European Affairs: Statements

I congratulate the Cathaoirleach on his recent appointment. I am delighted to be back in the Seanad. I was asked by the Leader to introduce a debate on European affairs and I jumped at the opportunity. Over a long period we have urged that the Seanad would assume a more relevant and proactive role in European affairs. I hope this opportunity for an exchange will be the first of many during the lifetime of this Seanad. Who knows, it might revitalise the Seanad and give a particular role to it for the future.

The topic I wish to address is the role of the European Union in enterprise, innovation and job creation. One could argue that is a broad topic but in the current context it is important to provide a focus in that regard. From my perspective it is important to explore some of the positive opportunities for the European Union to feed into not just this country's economic progress, although that is our primary interest in the Chamber, but also the economic progress of the European Union as a whole.

In the years and months since the global economic downturn there has been much talk about not wasting a good crisis and not turning away from a crisis. However, we have no choice but to face both the economic crisis we have been living with in this State and the crisis that has gripped the European Union.

Our economic future is inextricably tied to the European Union. It has to be. As a member of the Union we, and the companies that invest here, have access to a market of approximately 500 million people. That benefits us in the same way it benefits the other member states of the Union. Together, the 27 member states are a significant economic force. On our own we are rather insignificant, especially in the face of rising powers in Asia and South America, the so-called BRIC countries.

Ireland's future economic growth can only occur by creating an environment that allows the fostering of enterprise and innovation and, in turn, the creation of jobs. It is delusional to think that we can achieve any substantial level of growth or job creation while not part of a large market such as the European Union.

The Single Market is the most successful transnational economic project in global history. The point is worth repeating. At a recent ASEM conference which I attended on behalf of the Tánaiste in Budapest last week, the Australian Foreign Minister gave me some perspective on our current challenges in the European Union. As an outside observer of EU Finance Ministers, leaders and institutional representatives he was conscious of them constantly criticising themselves and saying they were not doing things well enough or achieving all they had set out to do. From his perspective as part of the broader Asian bloc, he said they would be doing extremely well if they could aspire to a fraction of the political and economic integration achieved by the European Union. They are envious of what we have achieved in the European Union. It is important to note that. The Single Market is the most significant, successful economic project in global history. It opened up an enormous European market, minimised internal trade barriers and led to growth, job creation and prosperity on the continent of Europe, not least in this country. Equally, it has provided exceptional choice and value for consumers — the citizens.

European governments must refocus their energies on this simple but invaluable process. The deepening and strengthening of the Single Market is the only logical way the eurozone can be reignited. The continued expansion of the Single Market to services makes sense as we export far more services than goods in the European Union. The Single Market currently falls short in this regard and there is immense potential to grow it. We need the political will to make it happen. The European Union must start acting collectively to make the knowledge economy a reality. There has been much rhetoric about the knowledge economy. We must make it a reality.

The Lisbon strategy for growth and innovation was a failure. The EU 2020 strategy, championed by Commissioner Geoghegan Quinn presents another opportunity, in effect, a second chance. We have the workforce and innovative skills to become world leaders in research and development. We must set realistic targets to achieve that goal. Public investment must happen by general agreement and targets must be adhered to, with sanctions for those who break commitments. That has been one of the failings in the Union, that we do not challenge each other and take each other on when we break the commitments to which we sign up. We in this country have been guilty of that on occasion no more than any other country.

Private investment should be incentivised by fulfilling foreign direct investment potential and creating market conditions for inward investment. That can happen through clever and competitive taxation mechanisms, which is important from our point of view, and keeping our cost base competitive. We can see how this country is gaining an advantage over our European partners by reducing our cost base. Initiatives such as the Single Market Act must act as a lever for more open trade and investment in Europe. Openness to investment is also what makes the Internal Market attractive to investors. EU investment rules should maintain the EU's attractiveness to outside investors and create synergies between multinationals and our SMEs which will help to improve overall capacity for entrepreneurship in general.

The EU Competitiveness Council has endorsed a new European integrated industrial policy for the globalisation era which puts competitiveness and sustainability centre stage. This policy forms part of the seven flagship policies launched under the European Union's new strategy for jobs and growth, Europe 2020. This is the second chance I mentioned. For those who may not be aware, the seven flagship policies are as follows: the digital agenda for Europe, the innovation union, youth on the move, resource-efficient Europe, an industrial policy for the globalisation era, an agenda for new skills and jobs, and the European platform against poverty. The strategy does not deal only with fiscal and economic issues but also with the social objectives of the Union, which are of critical importance.

The Government fully supports the core elements of the Europe 2020 strategy and its objectives to stimulate growth based on knowledge and innovation and a more sustainable and greener economy with high employment and social inclusion. That essentially sums it up. These objectives are also very much consistent with the Government's own strategies as set out in the programme for Government.

The industrial policy flagship sets out a strategy that aims to boost growth and jobs by maintaining and supporting a strong, diversified and competitive industrial base in Europe. The new approach also means examining the value chain through the entire process, from infrastructure and raw materials to after-sales service. With the globalisation of markets and the changing nature of both the manufacturing and services sectors, continued economic progress and growth will be driven by companies' continued innovation to successfully add greater value at every point in their value chain. This is something we cannot afford to forget, particularly in view of increasing competition from other regions of the world. Promoting the creation and growth of small and medium-sized enterprises is at the core of EU industrial policy. Moreover, the transition to a sustainable economy is recognised as an opportunity to be seized as a means of strengthening competitiveness.

Yesterday at the General Affairs Council in Luxembourg I, on behalf of the Government, agreed on further moves to remove excessive regulation for SMEs, especially micro-enterprises, and to further develop the Single Market. I also welcomed the strong focus on the Internal Market. The Council prepared specific draft economic conclusions to be presented to the Heads of State and Government at the European Council meeting later this week. This is a good news story. It has not always been possible to achieve agreement on focusing and prioritising a reduction in the regulation burden for SMEs. This is something, in fact, on which certain member states have an entirely different view from ours. There has been an added impetus because of the financial crisis, and this is something we can really embrace and welcome on behalf of Ireland.

For the EU to be able to compete globally, it must establish the best conditions for business. It must ensure its firms can engage in innovation and restructuring and can transform themselves quickly. It is important to facilitate timely and appropriate industrial restructuring and upgrading, thus ensuring the renewal of EU industrial sectors and the necessary upgrading of worker skills and opportunities. Supports such as the two Structural Funds, the European Regional Development Fund and the European Social Fund, as well as the Cohesion Fund, have contributed to regional competitiveness and employment objectives. The cohesion policy for 2007-2013 is explicitly linked to goals in Ireland's national reform programme under Europe 2020. This is something in which the Government is already actively engaged.

In addition to EU Structural Funds, Ireland receives significant funding from the European Agricultural Fund for Rural Development, the European Fisheries Fund and the seventh framework research and development programme, FP7. The Government has also secured funding from the European Globalisation Adjustment Fund for a package of measures to retrain and offer further entrepreneurial and educational opportunities to workers affected by, for example, the closures of Dell, Waterford Crystal and SR Technics. One of our number, Senator Colm Burke, who is formerly a Member of the European Parliament, was very active in that process, and he deserves great credit for lobbying on behalf of Ireland to secure some of that funding. A number of relevant State agencies such as FÁS, Enterprise Ireland and the county enterprise boards are involved in the distribution of these funds. These funds are a critical part of the lifeblood of our economy, especially at this difficult economic juncture, and they should not be ignored.

Ireland's ambition is to become a leader in innovation. Our goal is to develop an innovation-driven economy that maintains a competitive advantage and increases productivity. We have seen during this recession that companies that invested in research, development and innovation have held or increased market share and employment. That is an interesting statistic and one on which we have not really focused. It is clear that innovation is also a key issue for the future prosperity of the entire European Union. As we seek to continuously improve the effectiveness of our research and innovation systems, we need to learn from each other.

The European Commission, under the Europe 2020 flagship initiative known as the innovation union, has put entrepreneurs and SMEs at the heart of its innovation and research policy. Its aim is to remove the remaining barriers to bringing ideas to the market and promoting entrepreneurial mindsets among students and researchers. The task of Commissioner Geoghegan-Quinn's directorate-general is the achievement of a European research area and the creation of a genuine single market for knowledge, research and innovation. In my brief period in office, I have been extremely impressed with Commissioner Geoghegan-Quinn, who is extremely hard-working and has done a large amount to rebuild and repair our damaged reputation in the European Commission. She has brought energy and enthusiasm to her portfolio and I am proud that she is an Irish woman in such a significant position.

The Government attaches great importance to the completion of the European research area — that is, the single market for researchers — by 2014 and the creation of a genuine single market for knowledge, research and innovation, which is an integral part of the innovation union flagship initiative of the Europe 2020 strategy. All of this is under the remit of Commissioner Geoghegan-Quinn and she is working hard to make it happen by 2014.

