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Economic Competitiveness.

Dáil Éireann Debate, Tuesday - 1 February 2005

Tuesday, 1 February 2005

Questions (65)

Bernard J. Durkan

Question:

60 Mr. Durkan asked the Minister for Finance if he is satisfied that the economic policies which have been pursued are conducive to competitiveness; and if he will make a statement on the matter. [2503/05]

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Written answers

Securing national competitiveness is a key priority for this Government. The recent strengthening of the euro and its negative impact on our competitiveness further emphasises the need to keep domestic costs down.

I warmly welcome the downward trend in the rate of CPI inflation last year. The 2.2% increase last year was the lowest rate of increase since 1999. My decision not to increase excise rates in the budget will help inflation in 2005. We cannot control the rate of inflation; external factors have a lot to do with that outcome. We can, however, seek to ensure that our domestic cost base does not add to it. That is why we need sensible income policies and a greater role for competition in the economy. This is the way we can best protect jobs and living standards.

The consensus approach to wage determination has a crucial role in improving competitiveness, by delivering moderate wage increases. In this context, wage increases must be limited to those negotiated under Sustaining Progress. My Department participates fully in the negotiations of these agreements. Officials from my Department are also participating in the anti-inflation initiative set up as part of Sustaining Progress with a view to examining ways of reducing inflation.

It is also important to maintain spending growth in line with revenue growth, thus keeping the burden of taxation low in order to maximise our economic growth potential. We are maintaining capital expenditure at the current high levels relative to GNP in order to reduce the existing infrastructural deficit.

Question No. 61 answered with QuestionNo. 46.
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