Speech by An Taoiseach Enda Kenny T.D. at the IBEC CEO Conference “Better Business by Design”

Ladies and Gentlemen, I am delighted to join you this morning for your annual CEO conference.

I welcome the theme of your conference today with its emphasis on design. It’s very appropriate for the year that’s in it and I know that you are going to hear more about the Year of Design from Karen Hennessy later today.

I welcome in particular the theme of this session with its emphasis on “designing Ireland” – this truly epitomises where we are at as a country. After a number of years of painful adjustment, we are thinking with renewed optimism about where this country is going and all that we can achieve during a new phase of economic and social development for our country.

Economic Recovery Taking Hold
We can all remember the depth of the crisis that gripped the country only a few years ago. An economy in freefall; banks on the brink of collapse; thousands of jobs lost and Ireland’s international reputation in tatters. A country in a Troika bailout programme.

In the teeth of that crisis, the Irish people gave a clear mandate to a new government – to fix the public finances and get our country working again.

When we met this time last year, we were able to speak about signs of recovery. This year, we can say with confidence that the economic recovery has taken hold. The evidence is now clear.

· We are enjoying strong economic growth. The European Commission forecasts that Ireland will have the fastest growth rate in the EU in 2015 for the second year running.
· We had double-digit export growth in the first three quarters of 2014 and exports of Irish-owned companies reached a record high of over €18 billion last year.
· Investment is up, growing more than 14% last year with strong signals of confidence across the business sector, suggesting this strong growth is set to continue.
· We see positive trends also in our tourism statistics, in retail sales, in consumer sentiment, all pointing to renewed confidence in both the business sector and amongst the general public.
· Government borrowing is falling rapidly, from a peak of €22 billion in 2011 to around €5 billion this year – and we are on track to reduce the deficit to well below 3% of GDP this year.

Of course, most families don’t measure economic recovery in terms of GDP growth rates, bond yields, or Government deficits. What matters are jobs and their impact on people’s lives and family finances.

There is also steady progress to report on this front.
Since the Government launched its Action Plan for Jobs in early 2012, Irish businesses have added almost 90,000 jobs to the economy– just 10,000 short of the target the Government set itself for 2016.

Unemployment has come down now to 10.3% from 15.1%. Encouragingly, we are seeing significant reductions in the number of long-term unemployed and young people unemployed.

These positive developments have not happened by chance. They are the result of the sacrifices made by the people of Ireland, the corrective actions that you and your employees have taken to safeguard your businesses and they are down to the policy decisions taken by this Government.

I know well that most families in Ireland are only just beginning to feel the benefits of the recovery, and many have not yet felt the benefits at all.

A key priority for the Government in 2015 is to ensure that more and more people – in every part of the country – start to experience the economic recovery in their daily lives.
Job creation remains our top priority.

Getting a job changes a person’s life. It provides purpose, financial independence and the opportunity to provide for family and to contribute to community. More jobs fund better services.
More jobs generate the resources to reduce the tax burden on those already at work. More jobs mean the opportunity for our brothers, sisters and children to come home.

Of course, it is also important to share more of the benefits of recovery with those already at work.

I welcome the increasing evidence that private sector employers are once again agreeing sustainable pay increases with their staff, aligned to firm-level and sector specific conditions.

Local pay bargaining is clearly working for businesses and their staff – this Government will not return to the old social partnership model of centralised pay determination that did so much damage to our competitiveness during the Celtic Tiger period.

For the Government’s part, we have begun the process of cutting income taxes for workers, with a particular focus on low- and middle-income earners. When we last met before the budget, I said that the 52% tax rate on middle income earners was anti-jobs, anti-enterprise and anti-investment.

In the Budget, we reduced the USC and income tax rate on middle income workers earning less than €70,000. We will reduce it further in the next budget, and in the following budgets if re-elected. For the first time in seven years, working families are now seeing a modest rise in their take-home pay.

Well designed tax cuts that reward hard work and enterprise and help create jobs generate the resources we need for better services and more investment.