The EU framework programme for research has always been an important element of the internationalisation of Irish research. FP7 offers Ireland's SMEs, multinationals and research institutions valuable opportunities to participate in high-calibre research collaborations with our European counterparts. With a budget of approximately €50 billion over the seven years from 2007 to 2013, FP7 is the most ambitious European research-funding programme to date in terms of scale and scope. Moreover, as economic conditions have deteriorated nationally and internationally, FP7 comes into its own as a non-Exchequer funding source.

Based on national investment in research, Ireland is participating in the framework programme from a far stronger position than ever before. To put in context how important FP7 is to the research community in Ireland, in the period from the commencement of FP7 in January 2007 to the end of 2010, more than 3,500 applicants from Irish-based organisations took part in proposal submissions requesting European funding. Of these proposals, 847 applicants were successful, receiving a total of €269 million. This represents an overall Irish success rate of 24.04%, which is greater than the European member state average of 22.47%. This is one small example of how Ireland has punched above its weight in securing funding from the European Union.

The competitive advantage created through research, development and innovation will be a key driver in our economic recovery. Companies that undertake research and development, for example, have shown a level of growth in trade and exports during the downturn that demonstrates the value of productive, high calibre research and innovation activity. Every day, these companies are winning and servicing global sales contracts across a range of modern growth industries.

The programme for Government has placed particular emphasis on developing applied research centres. The new Government has moved swiftly to announce the establishment of centres in cloud computing, manufacturing research and energy efficiency research. These centres will tap into that science base and ensure ideas are progressed into workable businesses so as to create the jobs of the future and get the economy growing again. The extent to which Ireland's enterprise base has retained its commitment to research, development and innovation investments in the face of the downturn is both welcome and bodes well for the future.

The importance of the small and medium-sized sector is well recognised by the Government. Small businesses are the backbone of the economy with some 250,000 such small businesses employing approximately 700,000 workers. It is important the Government creates the right environment for businesses to expand so that we will see job creation and retention. The jobs initiative, very much in line with measures contained in the European Commission's programme, Small Business Act for Europe, is designed to create and sustain jobs. Governments cannot and do not create jobs but they can create the conditions for business to thrive.

As a result, the Government has appointed a Minister of State with responsibility for small business, Deputy John Perry, who will be the voice of small business to the Government to reflect concerns and bring forward proposals to assist businesses. He has also been appointed as Ireland's SME envoy under the review of the Small Business Act for Europe and will play a constructive role with similarly appointed envoys from other member states. He recently attended the first meeting of SME envoys in Budapest under the auspices of the Hungarian EU Presidency.

European SMEs derive a much smaller percentage of their turnover from exports than competing economies such as the USA and China. Therefore, there needs to be a much stronger international orientation of European SMEs for them to compete globally. Ireland is performing better than most with major growth in exports. The largest increases have been to EU member states. For example, Irish exports to Germany increased by 47% last year. The internal EU market is much more accessible to our exporters than many of the countries we seem to be obsessed with focusing on such as China and those in Eurasia and South America.

In order for this necessary expansion in EU exports to occur, we will need a greater opening and deepening of the Internal Market, which has to become the natural reference point and basis for a wider global growth. Some issues impacting on SMEs which are also addressed in the Small Business Act for Europe were already announced on 10 May as part of the Government's job initiative. These include better access to credit with the design of a temporary, partial credit guarantee scheme. A targeted scheme will be in place by the autumn and will operate for one year. An initiative for a €100 million microfinance start-up fund will be introduced. The 15-day prompt payment arrangements across the wider public sector in Ireland for invoices received after 1 July 2011 will be extended. Departments have been paying within 15 days since June 2009. There will be a greater emphasis in making public procurement more accessible to small businesses. Changes will be made to PRSI to encourage employers to recruit new employees and sectorial wage agreements will be reviewed to improve competitiveness.

Access to finance for SMEs, especially in the light of the credit squeeze caused by the banking crisis, is very problematic. It is very important, therefore, in addition to measures in the jobs initiative, that we keep working on the construction of a Single Market for venture capital and that we continue to broaden access to other European financial instruments such as guarantee schemes.

In accordance with the Europe 2020 policies under the industrial policy flagship and the innovation union flagship, it is important to continue to develop strong areas such as standardisation. For that reason, I welcome the Commission's proposals to strengthen the system of standard-setting in Europe. I hope our businesses and business organisations can assist in this process.

It is also important to continue to develop at EU level public procurement initiatives for small business, an integrated EU venture capital market and the development of more competitive solutions, better regulation and tackling red tape and duplication. It would appear from the draft conclusions for this week's European Council that all member states are now committed to this agenda.

Following the launch of the jobs initiative, the Government's message is that Ireland is open for business like never before and this means being open to the world. This is the message being brought to our European partners and beyond by every Minister. It will also be the role of the several trade delegations representing the Government in the autumn under the auspices of the proposed new trade council.

Ireland's transformation from a poor to a wealthy country, with a high standard of living, has been largely down to the opportunities opened up to us through EU membership and particularly the Single Market. For Ireland to emerge from its current challenges, deeper co-operation and co-ordination with our European partners in the European Union and the eurozone is not simply in Ireland's best interests, it is the only sane and logical direction on our path to recovery.

I welcome the Minister of State to the House and wish her well in her role covering European affairs. Only two Ministries of State are worth having and hers is one of them, with that held by Deputy Brian Hayes. No one would probably notice if the other Ministries were not there.

That is not really the case.

It is a fair point. The Minister of State with responsibility for European affairs has an important role and there is an argument for it to be elevated to a Cabinet position. Fianna Fáil attempted this, albeit unsuccessfully, in 1997.

It is also important the incumbent has a deep commitment to European issues. Deputy Lucinda Creighton follows on from the former Minister of State, Dick Roche, who had a deep commitment to European affairs both at national and party level. Another important aspect of the position is to promote the country abroad among our political groupings on the wider European stage.

The European Union, with its various institutions and agencies, has a huge capacity to aid Ireland in supporting enterprise, instilling innovative attitude and ultimately creating new jobs for our citizens. This often seems to be in grand strategies for the future rather than in dealing with the serious problems we face now.

We are lucky that Máire Geoghegan-Quinn was appointed to the position of Commissioner for Research, Innovation and Science. The Commissioner has a great deal of money to disburse at present. The Minister of State — as has been the case with other Ministers at different fora — referred to repairing Ireland's damaged reputation. She then stated that Ireland is punching above its weight in the context of the grants being allocated. That is a tribute not particularly to Commissioner Geoghegan-Quinn — who cannot favour one country above others — but rather to the reputation of this country and to that of the individual entrepreneurs and innovators who operate here. We have an ally in Europe with the Commissioner and I hope the Government will work with her in order to ensure that the country benefits from this link. Judging by the Minister of State's comments, that is already happening.

Commissioner Geoghegan-Quinn launched the flagship initiative "Innovation Union", which forms part of the EU's 2020 strategy. I have a difficulty with such strategies. The Lisbon strategy was not entirely successful and we have now been presented with the 2020 strategy, which relates to smart, sustainable and inclusive growth. Does the latter strategy contain an answer to our current unemployment strategy? I accept that we want to make Europe more competitive and base its future development on knowledge and innovation. We also want to promote sustainable growth and thereby encourage the development of an efficient, greener and more competitive economy. Furthermore, we are seeking to achieve social cohesion.

The European Union has a number of initiatives to facilitate these developments. However, a senior economist suggested to me last week that the officials of the Commission and those of European institutions in general would be far better to down tools in respect of these strategies and concentrate instead on the crisis in hand. The headline targets relating to the Europe 2020 strategy include items such as raising the employment rate of the working population from 69% to 75% and achieving the GDP targets in respect of research and development. The European Union has dropped back with regard to the percentage of GDP invested in research and development in recent years. It will be important to ensure that this will be reversed.

There have been a number of developments on the pharmaceutical front in this country in the past week or so. While these will primarily be of benefit to those who require particular medicines, they also have a secondary and major role to play in respect of the creation of employment in the pharmaceutical industry.

When discussing jobs, innovation, competitiveness and economic growth, it is important not to lose sight of the fact that we are not just concerned with creating wealth. We must also reduce poverty and improve levels of social cohesion. The latter is an important part of the strategy and it is vital that we should not lose sight of this.

The Minister referred to Irish companies drawing down €270 million from the innovation fund. That is excellent because it shows these companies are able to mix it with the multinationals. I understand the Commissioner reckons that we are well on target to draw down €600 million by the end of 2013. Irish companies are proportionately more successful than their European counterparts. That should give the country in general and consumers in particular a degree of confidence. We must get the message across that Irish companies are punching above their weight and doing well.

While I would be the first to acknowledge that the country's reputation has taken a battering, I do not subscribe to the notion that it has been badly damaged, destroyed or ruined. It was pointed out to me last week that there is record demand for popular Irish stocks and shares such as those of Kerry Group, etc. This is reflective of the fact that there are some very good companies in this country which are assisting in restoring its good reputation. It is important the Government and the European Union should do everything possible to cultivate that. Dublin has been selected as European city of enterprise. Dublin-based enterprises and small and medium-sized businesses throughout the country should use this as a basis to expand their research and innovation in order to capitalise on any opportunities which might arise.

