths that have served us well, and I believe will continue to help fortify our economy and society in the times to come.
Today we are in a situation we could not have foreseen.
This time last year, we looked forward to rebuilding our lives and creating a pathway to a new, and better, future for our country.
The war in Ukraine and its impacts on the global economy, coming so soon after the Pandemic, have made those ambitions more challenging.
Today’s discussions are an important opportunity to share views on how we can achieve our shared aims in a prudent, equitable, and sustainable way in the context of the forthcoming Budget
I look forward to your input and views today which will help guide our path through this difficult period and towards a better and fairer future for all.