I welcome the opportunity to speak on the national recovery plan as a strategy for economic recovery with the aim of restoring stability to the public finances, improving Ireland's competitiveness and stimulating enterprise growth and job creation. The Government published the four year budgetary plan last week mapping out Ireland's return to economic stability. The National Recovery Plan 2011-2014 is described as a blueprint for a return to sustainable growth in our economy. It was unveiled by the Government with the aim of restoring confidence, creating jobs and driving economic growth. I am pleased to be in the Seanad to outline how the plan gives citizens and businesses as well as international observers a clear sense of the economic and budgetary conditions that will apply over the next four years as we emerge from our economic difficulties and banking crisis.
The plan sets out specific actions to spur further improvements in competitiveness across all sectors of the economy, including measures to cut costs in energy, waste, transport, professional fees, property and labour. It commits to maintaining the 12.5% corporation tax rate, which this Government continues to reiterate as a key component of our industrial policy. On taxation, new measures are balanced in a way that is least harmful to enterprise while at the same time generating the required Exchequer revenue. The Government has maximised support and protection for enterprise and jobs as these are key to economic growth and recovery.
The need for the plan is abundantly clear. The Government will spend €18.5 billion more this year than it will receive in taxes and that gap must be closed. It is unsustainable that Ireland would continue to borrow €2 for every €5 it spends. Implementation of the plan will reduce Ireland's deficit to 3% of gross domestic product, GDP, by the end of 2014, and the achievement of that goal is critical for the proper functioning of the economy in the eurozone. The priority, however, is to ensure the public finances are stabilised in order that we can support enterprises to grow and create jobs. It is clear the best way to support businesses and create jobs is to fix the banks, address the deficit in our public finances and improve our national competitiveness. These actions are not aimed at firms of any particular size or sector but the overall economy. They are aimed at improving the overall business environment in this country in order that all firms can survive and grow.
According to the Central Statistics Office, the productivity of the Irish workforce was a third higher than the EU average in 2009 as measured by GDP per person employed. We have seen reductions in costs as measured by the harmonised index of consumer prices, HICP, compared with our EU neighbours. Our average hourly labour costs fell by 3.2% in the second quarter of 2010 compared with the second quarter of 2009, while average OECD and euro area labour costs continue to grow.
There are areas where the Government acknowledges a need to take further action to restore Ireland's international competitiveness. The National Competitiveness Council's annual competitiveness challenge was published today but its analysis fed into the consideration of the four year plan. As the NCC and others have recognised, we have made progress over the past two years but more needs to be done in terms of reducing costs and improving productivity in all sectors. The recovery plan has a range of measures aimed at tackling some of those areas over which we have some control that will reap rewards in terms of our international competitiveness.
The Government does not create jobs. The job of the Government is to support the private sector by removing structural impediments to competitiveness and employment creation as well as securing conditions for growth. There are actions which will be taken to cut costs for businesses but also to remove other obstacles for enterprise as well as measures to improve cash flow.
As mentioned by some Senators, energy costs are significant for businesses in Ireland. Figures released by EUROSTAT yesterday show that in the year to the end of June 2010, there have been significant reductions in Ireland's electricity and gas prices. Electricity prices for medium to large businesses fell by 20% to 36%, which is the largest drop in the EU and compares with an EU average of a 4% reduction. Gas prices for all enterprises were between 11% and 18% below the EU average.
The plan will continue to focus on rigorous efficiency targets for the State energy companies as well as implementation of the national energy efficiency action plan to achieve national energy savings of 20% by 2020. From 2012 to 2014, our semi-State bodies will invest almost €8 billion in sustainable energy, including renewable energy and the development of smart grids, a flexible grid that can incorporate renewable energy on our system and allow for a two-way flow of electricity. The €600 million east-west interconnector will be built by 2012 and this will mean we can export our clean green power to the United Kingdom and beyond.
