I move:
That Dáil Éireann takes note of the Government's National Development Plan 1989-1993.
This National Development Plan is primarily a programme for investment in the country's economic and social structures.It is a detailed multi-annual development budget designed to modernise the economy, expand our productive capacity and promote stronger growth with higher employment and improved social equity. It is an integrated plan comprising inter-related programmes which will be implemented in every region of the country and every sector of the economy. The programme is a blueprint for economic and social progress over the next five years. First, the plan outlines the macro-economic framework within which it will be implemented over a five-year period.
Secondly, it sets out the amount to be invested annually in the principal sectors of the economy and in each region. Thirdly, it provides outlines of the programmes for each sector and the seven sub-regions. Fourthly, it indicates the manner in which the plan will be implemented with estimates of the employment to be generated.
The plan has its origins in the decision of the European Council held in Brussels on 12-13 February 1988 when it was decided that as part of the Delors plan for the relaunch of the Community and the completion of the Single European Market the amount of the Structural Funds for the less developed regions should be doubled and a special effort made for the least prosperous. This means, in effect, that Ireland as a whole, will be a beneficiary of this increase as one of these regions.
Technically, this plan, therefore, is a framework to enable us to take up our share of the increased resources of the Structural Funds, as these funds in future will be allocated primarily on the basis of programmes. The Government, however, decided to avail of the opportunity to formulate a comprehensive investment plan which enables us to utilise the additional resources in a coherent integrated way as part of a major economic development programme.
The National Development Plan should be seen also as an extension of the Programme for National Recovery, consistent with its objectives and taking us further along the road of economic and social development. EC assisted development programmes will help to increase productive efficiency, improve communications with our principal markets, overcome the competitive disadvantages of peripheral location, broaden innovative capacity, enhance the quality of management and the skills of our workforce.
The Programme for National Recovery has laid the foundations of a sounder and more prosperous economy by bringing about marked improvements in key areas such as the public finances, interest rates and inflation, the balance of trade and payments, and competitiveness. This plan proposes to build on this progress with the assistance of the policy of cohesion adopted by the European Community.
The availability of the increased resources resulting from the doubling of the EC Structural Funds by 1993 represents a unique opportunity for Ireland to raise the whole country as a region of the Community on to a new plane of development and to overcome the economic and social deficiencies that are holding us back. The under-utilisation of our resources, including the talents and abilities of our people, is the biggest challenge we face today, a challenge that goes to the heart of our future. It is imperative that we succeed in raising permanently and significantly the level of economic activity to sustain more employment and support better living standards. We have proven our capacity to master modern industrial and service technologies and to sell our products and services in the markets of the world. To improve our performance as a modern economy and reach the standards we desire, it is urgently necessary to eliminate structural defects and bring the economic infrastructure up to the highest possible standard of efficiency.
I would like to deal briefly with the situation in the Community to which our national plan will relate. This Government have been active and effective in ensuring for this country the full benefits of our membership and in protecting our national interests in the Community. The success of our efforts is due to consistent and determined political effort and negotiation to achieve the objectives we set and pursued. The decision to double the Structural Funds came after intense negotiation at the European Council in Brussels in February 1988 and the inclusion of this country as one of those to benefit especially from the increase was of critical significance for us and opened the way for the launching of this plan.
The reform of the Community's Structural Funds in the context of the completion of the internal market has been finalised, and the new system is now fully operational since 1 January 1989. The doubling of the resources of the Structural Funds for the less-developed regions is accompanied by a commitment to a special effort for the least prosperous of these regions which, at my insistence, includes this country, and a provision that for these regions the rate of assistance from the funds can be up to 75 per cent.
We were also successful in obtaining agreement that certain infrastructural projects with private sector funding can be eligible for assistance — a provision which will be particularly helpful to us given our budgetary constraints and, through partnership arrangements with the private sector, ensure that infrastructural projects can proceed much more rapidly than would otherwise be the case.
The relaunching of the European Community and the new impetus toward integration has given the Community a new momentum of confidence. Economic growth last year was the strongest since the end of the seventies, the increase in investment the highest for over two decades. The inflation rate has been reduced to an average of 3.5 per cent. Employment at the Community level is now increasing, though the level of unemployment unfortunately remains high at 11 per cent.
The Community intend to build on this progress through the full implementation of the range of policies provided for in the Single European Act, completing the Internal Market and its social dimension, promoting economic and social cohesion, advancing research and technological development and protecting and improving the environment.
The whole purpose of completing the Internal Market is to lift the performance of the Community on to a higher growth path. The Cecchini Report suggested that the benefits resulting from increased competition, exploitation of the economies of scale and better use of resources could provide additional growth of around 4 per cent over a five to six year time span. This means that the average growth should be increased from 2.5 per cent a year to at least 3 per cent. Such a result would represent a further step in the strengthening and development of the Community, improve its world trading position and provide substantial rewards in terms of greater prosperity and jobs. Particular attention and vigilance will be necessary to ensure that these benefits are shared equitably among all the member states and throughout the regions of the Community.