The "Innovation Union" flagship initiative and the Europe 2020 strategy of which it is part provide a good basis on which to build our innovation and research capabilities. The flagship initiative contains lofty and ambitious goals which all of us support. However, this is not the first occasion on which the European Union has drawn up strategies of this nature. The Lisbon growth and jobs strategy, which was launched in 2005, contained many of the same goals as the Europe 2020 strategy and it did not work as envisaged. The proportion of GDP we spend on research and innovation dropped below 2%, well below the EU's 3% target. Forward thinking and strategic planning for the future are essential. However, we can sometimes think too much about the future and forget the challenges we face today.

The EU should take a step back and consider what it can do now to encourage job creation on a pan-European basis. It should then invest the requisite resources accordingly. That is already happening to an extent, particularly in the context of Commissioner Geoghegan-Quinn's portfolio. The taxpayers of Europe will warmly welcome this. It will enhance the reputation of Europe among its citizens in general to a greater extent than would lofty strategies, which are important but which do not always work out or present answers.

I hope the Europe 2020 strategy works. As a country with an open economy, Ireland badly needs it to work. Our future, in economic terms, is focused on exports. The Minister of State indicated that exports to Germany increased by 47% in the past year. Again, this is reflective of the good reputation enjoyed by Irish companies and their staff. It also reflects the fact that the country has a reputation as a place which can attract outside companies which can then export goods from here. The notion that our reputation has been terminally damaged or that massive work must be done to restore it is not entirely accurate.

Exports are driving the economy. We do not export shoes or many other basic products. We do, however, export products that are derived from innovation or in respect of which innovation is an essential aspect. We need to produce high-end goods and add value to them and to the economy by being competitive and customer-focused. We must also always strive for further innovation. An innovative approach underpinned by higher levels of competitiveness is one of the surest ways of distinguishing Ireland from its competitors and of ensuring that this country will be at the forefront when it comes to job creation.

I again thank the Minister of State and I look forward to her responses. I wish her well in her role, which is crucially important. I know she will do a good job.

I welcome the Minister of State, Deputy Creighton, and congratulate her on her appointment. As Senator Byrne stated, she is doing an outstanding job. Hers was an inspired appointment. I have no doubt that she will continue to represent us with great distinction on the European scene.

It is apt that we are engaging in this debate against the backdrop of the economic and financial crisis that has brought our country to its knees. There are 450,000 unemployed, our brightest and best emigrating, many people losing their homes, the public service is under pressure and large numbers of small businesses are struggling to survive. While most of our economic ills can be attributed to the disastrous economic policies pursued during the past decade, our recovery will be dependent on many decisions taken and measures implemented at European level.

I welcome the decision taken by European leaders at the end of March to put in place a comprehensive package of measures designed to strengthen economic governance, safeguard the stability of our common currency, the euro, and improve Europe's competitiveness. I understand that EU Heads of State or Government will meet again later this week at the European Council in order to address the economic challenges we all face.

In its first 100 days in office and since it took on the daunting task of turning the economy around, the Government has taken many significant decisions. These decisions have been supported by our European and international partners and they include the restructuring of our domestic banking system. Under this restructuring, two new pillar banks will be created and the banking sector will be smaller and will focus more on the needs of the Irish economy and Irish society in general. Funds must now flow to small businesses. Many Senators referred in recent days to small businesses being choked as a result of a lack of funds being made available by the banking sector.

Other significant decisions taken by the Government include the launching of the jobs initiative, which included a restoration of the minimum wage to its previous level, and the announcement of a comprehensive spending review that will engage in a forensic examination of spending across all aspects of Government. We all accept the need to secure value for money from the scarce resources available to us. Budget 2012 will make adjustments which will without doubt impose further pain and sacrifices on all sections of society. I hope these steps will not be in vain and we will soon begin to see the start of economic recovery.

Many Senators will agree that three key issues must be addressed if we are serious about economic recovery. The Minister of State spoke extensively about the issue of competitiveness, investment in innovation and research and development and the development of the small and medium enterprise sector. I welcome the endorsement by the European Union Competitiveness Council of a new, integrated European industrial policy which places competitiveness and sustainability centre stage. Sadly, we are all too aware of the large number of jobs this country has lost to lower cost economies over the past decade as a result of our lack of competitiveness. Ballinasloe has lost more than 1,000 industrial jobs, including at the plant in which I worked for 25 years, because we are no longer competitive.

As the Minister of State noted, we must strive to become a leader in innovation and invest accordingly. Such investment is key to gaining competitive advantage and increasing productivity. The many success stories of companies which invested heavily in innovation and research and development have continued to thrive despite the economic downturn. This makes the argument for investment in these areas. I join others in complimenting Commissioner Geoghegan-Quinn, who also hails from Galway, on the role she is playing. I have no doubt she will be a friend to Ireland in disbursing funds.

I am pleased the Government recognises the importance of the small and medium enterprise sector which employs almost 700,000 in 240,000 businesses. While Governments cannot create jobs, they can create an environment which facilitates job creation and retention. As the Taoiseach noted on the introduction of the jobs initiative, these measures are but a small start and a move in the right direction. I have had some positive feedback about the initiative from employers in small businesses in the west. The recently announced measures will have a significant impact and are already having a small impact.

The review of the sectoral wage agreements in the coming weeks will have a further impact on job creation and, I hope, enable small businesses to recruit an additional one or two employees, which would make a significant difference in reducing the awful figure of 450,000 people on the live register.

The Government's decision to appoint a Minister of State with responsibility for small business shows its commitment to this important segment of the economy. The Minister of State, Deputy John Perry, who was present for the debate on employment issues this morning, is taking his role seriously. Access to finance is an important issue for small and medium enterprises. I urge the Minister of State to continue to work on the construction of a single market in Europe for venture capital and broaden access to other European financial instruments such as guarantee schemes. The Government acknowledges that our European partners are crucial to enabling Ireland to overcome its economic difficulty. However, they must also divert their gaze from our corporate tax rate of 12.5%. We must ensure we maintain this tax rate as it is critical to the economic recovery.

The modest growth beginning to emerge in the economy is primarily being driven by exports and the international sector. It is in the interests of Ireland and the European Union that these prospects for growth are not damaged by uncertainty about our corporation tax regime. This is particularly important to a small, open economy on the periphery of Europe. As the Minister of State noted, the message the House wishes to send out today is that Ireland is open for business. We are meeting our targets and have, I hope, drawn a line under our banking problems. The fundamentals of the economy are strong. We will see a record balance of payments surplus this year and the country is beginning to return to modest growth, having recorded the second highest trade surplus in the European Union, after Germany, last year. It is also in the top 20 nations for quality of scientific research. These are all positive indicators and if we continue to work closely with our friends in Europe, the economy will achieve modest growth in 2012-13 and, I hope, significant recovery during the lifetime of the Government.

I am pleased the Minister of State with responsibility for European affairs is present for this discussion on enterprise, innovation and job creation. She referred to reputation. Colleagues in other member states have told me how impressed they are with our new Minister of State following her visits to the Continent. I am delighted she is helping to rebuild our reputation.

I echo the Minister of State's words about Commissioner Geoghegan-Quinn who has taken an active role since taking up her job. The Commissioner's portfolio is critical for Ireland. It is good for us to be seen in this light.

As Senators will be aware, I have been a member of the European Economic and Social Committee for 12 years and vice chair of the European Movement Ireland. Clearly, therefore, issues of a European nature are crucially important to me. Part of our success will be working together with our European counterparts and other member states. However, if I may make a slightly negative point, in working on European semesters we have a missed opportunity to target smart, sustainable and inclusive growth. All too often, the focus has been fiscal consolidation and labour market and pension reforms without consideration being given to how we can achieve inclusive growth or putting in place growth drivers to enable the fiscal consolidation to take place. I am concerned, therefore, by certain elements of the course we are pursuing.

I propose to focus on two of the flagship initiatives under the 2020 strategy, namely, the new agenda for skills and jobs and the Youth on the Move initiative. The latter tackles the high levels of youth unemployment across the European Union. When one considers the variation in youth unemployment rates — in the Netherlands, my husband's home country, it stands at 4.3% whereas in Spain it is currently 20.5% — one sees the challenge facing us. While each member state faces individual challenges, the European Union must meet collective challenges in countering youth unemployment. As a flagship initiative, I am pleased Youth on the Move has been given its own space. All too often, when the subject of youth is discussed, it is done purely in the employment sphere and associated matters such as entrepreneurship, training and education are overlooked. Youth on the Move claims it will unleash the potential of all young people. To achieve this objective we must give young people a solid basis in life.