Access to broadband is key for Irish industry to compete globally as well as nationally. Our broadband penetration has trebled over the past three years and our speeds have doubled. The recent Cisco Oxford survey places Ireland 13th in the world for broadband leadership. Commercial investment in broadband is supported by the Government's national broadband scheme launched by the Department of Communications, Energy and Natural Resources and operated by 3, a telecommunications company. The objective of the scheme is to deliver broadband to certain targeted areas in Ireland in which broadband services were deemed to be insufficient, and this was completed in October 2010.
The next generation broadband task force comprises industry, Government and ComReg representatives and is aimed at ensuring the development of next generation broadband infrastructure will meet the demands of Ireland's smart economy. The task force will meet in December to consider how best to maximise the impact of the investment in broadband infrastructure. Potential for collaborative approaches to investment will be considered in line with the European Commission communication published in September permitting such an approach. The overall objective of the task force is to foster a dialogue and follow-up actions which will promote the advancement of next generation broadband.
Costs in sheltered sectors will be tackled. The Government will receive regular reports from an independent figure who will oversee the promotion of competition in the professions. A package of measures will be implemented to reduce legal costs, including the introduction and enactment of the Legal Costs Bill.
Although commercial property costs have fallen, there is scope for further improvement in this area. While upward only rent reviews have been banned since February this year, the working group on transparency in commercial rent reviews made further recommendations in July to improve the rent review process for tenants and landlords. The plan commits to the implementation of the recommendations. It also includes actions to be taken on the rental of property by the State for its own purposes, as well as investigating the potential for providing access to vacant or under-utilised public property for entrepreneurs or business start-ups to use as incubation centres.
A key element of improving our competitiveness to reposition Ireland as an internationally competitive location for doing business is tackling our labour costs. We have already seen the process of adjustment in labour costs, with a 6.75% improvement in 2009vis-à-vis the euro area. The State must also ensure people choose work over welfare. The national minimum wage is currently the second highest in the European Union and the Government’s proposal to reduce it by €1 per hour will remove a barrier to job creation. It is essential to strike the right balance between the national minimum wage, labour legislation, social welfare rates, taxation and activation of the labour market to avoid disincentives to return to work. The reduction in the amount of the national minimum wage will be implemented in conjunction with reform of the welfare system designed to reduce unemployment traps.
The Government's four year plan provides significant funding for enterprise agencies, namely, IDA Ireland, Enterprise Ireland and Science Foundation Ireland, which will underpin their work of job creation and the research agenda. This is in line with the principles set out in the Government's infrastructure investment priorities report of July last. The capital investment in the agencies will drive recovery in the domestic economy as it will allow Ireland to continue to win foreign direct investment, grow indigenous exports and create high quality sustainable jobs in the smart economy.
The plan underpins the work of the job creation and research agencies, IDA Ireland, Enterprise Ireland and Science Foundation Ireland, by providing funding that will allow them to meet their targets. The capital investment in the agencies will allow us to continue to win foreign direct investment and grow indigenous exports. In this context, it is important to acknowledge, as previous speakers have done, that Ireland continues to regularly win foreign direct investment. Accenture, for example, has announced today that it will create 100 jobs. We are moving up the value chain in the types of foreign company which consider Ireland as a location for investment, especially in research and development and innovation. This is a critical factor which must be highlighted as a positive aspect of the economy.
The capital funding to be provided for the enterprise agencies carries with it challenging job creation and economic targets which are a key aspect of the economic recovery plan. The enterprise sector has a fundamental role to play in revitalising the economy. Accordingly, the enterprise agencies have been provided with funding to support this effort. Additional funding will be provided for Enterprise Ireland to support the research and innovation effort in Irish enterprise. This will enable the organisation to continue to support companies to undertake collaborative research projects and realise their potential.
While high levels of entrepreneurial activity have always been important to economic prosperity, in the current economic climate the survival, growth and development of small businesses are central to full economic recovery. The capital allocation for the county enterprise boards in 2010 is almost €15 million, a figure which has been supplemented by an additional €3.3 million sourced from savings elsewhere in the Department, bringing the total to more than €18 million.