Success in achieving the Community's objectives will require the support of the public and the social partners. This in turn depends on a commitment to a social dimension directed at ensuring that all Community citizens benefit and that there is a progressive improvement in social standards and working conditions throughout the Community. This concept is entirely in line with the approach which we adopted as an integral part of the Programme for National Recovery which relies for its success on the participation and co-operation of the social partners. The increase in the Structural Funds is designed to promote a more equitable sharing of the benefits and the opportunities between the centre and the periphery.
Deeply conscious of the crucial importance of this plan as a vehicle for utilising the increased Structural Fund resources to improve the performance of the Irish economy over the next five years, the Government made careful and effective arrangements for the preparation of this plan.
First, we acknowledged the vital role to be played by the Commission both in approving the plan to be submitted and in its subsequent implementation. It was clear to us that full and close co-operation with the Commission was essential in order to make a success of our preparation for the completion of the Single Market and, in particular, to ensure that the plan meets all the necessary requirements.We arranged, therefore, at an early stage to establish the closest possible degree of co-operation and co-ordination between the Government and the Commission and the administration here and the services of the Commission.
For this purpose, on the Commission side, a task force of relevant Commissioners and Directors-General was established, headed by President Delors. On our side, this was paralleled by a Committee of Ministers and Secretaries over which I preside. The objective is to ensure that the Government's policies and Community policies are fully co-ordinated on an ongoing basis and that as the plan took shape it would be with the full knowledge and understanding of the Commission at every stage. We developed what was, in fact, a novel partnership between us and this co-ordination and co-operation will continue to ensure the successful implementation of our Irish Plan.
Since Ireland is one region for the purposes of the Structural Funds, the plan covers the State as a whole and this is in accordance with the Community's regulations.
In preparing the plan, the Government carried out an unprecedented level of consultation at both national and local, regional level. At national level, the Central Review Committee of the Programme for National Recovery were consulted, as was a wide spectrum of business, financial and vocational interests.
To make the plan as responsive as possible to the needs and requirements of the different areas of the country a completely new system of consultation with local interests was put in place. The country was divided into seven sub-regions.In each region we established an advisory group and a working group to prepare an outline plan giving the needs and priorities of the subregions.
This two-tier system and the work undertaken in this way provided a valuable and vital input into the formulation of the overall National Plan and the related plans for the subregions which, in effect, make up the totality of the National Plan. I would like to thank all the members of both the advisory groups and the working groups in each of the seven subregions for their very important and valuable contribution. The plan sets out how the level of national expenditure is broken down into the expenditure, under corresponding headings, in each of the subregions. This is an important and significant innovation. Indeed, it is the first time that any National Development Plan as such has had a subregional basis and content. The National Plan, therefore, is integrated both vertically and horizontally. Each sector of the economy is inter-related with the other sectors and the subregions are integrated with the National Plan.
In addition to these structures which were put in place to facilitate and streamline the planning process, there was a constant flow of detailed information and projections between each of the Ministers involved and their Departments with the corresponding Commissioners' offices in Brussels. This latter process was primarily concerned with the preparation of the individual operational programmes for each of the different sectors. All of these operational programmes must also be submitted to the Commission for approval.
An additional separate plan will be submitted by June next, in accordance with the special time schedule provided in the regulations, in relation to what are called Objectives 3 and 4. These relate to action to combat long term unemployment and to facilitate the occupational integration of young people.
The plan has been published in its entirety, and is now being debated for three days in the Dáil. As I indicated at the launch of the plan, we welcome constructive criticism and suggestions for improvement. While the fundamental provisions must be broadly adhered to, the Government will be flexible with regard to detailed aspects of particular sectors and the timing and implementation of particular projects. We remain open to submissions and proposals. I would appeal, however, for a sense of realism and a regard for the national interest because that is the basis on which the Government undertook this major exercise.
I regret that some Members of the Opposition Parties have seen fit to knock the plan and make statements about it which are in no way related to what is actually in the plan and what it aims to achieve. I would like to suggest to them that they are very much out of touch with the widespread public approval there is for the Government's achievement in formulating this powerful, positive plan for economic and social progress. Their statements are in stark contrast with the favourable reception by the business and financial community and by the professional commentators. They are also at complete variance with the favourable reception of the plan by the Commission and the manner in which the work and the approach of the Irish Government were complimented at all levels.
