I wish to share time with Deputies Kehoe, Durkan and Allen.
National Development Plan: Motion (Resumed).
The following motion was moved by the Taoiseach on Wednesday, 9 July 2008:
That Dáil Éireann:
commends the Government on the progress made under the NDP as evidenced by the 2007 NDP Annual Report, particularly the substantial investment made in consolidating and enhancing Ireland's economic competitiveness;
acknowledges important economic and social progress made over the last decade and the fact that we face the present economic and fiscal challenges from a position of strength; and
commends the Government on the measures it is taking to address the current challenges, particularly the maintenance of policies that support economic and budgetary sustainability, thereby positioning Ireland to benefit from a future upswing in the global economy.
Debate resumed on amendment No. 1:
To delete all words after "Dáil Éireann" and substitute the following:
notes that the Government has contributed to the current economic downturn through:
the introduction of reckless inflationary budgets, driven by electoral needs, that killed competitiveness;
implementing huge increases in day to day spending financed by unsustainable property tax revenues; and
stalling public sector reform and abandoning any credible value for money discipline;
condemns the Government for producing a package of measures which:
fails to introduce serious reform in the way the public finances are managed;
ignores the need for a credible medium-term strategy to address our declining competitiveness and provide training and upskilling support for the increasing numbers of unemployed; and
misses the opportunity to embark on a process of economic recovery through reform.
—(Deputy Enda Kenny).
That is agreed.
I wish to deal with two matters in this debate on the economy. One is the decision of the Government to suspend the implementation of two important reports, one being A Vision for Change on the development of the psychiatric services and the other is Reach Out, the expert group's recommendations on reducing the incidence of suicide. In June, the independent monitoring group in its report on implementation of A Vision for Change in 2007 states, in the absence of clear identifiable leadership within the HSE to implement A Vision of Change, the monitoring group considers that the Health Service Executive was mistaken in its decision not to implement the recommendations to establish a national mental health service directive to drive the changes recommended in the report. It also states that the monitoring group does not believe that the administrative arrangements that the HSE has put in place are appropriate to the scale of the changes required. It further states that the monitoring group notes that the HSE appointed a director of cancer services in 2007 to lead the implementation of the national cancer strategy. The report states that the reform of mental health services requires a similar approach.
What is proposed is an indictment of the approach and the resources put in place for the development of our psychiatric services. No additional funding was put in place this year for the implementation of the recommendations, as proposed by the report, A Vision for Change. Of the €51 million allocated in 2006 and 2007, only €27 million was allocated for the purpose the Minister responsible directed and the balance was hived off by the HSE for its own reasons.
In regard to Reach Out, the expert group's recommendations for reducing the incidence of suicide, only €3.05 million was allocated last year and only the same amount was allocated this year. Effectively, no further initiatives can be taken to reduce the incidence of suicide because no further resources have been made available. Furthermore, it could be argued that with the effect of inflation, the value of the resources allocated has been reduced.
Some £3 million sterling was allocated to the equivalent office in the North of Ireland. Taking account of population differences and the exchange rate, €10 million is the amount that should be allocated here if we were to match what is being done in the North to reduce the incidence of suicide. It is an indictment of the Government that one of the first areas to suffer cuts is in the area developing services for one of the most needy groups in society, those suffering from a psychiatric illness and in need of intervention and those who are in danger of taking their own lives.
Second, I would like to deal with the neglect of my area, the mid west, under the national development plan. The 2007 NDP report was revealing. Representatives of the National Roads Authority were available to meet us yesterday. I discussed my area with them and came away from the meeting with little hope of anything being done for County Limerick. One of the first projects I raised was the bypass of Adare, which is crucial for my constituency. The representatives admitted that they have seen the traffic in Adare, which can be backed up for three to four miles at peak times. Adare is a brilliant tourist product, but it is being destroyed by the level and congestion of traffic going through it. Not alone were the representatives not able to give me any encouragement that the bypass, which was mooted many years ago, would be completed in the near future, they informed me that the national parks and wildlife service of the Department of the Environment, Heritage and Local Government has now decided that a section of the area identified for the bypass has been deemed a special area of conservation, which will create more difficulties for the completion of the project. I was totally depressed with the response I was given regarding the bypassing of Adare, Newcastle West and Abbeyfeale.