A guiding principle of the expenditure adjustments set out in the four year plan is that future capital investment must be targeted and employment focused. Public capital investment will have its greatest impact in maintaining sufficient capacity in the economy and supporting productivity enhancements. The programmes supported by my Department and its agencies will be critical in achieving a return to economic growth. Future policy will focus heavily on commercialisation of research outputs. Capital investment will, therefore, support direct job creation in world class, export oriented enterprises. There will also be a level of direct job creation during the delivery phase of valuable public infrastructure. The national retrofit programme, in particular, will give rise to a considerable level of jobs in the construction sector nationwide, while the intended introduction of water charges by 2014 will require a nationwide project to install meters in domestic residences.
Foreign direct investment will continue to be a catalyst for national prosperity. Foreign owned companies create hundreds of thousands of high quality jobs, both for the employees of the investing company and in the firms which provide goods and services for them. The continued attraction of sustainable foreign direct investment is critical to ensuring Ireland's economic recovery. Foreign owned companies produce more than 70% of all goods and services exported and spend more than €19 billion in the economy, including more than €7 billion on payroll each year. International investment will continue to be a key driver of employment, exports and growth.
Ireland's value proposition to multinationals is also strongly based on what I refer to as the four Ts — track record, talent, technology and tax regime. Our reputation for excellence in all of these areas continues to attract a strong flow of companies to the country. Foreign direct investment has returned to levels not seen since 2005-06 and the IDA has won 76 investments so far this year which will create more than 6,000 jobs. Of these investments, 22 are by companies new to Ireland. As I noted, Accenture which is backed by the IDA announced this morning that it would create 100 high value jobs, the focus of which will be the company's new research and innovation centre, its first dedicated centre globally.
Enterprise Ireland recognises that future sustainable economic growth will be based on a thriving Irish export sector characterised by innovative companies. Exports are critical both to maintaining current jobs and driving future job creation. There have been two calls under the employment subsidy scheme and 1,632 approvals have been made, valued at more than €130 million towards 14,902 subsidies. The companies in question have committed to maintain more than 100,000 jobs, of which 88,000 are full-time and 13,000 are part-time, to 30 November.
Enterprise Ireland remains focused on ensuring companies throughout Ireland survive the recession and are positioned to seize the export opportunities the tentative recovery in major economies will present. There has been a good recovery in export markets for indigenous Irish companies thus far this year and it is expected this positive trend will continue, with the prospects for job creation improving as a result. Enterprise Ireland also emphasises the role public procurement plays in economic recovery and development and supports small and medium-sized firms to tender for the supply of goods, services and works to the public sector.
One of the key messages in the Government's national recovery plan is that export-led growth will fuel domestic recovery. It recognises that the implementation of the strategy and action plan set out in the document, Trading and Investing in a Smart Economy, will ensure our trade, tourism and investment sectors will be well positioned to respond effectively to emerging opportunities as the global economy recovers. Trading and Investing in a Smart Economy is an integrated strategy that is global in scope and covers both existing and new high growth potential markets. The strategy provides a framework to maximise the potential for increased exports, tourism and investment that can support well paying jobs. It has set a number of ambitious targets to be achieved by 2015, for instance, the creation of 150,000 direct new jobs in manufacturing, tourism and traded services. This figure is based on agency estimates of their growth targets over the strategy period to the end of 2015.
The new strategy also foresees the creation of a similar number of new indirect jobs. This latter figure takes into account the differing impacts of new jobs in manufacturing and services, based on the numbers of projects, job intensity, purchase of raw materials and services, the re-spending of salaries and the impact of taxation.
Our export performance in recent years has shown considerable resilience. CSO data show that, overall, our total exports in the first half of this year were up almost 3% when compared with the same period last year. In particular, our services exports are performing very well, with the value of such exports having increased by 8% during the period in question. Data for our merchandise exports in July, August and September have also shown strong growth which augurs well for a final year outturn. I firmly believe Ireland's recovery will be export-led, necessarily and essentially.