This is the most important financial submission ever made by Ireland to the Community. It incorporates major elements of public expenditure and budgetary provisions over the next five years. It is the responsibility of the Government to make these financial decisions. The presentation of a coherent and comprehensive plan on time was vital. The Government have fully discharged that responsibility.
Ireland submitted this National Development Plan to the Commission on 22 March, comfortably within the legal deadline of 31 March and indeed, well ahead of all other member states, except Portugal. Our systematic and comprehensive approach of continued assessment and co-ordination at national level, complemented by the involvement from the outset of the subregional groups, has not been matched in any other Objective I member state. I draw your attention to this aspect to underline again the seriousness with which we undertook the regional input and our determination to produce a plan which would address the particular needs and aspirations of the different regions of the country.
The document which ensued is the National Development Plan which we have before us today — the fruit of careful, logical and systematic endeavour over the past 12 months. For those who persist in criticising that achievement, I would like to point out that Ireland's performance in regional consultation compares more than favourably with that of other member states.
The formulation of this National Plan was a very complex exercise. It involves intricate, interlocking calculations and projections, not just combining seven subregions into a coherent whole but also projecting the whole process over the five years ahead. This could only be done centrally. The same applies to its implementation, which can only be undertaken through national mechanisms.Anything else would result in administrative chaos. Of course a major part of the actual operation of the programmes will be regional and local and there will be the fullest possible level of consultation and discussion on this aspect.
A vitally important aspect of this National Development Plan is the manner in which the expenditures envisaged in the plan are fitted into and made compatible with the strict budgetary discipline being pursued under the Programme for National Recovery.
The economic recovery policies that we have implemented since March 1987 have the approval of the European Commission.Indeed, the recent annual report of the EC stresses the continuing importance of the process of budgetary adjustment, stabilisation of the debt-GDP ratio, a continuing reduction in the Exchequer borrowing requirement through cuts in public expenditure, with a greater emphasis on current than capital. The degree of improvement in the public finances achieved to date has been remarkable. The debt-GNP ratio has been stabilised ahead of schedule as a result of renewed economic growth and associated revenue buoyancy and the reduction of Government expenditure by 9 per cent of GNP since 1986. But further adjustment will be necessary, even after this year's targets have been achieved.
The reduction in the level of borrowing achieved in recent years and the improvement in the rate of growth in the economy have done no more than ease the problems of budget management to a limited degree. The recognition in the programme that "a fiscal policy which faces the financial realities is the key to putting the economy back on the path to long-term sustained growth" must still remain a major guiding principle for policy over the next five years.
The size of the Exchequer deficit is the primary determinant, within our control, of the environment for investment and sustained economic growth — through its impact on financial markets and interest rates and on stability and confidence generally.For this reason, and in view of the scale of outstanding debt and the large amount of resources this pre-empts, it is necessary to proceed beyond stabilisation over the medium term.
At the same time, there is good reason to believe that, with a positive response to the development programmes set out in this plan, the economy can move reasonably quickly on to a higher growth path. Growth in the Irish economy over the period to the mid-nineties could exceed the average of the EC, given continuing implementation of a responsible domestic policy strategy. Key elements in this will be the maintenance of a good management labour relations climate, low inflation and interest rates, a stable rate of exchange and a constant emphasis on competitiveness. Given a consistent adherence to the right policies and attitudes we could prudently anticipate real economic growth of the order of 3.5 per cent annually over the medium term, with the possibility of doing better than the EC average.
Such growth should lead to a modest reduction in the burden of debt over the coming few years. However, to fully reestablish sustainable growth in output and employment a more substantial reduction in the real level of debt is clearly necessary.
The progress made under the Programme for National Recovery and the major prospects of further progress under this plan, however, could be endangered if we allow inflation to rise significantly again in relation to our trading partners. This danger of a resurgence of inflation is a cause of concern in a number of developed countries which have suffered recent setbacks in this regard and it has recently started to creep up again here. There are some outside inflationary pressures but the increases in our rate have been to an extent generated here at home. It has taken us seven years to get inflation down from 21 per cent to 2 per cent, and we cannot afford to let go of the comparative advantage our low rate provides. This means two things. First, there is an absolute necessity for continued income restraint, and I mean incomes in the widest sense. Special pay claims in the public service or elsewhere can have serious implications. No case, however exceptional and however well founded, can be treated in isolation. The public should always keep in mind that every pay increase above the norm ultimately affects them in higher prices. The consumer and especially the housewife can be very effective in keeping prices down by vigilance, questioning and resisting unwarranted increases. Prices can be kept down by public awareness and pressure, by greater efficiency in business, by keen competition, by doing away with wasteful gifts and vouchers and finally by Government action when necessary. To keep prices and the rate of inflation down is one of the most important tasks we face in maintaining economic progress and in ensuring the success of this national plan.