Strong growth in jobs is funding tax cuts on working people. And less tax on work in turn means more jobs. Our goal for 2015 is to reinforce a virtuous circle of rising living standards, job creation and improving public finances.

We will also begin the process of equalising the income tax treatment of the employed and the self-employed. I want Irish entrepreneurs and small businesses to play a significant role in delivering full employment. The discriminatory tax treatment of self-employed people inherited by this Government can no longer be justified.

These tax changes, combined with the introduction of the Back to Work Family Incentive and increases to child benefit, will be a help to working families still struggling after seven years of cutbacks.

We also need to ensure that as the economy recovers that vulnerable workers that lack bargaining power are paid fairly. Work must pay more than welfare and those in full-time work should not be poor. Too often, this is not the case at the moment.

That is why the Government is legislating to establish a Low Pay Commission. After the Low Pay Commission makes its first recommendation in July, the Government will respond by the October Budget.

For employers, a benefit of the Low Pay Commission concept is that in assessing the national minimum wage annually, any adjustments into the future will be incremental and far less disruptive for business compared with the big changes in the past.

I am not complacent about the need to maintain our competitiveness. When we last increased the minimum wage in July 2011, we simultaneously halved the lower 8.5% rate of employers’ PRSI to offset the impact on employment costs.

To protect jobs, I will once again ask Government to look at measures to mitigate the impact of any increase to the minimum wage, particularly for small employers.

A Plan to Secure the Recovery
Ladies and gentleman, the economic recovery remains fragile and incomplete. Irish families and businesses need a solid foundation on which to plan their futures, but remain nervous about the risks ahead and the danger of slipping back.

My commitment to you and to the Irish people is that – under this Government – we are never going back.

Through our Spring Economic Statement this coming April, the Government will set out a 5-year plan out to 2020 to secure the recovery, including a commitment to deliver sustainable, full employment by 2018.

By full employment I mean that everybody who needs a job can find one. This is a highly ambitious goal.
To achieve this, we will need to help businesses add at least 40,000 new jobs this year; and to add the same again in 2016, 2017 and 2018 at which point we will have replaced every job lost during the recession with new, more sustainable jobs.

It can only be achieved by a Government that makes the right choices.

One that protects the strong foundations that have been laid.
One that ensures that the hard won recovery is sustained and endures.

At the heart of our plan will be a commitment to protect the hard-won restoration of our national competitiveness and stability in the public finances.

We are never going back to the “boom and bust” economics and the “when we have it we spend it” approach to budget management of previous Governments.

And we are never going back to the culture and practices of speculation, lack of oversight, wanton waste of public money and blatant disregard to our international reputation.

We will eliminate the remaining gap between Government revenues and spending by maintaining discipline over public spending, while making the space for personal tax reform and the big increase in investment in key services and infrastructure needed by a growing population.

In doing so, we can deliver steady, sustainable growth that does not have to be paid for by our children.

This approach will keep interest rates low by bringing Government debt to well below the European average by 2020, and help protect our recovery against the risks that still lie ahead.

Our plan will consolidate Ireland’s position as the location of choice for new investments and job creation in a whole range of new and traditional sectors, not just for foreign multinationals, but for our own Irish-owned businesses across the country. We will keep the 12.5% rate of corporation tax, no matter what the pressure from other countries.

Concluding Remarks
Ladies and gentlemen, there is renewed optimism in this country and there is a strong basis for this optimism. Even in the year since we last met, we have witnessed considerable further improvements in the performance of this economy.

I believe that the recovery that Ireland is now experiencing can be just the beginning of a more sustainable, authentic and fairer phase of long-term economic development and prosperity for our people.

I also believe that the recovery will, if secured, translate into real improvements in people’s day to day lives.

Fair rewards for hard work, not quick profits for speculation.
Steady growth, not boom and bust.

But the recovery is still fragile and, as we have witnessed in other countries, hard-won economic stability, progress and credibility can be too easily reversed.

Without political stability, there can be no economic stability.
And without economic stability there will neither be confidence nor investment.

For the next year, this Government will continue our work to secure the recovery, and strengthen its impact on the daily lives of our people.