The Minister of State referred to sanctions. All too often member states are willing to agree to lofty ideals but unwilling to set clear and measurable targets. As I indicated, unemployment rates vary considerably across member states although many of the challenges facing them are the same. We could set clear and measurable targets and indicators for each of the member states. If they were not met, some form of sanctions should be imposed. The rewards would clearly speak for themselves. With regard to young people, I have concerns that in dealing with our economic crisis and focusing on reducing sovereign debt, we are reducing public investment in education and training, the very areas we will need to develop in the future. The teaching of languages is very important as are what are often called the STEM subjects — science, technology, engineering and mathematics. We need to focus on attracting more young people to take up those subjects. The early study and career guidance looking at the labour market needs and the skills of young people and providing entrepreneurship at all levels of education are also important. The Erasmus for Young Entrepreneurs programme was launched a few years ago and we could encourage more young Irish people to get involved. This Erasmus programme will give a young person the opportunity to go to another member state and look at opportunities of entrepreneurship there and bring them back. The Minister referred to the growth in the German market and we need to be thinking in this way.

I was in China recently with the Chinese economic and social committee. We were looking at areas such as inclusive regional development and the green economy. We often talk about our young people leaving Ireland and we see them as being gone forever. I was impressed that China is encouraging its young people to leave, but come back after a year or two and bring that knowledge back. That is a message we should be giving to our young people. While the jobs are not here, that will not necessarily be the case for life. We should be looking at training opportunities and upskilling. We should be exposing them to innovative and creative markets, and entrepreneurship. I recognise the Every Job Counts: Youth Solutions initiative to encourage entrepreneurship launched recently by the Minister for Children and Youth Affairs.

We can learn from some of our counterparts in other states about additional training opportunities for early school leavers and low-skilled workers. We have an issue of access to apprenticeships. We are often told that the best way a young boy can get an apprenticeship is to join the Army, which offers some of the best apprenticeships in the State. We should draw on some of that knowledge that it does so well and create apprenticeships to develop those skills.

The validation and certification of skills across educational settings is very important. This is true not just of the formal education setting but also in the informal education setting — looking at us buying into European skills passports, etc., so that when our young people go to other countries they are able to transfer that accreditation and qualification.

The big questions are on the spending programmes of the Europe 2020 strategy, such as research and development, and education. I am very conscious that we are lining up in Europe for a battleroyale. They are likely to be reducing funding across all our multi-funding spending lines. I know that next week Commissioner Barroso will announce the financial framework beyond 2012 and I know the battle lines are being drawn up on this debate. It is a crucial time for the future of Europe and for Ireland. This is funding that has benefited Ireland greatly but how do we ensure we can maximise it? I am concerned as to how we, as Senators and others, can support Ireland’s role in tackling the funding crisis that will potentially loom as the funding reduces at a time when we should be investing more.

I am organising an event in September with representatives from several member states. I will contact the Minister of State in that regard. We are trying to bring experiences from different countries to try to use that knowledge and hopefully come up with some creative solutions and ideas that can be used in several member states.

I welcome the Minister of State and congratulate her on her new role — I may have already done so in person, but I now do so formally. I am delighted to have the opportunity to speak on the topic of the EU's role in enterprise, innovation and job creation. It is a timely topic, particularly for somebody with a connection to Trinity College — the Minister of State also has a connection. Last Friday the new biomedical sciences institute was opened in Trinity College. I was privileged to attend the opening at which Commissioner Geoghegan-Quinn was the keynote speaker. The institute, which is the biggest capital project undertaken by the university to date, cost €131 million of which €80 million was invested by the State. Of the rest of the investment, some funding came from private benefactions but some came as a loan from the European Development Bank.

The EU is playing a very key role in this institute. The institute represents what we should be doing in terms of innovation and job creation strategies. Commissioner Geoghegan-Quinn emphasised this in her keynote address in saying that the European Commission has put research and innovation at the top of the European agenda and she put the new Trinity institute in that context. She pointed out that the work to be done in the biomedical sciences institute will deliver jobs in health and help improve public health and quality of life. It has a number of different focuses. It will provide very impressive accommodation for 700 researchers and 900 students. It will be a driver in innovation and research in biomedical sciences.

Of course it is expected that it will also have a large role to play in job creation. Earlier Senator Crown spoke about the enormous potential of the biomedical sector for job creation and it is already a major part of our economy. Nine out of the ten biggest life sciences and pharmaceutical companies have a significant presence in Ireland. The sector, encompassing pharmaceutical, biotechnology, medical devices and diagnostics, employs more than 47,000 people in Ireland and is clearly an enormous growth area. It is also very much an area of added value where research and development jobs play a large part in the companies located here.

The Trinity institute is a collaborative institute with other universities and institutes of technology across Ireland. It not only seeks to train people to work for the big companies located here, but also clearly seeks to develop innovation and create companies here. I know the Minister of State is very aware of the campus company innovation and the sort of innovations that have come out of that, where academic research has spawned discoveries which in turn have become commercialised. There are a number of well known examples of this, including Opsona, a biomedical spin-off, and Solvotrin, a pharmaceutical spin-off.

We can see how investment in the third level sector can directly stimulate innovation. It is not just about training people to go and work in big companies or to go and work abroad — although that is a very important role for the third level sector — it is also about fostering and stimulating entrepreneurship and innovation. In all of that it is critical to have support from the EU on a number of levels. The Minister of State referred to some of the different programmes, including FP7, and the strong success rate of Irish applicants in securing funding under that framework programme. That programme has specific Marie Curie actions for commercial enterprises. A great deal of SP7 is of direct relevance to initiatives in Ireland in the biomedical and pharmaceutical sector. It is worth emphasising our 24% success rate in securing funding from those EU funds.

There are also other EU funds and other ways in which the EU can support small businesses. The Minister of State and others have referred to some of the other initiatives for small and medium-sized enterprises that have been taken at EU level, including the Small Business Act for Europe introduced in 2008 and aimed at cutting red tape. I suppose the EU has tended to get a bad press in terms of imposing quite onerous obligations on small companies — it can be very difficult for small companies to comply with those. However, there is a growing recognition at EU level of the need to be somewhat more rational in the imposition of administrative requirements. It is just a feature of EU life. I speak as somebody who in the past was part of a consortium that recently got EU funding for research in Trinity into fundamental rights protections across the Union, and also in the past got EU funding for other research programmes into criminal justice systems across the Union.

I am aware of the amount of red tape that must be gone through to justify and secure funding at EU level. It is worth going through it, however. While it is difficult to comply with the obligations, particularly with regard to research funds, many obligations imposed by the European Union and the conditions pertaining to funding are for the purpose of ensuring transparency in how those funds are spent. This is critical.

Let me refer to a recent case I raised on the Order of Business last week although it may not be directly relevant to this topic. It was a case taken to the European Court of Justice by Irish barrister Mr. Ciarán Toland, who was represented by former Senator, Mr. Eugene Regan. The case, won by Mr. Toland, was to gain access to a report on expenditure of allowances by Members of the European Parliament. It is an interesting case because the report has been more or less fully leaked into the public domain. While it was in the public domain, it had never been officially published. Until I read the account of the case, I was not aware that the European Parliament had refused to release the report. Mr. Toland could successfully argue that it was irrational to withhold publication and that, in the interest of transparency and accountability, the Parliament should be publishing such reports. We would agree with that. When talking about red tape and the need for the European Union to be more rational about the administrative requirements it imposes, we should realise those requirements are imposed to ensure accountability and transparency. In spite of this, there is a lack of transparency and accountability regarding the reports of some EU institutions.

Other initiatives taken at EU level to support enterprise include focusing on groups that are under-represented. Senator van Turnhout referred to the need to support young people in respect of entrepreneurship. While this is essential, it is worth mentioning initiatives at EU level to encourage women entrepreneurs. Women tend to comprise a smaller proportion of entrepreneurs than men. As part of the Small Business Act initiative, a varied range of supports has been set up to promote entrepreneurship among women, particularly women graduates. There is a European network of mentors for women entrepreneurs, and a network of female entrepreneurship ambassadors. What is Ireland's participation on those networks and at what stage of advancement are they? I was not significantly aware of them heretofore. It is worth engaging in promotion at national level as well as EU level. Having seen figures on women in industry and business, and on entrepreneurship in Ireland, I noted that while there are some very high-profile women who are very strong role models, women in general do not comprise as large a proportion of entrepreneurs as men.

My colleague Senator Heffernan will be talking more about the European Union's role in job creation in the agriculture sector. There used to be a perception that the Common Agricultural Policy rewarded the opposite of entrepreneurship and tended to stifle the development of agriculture. It is important to welcome changes to ensure greater sustainability in agriculture, both in Ireland and other member states.

A debate such as this could not really make sense unless we are also critical of the European Union and its structures. Other Members have referred to the Union hampering job creation in Ireland. We are speaking at a time when the French President is suggesting we should change our corporation tax rate in order to obtain room for manoeuvre on the IMF-ECB deal. I am glad the Government is taking a very strong line of resistance to the suggestion by President Sarkozy because the 12.5% corporation tax rate is clearly a vital component of our job creation and retention strategies. It must be maintained. Although the European Union is supplying supports through programmes such as FP7 and the initiatives to encourage women entrepreneurs, the current bailout package, of which we are all too aware, is not sufficiently supportive of enterprise and entrepreneurship in Ireland. In many cases, it is serving to stifle it. We are all aware that the European Central Bank has played a very tough role in negotiations involving both the previous and current Governments. It is fair to say, therefore, that the European Union does not have a consistently good role in supporting job creation in member states, particularly this one. Any debate must acknowledge that.