Through its underpinning of the work of the relevant State agencies, by providing the funding to allow them to meet their targets, the national recovery plan fully supports the implementation of the new trade strategy. Likewise, the capital investment in the agencies will allow us to continue to win foreign direct investment, grow indigenous exports, increase the number of tourists and create high quality sustainable jobs in the smart economy. With the plan, Trading and Investing in a Smart Economy,we are positioning Ireland to be successful in selling our goods and services abroad, while winning global investment and attracting visitors from around the world. The strategy will help Irish exporters to expand their market share overseas, including in food exports. Export-led growth is the right strategy to follow. Supporting export-led growth is, therefore, of critical importance for the recovery of the country. I am confident that the four year recovery plan fully supports the achievement of the ambitious targets set out in the recently published document, Trading and Investing in a Smart Economy.
Investment in research, development and innovation plays a significant role in building Ireland's smart economy. Research, development and innovation investments not only embed existing operations and employment but also pave the way for future investment and job creation. The Government is committed to the overall development of the smart economy. We are firmly of the view that innovation can help to accelerate our economic recovery and get us back on the path to sustainable growth. The Government strategy being implemented comprehends research and the application and commercialisation of its fruits. Research, development and innovation investments in IDA-supported companies have been steadily growing and in 2009 amounted to over €500 million, with investments in a wide range of sectors. Research, development and innovation investments in IDA-supported companies in 2009 represented 49% of all the investments in that year. In the years to 2014 the goal will be to increase the number of firms undertaking meaningful or significant research, development and innovation projects.
It is recognised that the generation of new companies from the outputs of research offers a potential source of future jobs and revenue. Enterprise Ireland will devote a significant effort to developing new start-up companies with high performance potential. The funding to be provided for Science Foundation Ireland will enable the agency to stabilise the number of researchers and research teams. This is critical to ensure Ireland will retain the excellent science base we have built in the past decade. It also supports indigenous companies which are reliant on knowledge for growth and job creation and will strengthen research and industry collaborations. Since 2007 researchers from Irish companies and higher education institutions have won funding totalling €269 million for research projects in areas such as ICT, health, nano-technology and energy. Small and medium enterprises account for 74% of the funding to private industry. This funding enables Irish SMEs to collaborate with world class research teams across Europe. The Irish success rate of applications is 24.04%, well above the European member state average of 22.47%. The new ideas and innovations generated from these research collaborations will help to create new high quality jobs.
Enterprise Ireland is focused on maximising the return from the State's investment in research and development. This includes the spin-out of innovative companies from research clusters, the transfer of technology to existing companies, including within the multinational base in Ireland, and supporting collaboration among companies based in Ireland and the research institutions which can work on projects of commercial application.
There is also a strong effort on the part of Enterprise Ireland, working with universities and institutes, to collaborate with overseas colleges in research and development. This effort should be promoted in the trading and investment strategy published some months ago. We should concentrate on promoting Ireland, not only as a centre of learning and a centre for research and development but also in building strong collaborative links with universities and research institutes throughout the world. This area offers enormous potential. In my time as Minister of State with responsibility for trade and commerce we put a great deal of effort into trying to bring Irish universities and institutes together and then went abroad to sell Ireland Inc. as a place in which collaborative work could be done in the areas of research, development and innovation.
With the capacities we have and the high quality and critical mass of research undertaken in Ireland during the past ten years or thereabouts and by working with the multinationals, the commercial world and outside research bodies, Ireland can really benefit in the years to come. I will encourage whoever will sit in the ministerial seat in Kildare Street to promote actively the idea of Ireland being an education hub and, more important for longer term strategies, build on these collaborative links. They may be tenuous, but they are being established on a continuing basis. I am sure that with support from the Government and everybody else concerned they will bear great fruit in years to come. One can already see this in the context of UCC and the Cancer Research Centre which engage in a very strong collaboration with an outside agency in the United States. That collaboration is underpinned by work done on both sides of the Atlantic and mirror-imaged across all sectors of the economy. It is seen in the clusters of medical device manufacturing companies in Galway which work with similar clusters in Massachusetts and elsewhere. There is enormous potential in that strong collaborative approach.