The plan we have adopted is, despite the demands for additional capital expenditure, consistent with the financial policy goals we have been adhering to and in fact improves on them. The plan envisages a reduction in the Exchequer borrowing requirement to 3 per cent of GNP in 1993, and in the debt-GNP ratio from its current level of 133 per cent to 120 per cent by that date. It is possible, if the experience of the last two years were to be repeated, that financial progress could be faster than that. The Exchequer returns for the first quarter of 1989, in so far as they give any valid signal for the year as a whole, are encouraging. It is not possible accurately to predict the course of events for many years ahead but our responsibility is to set realistic, achievable targets and implement consistently and courageously the policies necessary to achieve them. If conditions warrant we will raise our sights higher as the implementation of this national plan brings the desired results.
The Exchequer borrowing objective of a reduction in 1993 to 3 per cent in conjunction with the growth rates envisaged sets the national debt-GNP ratio on a downward path. This reduction in indebtedness should, in turn, lessen by about one-tenth the annual burden of debt service, thereby releasing resources for other desirable purposes including a reduction in taxation.
One of the purposes of the plan is to secure a substantial increase in private investment. We do not propose to make economic growth and employment dependent on increased domestic Government expenditure. There has been substantial progress recently in streamlining the economy, and we have the capacity to absorb the additional funds now available and to use them for productive purposes without difficulty. It is not legitimate to criticise this plan for what it does not contain. Neither taxation policy nor social welfare policy, which are covered in the Programme for National Recovery, feature as such in the National Development Plan, because they are not directly relevant to the increased Structural Funds. The title of the plan is National Development Plan 1989-1993, and it is essentially an expansion in depth and an elaboration of some key development aspects of the Programme for National Recovery.
In the past additional EC aid, in the form that it took especially following our joining the European Monetary System in 1979, required us to increase Exchequer borrowing by substantial amounts in order to avail of Community funds. On this occasion the Government are determined that there will be no conflict between the goal of better overall financial balance and increased capital expenditure.
The plan envisages total expenditure of £9.1 billion over the five year period 1989-1993. This includes £3.6 billion of public and similar expenditure, £2.1 billion of private sector expenditure and £3.4 billion from the EC Structural Funds. Full details of these expenditures are set out in the plan.
In addition, the separate plan to be submitted by June next is in relation to what are called Objectives 3 and 4. These relate to action to combat long-term unemployment and to facilitate the occupational integration of young people. Provision for £0.6 billion of expenditure will be made in that plan, of which £0.2 billion will be public expenditure and £0.4 billion from the Structural Funds.
In total, the two plans will amount to £9.7 billion of expenditure, of which £3.9 billion will be sought from the Structural Funds.
For 1989, the plan now submitted provides for expenditure of £1.5 billion, including £0.4 billion from the Structural Funds. The 1989 budget has already taken this expenditure into account so that the development measures could go ahead as rapidly as possible.
The plan is geared to maximise the amount of Structural Fund aid which will be made available to Ireland and to use it to best advantage in developing the economy. The amount sought from the Structural Funds, totalling £3.9 billion, goes beyond a strict doubling for Ireland over the period. It represents what the Irish Government would regard as a fair allocation of the available funds in the light of Ireland's development needs.
The public finance position limits the Government's room for manoeuvre in providing domestic resources to develop the economy. What the plan sets out to do is to maintain domestic public and similar expenditure on structural development somewhat above its 1988 level and on top of that to invest the additional Structural Fund resources in additional development.
This is in line with the "additionality" provision in the Community regulations. This provision requires that the increased appropriations from the funds should result in at least an equivalent increase in the total volume of official or similar structural expenditure, including the Community assistance, in the member state concerned, taking into account the macroeconomic circumstances in which the funding takes place.
In our circumstances, given the level of the national debt and the continuing need to reduce the level of Exchequer borrowing, the scope for increasing the level of Government investment in the economic infrastructure is of necessity limited, but the higher intervention rates now available from the Structural Funds are of very great value in this regard as they will mean that the increased Community assistance will greatly increase the return that can be procured in improved infrastructure from domestic expenditure, public and private.
The Government intend to pursue a further reduction in Exchequer borrowing over the medium term. This reduction must be sought primarily on the current side, that is by reducing the budget deficit. This will require continuing strict financial discipline. In fact, since 1986 the greater burden of adjustment has been on the current side, which has been reduced by 4.3 per cent of GNP, compared with a reduction of 3.3 per cent in Exchequer capital borrowing. For the first time since 1982 the Public Capital Programme in 1989 showed an increase of £80 million over the outturn for 1988, an increase that was achieved however without resort to additional Exchequer borrowing.