Since my election to this House and, essentially during the past ten years, there have been many years of economic growth during which money was squandered. Having regard to that, what is happening as a result of the announcement of the savage cuts inside and outside this House is frightening.
The Taoiseach and the Minister for Finance have said that the most vulnerable in the community will not be hit by the cuts, but I can assure them that our most vulnerable people, the elderly, are being hit. The home care packages and the home help service, which were very much welcomed by the elderly, have been totally cut in my county in recent months. Anybody, having left hospital, who has sought a home care grant or a home help service has been told to go away because such grants are not available due to a funding crisis within the HSE in the south eastern area. Our elderly are the most the most vulnerable and dependent of our people. We all have elderly parents, aunts, uncles or grandparents and they all appreciate the welcome support of the home help service. It is a scandal that this service has been cut. People who had a home help for six hours a week have had the number of hours reduced to four. It is a scandal that this has happened. It was a lie for the Minister for Health and Children to come into House and say that the delivery of these packages is not being cut.
I was interested to hear the Ministers for Education and Science and Finance say there would be no cutbacks in the education sector, but the Minister responsible asked the VECs to cut their funding yesterday. We all know that primary schools, secondary schools and VECs are hard pressed to cope. The Government recently introduced water charges for schools. Schools have had to fundraise to pay for items they should not have to pay for. It was great when the Government was able to blame Europe in this respect. It is great pass the buck and to blame somebody else, but these are front-line education services. This has affected the school building programme. Many school extensions and new schools have been promised in my county. The school authorities in a school in Crossabeg were promised that a project would proceed a year and a half ago, but they are still no closer to the project being delivered and now they have been told to hold off in respect of it. I met the Minister for Education and Science last week and I hope he will have some good news on that project. There is nothing as bad as promising something to a local school board and then having to tell its members that the project will not be delivered.
The decentralisation programme was announced, with great fanfare, in the House in the 2004 budget. I remember that day when all the Government backbenchers and Ministers raced out the door of this Chamber to go their constituencies, local radio stations and local newspapers to tell them, with great fanfare, of all the jobs that would be coming to their constituencies. I will give an example of what is happening in regard to that programme in my town of Enniscorthy. Enniscorthy Town Council paid huge money for an old convent on Nunnery Road in recent years. The OPW promised to buy it off them for the purposes of decentralisation. The decentralisation programme has been shelved and now Enniscorthy Town Council has been left holding the baby. This is typical of what this Government has been doing over the last number of years. If the Tánaiste is going to come down and give more money to the estimates for Enniscorthy Town Council she is very welcome but, like all Governments over the last number of years, this one has refused to fund local authorities. It will ensure it will bring in plenty of stealth taxes over the next while. The Government has announced a 3% cut in the payroll of all local authorities. The Minister knows this 3% will be taken off the overall budget and sewerage and water schemes, roads and house building will be affected. I would love to go on for the next hour, but unfortunately, I had only five minutes. I would like to take the opportunity to criticise what has been happening in this House over the last while.
Nothing constructive then.
I am sure Deputy Durkan will continue the criticism.
Sadly, I have no accolades to throw in the Government's direction. I am sure the Government Deputies will not be surprised at this.
My colleague, Deputy McHugh will share time with me. What intrigues me is that the Government seems to be surprised at the situation in which it finds itself. The braver dogs in the street have been barking the economic issues for the last five or six years, not the last couple of weeks. The few unembedded, economic journalists spoke out and got little credit for it. They were accused of being unpatriotic and talking down the economy. The evidence was there; from the time the first benchmarking was introduced there was a clear indication that things were gone wrong. That was introduced because a short time after the partnership agreement, it was found that it was falling asunder. That was the signal seven years ago. I cannot understand why it took the Government so long to recognise it. It is because it was getting in the lolly. It was coming in piles from the housing and development sector because of VAT and other taxes.
The Government did nothing. It waited and milked the economy for everything it had. The building industry boomed, the Government had more money to spend and it splashed it around.
