 We have a rather good panel put together, and thank you all very much for attending today. We are very pleased to be joined by the Minister for Finance, Michael Noonan, a very busy job at the best of times. But I gather today there may be something happening in another part of town as well that may distract him, or maybe not. We also have Michel Servaud from the European Commission. We have Rowena Dwyer from the IFA and Paul Guinelle from the European Anti-Poverty Network. And I guess what we're going to be talking about today, and we're a few minutes later starting, which is good because that means I can get away with speaking for a few minutes less by way of introduction. I guess what we're going to be talking about is the idea of inclusive growth within these country-specific recommendations. We've become used to the recommendations telling us to get on with sorting out our fiscal affairs, get on with trying to grow the economy, we haven't placed enough emphasis on inclusive growth and dealing with issues on the social side that contribute both to welfare amongst individuals, but also to longer-term economic growth, and we'll be thinking there are things like the cost of childcare within the country and the provision of childcare, and also the work intensity in households where we do have problems, we know about those problems, and now we have the European Commission pointing the finger at us and saying, you do have problems and we are watching you and how you deal with those problems. So those are things that perhaps we should be paying more attention to and including it more in the kind of discussions we have about the management of the economy in general. So that's enough from me. More importantly, we should hear from our guests, and I'd like to call first on the Minister for Finance, Michael Noonan-T.D., to take the floor and address us. Thank you very much, Chairman, and fellow speakers on all the guests here today. I'd like to thank the institute for inviting me here today. The first significant speech I made when I was made Minister for Finance back in 2011 was to this institute at the invitation of Brendan Halligan, and that day we set out our difficulties and our approach to the Troika who were well embedded in the town and in our affairs at that stage. And I think it's a fortunate coincidence that this would be my last significant speech as Minister for Finance, so we're rounding off where we started. Things have changed. Thank God. So you'll indulge me if I wander a bit and ramble a bit and reminisce a bit and don't always hit the theme of the conference, but I'll do my best. As I said, when I spoke last, the Troika were in town. And since then, you know what happened. You remember the main points of it. And we left the Troika and we have them goodbye after three years without any precautionary programs. I think it's generally known as well. We had a lot of nervous people in the Cabinet and a lot of nervous people in the wider civil service and in the various state agencies who felt that we shouldn't leave the Troika without a built-in braces strategy behind. But we got back into the markets clearly without any precautionary program. And yesterday, Irish tenure bonds were quoted at 0.8% of 1% and 4.5% of 1%. So I think it's proof that we got safely back into the markets and stayed there. The names that were part of the daily dialogue in Ireland at that stage were people like Commissioner Olly Wren, Christine Lagarde who was the French Finance Minister, now in the IMF and a great friend of Ireland's, Wolfgang Frobel who never refused a reasonable request that I put to him, Mario Draghi in the bank who was always very helpful, Charles Regling who was in charge of the European Fund that funded the European money that we got and was very helpful to me when we went to repay the IMF loans that were outstanding and Jerome Dieselblom who was president of the Eurogroup. These were all very important in our lives in Ireland and they may be forgotten names now but I'd like to note them here today because they were very helpful to us. People that the Irish public don't realise are so helpful people like Mark Carney who's head of the Bank of England now but at that time was head of the Central Bank of Canada and he was also chairman of an organisation of Central Bankers to bring stability into the monetary markets. It was Mark Carney who designed the alternative arrangement for the promissory note for me and I'd like to put my thanks on the record as well because a lot of other smart people they failed to crack it but Mark gave me the design of it and we thought that agreed across Europe then and he's ministered in HM Flaherty who's a great friend of Ireland as well, the Canadian Finance Minister. It's not generally known that in the IMF and in the World Bank we operate in constituencies, groups of countries and the Irish constituency is led by Canada and Jim Flaherty was very good to Ireland in the IMF and in the World Bank in those terms and of course we must also recall the great AJ Chopra affectionately known as the Chopper by the Irish taxpayers for his insistence on financial cutbacks but he played his part as well and was a friend of Ireland. So you'll forgive me for reminiscing because these are the people that we negotiated with and these are the people who are most helpful to us during the three years that the tribe were here and that was the three years, as I say, since I spoke last to this institute. Now things have changed utterly, you know. I don't think a terrible beauty has been born yet but things have changed utterly. The Irish economy now is unrecognizable from how it was in 2011. We're on the third year of the fastest growth in Europe. The next