We need to look to our colleagues in other member states to support us this week in an attempt to reduce the interest rate and oppose President Sarkozy's position. I remember the former Minister for Finance and I arguing during the general election campaign in January and early February 2011. I argued strongly about our sense that there was goodwill directed towards us by other EU member states. Since the change of Government, we have been aware that this goodwill was severely tested and that other EU member states, notably France and Germany, are taking a very hard line against us. We must emphasise in any debate we have on the role of the European Union that we must not separate the Union's promotion of small business and its support for small to medium enterprises from its role in bailouts and in giving loans to countries whose conditions are so difficult that they are stifling enterprise and job creation therein. This is not only a factor for us in Ireland but also one for other countries in similar positions, such as Portugal.

We talk about boosting job creation through start-up funds, etc. There are some excellent indigenous examples. On the radio this morning, we heard about the Longford Business Angel model whereby a group of local businesspeople in Longford has invested money to set up a start-up fund for small businesses in its area. This is the type of bottom-up strategy for fostering small business that can really work. There are similar models at EU level also and Irish companies have been relatively successful at drawing down funding. This, however, is at the micro-level. When we examine the macro-level and EU policy towards this State, we see a very different picture in terms of support for small business and job creation.

Members have referred to other steps we can take. They stated the Union can offer support in terms of job creation. We are all aware that, under the last Government, one quarter of men employed in the country were in the construction sector. Perhaps the biggest challenge in job creation is the reskilling, re-education and retraining of young men, many of whom left school because the opportunities in construction were so lucrative and are now finding it very difficult to find employment. Measures aimed at supporting training and re-skilling and the rebranding and re-creation of FÁS are all vital Government measures in respect of which I believe the EU will and should be supportive.

Some of this debate reminds me of a famous scene in "The Life of Brian" in that I am prompted to ask: "What has the EU ever done for us?" It really is a very mixed bag. On the one hand, we have great initiatives such as the Small Business Act and FP7, but, on the other, there is a big stick approach at macro-level when we seek funding, despite the fact that the European Central Bank was very remiss for a long time in allowing excessive lending.

I welcome the Minister of State. Having listened very carefully to what she said today, I am delighted by her appointment and her enthusiasm and effort.

I am sure I am older than every other Member here. I left university in the 1950s. The day after I finished my last exam, I travelled to the Continent and spent the winter there. I believed I was a republican and a Nationalist but when I returned I suddenly realised I had to wear two hats; for the first time, I discovered other teenagers were European. I look back now at those years and note the changes that have taken place and how they have influenced us. We have five children and sent them all to school in France for one term before they were 14. Somebody said that if one learns a language before one is 14, one will be able to speak it without an accent. At that age, the two girls fell in love with Frenchmen and are now married to them. Half of our grandchildren spoke French before they spoke English. It has been a wonderful success.

I am an enthusiastic European. It was interesting to listen to Senator Bacik speak about "The Life of Brian" and ask what the EU has ever done for us. I think of the comparison between the 1950s and now. Yesterday, I was in Brussels and I thought about the fact that we no longer have customs. There was a time when one returned to Dublin one was worried about whether one had bought something and whether one would be examined. We hardly need passports any more; we still need them because of not having signed up to the Schengen accord but I hope we get through this. We can travel by rail, and one ticket will take us throughout Europe. It is so impressive to see this and to see the currency we have in 17 nations.

When considering what the EU has done for us, by far the biggest change is peace. In Ireland, we did not really experience the problems but two world wars occurred in the previous century and we have now had 70 years of peace. We must make this European dream work and we must find a way of doing so. It has been very threatened in recent times. It will not work if we allow the EU to fall apart in various ways. I am particularly worried about the danger of a two-speed Europe. Nationalism is great for sport and I want to support Ireland. However, we must put this aside in economics and avoid the dangers of a two-speed Europe.

I was delighted to hear the Minister of State say it is the Government's job to create the conditions for entrepreneurs and SMEs to succeed. The meeting I attended yesterday in Brussels was to do with SMEs and we spoke about the problems and challenges they face and the success they have. The major challenge SMEs have is in establishing new businesses with the amount of legislation and legal and administrative conditions in place. We must find a way whereby entrepreneurs and those establishing SMEs do not consider moving to China or California. We must ensure they do it in Ireland.

Several years ago I was in Panama, and that country had considered how to attract entrepreneurs and SMEs. The first thing it did was to make it easier to establish a new business and sought to be better than other countries which had reduced the administrative burdens for establishing new businesses. It set a target and exceeded it. It takes seven hours to establish a new business in Panama. This gives us some idea of what one is able to do.

Yesterday, I met the MEP, Anna Maria Corazza Bildt.

I am very impressed with her and I listened to what she had to say. She directed me to Mario Monti's article in yesterday's edition of theFinancial Times which is worthwhile reading for anyone who has not read it. It is a reminder that the 2020 strategy will not work unless we work very hard at it. We need discipline to ensure these measures succeed. We can make it work but we must be very committed to it.

I will now discuss some of the figures drawn to my attention yesterday. The economic world order is changing fast. My eldest granddaughter, Emily, was born in 1990 and at that time four European countries were in the top ten world economies, by 2020 only two will remain. Since 1990, European GDP has increased by 50%, and I thought that was great until I learned that China's GDP has increased by 500%, and by 2016 China will be the world's strongest economy. Where will a divided Europe be then? We will shout for Ireland on the football field but we must work together to ensure we find a way to sacrifice the differences we have.

Already, China decides the worldwide price of commodities. It owns more than 95% of almost all strategic commodities as well as strategic assets on five continents. I could not get over the amount it invests and buys in Africa. China will soon dictate the exchange rates of the euro and the dollar and decide which country it rescues and under what conditions it would allow such a rescue to take place. Europe must wake up to these facts and do so very quickly. We must clean up our financial back yard and at present we are part of that financial back yard. We must do so if we are to compete on a newly configured world stage. We are making an effort in Ireland and we are doing better than some other countries.

Can one picture how difficult it must have been in Greece last night when the confidence motion was passed by the skin of its teeth? It was done in almost darkness because the electricity workers were striking because they disagreed with some of the steps being taken. Talk about economic suicide. This is a time when we in Ireland need to focus our attention on what we need to achieve. We must urgently address the public deficits in some member states which have been known but ignored for years. They are now threatening the very survival of a united Europe and the survival of the euro. We must muster all our political courage to act, and the time in which to act is rapidly becoming a resource scarcer than oil, water or air. I am quoting someone with whom I spoke last night who also said we have only borrowed the world from our children and grandchildren and therefore we do not own it ourselves.

The changes that need to take place are severely altering the way the world trades. If Europe is to compete we must act as one and we must act very quickly. A typical example of where Europe cannot get its act together is the European patent. Has anyone counted the number of SMEs prevented from obtaining a European patent in the past ten years because for logistical reasons the cost has remained prohibitively high? Given this fact, how can Europe at the same time claim it is committed to boosting SME development, particularly innovation?

The Lisbon strategy was a very brave document. It promised to make Europe the most competitive knowledge-based economy in the world by 2010, which was last year. It did not succeed. Now we have a strategy for 2020. It is a lovely new strategy but do we have a similarly new political will? Our children will tell us that having a nice strategy in a glossy brochure is not good enough. It is not enough to tick a box and then relax. We need to deliver on the details which make a difference. Where is the 3% target for increased budgets for innovation? Fewer and simpler administrative rules to boost SMEs and a single market for the processing of payments are some of the measures we must take.

I speak about the Single Market for the processing of payments because the organisation in Brussels with which I am involved achieved success in this area. The outrageous charges that we, the public and citizens of Europe and retailers because we were representing retailers at the time, have to pay to pay to credit card companies is in the hands of each individual nation. However, the organisation, EuroCommerce, achieved a breakthrough in cross-border charges because the multilateral exchange is an outrageous burden. It is being changed in the United States and we can change it in Europe. There are things we can do but, as Senator Mullins and others said earlier, we must become more competitive and it is in our own hands to do so. The Minister of State can make huge changes. I am delighted to hear the words she used today and I encourage her to continue with the same enthusiasm.

I welcome the Minister of State, who is my constituency colleague. We all agree she has an in-depth knowledge of her brief and is ideally suited to the portfolio.

The EU has been a great friend to Ireland in the past two decades. Ireland and the EU face challenging times and this should be acknowledged when speaking about the EU's role in enterprise, innovation and job creation. To date the EU has contributed greatly to allow us create employment and its investment in our infrastructure, education and employment has contributed to the direct creation of more than 50,000 jobs in the past decade. The EU gives all its member states great resources to create jobs and at present Ireland is working to use these opportunities and resources to the greatest effect possible given our challenges.

It should be noted that Ireland is the second fastest spender of the European social fund and is on target to draw down €375 million for measures supporting labour activation and getting people into the labour market. Meanwhile, in the past two years Ireland has submitted six applications for the European globalisation adjustment fund for more than €60 million for training and job search assistance. That has assisted nearly 10,000 workers in training and retraining for a challenging economy. The European Union has been of great assistance in job creation.