The reformed EC Structural Funds provide for an increased maximum rate of Community contribution of 75 per cent of eligible expenditure involved. The precise contribution rate which will apply to particular operations will be a matter for negotiation with the EC Commission. Factors which are to be taken into account include the seriousness of the specific problems to be tackled and the financial capacity of the member state involved. Other factors such as the extent to which an investment will generate revenue will also have a bearing. Since Ireland has been classified as one of the least prosperous regions, it would be appropriate that the highest contribution rate should apply in Ireland as far as possible and this is reflected in the plan.
In determining the development priorities, the Government looked first at the main features of the economy which needed most attention, and where there are serious structural deficiencies which need to be remedied. We have to overcome low income and output levels, where quite insufficient progress has been made since we joined the EC. We have problems arising from our population structure, which has meant we have had to face both a rapid growth in labour supply and a high dependency ratio. This has also undoubtedly exacerbated our financial problems. The persistently weak demand for labour has led to high unemployment and emigration. We face difficulties in finding necessary development funds, because of continuing budgetary imbalances and high indebtedness. Access costs and serious gaps in our infrastructure hinder investment and development.We are still relatively heavily reliant on agriculture. There are weaknesses in our industrial structure, and investment levels have been low in recent years. Many of these problems arise in part from our position on the periphery of Europe. The completion of the Single Market and the parallel cohesion measures must aim to reduce the scale of these difficulties and begin to close the gap between Ireland and the central regions of the Community.
It was clear that two types of action were needed — action to improve the competitiveness and efficiency of the Irish economy, taking account of our geographic position as an island on the periphery of Europe, inadequate infrastructure and low population density; and action to strengthen the productive capacity of the economy. Improving the competitiveness and efficiency of the economy requires investment in transport facilities such as roads, rail and bus, sea ports and airports. It also requires investment in telecommunications, postal services, the energy network, sanitary services and waste disposal facilities. All of these were identified as sectors where steps need to be taken to improve our position.
As regards strengthening the productive capacity, the areas identified for development are industry, services, tourism, agriculture, fishing, forestry and rural development generally. These sectoral areas must be complemented by the development of human skills through improved educational and training resources and particular measures to facilitate the occupational integration of young people and to combat long-term unemployment.
Now that the development plan has been submitted the Commission will assess it and proceed to draw up what is called the Community Support Framework.This Community Support Framework will be prepared in consultation with the Irish Government. It will set out: the priorities included in the National Development Plan for which Community assistance will be provided; the forms of assistance to be provided; the indicative financing plan, with details of the amount of assistance and its sources; and the duration of the assistance. In effect, it will set out the development measures which the Structural Funds will assist over the period and the level of assistance which will be provided. This will be a crucial document since it will establish the overall financing position for the five-year period. The process of consultation and dialogue with the Commission, which has worked so well in expediting the preparation of the plan, will continue to operate during the examination of the national plan, the operational programmes and the support framework.
The regulations require the Commission to take a decision approving the Community Support Framework not later than six months after receiving the plan. However, I am confident that the process can be completed earlier than that. In discussions which we have had with President Delors and the Commissioners involved, we have stressed the need for early decisions so that the development operations can get under way as early as possible.
The plan sets out the overall strategy which will be followed in each of the relevant sectors. The operational programmes will spell out in more detail the precise measures to be undertaken. These will be chosen in a way which will maximise the development effect and deal with the main deficiencies in each sector. These operational programmes will show the specific developments and projects in each sector. These programmes will have to be agreed with the Commission and in fact will form the legal basis for the commitment of funds by the Community. The programmes to be submitted are set out in the plan as follows: industrial development; tourism; roads; transport, including air and sea freight, sea ports, airports, rail and bus; energy; sanitary and other local services; telecommunications and postal services; human resources, education, training and employment; and agricultural and rural development.
Many of these programmes have now been submitted to the Commission for approval. The only exceptions are where funding for 1989 has been agreed and the final draft is under discussion with the Commission. The Commission will be examining these programmes in parallel with their examination of the plan, and we would expect that they will be approved at the same time as or even before the Community Support Framework is established. The Ministers concerned with each sector will deal fully with them during the course of this debate. I would like at this stage to give a brief outline of our approach to the principal sectors in the plan.
For Irish business and industry the completion of the Internal Market has major implications. The fundamental EC objective is to remove trade and other barriers which distort competition. Ireland has, perhaps, the most open economy of any country in the Community.We have fewer non-tariff barriers to trade than are found in most other Community countries. At the same time we export almost three-quarters of what we produce. Unrestricted access to Community markets is essential not only to the development of indigenous industry but also in attracting overseas industrial investment to Ireland.
