This Budget helps build the Republic of Opportunity we are working towards. It is a fair budget that rewards work through tax reductions, breaks down barriers through targeted investment in public services and charts a course over the next few years to provide certainty to families and businesses.
I believe the choices the Government set out in the Budget strike the right balance between maintaining the stability of our public finances, improving our competitiveness and supporting enterprise job creation, so as to ensure we have the resources needed to deliver on our public policy objectives in the areas of housing, childcare, health and education.
Improvements in all of these areas improve the general business environment, making Ireland a more attractive place in which to do business and laying the foundations for future jobs growth.
Yes, our headline economic figures are good. Unemployment is down to 6.1%. 4 out of every 5 jobs being created are outside Dublin.
The enterprise agencies of my Department - Enterprise Ireland, IDA Ireland and Local Enterprise Offices – are helping to add 70 high quality new jobs per day since 2015, and have delivered over 50,000 net new jobs in the years 2015 and 2016 combined.
However, there is no room for complacency. We need to remain vigilant to the very significant challenges in the external environment, in particular in the context of Brexit.
Turing to my own Department, diversification has been at the heart of my approach to this year’s budget. It will help local SMEs to compete, innovate and trade to deal with the challenges of Brexit.
My Department has secured record funding in Budget 2018 totalling €871 million. This allocation is almost €48m above the published ceiling of €823m for the Department in the Department of Public Expenditure and Reform Revised Estimates of November 2016 and July 2017.
The Department’s Capital budget increased by €40m on the published ceiling to €560m – a record Capital allocation for the Department - and will increase by a further 7% to €600m in 2019 and 2020.
Responding to Brexit Challenges
A new €300m Brexit Loan Scheme will provide affordable financing to Irish businesses that are either currently impacted by Brexit or will be in the future. The new scheme will be open to all trading SMEs and large firms employing less than 500. The scheme will see a sizeable reduction in interest rates charged for lending to circa 4%. The total Exchequer funding of the scheme will be €23 million, with my Department contributing €14 million and the Department of Agriculture, Food and the Marine contributing €9 million.
In addition, I have asked my officials to progress with the Department of Finance and the SBCI and EIB the development of a Longer-Term Loan Scheme, together with a new Business Advisory Hub service, which would focus on business development to allow enterprises to position them for a post-Brexit environment.
I am also pleased to announce that I have secured an additional €3 million of Current Pay Funding from the Minister for Public Expenditure and Reform which enables the recruitment of a further 40-50 staff to bring the total additional Brexit related posts up to 100 in 2018 and to ensure a joined-up response to Brexit.
I would also highlight that I am providing for an increase in the Pay budget for the Health & Safety Authority (HSA) in 2018 to enable the Authority to prepare to meet the challenges its regulatory functions will face post Brexit.
The Capital allocation for Enterprise Ireland in 2018 is c.€63m. In addition, EI will utilise Own Resource Income (ORI) to support a range of enterprise development initiatives next year. Typically, such ORI is in the region of over €65m per annum. At the end of 2016 EI clients were directly supporting 201,000 jobs. EI strategy is to both grow and maintain jobs, in the face of Brexit, with a target to support 60,000 new jobs to 2020. EI Strategy is to continue to support exports to the UK while growing and diversifying outside the UK. EI aim to grow exports from €21.6bn in 2016 to €23bn in 2017 and out to €26bn by 2020. A new Eurozone export strategy, with a target to double exports by 2020, is being rolled out over 2017/2018. In early 2018, EI will roll-out a second Regional Investment Fund Call for Proposals with funding of €25m.
The Local Enterprise Offices (LEOs) are a key element in supporting entrepreneurship and enterprise throughout the regions. The LEOs supported a record 3,680 new jobs in 2016. The capital allocation for the Local Enterprise Offices of c.€22.5m will allow them to continue to support over 6,000 micro enterprises employing more than 34,000 people and support the creation of over 7,500 new jobs (gross) next year, in addition to providing training mentoring services and promoting a start-up culture locally.
Funding for InterTrade Ireland at c.€5.7m will be used to assist SMEs to develop cross border trade and capacity building. With the advent of BREXIT, ITI is uniquely placed to assist companies that will be adversely impacted by the UK departure from the EU.
Attracting FDI to the regions is an integral part of our growth strategy. IDA Ireland’s capital allocation for 2018 of €137m, an increase of 45% over the last two years, will enable it to continue to deliver on its investment and job creation targets as set out in its five year strategy, Winning Foreign Direct Investment 2015-2019. The Agency's allocation will be used to support FDI clients through employment grants, training grants and physical infrastructure. The 'Winning' strategy targets the creation of 80,000 new jobs and 30-40% increased investment in each region by 2019. At the end of 2016 IDA supported client companies employed more than 199,000 people in Ireland. Budget 2018 will support the ongoing rollout of its Regional Property Programme. This will allow for the completion of Advance Buildings in Galway, Athlone, Dundalk and Limerick in 2018, with design on similar buildings in Waterford and Carlow to be progressed during the year with a view to their completion in 2019.
The Capital allocation for Science Foundation Ireland in 2018 at c.€166.75m, an increase of €4.25m on 2017 allocation. The additional funding is also being allocated to bring the number of Research Centres funded by SFI to 17 up from 12 at the beginning of 2017. In addition to the 4 new Research Centres announced last month, an additional €4.25m is being allocated today to develop a new SFI research centre – the SFI FutureMilk Centre – in 2018, which will be led by Teagasc, in partnership with the Tyndall National Institute and universities and institutes of technology throughout the country.
A major investment is being made through the allocation of €7.5 million for a new PhD and Research Masters Programme to meet enterprise skills needs. In 2018, the programme will provide funding for 150 new enrolments in disciplines aligned to enterprise needs.
The increased capital budget for Innovation will allow Ireland to join the European Southern Observatory (ESO) in 2018. The benefits of membership are significant and include the creation of advanced enterprise relevant skills in areas such as data analytics, software and photonics.
In the area of innovation, Enterprise Ireland (RDI) Capital allocation for 2018 at c.€122m will enable it to further scale-up of in-Company RD&I by harnessing a combination of national and international in-company RDI funding.
The continued funding of the European Space Agency at c.€17.8m in 2018 will enable Irish companies to win new product development contracts and support the establishment of new high performance entrant companies and start-ups through the ESA Business Incubation Centre (BIC) for Ireland.
The tax package in yesterday’s budget will significantly enhance our competitiveness. The USC reductions, the reduction in the marginal rate of tax and the new share based remuneration scheme – KEEP – will in particular support our SMEs. I would also highlight the fact that we have retained the 9% VAT rate, while other parties such as Sinn Fein, were advocating its part-abolition. I believe businesses need every support they can get at this difficult time in the face of currently fluctuations and general business uncertainty.
In conclusion, I want to reiterate that I believe this Budget provides a platform for the next stage of our economic and enterprise development.
It strikes the right balance between maintaining the stability of our public finances, improving our competitiveness and supporting job creation.
It’s another small sustainable step forward in the right direction. It is modest but it is real.