To help member states reform their labour markets, improve education systems and support social inclusion the EU has a financial mechanism, the European social fund. In Ireland, over €900 million is being invested through the human capital investment programme to which the European social fund contributes €375 million. That money has gone towards a great many training and education programmes. It is clear the EU continues to help us create jobs in a challenging environment and, moreover, help us prepare for future changes in the labour market and further challenges ahead through its extensive funding for retraining programmes and education.

With regard to innovation, in the past decade through the European social fund, Europe has helped Ireland by creating specific goals and targets, goals which Ireland has responded to admirably and worked hard to reach. For instance, an EU-wide goal which has been mentioned often is the target of having 3% of GDP of each EU member state spent on research and development by 2020. When that goal was set in 2000, Ireland's spend on research and development was 1.12% of GDP and by 2009 that had increased to 1.7%. That may appear to be a small percentage but we should consider that in that period Ireland outperformed EU and United States growth in research and development. Moreover, that increase directly created 22,000 highly skilled jobs. The figure is expected to exceed 2% by 2013, which puts us on target to achieve that ambitious goal. I would agree with the Minister's comments with regard to enforcing those targets, which is very important.

Furthermore, the EU's focus on innovation and the supporting mechanism of the European social fund have encouraged us to invest in education and helped foster innovation from a young age. Last week I met with the head of a $500 million Silicon Valley company at the launch of its Dublin office and he stated that he saw Ireland as the capital of innovation in Europe, which is a wonderful accolade and something we must continue to actively cultivate in spite of the challenges we face.

The EU has helped us innovate and by innovating we can begin to work our way out of the problems in which we find ourselves. If we always do what we have always done we will always get what we have always got. What worked previously may not work again. Using the resources that the EU gives us to create a flexible, innovative, creative workforce is now one of the biggest challenges facing us.

In addition to all of that, the EU anticipates that 85% of jobs will be medium or high skilled by 2020 and, as such, the European social fund has allowed us to actively train and retrain our citizens. We currently have the highest percentage of third level graduates in the EU between 30 and 34 years of age — my own generation — and while we face many challenges we must continue to pursue these goals and take advantage of the resources at our disposal. The €370 million in the European social fund is precious. Moreover, we have also secured €213 million in funding for research and education from the seventh EU framework programme.

While we have been working our way through a terrible period, with the help of the EU and a continued focus on educating and training our citizens more will be prepared to take advantage of jobs in our digital, knowledge-driven economy. Even now, without the continued assistance of the EU, our jobs position would be a degree worse than it is, something which is difficult to imagine and yet is rarely acknowledged. As we continue to invest and focus on rebuilding our economy it is important that we recognise the contribution the EU has made to innovation and job creation and actively work to make the most of the opportunities and funds available to us.

I thank the Minister for coming into the House. I welcome her comments and wish her the best of luck in her very important job.

I welcome the Minister to the House and echo the sentiments of my colleagues on the importance of the ministry for European affairs. I hope that with the permission of the Leader we will have regular debates with the Minister on issues of importance, given the current flux in European affairs.

The European Union has an odd relationship with the concept of innovation. If points were awarded for all the talking we do about innovation we would surely rank as the most innovative and creative region in the world. However, the sad reality is that is not the case. The innovation union scoreboard based on innovation performance has the USA at 0.672, Japan at 0.641 and the EU 27 at 0.516.

There appears to be a paradox now at the heart of EU policy towards enterprise, innovation and job creation across Europe and specifically in its application in this State. The Europe 2020 document, the key strategic document to which the Minister referred, the framework for European economic growth, sets out a vision for Europe's social market economy in the next decade and rests on three interlocking and mutually reinforcing priority areas: smart growth — developing an economy based on knowledge and innovation; sustainable growth — promoting a low carbon, resource efficient and competitive economy; and inclusive growth — fostering a high employment economy delivering social and territorial cohesion.

The Europe 2020 strategy was launched as a new economic strategy to simulate sustainable growth and employment with the year 2020 in mind but that strategy will fail to succeed, much like its predecessor, the Lisbon strategy, if it does not take into account the local and regional capacity for sustainable development, creativity and innovation with the well-being of citizens at heart.

The question of the well-being of citizens of Europe should be prioritised at all levels of the policy and decision making process but as we can see, the EU-IMF deal does not do that. The success of Europe 2020 and the innovation union cannot be divorced from the current EU-IMF deal, which undermines the ability to grow the economy and adds to the burden of unsustainable debt. The EU policy for dealing with the debt continues the failed cycle of cutbacks, austerity and unemployment. As the Nobel Prize winning economist, Joseph Stiglitz, pointed out, the EU recipe for recovery is more of the same, namely, to meet the deficit reduction targets with more austerity, which in turn means still lower growth and higher unemployment. As we examine our own unemployment figures it undermines the priority of the Europe 2020 strategy.

The Government accepted the EU-IMF deal and as a result we cannot make investments to the scale we would like to create growth, make the economy more competitive or deliver the necessary employment. The deal demonstrates that the rhetoric of Europe 2020 has all the warmth and comfort of the emperor's new clothes. It would appear that this Government, which was elected with such a strong mandate and with so much promise, has allowed itself to be reduced to going along with the charade.

We must be clear that the EU-IMF deal does not contain targets for job creation, spending commitments to get people into employment or help for small and medium-sized companies to maintain or create jobs. In terms of the EU-IMF deal, there is no plan to reduce unemployment, create jobs or stimulate the economy and no amount of rhetoric can disguise that fact. It is important that we remember that job creation, growth and competitiveness is key to sustainable economic recovery and the objectives of Europe 2020 must be met at a national and European level. Those objectives must be supported not with rhetoric but with resources and a policy.

The World Economic Forum ranks the competitiveness of economies across the globe and Ireland is ranked at only 29th behind other European countries that offer higher levels of social protection such as Germany, the Netherlands, Norway, Denmark and France. The reason they identified us for a low rank was under-investment in education, research, infrastructure and broadband connectivity. There is a danger that we are tackling the issue of competitiveness by cutting back on investment in these areas. We must remember that our economy will not grow or be more competitive by reducing the wages of the lowest earners. Competitiveness is not a race to the bottom to attract low paid, low skilled, low value jobs. We must remember that we are not competing with the emerging economies such as China on those grounds. We are competing with them, and competitiveness can only be achieved through investment in education, infrastructure, technology, research and development and innovation.

Our competitiveness on a European level and particularly on a global level will continue to be undermined by partition. Barriers to trade remain between North and South. I listened to a speech by Dr. John Bradley, a former economist at the ESRI, who said that the two disjointed research and delivery strategies and two disjointed third level sectors on the island are not helping our competitiveness. We have a situation where complementary companies on the island are trading in splendid isolation.

The Minister of State mentioned that the EU has a role in growing the economy and in delivering competitiveness and employment. We want to play a full role with our European partners, but that will require a fundamental change in policy. We need to look at a radical policy shift from austerity to stimulus that will deliver smart, sustainable and inclusive growth. Will the Minister of State or her counterparts in the Department of Jobs, Enterprise and Innovation co-operate with the relevant Minister from the North to see how Europe can support the greater integration of innovation and research and development on the island, including the take up of programmes such as the FP7? What percentage of FP7 projects are on a North-South basis and what exactly is the value of these projects?

It is critical to remember, among all this talk of enterprise, innovation and job creation, that Irish industrial policy, in spite of some shift towards the development of indigenous firms in response to many industrial development reports, remains over-dependent on low corporate taxes to attract MNCs. Our economic development policies focus to far too great an extent on high-tech and research and development, rather than on innovation at all levels. While I welcome any and all research and development spend, the focus on innovation solely at this high-tech level is not an accurate reflection of the make up of the economy. We need research, technology and innovation of industrial relevance across the whole spectrum of enterprise in this State. With all the talk of indigenous enterprises and export-led growth, we need to be looking at how to innovate in indigenous enterprises such as the agrifood sector. Central to all this are small and micro-business start-ups. In terms of developing small enterprises and getting communities back to work, what steps is the Minister taking to promote the €500 million EU Progress Microfinance Facility?

Unless we fundamentally rethink the policy direction of the austerity programmes at European level, our economic development and our capability to innovate will be crippled. As innovation starts at home, we need to look at the EU-IMF deal and its effect on our innovation.

I thank the Minister of State for coming before the House, and I wish her the best of luck in her important role.

Last Thursday, my club Blackrock played a championship hurling match against Dromin Athlacca. We lost that one unfortunately, but as I looked at the match programme, I started to wonder how many of these lads had full-time jobs or prospects of employment that will keep them in their home towns and parishes. Of the 15 that started on the team, over half were not working. Some were students and the others were drawing the dole. This situation is replicated in every town and village across the country. For example, my brother is in London earning a living. He returned from Australia to help me out during the general election, and he was by my side as we travelled around the country campaigning for the Seanad. That kept him busy for a while, but the reality was not long settling in. He is now across the Irish Sea and is hurling with the Brothers Pearse Club in Neasden, Kilburn, north London. There has never been so much competition for places on his team, and he tells me that the standard has improved greatly in London. Most of the lads on that particular team are Limerick men, and all of them are working there.