It is, therefore, of fundamental importance to Irish economic development that the remaining barriers to trade in the Community are removed. We have been strong advocates of the need to create a single European market, because of the major opportunities that will arise in that market for Irish firms. Irish firms have shown that they can compete successfully in Europe. At the time we joined the European Community in 1973 only about one-sixth of our exports went to Community countries other than the UK. Today, while the UK still remains our most important export market, we have more than doubled the proportion of our exports going to other Community countries. In the process Irish firms have achieved a healthy diversification of markets and export products. They have shown that when trade barriers are lowered they can penetrate and compete successfully in some of the most competitive markets in the world.
Last year our exports reached record levels. One of the most significant features of this performance was the level of export growth achieved by the indigenous sector of Irish industry. Exports from this sector increased by over 23 per cent last year — well ahead of the overall growth rate of 15 per cent in total exports. This is one of the clearest indications to date that smaller Irish firms are beginning to get their export activities right. Improved marketing and export performance of this nature are essential requirements if we are to benefit from the opportunities which the single market will generate.
Successive CII surveys have shown that the Irish business sector is optimistic about the opportunities that the completion of the Internal Market will bring, but there can be no complacency. Undoubtedly, the removal of hidden trade barriers and the increased demand which the single market programme will generate will make Ireland a more attractive location for internationally mobile investment seeking access to European markets and will provide increased export opportunities, but competition will also increase markedly in markets right across the Community. That is why the Government engaged in an intensive awareness and information campaign at the end of 1988 to bring home to business firms not only the significant new opportunities for business now coming on stream but the increased competitive challenge that will also arise.
In planning for the best possible use of the increased Structural Fund resources that will become available over the next five years the Government have taken care to maintain a proper balance between essential investment in upgrading the infrastructure needed to underpin economic development and in directly productive sectors of the economy. We also had to keep in mind the fact that the Commission emphasises that infrastructural investment should be related to productive purposes.
Over the period 1989-1993 the objective of the Government is to create 100,000 gross new jobs in manufacturing industry and international services. The achievement of this outturn will represent an improvement of almost 20 per cent on performance in recent years.
Over the period 1989-1993 a reorientation of industrial policy will take account of the changed environment which the completion of the Internal Market will bring about. The competitiveness of Irish industry must be improved. Such improvement will be essential for most Irish firms if they are to gain new markets and to withstand the increased competition that will occur in their existing markets.
A supportive environment for new business investment will be kept in place. It is essential that the rate of inflation be kept to the lowest possible level. We will continue to work with the social partners to avoid levels of inflation, interest or pay increases that would undermine the major achievements in economic recovery of the past two years which have achieved the improvement in the investment climate which is now beginning to translate into jobs. Downward pressure on services costs — electricity, telecommunications and postal charges, insurance — is the key to competitiveness and must be maintained.
Increased resources will be devoted to achieving a further significant shift in State support to upgrade the marketing and technological capacity of Irish industry.Improved marketing performance by Irish firms will be required not only to maintain our existing market shares in an expanding market but to take up opportunities in new markets which the removal of trade barriers will bring about. Irish firms will increasingly realise that they are no longer exporting to Europe but marketing within Europe. Our objective is to double the market share of Irish firms in other Community Markets by the mid-nineties and to be well on the way to achieving this with the aid of the Structural Funds by 1992.
Community surveys have shown a significant technological gap between the core and the peripheral regions of the Community. A determined effort to narrow this gap will be made in Ireland over the next five years. This will be done by concentrating our efforts on selected areas of advanced technology relevant to the needs of existing and emerging new industries in Ireland and where basic expertise exists in our third level education colleges. We will promote greater links between industry and higher education bodies and ensure that the technological support services available to industry from our research institutes and industrial promotion agencies are designed to help firms achieve a competitive edge in the market place.
The increased competition in the free internal market will provide both the opportunity and the need for Irish firms to combine their resources with other firms based either in Ireland or other Community markets in order to increase efficiency in production, marketing, distribution or product development. The IDA, SFADCo, CTT, EOLAS and Údarás na Gaeltachta will support and promote new initiatives to achieve such joint ventures.
Some £1.2 billion of direct support will be channelled directly to Irish firms over the five year period from the increased resources available and together with matching resources from the private sector will underpin a total expenditure of over £3 billion by Irish industry between 1989 and 1993.
Tourism has been identified as a key sector for expansion over the period of the plan, following up the high priority this Government have given tourism since coming into office. Tourism is labour intensive, has a low import content and has the ability to provide income and employment in the most remote regions of the country.
Measures taken over the past two years since the launch of the special programme for tourism in May 1987 have brought a major improvement in the industry. Annual visitor numbers are up by over 30 per cent on 1986; annual revenue has passed the £1 billion mark; and the sector now sustains some 67,000 full time job equivalents or 6 per cent of the labour force. Bord Fáilte are targeting for a further 15 per cent increase this year. The board believe that the sector is now well on course for achieving the stated objective of a doubling in visitor numbers by 1993.