budget should be balancing the budget and showing a slight surplus probably. We're on the cusp of full employment having come down from over 15% on employment rates for almost six now. We have a debt GDP ratio which is below the European average even though debt is still a risk to us and the growth is also inclusive if I can come back to the theme of the conference. My experience on the ground in politics is the great social division in any country and particularly in Ireland is between those who have jobs and those who don't have jobs and unemployed people have a very hard time even though we sustained the headline levels of social welfare during the crisis to be unemployed as to be on low income, to be unemployed as to be in a poor household, to be unemployed as to have your morale going down and staying down. And after a while there's a kind of a hopelessness enters in the doors of unemployed households. So if you want an inclusive society get people back to work and work is the solution to many of the problems of inclusion and well-paid work is of great benefit and we have done that. Now, it's arguable that the initial stages of the recovery were confined to Dublin and the East Coast but that has changed particularly in the last 12 months. The Central Statistics Office divides the Irish economy into 14 sectors. Every one of those sectors 12 of them private, 2 of them public have put on jobs in the last 2 years and every region in the country has also put on jobs. So the recovery now is across all sectors and is in all regions and there's an acknowledgement of that and that is I think the biggest contribution to an inclusive society that we can make and that should continue. Of course there are other issues and as I said we maintain the rate the headline rates of social welfare but that's safety net politics getting people out of poverty jobs is what you create and well-paid jobs is what you create and you organize your economy so that your employment is moving up the skill set so that there's even better paid jobs as you invest in education and as you move towards a modern economy and we're doing that and of course there's more to be done I acknowledge that always and I don't think any senior politician would ever say job finished but significant progress has been made as I say in all sectors, in all regions and the great social division of being unemployed, being jobless, being hopeless that's being now removed from Irish society it applies to the young as well and many of the young people who didn't go into unemployment because they immigrated are now coming back and the figures are quite interesting there was a net inflow in March of 216 the last figures I've seen there was a net inflow of 3000 but it's a long way back to March of 216 a lot has happened since so I understand anecdotally there's a very strong inflow in now so we have to continue to keep doing the good things we're doing and then we have to look at the micro issues that are affecting inclusiveness in our society and address those as micro issues within the macro policies that we have been following there are risks there are always risks but debt is a big risk in Ireland all the time and we kind of our fears are a lead on debt because the way it's measured internationally it's always measured in debt GDP ratios and on the debt GDP ratios we're about 74% and the European average is somewhere in the low 90s so it looks very good but there are other measurements of debt where we don't look good at all I mean it's 200 billion per capita debt it's 42,000 for every man, woman and child in the country and we're second only to Japan if you measure it on the basis of per capita debt so that debt the risk is out there with that huge bulk of money if you look at it historically as well you know at the top of the Celtic Tiger and let it be true or false economy the debt was 25 billion it's now 200 billion so you can see by historic measurement that it has changed dramatically and it is a risk and the debt has to be brought down not just in proportion of terms but in actual terms and that's why I confer on again that it's a good idea to use the proceeds of the sale of the banks to bring down the debt because the money to recapitalize them was borrowed anywhere in the past instance and we proceed to do that it's about the only internal risk that we have the other risks are external Brexit is a risk and I don't need to recite the Brexit risks for all of you we don't know what the crystallization of the risk will be until the agreement between the UK and the European Union is finalized if it is finalized but we know it's a risk and it can be a very big risk or it can be a more moderate risk if Mrs May is still Prime Minister and she succeeds in negotiating a free trade agreement with the European Union which is reciprocate that modifies the risk for us but if we have to pay tariffs it's a huge risk if we have to pay World Trade Organization tariffs it's a massive risk the risk on prime stake for example sorry the tariff on prime stake for example is about 60% the tariffs across a range of dairy products are between 30 and 50% you can imagine what that does to the competitive business, the Irish food industry in the UK market the margins aren't as wide on manufactured goods but again they can tip the balance so Brexit is a risk to our prosperity and like all the risks it faces we have to be very smart both at political level and civil service level and diplomatic level to negotiate the solutions that are in our best interests our best interest at the moment is that the UK would land with an arrangement that's not too far from what they have at the minute a single market under another name that's what best suits