There is nothing corrective in the proposals that have come before the House in the last few days. I have listened carefully to all that has come from that side of the House and not a single correction to the economy has taken place. There are cuts, just a little hurt to remind the public that this is severe and will hurt them more for a little longer. "Health cuts hurt the old, the sick and the handicapped" was an election slogan some years ago. It may have been even before the Ceann Comhairle's time. I remember it well.
The Ceann Comhairle is here a long time.
It has nothing to do with the economy. No corrective measures, good, bad or indifferent have been taken. The amazing thing is that we have not heard in recent days about the high wage economy. Do Members remember the high wage economy about which the former Tánaiste used to boast? We were a special country, international marketeers and competitive. We have not been competitive for the last five years. That signal was starkly visible. The economic fundamentals are not in order. That is the sad part about it. Wherever the Government is getting its figures, it is wrong. Government members are codding themselves. They are gone off the wall. It is worse than it has been portrayed.
Sadly, if the Government thinks this is the full extent of the problem, it has another thing coming. Let it watch the markets and shares and see what is happening. Does the Government realise that what it is doing does nothing to address those issues to restore confidence in the economy? We have an economy that was driven by the construction industry. The Government was creaming off money in taxation, VAT, stamp duty and all the other ways and that is why it was doing so well. However nothing is being done to correct it. There are building sites all over the country locked up. No houses are being sold because the public cannot afford to buy them. Houses are being repossessed from people who bought them four or five years ago. Action was not taken because of a fear of negative equity. As we all know, negative equity is not a great idea but does not affect individuals unless they have to sell.
There is thinking in Government that everything will be restored in a short space of time and things will start flowing again. Unfortunately, they are not and the Government does not realise it. I cannot understand the economic basis on which the Government places its premise. Nothing will happen. The banks cannot or will not lend. The construction industry is stuck on the other side and can go neither forwards nor backwards. That is the kernel of the problem. Tinkering around the edges of it will not solve the problem. The Government can cut the health and education services and cause as much hardship as it likes but it is not addressing the underlying economic issues as borne out by Deputies Kenny, Gilmore, Bruton and Burton in the last few days.
Yesterday the Taoiseach and Minister for Finance mentioned management. That is what we have not got. There has been no management. Any fool could have recognised that when we had low interest rates, as we had over the last seven, eight or nine years, people would automatically speculate in property, as they are now speculating in oil, hoarding it and driving the market wild. The Government did nothing about it, but said interest rates are set by the ECB. That is correct but credit rating is not set by the ECB.
Sadly, my time has expired. It is sad that we get only five minutes on an issue as important as this with the economy as it is.
We would like to help.
I accuse the Government of total irresponsibility. In the last few days I wrote to the Minister for Transport advising him of the hardship likely to be caused to a poor provisional licence holder who has driven the family, for whom she cares, all of whom have special needs. The Ceann Comhairle will like this one. He wrote back to me and said he had referred it to Mr. Noel Brett, who is responsible. Who is responsible in this House? Is there nobody responsible on that side? What has gone wrong with them? They failed to live up to their responsibilities and running away from it will not solve the problem.
I am glad of this opportunity to say a few words on the economy. I will try to be as constructive as possible because we collectively have a serious responsibility for trying to drive our economy forward. Before we do that, the Government side of the House must start being realistic and honest to see exactly where we are. We need a bottom line, to know exactly where the cutbacks will be and to be honest with the Irish people. For example, on Tuesday we heard there would be no cutbacks in education and health, but on the previous Friday there has been talk in Letterkenny General Hospital, which is local to me and the Tánaiste, of 20 beds being taken off the list. There are cutbacks. Special needs assistants are being cut back in the special needs and disability sector. The cutbacks have been coming down here fast and furious in the past few months.
We need to begin listening to where wastage is still ongoing. In 2007 in the primary school sector we spent €35 million on rental of prefabricated buildings. That is a complete and utter disgrace and waste of money. The wastage is there and we must tackle it. This Government must use every resource to tackle the ongoing wastage. The HSE has paid €1.75 million for late payments to suppliers. That is centrally controlled. In the north west that equated to €500,000. That is not the responsibility of local managers or hospitals but is centrally controlled by the HSE. We must target that kind of wastage where payments can be made on time, avoiding this waste of Exchequer funding.