To sustain growth of this magnitude there is, however, an urgent need to improve the quality and range of Irish tourism facilities, with particular attention to the faster growing segments of the international tourism market. Ireland should have a natural advantage in the provision of activity and special interest holidays such as fishing, golf, sailing, cruising, walking, cycling, archaeological, historical and cultural visits. However, these advantages are not enough without the provision of first class facilities and amenities for visitors in each of these areas.
Heavy and sustained investment in product development, backed up by effective marketing and competitive pricing, is essential for the continued successful development of Irish tourism. The plan envisages investment in all aspects of the tourist infrastructure necessary to establish Ireland as a major tourist venue and marketing will be co-ordinated by the State agencies and combine State and private sector expenditures. The need is to eliminate deficiencies and bottlenecks and overcome constraints by organising combined investment from public and private sources and the Structural Funds.
A very encouraging development has been the great upsurge of investment interest in the tourism industry in Ireland this year. A very large number of high quality projects are coming forward, involving high levels of investment and capital expenditure, filling in particular gaps in the infrastructure of tourism amenities and facilities. Bord Fáilte are very active in encouraging these developments and are monitoring them to make sure that every possible assistance and facility is extended to the promoters of good, sound, viable tourism infrastructural projects.
It is true that our island located on the periphery of the European Community places us at a major cost disadvantage vis-á-vis our European neighbours. We have been at pains constantly to emphasise that aspect to the Commission and to the Community services in general. Transport costs for Irish exporters are approximately twice those incurred by Community countries trading with one another on the European mainland. The opening of the Channel Tunnel in 1993 will accentuate our peripheral location, leaving Ireland as the only member state without a land link to the rest of the EC. These factors, together with the completion of the Internal Market, make it essential that we provide an efficient inland and access transport infrastructure.We cannot change our geographical position on the European Continent, but we certainly can and must do everything within our power to ensure that internally transport access of exports to our ports and to our airports is the best we can provide. The most significant reason for high Irish transport costs is the poor state of the national roads and the access roads to our principal ports and airports.
The plan proposes Exchequer expenditure of almost £1 billion over the five years on the development of our roads with £755 million on national roads. Local authorities will continue to provide funds from their own resources and the Exchequer will continue to provide certain finance for road maintenance.
Under the plan, immediate priority will be given to the development of the following strategic sections of national routes; Euroroutes EO1 and E20 and Dublin to Kinnegad. The detailed strategy has been set out in the Operational Programme for Roads, which has been formally submitted to the EC Commission.
Before Easter, the Minister for the Environment invited proposals for private investment in the Dublin Ring Road in return for a toll franchise. We expect a positive response to this proposal. We have also identified three other projects which have potential for private toll based investment. These are the Newbridge/Kilcullen by-pass, the Lucan/Kilcock Road and the Cork Downstream Crossing. We will also welcome realistic investment proposals relating to these projects. Private investment in toll roads will be used to accentuate the investment programme on national roads and will not be in substitution for Exchequer funding.
Roads are, however, only one aspect of our transport infrastructure. Over the next five years the Government are proposing total investment of over £440 million in transport in the following other specific action areas: development of air and sea corridors and services to UK and mainland Europe; investment in the State and regional airports; development of certain commercial seaports; and investment in bus and rail infrastructure.
The investment plans for each of these areas have been specifically designed by the Government to ensure that Ireland is more fully integrated into the mainland European transport network.
The approach has two aspects. First we have to orient our whole transport system in all its aspects to European access. At the same time, we have to develop our internal transport systems to make sure that to the greatest possible extent it facilitates especially our export trade and also the import of essential goods.
Over the last two years Irish airports and carriers have between them generated an unprecedented growth in air traffic, internal, cross-channel and international, which is without parallel in Europe. I would like to pay tribute to all concerned. The Government's concentration on cheap access, on opening up routes, and in supporting investment in our airports both national and regional is paying off. There will be continuing investment of £120 million over the period of the plan. Plans are also being drawn up for intensive air freight services to Continental Europe. Again that proposal for air channel as it is sometimes called is related directly to the opening of the Channel Tunnel. At that point, we will be the only country that will not have a direct land link with mainland Europe for our exports and imports.
Port facilities must be suitably modernised so as to enable faster turnabout of ships. Computerised documentation processing must be used to cut down delays. The development plan targets the main commercial ports. Total proposed investment in commercial ports over the period of the plan is £72 million and this will mainly be concentrated on Dublin, Rosslare, Waterford and Cork. Other ports will also be included.
For an island State the need for a fast efficient and competitive sea transport is self evident. We therefore intend to develop a fast sea freight shuttle service to Europe using Rosslare harbour as a hub. We will supplement this by an enhanced lift on/lift off capability using the most modern purpose built harbour container vessels plying from Dublin, Waterford and Cork to mainland Europe. We will expand the conventional fleet by encourging private investment in shipping and stimulating this by direct grant assistance.
