Good afternoon,
Ladies and gentlemen, distinguished guests, thank you for the invitation to speak here today.
I would like to particularly thank Martina Lawless and her team for the opportunity, and for their ongoing and insightful work across many areas of public policy.
In these fast changing and uncertain times, the work of the ESRI has never been more important in providing evidence to help ensure informed debate.
As we gather today, we are now just 15 short days away from Budget 2027.
And as we continue our preparations, this is a good opportunity to take a step back – and reflect on the state of the Irish economy, the challenges we now face and the opportunities they create for this country.
By almost every measure, the Irish economy has been transformed over the past decade.
When I first entered politics, unemployment had peaked at almost 15 per cent. Today, unemployment is at historic lows, around 5 per cent, with a record number of people in work.
In 2011, Ireland was in economic purgatory. The choices we made on our budget were not our own. Our room for manoeuvre was severely constrained.
Today, we are running budget surpluses and investing every year in our sovereign wealth fund — the Future Ireland Fund — as well as saving via the Infrastructure Fund — building resilience for the years ahead.
And we have done so while navigating a series of extraordinary shocks: a global pandemic, Brexit, war on our continent and repeated upheavals in the global economy. Each has tested our economy and our society to their limits.
Yet we have come through those challenges in a fundamentally stronger position.
As I stand here today, I am one of very few Finance Ministers in Europe with the resources to set out a Budget that will increase current spending, increase capital investment and reduce taxes.
That is not lost on me as I prepare to deliver my first Budget as Minister for Finance.
It is an extraordinary privilege.
But it is also an extraordinary responsibility — because the strength of our public finances today gives us choices that were simply not available to us in 2011.
The challenge now is to use those choices wisely: to invest in our future, to strengthen our resilience, and to ensure that the progress we have made is both sustained and shared.
Fiscal Policy
The job of government is to ensure that with all the information available to it — and the ESRI plays a crucial role in that regard — it makes the correct choices, both for the now and for the future.
The annual budgetary process is often characterised by the ups and downs of tax and expenditure policy.
Most people — quite rightly — are interested in their individual circumstances.
The rate of tax they pay, the level of funding going into their local schools and hospitals and the social payments they or their families might rely on.
But Budgets should be and are much more than that.
The annual Budget is the key tool the Government has to influence the economy, to implement our country’s priorities and to shape, over time, the kind of Ireland we want to live in.
With every Budget we try to balance the needs of the present moment, while protecting our country and our economy for the future.
This Budget will be first to be delivered under the Government’s Medium-Term Fiscal and Structural Plan. The publication of the Plan last year was not simply a technical exercise.
It is a statement of intent.
It is a roadmap for how we safeguard our economic model in uncertain times, protect living standards, and invest responsibly in the future of our people.
A Changed Global Environment
And as we gather here today, we can have no doubt that we live in a much-changed world.
Russia’s war of aggression against the people of Ukraine has brought us back to a world of territorial expansionism.
The broad shift in US policy towards its allies — in both the geopolitical and economic spheres — has changed the post-World War order.
And the continued competitiveness pressure on European industry from China, and others, is evidence of a new geopolitical and geoeconomic paradigm.
The previously understated nexus between national economic goals and geopolitical interests is now explicit. In other words, saying the quiet part out loud has become the new normal.
Nowhere is that more obvious than in Iran, where the weaponisation of global trade in oil and gas continues to have a major impact on people’s everyday lives.
The question for Ireland — and for the European Union — is how to respond to this new and more uncertain world.
In that response some fundamental questions need to be answered:
● how does Ireland remain competitive?
● how does the EU stay economically strong and geopolitically relevant?
● And how do we protect our way of living from those that wish us harm?
● And in a world defined by division – how do we keep our people together?
Competitiveness: The Foundation of Prosperity
I believe if we want to protect our values, our way of life, the immeasurable improvements we’ve made to people’s standard of living in this country and in Europe more broadly, we need to do so from a position of economic strength.
Everything else stems from that.
In that regard, Ireland supports the objectives of refocusing the EU agenda on competitiveness, productivity and completion of the single market.
We will continue to work with our European colleagues in implementing many of the recommendations of the Draghi and Letta reports.
The path towards a more productive, more efficient and economically stronger European Union is clear.
While ensuring that core Irish interests are protected, we want to get on with that job.
The result will be increased prosperity for Ireland now and into the future.
Because, despite the relatively good position Ireland is in, we have a lot of work to do. Without making the right choices, our continued prosperity is far from guaranteed.
Some of the most technologically advanced, highly productive companies in the world are based here.