We still have a role to play in our export market, and this is where the Tánaiste comes in. Last week Germany started taking back production it had outsourced to China and has started producing quality German products instead. These are mass produced products that Germany can produce better at home. We must begin to become competitive and introduce that resilience in producing and manufacturing which we had in this country and start to instil that confidence that we can bring up our exports again.
The export market has not just fallen in the past six months, it has been falling for the past five years. The construction sector has been camouflaging the decline in the manufacturing sector in my neck of the woods and in export growth for the past ten years. Basically, it was a band-aid in terms of providing employment but now we have nothing to drive the economy forward.
I wish to ask the Tánaiste a specific question about counties Kerry and Donegal. There are two Coast Guard stations in situ in those counties, providing an excellent service, although they need upgrading and additional investment. The Tánaiste sits at the Cabinet table with the Minister for Transport, Deputy Dempsey, who is responsible for this area. In light of the economic downturn, will a new Coast Guard station be built in a different area, involving the procurement of land and a considerable financial outlay? Will a new facility be built and will the stations at Valentia and Malin Head be closed down?
The Minister for Agriculture, Fisheries and Food, Deputy Smith, who is sitting beside the Tánaiste, has displayed leadership which should be followed. He is considering the possibility of retraining redundant fishermen to enable them to work in the merchant navy. I welcome measures such as that, which may look small, but which could have a very positive impact. We must find ways of building our capacity, retraining workers and being inventive in moving forward.
I wish to share time with the Deputy Brendan Smith.
Without doubt, the key consideration in addressing the challenges in the environment we now face is to maintain and enhance our competitiveness in the fullest sense; competitiveness that will enable our economy to develop on a path of sustainable export-led growth; competitiveness in terms of enabling us to remain an attractive location for foreign direct investment and to provide the right conditions for building a strong indigenous industrial base; and competitiveness that will underpin our development as a knowledge-based, innovative economy capable of sustaining high quality employment. Such an ability underpinned the impressive growth of the recent decade and this Government is committed to creating the same conditions to allow us to be competitive when the current challenges abate.
Against that background, I am happy to provide clarification to the House of the savings to be achieved by my Department during the remainder of 2008, following the recent Government decision on the need to curtail Exchequer spending in the current year. Minimum savings amounting to €24.551 million on a total budgeted spend of almost €2 billion will be achieved across all areas of my Department's Vote as required by the Government decision. However, a number of key principles arise. First, I am determined that the key agencies of the Department will remain sufficiently resourced to ensure strong delivery in terms of inward investment, growth of the indigenous sector, research and development and upskilling the workforce. These are all areas of productive investment that will ensure that Ireland is well placed to capitalise on the economic upturn that will inevitably arise.
Second, the savings have been designed to ensure that the most vulnerable in our society are protected. Thus, there will be no reduction in places on community employment or jobs initiative schemes and no savings are being sought on programmes for people with disabilities.
A sum of €19.15 million of the 2008 savings will be from the FÁS allocation which is the largest single spending area within the Department's Vote. In general, the savings include areas where spending requirements will be less than budgeted due to lower apprenticeship entrants, lower dependant allowance costs and savings already yielded by lower than expected activity in the first half of the year. A small saving of €440,000 arises as a result of reduced training provision by Skillnets. Combined savings in the order of €2 million have been identified across the Competition Authority, the National Consumer Agency, the Irish Auditing and Accounting Supervisory Authority, the Companies Registration Office, the Office of the Director of Corporate Enforcement and the Health and Safety Authority, while administrative savings will also be delivered by the development agencies operating under the aegis of my Department, including IDA Ireland, Enterprise Ireland, Shannon Development and Science Foundation Ireland. A saving of €1 million will arise on my Department's administrative budget and remaining savings required will be spread across other smaller areas of the Department's budget.
It would be wrong to suggest that delivering these savings will be painless. They will require stringent measures and tight controls. However, they will be managed in a manner designed to minimise the impact on programme delivery by exploiting natural savings arising from reduced activity and delays in filling staff vacancies. As required by the Government decision, savings will include a reduced spend on areas such as consultancy, advertising and public relations. The measures identified are prudent and targeted to have minimum impact on frontline services and reflect the Government's commitment to take determined action on matter within our control.