The Government expect the Commission to acknowledge the acute and unique problems faced by Ireland in this regard and will strongly support us in our determined drive to improve the access and internal transport networks throughout the economy.
Energy has a vital role to play in the National Development Plan and in the national and Community objective of greater economic and social cohesion in the run up to 1992 and beyond. Energy is fundamental to all sectors of the economy.It is vital to ensure that the provision of adequate, reliable and competitive energy supplies does not pose a barrier to economic growth and development at national or local level.
After acute problems became evident during the second oil crisis in 1979, a major investment programme was undertaken to ensure adequate electricity supplies in the eighties and to extend the national gas network from Cork. Dependence on imported oil has been reduced from 70 per cent to under 50 per cent and in electricity generation to insignificant levels. Our electricity prices have become much more competitive in the last two or three years. Exploration for offshore oil and gas has been stepped up as a result of the new licensing terms and the agreement reached with Marathon has already produced results in the welcome form of a new gas find after years of stagnation. I know that all Deputies in the House will welcome this very significant addition to our indigenous resources of energy in the new find of Kinsale.
Ireland is the only member state with stand-alone gas and electricity networks. There is no interconnection even with Northern Ireland at the present time. Our small and dispersed population structure and the dispersed pattern of industrial settlements are disadvantages. As a result, Irish energy costs are significantly above average Community levels. It is essential that we develop indigenous resources to the maximum extent possible.
Subject to further assessement, it is intended to pursue steps to integrate Ireland's electricity and gas systems with other networks in the Community. Energy investments over the next five years, will therefore, form an integral part of the overall National Plan.
We must always be alert to new technological development. Things which may appear impossible physically or uneconomic at present may, in a very short time, because of the fantastic advances that are taking place in technology become feasible from our point of view.
Within the framework of the plan, an operational programme has been prepared for continued major investment in sanitary services. For the period 1989-93 investment of £62.5 million a year is projected, and support is being sought from EC Structural Funds towards the greater part of this projected investment.
The objectives of the sanitary services programme are to provide adequate good quality water supplies for industrial, agricultural, domestic and other users, and to provide systems for safe, adequate waste disposal from industrial, residential, and other development. These objectives are critical both to the economy and to the environment. A high level of investment is required to ensure that this programme will support planned economic expansion, for example, in natural resource based industries and in tourism. Efficient services are essential for the exploitation of agriculture also and the expansion of the food processing sector; clean, pollution free waters are essential to the development of inland and coastal fisheries.
Our information technology industry in general and telecommunications in particular are a success story. We are already one of the most computerised countries in the world with one of the best telecommunication systems.
It is time people started talking about that fact. Many industrial visitors or people involved in the services industries coming to this country are constantly amazed at the high level of computerisation in the Irish economy and also at the enormously high proportion of computer literate people in our workforce.These are tremendous advantages and these should be more frequently adverted to. Nevertheless, at present telephone density in Ireland is the second lowest in the Community; the full range of modern services is still not available nationwide and, despite substantial price reductions last autumn for international calls, the cost of our telecommunications service is still not in line with that of other member states.
During the period of the National Development Plan, capital expenditure on the Telecom Éireann network will be needed of the order of £675 million. Of this amount £369 million is considered to be of a structural nature and grants totalling £17.9 million have already been approved under the EC STAR programme, expenditure which will be matched by an equivalent investment by Telecom Éireann, in expanding the network, completing digitilisation of the trunk service and other similar improvements.
Since Ireland joined the European Community in 1973 one of the consistently favourable features of our membership has been the flow of assistance for programmes of vocational training and job creation. In 1973 Ireland was approved for just over £4 million in Social Fund assistance. In subsequent years, the level of assistance grew rapidly as the national system of vocational training developed and expanded. In 1988 Ireland was approved for assistance of £166 million from the Social Fund, and our cumulative total approved assistance, between 1973 and 1988, now exceeds £1,250 million.
This assistance has enabled us to develop a modern infrastructure and system for vocational training which would simply not have been possible without the assistance of the European Social Fund. The money received has enabled FÁS to build and equip its network of training centres, to run many different types of training courses, including new technology courses, and to undertake a whole range of initiatives in the training area. The ESF has assisted the Department of Education to expand its technical and other courses in the regional technical colleges and colleges of technology. It has provided generous assistance for the training of the handicapped and has helped the IDA and other development agencies by providing assistance for training grants.
Ireland is cited in Brussels as a country which has made efficient use of its European Social Fund receipts and it is frequently said there that the effects of the ESF can be seen more clearly in Ireland than in any other member state.