us the second risk is Mr Trump's America because he has been making very strong protection of soundings now we're free trade people we're a small island less than 5 million people in the 26 counties we live by trade we live by trade unless we can trade openly without tariffs or without protectionism that's a risk and there's a trick to that coming from the United States Administration now the second risk from the United States has been ameliorated in the last month or so and that's the desire to put in a kind of a customs tax I mean if you stick 20% on to all goods imported into the United States and we're exporting about 17% of everything we produce to the United States you can see what the impact that may have but the White House has gone cold on that particular issue there are no longer sponsoring this and the people in the house who are promoting that health customs import tax I don't believe they have a majority anymore because there has been such domestic opposition too so that risk is ameliorated significantly there will be changes in the corporate tax code in the United States I don't think it'll affect us very much the rates are very high they're totally out of line with other trading economies they're somewhere between 35 and 38 they could take 10-15% off them and they wouldn't affect us there's a secondary proposal though that there would have some kind of amnesty with a levy attached for repatriating profits there are 2.7 trillion US multinational profits elsewhere in the world and they are liable to tax but the tax only crystallizes if the profits are repatriated to the United States and there's a proposal put forward by Mr. Trump's people that they would repatriate not at the corporate tax rate but at 10% and it's even more complex than that they would be free to use the money as they wished if the profits were deemed to be repatriated now that's a fancy way of saying you have an amnesty if you pay 10% and you can do what you like with your capital overseas now that shouldn't affect us very much as a matter of fact it may loosen up capital that could be used right around the world but also in Ireland so I think the tricks from the United States have ameliorated somewhat I don't think there's a very large threat on the corporate tax side but there is a threat on the protectionism side and we're not sure how that's going to how that's going to carry out we have country specific recommendations from the Commission which were brought forward last week as part of the EU semester process and I think that's a very important process where you get an external evaluation of your economic policies and you get advice usually the advice is pretty simple so the advice this time is to continue to stabilize the public finances the advice is also to use any windfall gains to reduce the debt now apart from the sale of bank shares we're going to get significant windfall gains from the Nama profits they announced their annual report yesterday they're predicting now they'll have in excess three billion to return to the extekers when they finish their operation there are significant windfall gains as well coming from the liquidation of IBRC Anglo and when that liquidation completes it's not only sufficient for unsecured creditors but there is money which will also be transferred to the extekers there's also a recommendation which will be in line with your team today to activate activation policies for unemployed persons especially with those skills who find that their skillset don't fit the labour market anymore retraining and so on and of course that's a very good recommendation and there's also a recommendation on non-performing loans AIB which is in the news now had non-performing loans in excess of 30 billion they have it down to about 8 billion now and all the banks in Europe in the context of banking union have been instructed in the last couple of weeks by the European Union Banking Regulator in Frankfurt to get their non-performing loans down and again it's a recommendation we can agree with so these recommendations I can agree with and I'll bequeath them to my successor to implement them as time goes by on Europe I suppose Europe is growing again and all economies were growing six months ago Greece has had a bit of a setback in the last quarter but it should start to grow again in the next two weeks the money for the third programme was released as I expected to be released to them in the second week in June so Europe is growing it's not growing very strongly but it's growing stronger than it was last year or the year before and a quantitative easing policy followed by Mario Draghi is working and it's monetary policy is working in Europe now and I hope it continues to work Europe has changed as well the big risks in Europe weren't so much the economy but the political instability coming from right and left-wing populism and all that agenda which we know so well about that you're following the news Spain on the replay succeeded in stabilizing around the centre putting that kind of government in place again Austria succeeded in putting a centre president in place when there was a threat of fascism again in Austria Holland succeeded in keeping the anti-immigrant party to about 10% and are in the process of forming a government now around the centre and I think that will be completed in the first half of June France and Macron is centrist and that has happened as well and if you cross across all of them apart from there being centrist in terms of economics and ideology they're all pro-European so there's a series of pro-European governments now being formed across Europe and if you were looking at it this time last year you'd be saying Europe is in crisis but it's no longer