That is not an accident.
It is the result of years of good policy choices.
Given their scale and success people often make the mistake of thinking that the Irish business environment is solely about multinationals.
But Irish firms are the backbone of this country.
● SMEs employ almost 1.6 million people, accounting for two-thirds of employment in Ireland’s business economy.
● Irish-owned companies, supported by our enterprise agencies, exported almost €39 billion of goods and services in 2024.
● And Irish brands in food, aviation and construction are some of the most recognisable in the world.
Enterprise policy is not zero sum. It is not a question of having Irish companies, or US ones. We can have both.
We need an ecosystem that supports the success of both those wishing to invest in Ireland and those wanting to scale their Irish business.
Geopolitical changes and shifting patterns of trade will likely mean that the future of the Irish economy is more diversified; it is more Irish and it is more European.
That is not a threat, it is an opportunity.
Everyone knows about the level of concentration in corporation tax receipts, but that is just a reflection of the concentration in our industrial base.
We are very reliant on a few key sectors, a few key firms and a few key products. Let’s not pretend that’s not the case.
What we now need to do is make the right choices for the next steps.
That is also why, in October, I will be lowering the tax burden.
Work must pay.
My job as Minister for Finance — and the Government’s job — is to help make sure that next wave of investment; that next emerging industry; that next breakthrough; happens right here in Ireland.
Whether it be from an Irish or foreign-owned firm we want to ensure that we remain at the heart of technological progress.
At the heart of global commerce.
But that next wave of investment won’t just happen.
Sitting in the Dáil listening to some of the Opposition speak, I sometimes worry about the complacency that has seeped into Irish political discourse.
The debate, almost always, centres around spending the fruits of private sector gains, rather than discussing how we can help ensure those gains continue.
Private Sector
In a successful economy such as ours, it is not the State that generates long-term economic growth, rather it is there to facilitate it and by extension raise living standards.
And, over the coming years, I am very optimistic that we can do just that.
I look around the world today and I see advances in artificial intelligence that could only be dreamed of 10 years ago.
I see improvements in robotics, manufacturing techniques and medical technology that point to tangible improvements to the daily lives of many, at lower costs for all.
Ireland became a relatively well-off country by embracing the future all the way back to the 1980s whether that be in computers, internet services, semiconductors, pharmaceutical research, or medical technology.
We have been at the forefront of global innovation over the last four decades.
Now, as what has been described as the ‘fourth industrial revolution’ continues at pace, we need to repeat that success.
And then repeat it again - and again.
We must compete, innovate, adapt and invest.
Above all, from a public policy perspective, we must think in decades, rather than years.
We do that by investing in both our physical infrastructure via the National Development Plan, and in our people, through early, school-age and further education.
National Development Plan
One of the key functions of the State is to facilitate private sector growth by investing in public infrastructure.
Such investments are public goods, and it is only right that the State uses the resources available to it to improve them.
The NDP represents the most ambitious infrastructure plan in our history.
Over €275 billion will be spent over the next decade with a particular focus on strategically important sectors such as energy, water and transport.
Childcare
But improved infrastructure won’t be enough because the security of our economy depends on investing in the ingenuity of our people.
We have built our success over recent decades on the capacity and talent of our people because that is what senior business leaders in this country tell me time and again; about the energy and talent their staff bring.
Our education system at primary and secondary level is one of the best in the OECD, with consistently good outcomes.
But we need to do more in early childhood education. We need to make it more affordable, improve access and make childcare a better career choice for people.
This is a matter of equality, of opportunity – but also of economic necessity.
And this year’s Budget will allocate funding to make that happen.
It is vital for parents who are working hard to earn a decent living but finding high costs eating into their earnings - but it is also a sound economic investment for our children’s future.
There are women – and it is mostly women – who cannot fully participate in the workforce because of a lack of affordable childcare.
This limits our potential as a people, a society and an economy.
It is my firm belief education commences with early years’ education, and I hope, over time, we can advance policy in this area.
Reform
However, the hard truth is that we cannot throw money at every problem and expect results.
Additional funding in critical infrastructure, childcare and education is necessary — but in no way sufficient — to solve some of the issues facing our country.
That is why the Government published the Accelerating Infrastructure Action Plan last year. The report sets out 30 actions — most of which will be completed this year — that will reduce delay, increase efficiency and achieve better value for money for taxpayers.
More fundamentally, the reforms in the Plan will rebalance rights towards the common good and away from individual or stakeholder interests.
In my view, for too long we have been constrained by the search for regulatory, environmental and democratic perfection — to the detriment of getting things done.