This is the crisis we are facing. We need to find jobs for our young people, or else we will lose them. We may not lose them forever, but we will certainly do so for a while. The Passport Office down the road from this House is struggling to deal with the increase in applications. Most of those applications are from young women and men like myself, and this is the legacy of the previous Government and is the challenge for the current Government.

One sector in which Ireland should be a global leader is tourism. We have a fantastic product, but it has been neglected for a number of years. According to a recent Fáilte Ireland conference, UK tourists no longer see Ireland as a unique destination, because when they come here they see the same high street shops that they see at home. I remember travelling in Peru a few years ago, a country in the developing world but whose economy is largely based on its tourist product. I travelled to Machu Picchu and talked about it to a friend from County Down, who seemed to be rather underwhelmed by the whole experience. He said that it was just a ruin, and that he could look out his back door at home and see ruins. I laughed at that but it made me think how underdeveloped our tourism industry is. Rural Ireland is a fantastic tourist product. The recent visits by President Obama and the Queen of England have helped to highlight this.

What is the EU doing for tourism in Ireland? What can the EU do for tourism here? We have got ambassadors in every country across the EU. What exactly are they doing to promote Ireland? What are our MEPs doing to promote Ireland as a tourist destination?

Ba bhreá liom i dtosach báire fáilte a chur roimh an Aire Stáit agus a rá léi go gcreidim go mór go bhfuil an cumas aici agus an mianach inti an dualgas seo a chomhlíonadh go paiseanta. I want to welcome the Minister of State to the House and wish her well. She is fit for the role, but she has become Minister of State with responsibility for European affairs at a particularly difficult time in Ireland's relationship with the European Union.

In the past couple of years, we have heard calls to reflect on our relationship with our European partners. Things have changed quite dramatically since the debate on the Lisbon treaty. It was a very good thing that people in Ireland had the opportunity to vote in a referendum, however awkward that might have been seen by the political class at the time. It is worth remembering that during the second referendum campaign, the slogan about voting "Yes" for jobs was used to particular effect by the Minster of State's own party. If one was to ask Irish people today in a survey whether they felt that the EU was prioritising job creation and the recovery of Ireland's economy, I think many people, fairly or unfairly, would say "No". There is undoubtedly a perception right now that Europe is dominated by the interests of certain very large and powerful countries. That may or may not be true. There is a great degree of complexity about the decisions and choices that have to be made as we pursue our interests at European level. I do not want to make glib statements about the attitudes of certain other states in the EU or the attitudes of the EU institutions themselves.

I did not have the pleasure of hearing the Minister of State's speech because I was otherwise engaged. I apologise for that.

I can send a copy of my speech to the Senator.

I would be delighted to receive it. I hope she forgives me if I ask her about certain things that she may already have addressed in her speech, or certain things she is not in a position to address today for legitimate reasons, but which I feel I should take this opportunity to raise.

Many people are worried that we are prostrate before the agenda of private financial institutions. It seems that whatever is allowed, what must not be allowed is further loss of confidence by the markets when it comes to lending money. The worry that generates is whether sufficient attention is paid to the consequences for social solidarity and cohesion when taking a strict view on the insistence of paying back debts in full and the reluctance to contemplate default or putting new language on what might amount to default or restructuring of debt. Are we prostrate before the absolute value of maintaining confidence in the financial markets? When we see emerging discontent in countries such as Greece, are we reflecting enough on the more important value of maintaining social solidarity and cohesion? Are we reflecting enough on the consequences of turning the screw on countries to the point where their people may not be able to take any more? Is this something where there needs to be a radical rethink at European level?

The President of the European Parliament, Mr. Buzek, is due to come here on 11 and 12 July. He is expected to address the Dáil. On the previous occasion when the President of the European Parliament visited the Oireachtas, Mr. Pöttering addressed the Seanad. That was in the run-up to the second Lisbon referendum and was probably no accident. He was welcome nonetheless. In the past few days, we have been discussing the desirability of having distinguished visitors and representatives of different causes and viewpoints — eminent and otherwise — addressing the Seanad. Is it desirable for him to address the Seanad also? Does anything in the protocol or the rules of these Houses prevent a joint sitting of the Houses addressed by Mr. Buzek? Many people would welcome that. We would also welcome the opportunity to ask him questions but I do not envisage that happening in the short term in the Dáil Chamber. I would be grateful for the response of the Minister of State on this point or via the Leader if she is not in a position to respond today.

Another issue concerns the potential of the Seanad as the scrutineer of European legislation. What is the position of the European scrutiny committee? Does a vacuum need to be filled in light of the reconfiguration of the Oireachtas joint committees? What is envisaged in terms of the capacity of these Houses to scrutinise the ever-growing body of proposed legislation from the EU?

I recently had interesting correspondence from people concerned about a proposal made by the European Council of Presidents and Prime Ministers for the establishment of the European Stabilisation Mechanism from 2013. These draft laws are designed to give centralised control of two critical elements of national Government spending, namely, annual budgets and economic policy. According to the conclusions of the last EU summit, this permanent EU fund is expected to require a contribution from Ireland of some €10 billion. This is a large sum. Implementation of the European Stabilisation Mechanism would require amendment of Article 136 of the Treaty on the Functioning of the European Union. I imagine it would need to be ratified on a constitutional basis by each eurozone member state. Does that suggest there should be a referendum on this? I understand it is not the Government's intention to hold a referendum on the European Stabilisation Mechanism. Does such a stance not fly in the face of the stance of the Supreme Court judgment in the Crotty case, that any further ceding of sovereignty to the EU institutions by Ireland must be agreed to by the people in a referendum? However painful the experience of a referendum in the eyes of some, they are the only show in town when it comes to a serious national debate about our relationship in the EU. I would not want to put at risk the healing of our relationship with our European partners and our ability to get the best possible deal in our negotiations with them in respect of reducing the interest rate on the bailout fund. We must continue to value and prize our Constitution and we must be seen to do so. I welcome the view of the Minister of State on the European Stabilisation Mechanism. If there is not to be a referendum, perhaps the Minister of State can explain why not. Leis sin, gabhaim buíochas leat, a Leas-Chathaoirligh, agus mo leithscéal dá mba rud é go ndeachaigh mé thar fóir ó thaobh an ama de.

I welcome the Minister of State and the theme of her contribution is very important and provides an opportunity for us to explore jobs, enterprise and innovation across the EU and how it affects us. Recently we saw figures for exports and these are ensuring the recovery of economy. Exports are the strength of the economy and we have a large market of 500 million people in Europe. That was the theme of the debate on the Lisbon treaty. It concerned jobs created in serving that market. The exports of those employed in the industry have increased, although not as much as we would like, but the European market is important to us. Recent figures from the CSO show that exports in April increased by 6% on the equivalent period last year. That gives us confidence but we must focus on the area. We cannot be complacent.

We must focus on competitiveness and ensure that those exporting to Europe and internationally are allowed to compete with other products. They must not bring excess baggage from doing business in this country. The climate in this country must allow them to reduce their costs. The cost of labour has decreased but we must improve the cost of doing public business, which is a major cost for those operating in this country. This includes the public services offered to businesses. Opening up the sheltered parts of the economy must be addressed.

JLCs and EROs were mentioned. We must introduce efficiencies in rates and costs. This includes the cost of water and waste. These need to be made more efficient. The cost of oil is outside our control but many costs are within our control. If we focus on exports to European and international markets, we must focus on cost.

A previous speaker referred to expenditure on research and development. We have a target of spending 3% of GDP on research and development by 2020. The figures for private business expenditure on research and development are increasing. Small businesses, with fewer than 50 employees, have not increased spending on research and development. They need to be facilitated in that.

I understand the Minister for Jobs, Enterprise and Innovation, Deputy Bruton, intends to bring proposals on this matter in December's budget, although it was hoped to include it in the jobs initiative. Small companies will be facilitated through tax incentives to increase expenditure on research and development. Innovation involves not only science and technology but also focusing on processes, services and efficiencies. That was the theme of the Minister of State's speech and across Europe there is a focus on helping entrepreneurs and small businesses to innovate and avail of services in the area of research and development.

Barriers to innovation include intellectual property and patent law, an area which is more expensive and cumbersome in the EU than in the United States or Japan. Venture capitalists need to be engaged to support businesses, particularly firms operating in the high technology sector. It has been noted on numerous occasions that our bankruptcy laws are archaic and not fit for purpose compared to the UK and other European countries. We will not be able to encourage entrepreneurs and business start-ups while our bankruptcy laws are so outdated. As I am conscious of the time, I will now conclude.

To clarify, I was not looking at the clock. I noticed that Senator Mullen was leaving the Chamber just as I am about to answer his questions after being absent for my opening statement.

I thank the Senators for their contributions. This was an interesting and useful debate and I take note of the many issues that have been raised by contributors. I will attempt to respond to as many as I can but it will probably not be possible to address all of them in the eight minutes available to me.