In addition to mapping out how we are to put the public finances on a stable footing, the four year national recovery plan is also a blueprint for economic growth, driven by export performance and based on having a more competitive economy. A competitive corporation tax rate, labour tax wedge and marginal tax rate are critically important determinants of our attractiveness for foreign direct investment, labour market participation and overall competitiveness. The plan recognises this fact and lays out proposals for taxation, accordingly, maintaining an overall competitive tax regime. One of the strengths of the plan is that it sets out a figure of €5 billion in tax and revenue raising measures but does so in a way that is least harmful to the enterprise sector. Any person who reads the published National Recovery Plan 2011-2014 will see that we are trying to ensure we will not make Ireland less competitive, and that we do not place taxes in areas that would create blockages for entrepreneurs or investment in job creation measures.
For that reason, whatever the outcome of a general election or discussions that may be held about this document, when people go on the hustings, we should have a fair debate on the content of the plan and what it tries to achieve. If any person opposes the plan, he or she must be honest and declare how he or she will find funds in the years ahead. I have listened to the contributions made by Senators. Although tax increases are proposed in the plan, it is obvious that if parties of a different political hue were in government, further increases would be necessary to fund their proposals. This is something that should be explored consciously and discussed in an open and honest manner. First, there will be no change to the 12.5% rate of corporation tax. As clearly stated in the plan, while taxation has to play a part in restoring balance to the public finances, this will not apply to our corporation tax rate. A low rate of corporation tax on export oriented activity has been a cornerstone of our industrial policy since the 1950s and the 12.5% rate is now part of our international "brand". The contribution from the corporate sector will be made through the maintenance and creation of high value employment.
I again welcome the strong support across all sides of the Houses in recent times for the corporation tax rate although kites were flown at times. A Fine Gael motion was tabled in the Dáil on the matter and it received all-party support. It is critically important to send the very strong message that Ireland retains sovereignty in its taxation affairs and that, in the context of corporation tax, the only people who can change the rate are those who are democratically elected to the Houses of the Oireachtas. It will remain within the competency of the national Government. This should be said on every significant occasion. When Senators make their contributions inside or outside the House, they should continue to emphasise this fact because sometimes ears may be closed to the truth.
The plan will ensure we will retain a competitive labour tax wedge. Income taxes drive a wedge between the cost of hiring someone and the actual take home pay of that individual. Increasing the tax wedge increases the cost of labour, replacement rates and stimulates a move towards the informal economy. Under the plan, it will be necessary to broaden the tax base by increasing the overall tax burden on average earnings for a single person from 29% in 2009 to 34% by 2014. Ireland will, however, maintain a competitive tax wedge, being the second lowest tax of the EU members of the OECD. Although tax increases are included in the national plan, it is critically important to point out that Ireland will not be a high tax economy when it comes to employment.
The marginal tax rate — the amount in tax paid on the last euro of earned income — is also a competitiveness issue. Research shows that very high marginal rates increase the average rates paid in tax by high skilled workers and create a brain drain, resulting in a lowering of innovative activity and productivity. It is important, therefore, that the taxation measures included in the plan do not lead to an increased marginal rate. I welcome the clear statement that over the 2010 to 2014 period of the plan the top marginal rates will remain unchanged.