Of course, some of the factors impacting negatively on the economy and on our competitiveness are beyond our control. Therefore, it is all the more vital that in areas where actions can influence our cost environment, we act responsibly and work together to ensure that we safeguard and enhance our competitiveness. This is our best route to job creation and increasing living standards in the medium term.
The Government is committed, through the national development plan, to investing in competitiveness, through funding for training and upskilling, science and research and the attraction of new industry, as well as the growth and development of our existing industry. This agenda goes hand in hand with maintaining and enhancing standards in the workplace and employment rights through the partnership process. We do not and cannot seek to advance one at the expense of the other.
At the outset, we should not forget where we are. On overall competitiveness, Ireland stands out in a number of important categories. The world competitiveness scoreboard as recently as May this year ranked Ireland at 12, up from 14 last year. The Centre for European Reform ranks Ireland 6th among the 27 EU member states for overall competitiveness in 2008. WTO data show that Ireland is now the 12th largest exporter of commercial services in the world. The Lisbon Council's European jobs and growth monitor ranks Ireland as the second most competitive economy in Europe in 2008. Our GDP expanded at an annual average rate of 6.5% over the period 1997 to 2007, which has facilitated a substantial improvement in living standards.
As Minister for Enterprise, Trade and Employment, the central thrust of my Department's policy will be to continue to strengthen and build on our competitiveness through the provisions of the national development plan. The ability to create and exploit knowledge is an essential feature of an advanced economy and therefore Ireland has placed research and development at the heart of its economic development effort. The Government, through the strategy for science, technology and innovation, recognises the importance of moving our economy to a knowledge-driven one. The objective of the strategy is to provide the opportunity to achieve convergence, coherence and synergy in our national innovation system. The current national development plan provides for a very significant increase in the investment in technology, innovation and scientific research, amounting to a commitment of €8.2 billion over the period 2007 to 2013. The aim is to build the skills needed for a modern knowledge-based economy and to strengthen Ireland's research base.
As a result of significant Government investment, multinational and indigenous companies now see Ireland as a location for world-class innovation activity.
There was a net loss last year in IDA Ireland jobs.
Ireland's overall innovation performance remains strong according to the latest evidence released jointly by Forfás and the Central Statistics Office. The level of product and process innovation activity is above the EU average for manufacturing and service sector firms.
A strong research and development and innovation performance is one of the many elements in ensuring that Ireland remains a competitive location for attracting foreign direct investment. Such investment has played and will continue to play an important role in the development of our economy. In recognition of this, the foreign direct investment subgroup of the national development plan, involving IDA Ireland and Shannon Development in the Shannon Free Zone, will invest €1.6 billion over the lifetime of the plan to promote new foreign direct investment and the expansion of existing foreign direct investment in Ireland. While international competition for foreign direct investment is relentless, Ireland continues to punch above its weight when it comes to attracting overseas investment.
The level of foreign direct investment in Ireland, relative to the size of the economy, is one of the highest in the world. Today, there are in the region of 1,000 overseas companies employing more than 136,000 people in this country. These include many of the leading companies in pharmaceuticals and biotechnology, medical technology, financial services, international services, digital media and information and communications technology.
The economic impact of foreign direct investment in Ireland is pervasive and goes much deeper than just job creation. Foreign owned companies are at the cutting edge of demand for high skills, of advanced management training and business processes, which permeate the wider business community. These companies are leading contributors to the national research and innovation agenda. They have contributed greatly to the broadening of the economic base in Ireland by fostering entrepreneurship and promoting the start-up of indigenous enterprises.
In addition, during 2007 these companies have put €15.87 billion in direct expenditure back into the economy. Of this €5.7 billion was spent on services and €3.43 billion on material and components from Irish sources. In addition, the corporation tax generated by these companies was €3 billion or almost 50% of the total corporate tax take in the same year.