Senator Thomas Byrne and others noted that the EU is very good at introducing lofty and grandiose strategies but that perhaps we would be better served if it responded to the immediate crisis. I would exercise caution in that regard, although I understand their frustration. I have been critical of the Lisbon strategy and have already stated my belief that it has failed. However, it did not fail because it was trying to set out a path for the medium to long term but through a lack of political will. This State is as responsible as every other member state for that failure, reasons for which include breaches of the Stability and Growth Pact and inadequate economic governance and bank regulation across the European Union. There was no political will to put these structures in place. The Minister for Finance put it well when he stated that we built a currency without an architecture to support it.

To some extent, we need more rather than less of Europe. In any politics, be it domestic or European, setting out a path — Senator Mullen has returned — for progress, with benchmarks and a clear agenda for the economy and society is the right thing to do. Knee-jerk reactions to short-term problems is not the way we want to go. That is how this country was governed for the past 14 years and it is the reason we are in our current crisis. Arguably, one of the failings of the European Union was that it did not aggressively and energetically pursue a long-term strategy. While it had a strategy, this was largely ignored. That is not a reason to argue against a strategy for the future, however, because the EU needs strong political leadership if we are to find a way out of this crisis in the medium and long term. If anybody thinks the growth that China experienced in recent years happened by accident, he or she is sorely mistaken, because it has been assiduously pursued over many years.

I do not want to get into "he said, she said" party politics but questions have been raised about the idea that reputational damage has been done to this country. I have been involved in European affairs for more than ten years. In the last Dáil, I was a member of both of the Oireachtas committees dealing with European matters and I took my job seriously. I was also active in my party's network in the EPP. However, I had no idea of the extent to which our reputation had been damaged until I met key representatives of the European institutions in my capacity as Minister of State. Most critically, Irish people who were actively participating in European institutions and Irish companies based in Brussels and Luxembourg have no doubt that Ireland's reputation as a country with which to do business has been seriously damaged. I am not pointing fingers or apportioning blame, it is a fact and we need to get on with the job of restoring our reputation.

I acknowledge that Irish companies have excellent reputations. Senator Byrne alluded to the Kerry Group, which is one of our major exporters and success stories, and there are many other companies with similarly untarnished reputations but the reputation of Ireland Inc. — I dislike the term — and the Government has been severely damaged. In the past three months we have already made progress in terms of undoing some of that damage.

Senator Mullen referred to the three priority areas of SMEs, competitiveness and innovation. I concur entirely with him in this regard. He also stated that our 12.5% corporate tax rate is vital to our industrial strategy and prospects for recovery. This is a point which Ministers have been making in all our bilateral and multilateral meetings in Brussels and elsewhere in Europe over the past three months. It is not fair to claim the EU is staging an assault on our corporate tax rate. The European Commission has been trenchant in its support and has been openly critical of the member state which, for domestic reasons, has focused its sights on the matter.

It is also not true to say that the vast majority of member states have any interest in changing our corporate tax rate or that the European institutions have their sights set on it. We are working hard to get out of the deadlock in this regard. The Minister, Deputy Noonan, and his officials have remained in constant contact with the French Ministry of the Economy, Finance and Industry, and I have been playing my part in the matter. The signals in recent days have been more encouraging but I do not want to pre-empt the outcome given the sensitive nature of the issues arising, which are, of course, informed by domestic politics and have more to do with national parliaments than the European institutions.

Senator van Turnhout made a thought-provoking intervention in regard to youth on the move. I acknowledge her deep interest and knowledge of this area and I am sure the debates on this subject in the Oireachtas and the Committee on European Union Affairs will benefit from her expertise. It also spills over into the portfolio of the Minister for Jobs, Enterprise and Innovation, Deputy Bruton.

Much of what was said is accurate. There is an expectation that we are lining up for a battle royal with the forthcoming multiannual financial framework. It is always a battle royal. It is usually a battle royal between the British and the French. We usually find ourselves on the same side as the French. It will be no different this time because our interest is in defending the Common Agricultural Policy.

I wish to add a note of caution. It is not in this country's interests to only focus on defending our national interests in a narrow sense. We are Europeans as much as the French, Germans or Spanish. We are all Europeans. We all have a stake in this project. It is in our interests to ensure that the common European agenda is a positive one without simply always reverting to a knee-jerk reactionary attitude. While we wish to defend the Common Agricultural Policy and the great benefits it has brought to rural development in this country and to food security and food safety, we must couch the debate in a much broader context.

I have had interesting discussions with the Minister for Agriculture, Marine and Food, Deputy Coveney, in which he contextualised this country's defence of the Common Agricultural Policy in the very real challenge of food security on a global scale. We have a booming population, unfortunately not in Europe but in the regions referred to by many speakers such as China, South America and the African Continent. They are areas where food crises already exist in some parts and where there will be a more serious crisis in the years ahead.

Europe and the Common Agricultural Policy within the European Union has a significant role to play in ensuring that we can secure our food supply for the future. The Chinese economy will be the largest one. Senator Quinn made an interesting contribution in that regard. It is the economy which will spin the globe on its axis. China will be able to dictate what food products it wants and the quality and type. We in the European Union must be cognisant of that. We will no longer be the big economic player we were. That is a big threat.

Never was a truer word spoken than the old cliché, "United we stand, divided we fall", in terms of the European Union. We must wake up to the global pressures. As Senator Quinn said, it is all right to be nationalist when one wants one's football, rugby or cricket team to win but there is no room for nationalism in economics. We moved beyond that approximately ten years ago. The Chinese have seen that already. We must ensure this country's future economy is secure in the context of a united and cohesive European Union. That is not to say there are not major challenges, there are. I would like to see us face up to those significant challenges. Many European countries, big and small, have retrenched and washed their hands of some of the challenges that lie ahead. As a small member state it is up to us to remind member states, big and small, that our interests are best served by working together than by being divisive or divided. How much time do I have left?

I have not even got to half of what I wished to say.

The Order of Business was decided this morning.

I wish to answer a few specific questions. I will respond to Senator Rónán Mullen's questions as he took the trouble of numbering them and setting them out in detail. On the consequences of debt repayment for social solidarity, there is huge pressure on social solidarity. I will reply to Senator Mullen in the same vein as I spoke to Independent Members in the Dáil earlier today. The consequences of social solidarity if we withdraw from an EU-IMF programme and our schools and hospitals shut down next week is that there is nobody to meet the massive bill for the State to pay social welfare, disability allowance and carers. We must put matters in context. It is all very well to say that we should pound the table and shout the loudest.

I do not advocate withdrawal.

We have no alternative but to make the EU-IMF programme work. There is no doubt about that. If we want to get out of the programme and ensure we borrow less money than is envisaged, we must get back into the international markets to borrow money directly from them. To answer the Senator's question, confidence is exceptionally important. That is the world we live in. We might like a more utopian, ideal world but this is the one we live in. We must make the programme work.

There is scope for much more solidarity. It is difficult, however, because we have a largely home-grown crisis in this country and taxpayers are unhappy with the situation, as I am. In Germany taxpayers have been asked to loan money to countries that may not pay them back. Then when the loan has been secured the next request is for the interest rate to be reduced and some of the debt to be written off or extended. That is not realistic. We must understand not just where we are coming from and our own travails in this country but also understand where they are coming from. If we can achieve a meeting of minds we will be in a much stronger position. The "them and us" approach does not work. We must wake up to that.

I am delighted the President of the European Parliament, Mr. Buzek is coming to visit. We are the last member state he is visiting. He wanted to visit several times in recent years but it was not possible for him to do that for various reasons. He will address the Dáil. That was very much at my insistence. I believe we have secured agreement for that. I expect it will be a joint sitting. I had anticipated a joint sitting when Commissioner Geoghegan-Quinn visited on 9 May but the Taoiseach's nominees to the Seanad had not been appointed and as there was no Seanad in place we could not do that. I expect it will be a joint sitting in the Dáil Chamber.

I see a great potential for this Chamber in contributing to scrutiny of European legislation and policies on behalf of the Oireachtas. I do not believe the new system leaves a vacuum because each sectoral committee will be responsible for scrutiny. That is the way it should happen. This Chamber can add value to the process, as the House of Lords does in Westminster and as many other Upper Houses do across the European Union. It is up to Senators to assert themselves and insist on the role for the House. I would be very supportive of that initiative.

On the establishment of the ESM, it is untrue to say that the ESM gives EU control over domestic budgets or economic policy in member states. That is not the case. We have had closer economic and budgetary co-ordination as a priority of the European Union for many years but it just has not happened. I do not believe a transfer of sovereignty is envisaged through the ESM treaty to the European institutions. Therefore, I do not envisage that it will be necessary to have another referendum on the matter in the State. I have met with the Attorney General already and I intend to meet her and her officials again in the weeks ahead but I do not see any additional transfer of sovereignty envisaged in the ESM, therefore I do not see any reason to hold a referendum.

I wish the Minister of State every success in her brief and luck in the future.