I refer to the banks and the provision of credit to viable enterprises. Central to this has been the repair of our banks which are the key facilitator of business transactions in the economy on a daily basis. Specifically, the provision of credit to our enterprise sector, especially SMEs, should primarily come from a properly functioning banking sector. The code of conduct on lending to small businesses, the bank guarantee scheme, the recapitalisation scheme, the nationalisation of Anglo Irish Bank and the establishment of the National Asset Management Agency have all contributed to the stabilisation of the banking sector with a view to facilitating the flow of credit. In this regard, the House will be aware that the Government secured a commitment from the main lenders, AIB and Bank of Ireland, to make available not less than €12 billion in total for new or increased credit facilities to SMEs over 2010 and 2011, including funds for working capital.
The Minister for Enterprise, Trade and Innovation, Deputy Batt O'Keeffe, and the Minister for Finance, Deputy Brian Lenihan, have both made it a priority to meet the banks regularly to discuss the availability of bank credit for businesses, especially SMEs. They have reminded the banks of their obligations under the recapitalisation package and of the huge investment of taxpayers' money into the banks aimed at getting the economy moving again. The Government has arranged that AIB and Bank of Ireland will make available not less than €3 billion each for targeted lending for new or increased credit facilities to SMEs, farmers and sole traders in both 2010 and 2011. Specialised funds for seed and venture capital and for environmental lending are also in place. Banks are working with Enterprise Ireland to provide better financing for high-tech companies and exporters.
Each bank's performance in regard to its €3 billion lending plans is reported regularly, including sectoral and regional breakdowns. The Credit Review Office, headed by Mr. John Trethowan, is monitoring the banks and assessing their policies. His work is having a positive and meaningful impact on this aspect of banking at present. As noted by Senators earlier, in his second quarterly report published on Thursday, 18 November, Mr. Trethowan indicated he had analysed 19 applications for loans to small firms and told the country's two main banks that credit should have been given in the case of five of them. In other words, he overturned five refusals. The report also showed that the two banks covered under the Government's recapitalisation plan, Allied Irish Banks and Bank of Ireland, have, through their respective appeals mechanisms, processed 114 internal reviews of decisions on loan applications. Of these, 86 were upheld, 20 were reversed and eight are still being reviewed. In his report, Mr. Trethowan stated: "Current market perceptions that banks are not lending to SMEs is based on experiences from six to nine months ago, and the current situation whilst still not entirely perfect, is now continually improving." This development will no doubt be welcomed by all sides of the House as the issue of funding to SMEs, working capital and cash flow was continually raised by all during any debate on the economy, job creation or SMEs.
As I mentioned in this House last month in the course of an Adjournment debate, all Departments are now required to pay their business suppliers within 15 days of receipt of a valid invoice. This directly impacts on the cash flow of SMEs. One of the commitments under the National Recovery Plan 2011-2014, published on 24 November 2010, is that the 15 day prompt payment rule will be extended beyond Departments to the wider public sector. My Department is working on how this arrangement can be put in place in practice, including in regard to reporting requirements by State agencies. My officials will consult other Departments and State agencies on the matter shortly.
A second commitment under the National Recovery Plan 2011-2014 of interest to SMEs is the decision by the Government to review the business expansion scheme. The scheme has been operating for 26 years but funds raised under it since 2008 have declined significantly and businesses have complained that the scheme is administratively too complex. For these reasons, the Government has decided, subject to European Commission approval, to transform the old scheme into a new and better focused business investments targeting employment scheme, BITES. The Government has taken targeted action to ensure credit is available to viable businesses without imposing burdens on the taxpayer.
We are providing the necessary certainty and confidence for the international markets and for Irish citizens that we can restore order to the public finances, reach our budget deficit target of 3% of gross domestic product by 2014 and stimulate economic recovery by investing in enterprise and jobs. I am pleased to see there has been favourable international comment on the plan. The European Commissioner for Economic and Monetary Affairs has welcomed the plan, stating "it is an important contribution to the stabilisation of Irish public finances". He also noted it "strikes a good balance of durable expenditure and revenue measures, with due regard to protecting the least well off".