The perfect has been the enemy of the good.
While, of course, the former issues are important, at some point our citizens rightly demand the latter.
Other western countries are facing the same issues.
The Infrastructure Future Act in Germany and planning reforms in the UK mirror very closely our own initiatives, such as the Critical Infrastructure Bill and the new Planning and Development Act.
Some of you will be familiar with the book ‘Abundance’ by Ezra Klein and Derek Thompson. I am taken by its central argument: modern societies know how to create more of what we need like housing, clean energy and infrastructure.
But political, regulatory, and institutional barriers often prevent them from doing so.
That simply must change.
Public sector reform
So too has the way that many of our public services are delivered.
Those of us who have the privilege of serving the public, of spending public money, have a responsibility to ensure that we do so in the best way possible.
We should be constantly looking at ways to improve. Whether that’s in public procurement, financial management or the use of new technologies, each one of us has a duty to ensure maximum value for taxpayers.
I want to free up public sector workers to do the things they enjoy doing. Working efficiently, using technology, and improving value for money frees up resources for other things.
In that context, the Budget cannot just be about the additional funding being made available next year.
That’s important, but what’s more important is the overall level of spending. The size of the State and what it does — and doesn’t — do.
It is about
● How we spend over €150 billion providing infrastructure and services to our citizens.
● The outputs — and more importantly the outcomes Irish people deserve.
We are determined to shift the focus of budgetary strategy to the whole of spending and away from the margin.
Such a focus should bring attention to the way we currently do things, why we do them, and if we can do them any better.
Populism
Because bureaucratic failures are a key driver of people’s frustration with the Government.
I fully understand that especially when costs are high. The cost of getting to work; buying food for our families; finding money to meet the heating bill.
These frustrations have created a space for a populist brand of politics that promises easy answers.
But the populists have no answers. Scapegoating minority groups, blaming somebody from somewhere else and intimidating politicians is not the path towards progress.
It is dead-end. A failed ideology. A road to nowhere.
Governments cannot be bystanders.
We have the mandate to meet our citizen’s expectations, to ensure affordable housing, to provide reliable infrastructure and reduce the cost of everyday life. It is our duty.
The publication of the NDP, the reforms of our judicial and administrative processes and the clear prioritisation of strategically important projects, confirm that.
Now is the time to deliver.
We have committed over a quarter of a trillion Euro to improve infrastructure in this country.
A quarter of a trillion Euro.
In return, taxpayers rightly demand results and it is up to all the organs of the State to ensure they get them.
Energy
Key to this will be the energy transition.
Recent events, both economic and meteorological, have shown that we really have no choice. We must get this right.
The high cost of energy is really hurting.
Whether it be electricity, heating or transport, our reliance on fossil fuels, and the high costs they bring, are having a major impact on people’s standard of living.
More broadly, the vulnerability of our energy supplies is a key national security risk.
This Government has committed to taking all necessary action to ensure and protect Ireland’s energy security.
This year, the Government has committed around € 1.25 billion to help alleviate some of the pressures people are feeling.
That was the right thing to do.
People all across Ireland, particularly those in rural Ireland, that do not have access to regular public transport could not fully absorb the increase in petrol and diesel prices.
The impact on inflation would be too high, particularly for those on low incomes.
The Government cannot do it all, but when the position of the public finances allows help to be provided; it should be provided.
However, longer-term, we need to move away from treating symptoms and begin to tackle the cause.
That means ending our reliance on imported, dirty and expensive fossil fuels.
We want an energy mix that lowers costs, is less exposed to volatile global markets, and is supplied by new industries rooted in Irish talent and Irish places.
And we have made huge progress:
● Ireland now has more than 3 GW of installed solar PV capacity.
● Over 40 per cent of our electricity generation comes from renewable sources.
And we will do more because we know the Irish people are doing more when it comes to their everyday lives.
We have seen that in the record number of new EVs registered so far this year and the surge in applications for home energy efficiency adaptation measures on top of the nearly 60,000 that were homes retrofitted last year.
As a Government we will do more to make it easier for citizens to make these changes for the benefit of all of society and our environment.
We want an energy mix that means lower costs, less exposure to volatile global markets, and new industries rooted in Irish talent and Irish places.
That is why a key strategic aim of this Government is to lower our dependence on fossil fuels.
Defence
If energy security is a strategic necessity in our changed world, Ireland also faces significant new defence and security challenges, and we must be ready to respond.
In this new environment, our European partners are setting out on a path to ensure that their citizens are safe. This is not only their right, but their responsibility.