In line with the national spatial strategy and the national development plan, IDA Ireland is actively enhancing the potential for regions to prosper. It has been instrumental in the development of high quality flagship technology parks in the gateway and hub locations, ensuring full integration into the surrounding business and economic environment. Over the lifetime of the NDP, IDA Ireland will maintain a strong focus on maximising the capability of regional locations to absorb a greater proportion of high-quality FDI. Last year alone, IDA Ireland secured 114 new investments, amounting to more than €2.3 billion in capital investment. A total of 64% of the investments secured by IDA in 2007 were located outside of Dublin.
Ireland's competitiveness is based not on Irish tax benefits and costs alone but on knowledge, innovation, flexibility, and connectedness — how everything works together. Ireland continues to be one of the most attractive places in the world as a location for global business. With our highly educated, skilled and adaptable workforce; our strong focus on research and development and knowledge; and our "can-do" responsive and open attitude, we remain a location of choice. As a small open economy, Ireland welcomes the continued strong interest demonstrated by many of the world's leading companies in investing and expanding here. Ireland has transformed as an economy over recent years and we are well positioned to continue this transformation over coming years. We are pro-business, pro-European and proud to be always at the forefront of the minds of global business leaders as they make critical investment decisions.
Of course, FDI is only one side of the enterprise equation. A strong and vibrant indigenous enterprise sector is also important to ensure that our economy grows and develops. An investment of €1.7 billion has been allocated under the NDP for enterprise development in the indigenous sector.
Enterprise Ireland has delivered handsomely on its 2005-2007 strategy by meeting or exceeding the publicly stated targets through assisting 221 new high potential start-up companies against a target of 210, 70 of which came into being in 2007.
In summary, while the issues facing the economy are challenging, we are starting from a strong position. Ireland has a good economy, the fundamentals of which are right. The Government is committed to building on this and ensuring that we remain competitive and in a position to take full advantage of any upturn in the global marketplace. We do this through our plans and programmes under the NDP and will create the environment whereby we will continue on a path of sustainable export growth, enhancing our attractiveness as a location for FDI and continuing our development as a knowledge-based and innovative economy.
As the Minister for Finance has outlined, the fundamentals of our economy are sound. Our current difficulty does not represent a return to the 1980s. Indeed, the economy has changed dramatically over the past 20 years. Our public debt is the second lowest in the European Union. The general Government debt has declined from over 100% of GNP in the 1980s to 53% of GNP in 1998 and to a forecast of around 25% of GNP this year. This means that provided we continue to follow sound economic principles and policies, Ireland will return to higher economic growth when the difficult economic conditions pass. The Government has demonstrated that it is prepared to take difficult decisions in the short term in order to ensure an early recovery from the current problems.
The decision by the Government to implement a number of prudent spending measures representing €440 million in savings this year and €1 billion next year signals our resolve to deal with these economic issues now rather than face a more difficult situation in 2009 and subsequent years. The decision requires a renewed focus on spending public funding wisely while maintaining the investment in infrastructure and the productive sectors of the economy that lay the foundations for future prosperity.
The focus of the measures announced by the Government is on administrative expenditure, streamlining the delivery of services and improving efficiencies. For the Department of Agriculture, Fisheries and Food, the Government decision involves savings this year of €9.1 million. The savings will be absorbed by the administrative budgets in the Department and its State agencies and will involve savings in operating costs, including salaries. A saving of €1.04 million will be applied to the administrative budget of the Department and savings of €5.391 million will be sought from among the State agencies, while a further saving of €2.679 million will be found on the cost of consultancies, PR and payroll costs. Further savings will be sought next year.
The Department has, of course, been engaged in ongoing efforts to improve efficiency and has reduced staff numbers significantly in recent years. As part of the recent efficiency review, the Department again reviewed all aspects of expenditure with a view to identifying further savings on administrative spending. The exercise included the State agencies under the aegis of the Department. I will now consider specific proposals, including staff costs — both pay and non-pay — and the possibility of further staff reductions, to realise the expenditure savings this year. Savings next year will be considered in the context of the preparation of the 2009 Estimates.
While the decisions taken yesterday do not target particular schemes for savings, this situation must be reviewed on an ongoing basis, particularly next year. I must manage the resources available to the Department to best effect. In that context, I will also be examining every aspect of the Department's programme of schemes and services with a view to ensuring that expenditure is fully justified and that we get the best possible value for public investment. I would, however, like to clearly state my commitment to the continued development of a modern, efficient and competitive agrifood sector. I remain fully determined to maintaining a focus on investment and other measures designed to develop productive capacity, protect the environment and ensure the sustainability of the agriculture, fisheries and food sectors into the future.