in crisis now because there's a stabilisation around the centre Mrs Merkel is favourite to win in Germany she has won very significant regional elections as well as the most significant North-lying Westphalia population of 18 million people and she changed the arithmetic by 8% very significant and always treated that regional election is always treated as a weather rain for the national elections because it's the last big one before the national elections so if one was to predict the future you would see a reaffirmation of the French-German access you see Berlin and Paris coming closer and that would be good for those of us who believe in the European project we'd like to see that there are problems of course that continue in Europe one of them is can you have a currency union without a monetary union quite clearly no so there is a monetary union in Europe and it's run by the European Central Bank but the more interesting question is can you have a currency union without a fiscal union and there are fiscal rules that are common which we apply in common I referred already to the European semester and the recommendations and the commission which are part of that well there are other issues as well that are emerging now from Macron's government is it possible to have a budget for the eurozone to be deployed across the eurozone is it possible to have mutualisation of debt in the eurozone and would that ultimately lead to a European eurozone and a finance minister who would deploy the budget and make budgetary decisions and now Emmanuel Macron is very much in favour of these consulates so they're going to become part of the European agenda in the next couple of months and there will be a significant debate on them and you can see the difficulties if you look at other currency unions like the United States the month and start of this are back around 1795 and they mutualised debt in the United States and they underpinned the dollar and the question you know hasn't really arisen sense but they rented the debate I mean that was mutualisation of debt and practice but it means that some central authority issues euro bonds and the risk on debt is shared across the members and there will be interesting debate about to emerge and we'll see where it lands one of the things that concerns me is that I was involved in the campaign I'm old enough to have been involved in the campaign on Ireland's entry to the European Union way back in the early 70s and at the time part of the argument was that the commission was the bulwark for the interests of smaller countries and that we wouldn't be overwhelmed by the larger economies the French and the Germans and the Spanish and the Italians because the commission had amended to stand by smaller countries that's no longer true the commission doesn't stand by smaller countries any longer as far as I see now in its modern manifestation the commission promotes the interests of the larger countries you'll see that in the CCCTP especially not in the consolidation phase but in the payment phase following the OECD mandate of tax liability arising where the economic activity which creates the problem occurs the commission is trying to apply a formula where different pieces of the economic chain will carry an element of the tax in other words that if you sell an awful lot of stuff manufactured and doubled and if you sell it in France as well as getting vatterned the French exchequer will take a tranche of the profits on it so you're applying a formula to different pieces on the chain and you can see that, that obviously disfavours smaller economies who produce and it favours larger economies who have a big market and the commission through the commission is pushing this quite strongly so I'd be reluctant to rush into new arrangements on fiscal union with European finance minister unless we had assurances that the commission would revert to its previous practice if not mandate of standing by smaller countries and protecting their interests rather than the larger countries but what's happening in Europe now is extremely interesting what's happening in France is very interesting what's happening in the French-German relationships is very interesting as I had yesterday I heard this some of Mr Macron's advisors have developed a policy to encourage extra investment in Europe and to modify the fiscal rules to allow for investment and this is something we can support as well because it's necessary investments right across the eurozone now even though it has increased with the Yonker plan it's 2% less than the average between 2000 and 2005 so we're still a drift of what it was just at the turn of the century and extra investment is required if you want to grow economies especially when they're recovering from recession you have to invest and if the fiscal rules are one size fits all and their restricted capacity to invest in both social and economic infrastructure that's the detriment of growth in the economy and you can invest without doing any violence to the general scheme of maximum economic management are indeed without any undue risk to the fiscal position of countries so that's really all I wanted to say and I wanted to put it in that context I mean I agree with the theme of the conference there's not much point in having kind of statistically growth in the economy there's no point in having growth in the economy that doesn't permeate the lives of people there's no point in having growth in the economy that simply continues to enrich an elite growth in the economy always has to be for the generality of people and as well as growth like without it is it's like prayer without good works that way that way you would say about the altar so thank you very much