As the Government of Ireland, we have the responsibility to protect our citizens and our institutions, to ensure our waters are not being used for illegal activity, or by rogue States and to ensure that the critical infrastructure on which hundreds of thousands of Irish livelihoods depend, is protected.
That is why we will continue to invest in the people, equipment and capabilities of our Defence Forces. Moreover, the Medium-term Plan and the wider EU fiscal rules allow for further flexibility in this area, if needed.
At the end of this year, the UNIFIL mandate will conclude, bringing a defining chapter in Ireland’s proud peacekeeping history to an end.
But the ending of UNIFIL must not become the end of Irish peacekeeping. Reforming the triple lock will not alter our military neutrality, nor will it see Ireland join any military alliance.
Decisions on the deployment of our Defence Forces will remain with the Irish Government and Dáil Éireann, acting in accordance with the UN Charter and international law.
But we do not accept that any foreign power should have a veto over Ireland’s sovereign decision to contribute to peace.
That is why we will enact legislation to reform the triple lock, protecting our neutrality while securing the future of Irish peacekeeping.
Importance of policy
And if our economic journey over the past few decades has one key lesson for us; it is that strategic policy matters.
Whether it was the establishment of the IDA in 1949 or the changes to the corporate tax code in the 1990s – they have all shown that long-term thinking leads to long-term success.
In October last year, my department published Future Forty: A fiscal and Economic Outlook to 2065.
The report examines the long-term impacts of so-called megatrends and other structural shifts.
This extremely important piece of work points to an Ireland in the future that will be older, less productive and less able to make the types of choices available to us now.
In other words, it is a call to arms, to put in place policies today that will help us maintain our living standards tomorrow.
And this is exactly what we have begun to do.
The fiscal strategy set out in the Medium-term Plan embeds a set of policy choices that will still bear fruit many years from now.
It will allow us to continue to improve public services in a sustainable way. Exchequer expenditure will grow at an average rate to 6 per cent from now until 2030.
There will be many who will wish to see that number increase. The nature of the Budget process in this country is that demands are infinite. Resources, of course, are not.
But we know what it is like when the public finances are mismanaged. We know the misery and the pain that causes.
We never want to go back there, and under this Government we won’t.
But we should never be afraid to invest in the future either. The sort of public infrastructure investments we are undertaking will pay dividends for many decades to come.
In fact, the critical importance of these investments led the Government to commit to funding them irrespective of any changes in the economic or fiscal position.
That’s a big commitment, but it is the right one if we want to think in decades, not years.
In this highly uncertain world, our demographic outlook is clear. From the middle of the next decade, we will begin to age rapidly. By 2050, just 24 years away, Ireland will look a lot like Italy or Japan does today.
In such a society, growth will be lower, costs will be higher and the burden on taxpayers – our children - will be immense.
There is no way of avoiding that fate and that is why it is so important that we continue to run surpluses and invest in our sovereign wealth fund.
Savings Account
But investing in the future should be open to all.
Every person in this country should have the opportunity to ensure that their hard-earned money works even harder for them. That they can invest for their kids, or their grandchildren, in a safe and easy-to-understand way.
That is why I’ll be introducing the new investment account next year.
Details of the account will be announced on Budget Day, but the facility will be easy to understand, tax efficient and flexible.
It will be open to all.
That initiative and the Government’s commitment to the Future Ireland Fund represent the application of the same principle.
A principle that says if you have it, you invest it.
● That’s why we will be investing record amounts in public infrastructure.
● That’s why we will be spending more on childcare, education and lifelong learning than ever before.
● And that’s why we will continue to invest in the Future Ireland Fund.
Conclusion
The pace of change in the world today is sometimes frightening.
But I firmly believe that we have the tools at our disposal to not only meet those changes, but to prosper from them.
If we make the right choices today, we can have an even brighter tomorrow.
A future in which Irish energy fuels Irish homes and in which Irish businesses compete on a global stage.
A future in which the cost of everyday life is more manageable for more people, where everybody benefits from an economy that is innovative, lean and adaptable.
A future in which the Irish State delivers the services our citizens expect, in a way they deserve.
A future that is prosperous, clean and fair. None of this can be achieved by looking back or being afraid.
We should never be fearful of being bold, of looking to the future with optimism rather than scepticism; with ambition instead of indifference; and with energy, not complacency.
No one Budget can get us where we want to go.
But each incremental step we take, each budget, each right choice, will get us there.
And in 15 days’ time, I will take one of those steps.
It is an incredible privilege and I cannot wait.
Go raibh maith agaibh. Thank you.