The national recovery plan is also supported by the agreement reached over the weekend on a funding package of €85 billion from member states of the European Union through the European financial stability fund and the European financial stability mechanism, bilateral loans from the UK, Sweden and Denmark, and the International Monetary Fund's extended fund facility on the basis of specified conditions. This includes a contribution from the State of €17.5 billion which will come from the National Pensions Reserve Fund and other domestic cash resources. The details of the programme closely reflect the key objectives set out in the national recovery plan.
Much of the commentary is fair in the context of the political charges that can be made against the Government for what was done and how we got here. It is important, however, to keep matters in perspective and not rewrite history. I take no joy in standing here. As I have said in the House on numerous occasions, I have more at stake in this country turning the corner, becoming prosperous and giving opportunities to our young people as a father of three young people than I ever will have as a Minister of State or as a Fianna Fáil Deputy or candidate. I have been abroad on numerous occasions promoting Ireland as a place for foreign direct investment and promoting Irish companies in export markets throughout the world. While some may not believe it, I know that commentary in these Houses is taken seriously and has an impact on how people abroad view us. I genuinely and passionately believe this is of huge significance. We can decide how we fight the next election but commentary and loose tongues will undermine confidence in this nation.
While I am not suggesting we should have shirked our responsibilities, the Government has spent the past two years fighting for the country's basic identity and economic survival and for the survival of the institutions that fund our small and medium businesses. We can argue about how we got here and about the mechanisms we have used to ensure we still have a country and a banking system that are at least basically functioning, surviving or on life support. There is continual use of the scorched earth policy, however, which is normally used by the retreating army, not the advancing army. We have a situation where much of the commentary coming from some parts of the House is almost in the vain hope that the whole thing will fall over and they will then march over the scorched ground and picked up the burnt-out carcass of what remains. I say this as one who may not have an opportunity to speak in the House again because of the dissolution which will happen some time early in 2011. I urge Members, when debating, to be conscious that there is a broader audience.
I could deal with the political points that were made in the context of the funding of the banks and whether we should have nationalised them or let them fail. Any objective analysis would point out that the Government's first and foremost duty is to try to ensure we have a State that functions, that can pay its way in the world and, more importantly, can pay its citizens in the form of social welfare payments and pay to teachers, nurses, doctors and gardaí, as well as pay for the services any modern state would consider normal.
With regard to the IMF-EU package, we will be paying an average interest rate of 5.8% if we draw down the facility. As we speak, Irish bonds are being traded at over 9% on the second-hand bond market. The Government could have been cute and decided, as it would not be in office in June 2011, to let matters drift. No responsible Government could pass a budget for 2011 knowing there was not enough funding to meet even the basic commitments of that budget. At least whoever is in government will know they had access to guaranteed funds subject to conditions on the basis of which any Government could decide upon its priorities. There are parameters laid out that people will have to live within to gain access to the funding. If they do not want to gain access to that funding and live according to the parameters laid out in the national recovery plan and agreement with the European Union and IMF, they can tear up the plan. In that case, they will have to gain access to funding somewhere else. I am not an expert economist but realise that the bottom line is that we, as a sovereign people and Government, have a responsibility to ensure we have funding mechanisms available to us.
The talk of a sell-out of sovereignty is alarmist in the extreme. Let us be quite clear about this and ask whether we are beholden to the IMF and the European Union or to bond markets. Either way, we must borrow money somewhere. I would prefer to be borrowing it from people with a genuine interest in seeing this country survive, grow and prosper. There is collegiality among those within the European Union and, more important, the eurozone at present. Today's market conditions demonstrate a re-focusing of efforts to undermine Portugal, Spain, Italy, Belgium and the whole eurozone. This country has invested enormous sums emotionally in the European concept. For us to suggest now that we could have defaulted and that we should tear up the old bonds and throw them on a bonfire is inappropriate. We are very dependent on the stability of the eurozone and on a functioning political European Union. It has been our friend and will continue to be our friend but we have a duty to play our part in ensuring there will not be an unravelling of a project that most in this country believe is good and from which they have benefited.