Just last week, the Department published a number of reports on the important contribution which the agriculture, food, forestry and fishing industries contribute to the economy, particularly in rural areas, and to Irish society in general. The agrifood sector is one of our most important indigenous manufacturing industries. It accounts for almost 7% of GDP, 8% of employment and 10% of exports.
To gain a further understanding of this contribution, a report produced by Brendan Riordan, research consultant, in May 2008 provides estimates of the net inflow of funds to the Irish economy associated with the agrifood sector and makes comparisons with other sectors in the economy. The report shows that the agrifood sector, more correctly referred to in the report as the "biosector", contributes approximately one third of the net flow of funds into the economy generated by primary and manufacturing industries. This is at least double the sector's contribution to exports and underlines the importance of the sector to our economy.
Policy makers around the world are realising the importance of agriculture and natural resources generally as providing solutions to many of the key problems facing mankind, including challenges relating to food security, energy provision and climate change. At a time of challenging economic circumstances, both nationally and globally, this report provides a timely indication of the importance of the agrifood sector to our economy.
It indicates that in 2005, net foreign earnings of the sector, including agriculture, forestry, fisheries, food and drink industries, amounted to 32% of the total net earnings from primary and manufacturing industries. This was double the sector's 16% contribution to exports in that year. These findings are consistent for the period from 2000 to 2005. It is also worth noting that the report highlights that in 2005, for every €100 of exports from the biosector, €48 was retained in Ireland. This compares with €19 retained for every €100 of exports in the non-biosector.
The reasons given in the report for the sector's disproportionately large net contribution to earnings from exports include the fact that the import requirements per euro of biosector exports were found to be lower than in the non-biosector; foreign ownership, and thus profit repatriation outflows, was lower than in other sectors; and receipts of EU payments were almost entirely in support of agriculture and its exports.
I find it interesting that the results are not, however, heavily dependent on EU receipts in any of the years from 2000 to 2005. Furthermore, global price increases for food, feed and forestry products in the years since 2005 may have further boosted the contribution of the sector and may well have strengthened its position as a major contributor to the future prosperity of Ireland. Finally, this study emphasises the strength of the biosector's linkages with Irish businesses. These connections are particularly close for the natural resource-based industries of agriculture, forestry and fishing, along with industries using their output, and these linkages demonstrate the importance of these sectors to the economy.
Against all of that background, it is more important than ever that we get value for money for public investment in this sector. The Agri-Vision 2015 report published by the Department in 2005 outlined a number of key challenges if we are to capitalise on the significant potential of the sector to expand and develop.
The over-riding objective is the development of a consumer-focused, competitive and sustainable industry capable of meeting the challenges of more liberalised global markets and a range of broader societal demands. In practical terms, this means delivering high-quality food in which consumers at home and abroad have confidence and which is produced in an environmentally friendly manner for high-value markets and at a competitive price. This is not something that can be achieved by Government alone. Producers, processors, State agencies and all of those involved also require significant effort.
The same underlying objectives apply to the development of the fishing sector. The strategy for a restructured, sustainable and profitable Irish seafood industry 2007-13 focuses on rebalancing fishing capacity with stocks and on developing strong and vibrant fish processing and aquaculture sectors.
This Government is delivering on these objectives through the implementation of a wide range of measures provided for in the national and rural development programmes for the period 2007-13. Schemes such as the farm waste management and farm improvement schemes, the REPS and disadvantaged areas scheme, grants for afforestation, the breeding and welfare scheme for suckler cows, installation aid and the early retirement scheme, the marketing and processing scheme, the suckler cow scheme and the FIRM and stimulus funds for research and development, involve expenditure by my Department exceeding €1 billion in 2008, and are aimed at improving the structure and productive capacity of Irish farms, protecting the environment, ensuring that primary production methods are sustainable and meet the broader expectations of consumers, and encouraging research and development in processing and primary production and capital investment in the food processing sector.
Debate adjourned.