no 3 tao is each

8/7/2019 No 3 Tao is Each

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Draft Briefing Material

Economic Challenges \ Policy Issues

Tab 1 Macroeconomic policy

Tab 2 Jobs \ Enterprise

Tab 3 Competitiveness

Tab 4 Innovation

Tab 5 Labour Market

Tab 6 Europe 2020

Tab 7 Communications \ International Reputation

Tab 8 Climate Change

Tab 9 Housing

Tab 10 Central Statistics Office


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1. Macroeconomic Policy

Summary

The macroeconomic challenges facing the economy as a result of the high

fiscal deficit, rapidly increased level of debt, fall in output and entry intoIMF\EU programme are well-known. Major challenges in the immediateperiod ahead include:

EU-level negotiations in March in relation to reforms ofEFSF\ESM and proposed Competitiveness Pact

need to engage with IMF\EU in relation to changes proposed onfoot of Programme for Government

Text withheld undersection 31 - Economic and Financial

Interests of the State meeting 2011 fiscal targets, which will pose major deliverychallenges

need to prepare for further adjustments over 2012-14 period,including possible comprehensive expenditure review

introducing new budget advisory council (as per IMF\EUprogramme)

Priority Issues

TheIMF\EUProgramme and Budget 2010 are based on the following:

Growth projections are as follows:2010* 2011 2012 2013 2014

GDP 0.3 1.7 3.2 3.0 2.8GNP -2.0 1.0 2.6 2.4 2.4* 2010 growth figures will be published by CSO on 24 March

Reduction in the General Government Deficit over the period to 2014 as

follows:2011 2012 2013 2014

GGD (%of GDP)

-9.4 -7.3 -5.8 -2.8

Adjustments are proposed as follows:2012 2013 2014

Total 3.6bn 3.1bn 3.1bn

Tax 1.5bn 1.1bn 1.1bn

Expenditure- Current 2.1bn- 1.7 2bn- 1.6 2bn- 1.6


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- Capital - 0.4 - 0.4 - 0.4

There are howeverserious risks including:

lower levels of growth (most independent forecasts, includingCion, have projected lower levels of growth)

higher than projected costs from financial sector restructuring,including worsening mortgage arrears problems

sustainability of public debt levels, of which it has not beenpossible to convince the markets

further economic shocks, including Exchange rate movements

Immediate issues for attention include:

EU-level negotiations in March in relation to EFSF\ESM and

proposed Competitiveness Pact: separate briefing will be provided onthis fast-changing negotiations leading-up to the Summits on 11 and24 March

Need to engage with IMF\EU in relation to changes proposed onfoot of Programme for Government: will be necessary to agree onstrategy for engagement with IMF\EU in relation to bilateralrenegotiation; a review mission is due to visit Ireland in April;

Text withheld under section 31 - Economic and Financial Interests

of the State

Meeting 2011 fiscal targets, which will pose major delivery

challenges: delivery of 2011 expenditure targets will pose majorchallenges, particularly in terms of efficiency savings in the publicservice; tax returns will also be dependent on growth outcome; anyslippage on expenditure side will require further discussions with IMFand possible corrective measures

Need to prepare for further adjustments over 2012-14 period,

including expenditure review: a comprehensive expenditure reviewis an opportunity to reflect Programme for Government priorities in

revised spending estimates for 2011-14, while providing certaintyabout expenditure for those years; however it is a major undertaking


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with many other concurrent pressures and will need to be structuredcarefully

Introducing new budget advisory council: this is a commitment in

the IMF\EU programme (for delivery by end quarter 2) and willrequire legislation; related budget rule measures, including possibleEU requirements, also require legislation

These issues are the responsibility of the Department of Finance, but theEconomic policy Division provides briefing\speaking material asrequired, including on (i) significant statistical or economicreleases\reports and (ii) weekly summary of economic news.


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2.Jobs / Enterprise

Summary

Given the challenge of reducing unemployment from its current level of

13.5%, the priority is a coherent approach across GovernmentDepartments to creating and protecting jobs and supporting enterprise byensuring that:

commitments in the Programme for Government relating toenterprise and jobs are delivered

existing enterprise and sectoral strategies (e.g. Trade Strategy, Food Harvest 2020, Innovation Taskforce, Green Enterprise

Action Plan see below), where consistent with the PfG, areimplemented

new and emerging challenges\opportunities are addressed byrelevant Departments\Agencies

Priority Issues

A range of job creation and enterprise strategies which requireimplementation across Departments\Agencies:

Trading and Investing in a Smart Economy: A Strategy and Action Plan for Irish Trade, Tourism and Investment to 2015: setsambitious targets for trade, tourism and investment which have the

potential to create 150,000 direct jobs to 2015, as well as assist thecreation of a further 150,000 indirect jobs. A Foreign TradeCouncil has been established

Food Harvest 2020: a strategy for agri-food, forestry and fisheriesfor the next decade. It contains recommendations to ensure the

industrys central contribution to export-led economic recovery.FH 2020 sets ambitious targets to be achieved by 2020, includingincreasing the value of primary output by 33% and raising thevalue of value-added and exports by around 40% from a 2007-2009 average baseline figure.

Innovation Taskforce: which recommends actions to positionIreland as a Global Innovation Hub (see Tab 4 for moreinformation)


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Green Enterprise Action Plan: identifying 55 recommendations tosupport green jobs in areas such as enhancing the energy grid,water services investment, introducing electric cars, introducingregulations promoting biological waste recycling, supports for

bioenergy and retrofitting of buildings.

Irelands International Education Strategy 2010-15 Investing inGlobal Relationships has the objective of increasing internationalstudent numbers in higher education by 50% and in Englishlanguage schools by 25% by 2015. It is estimated that by 2015 fullimplementation of the strategy will be worth 1.2bn per year to theeconomy (current estimated worth is 900m annually).

Other specific cross-departmental initiatives which require attentioninclude:

proposals emerging from the Your Country, Your Call initiativefor an International Content Services Centre and Ireland as a CloudComputing Centre

business plan to be submitted shortly for implementation of theGreen IFSC initiative

an initiative with Google to help Irish SMEs develop an onlinepresence

extending the 15 day prompt payment rule outside of centralGovernment Departments

developing Ireland as an International Construction ServicesCentre

Cabinet Committee on Economic Renewal and JobsThe Division supports the Cabinet Committee on Economic Renewal andJobs, chaired by the Taoiseach, which aims to ensure a co-ordinatedcross-Government approach on these issues.

Most of the work at official level is carried out by a Senior OfficialsGroup which brings together all relevant Departments and Forfs.


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3. Competitiveness

Summary

While Ireland has regained competitiveness in the past two years,significant further improvements are required to support export-ledgrowth.

A sustained, cross-departmental approach will therefore be required toensure further improvements by:

delivery of the competitiveness measures set out in the Programmefor Government, National Recovery Plan and IMF\EU programme

responding to recommendations and analysis from the NationalCompetitiveness Council and other appropriate bodies

Priority Issues

The Irish economy experienced substantial losses in price and labour costcompetitiveness during the past decade due to rising prices and

production costs relative to our trading partners, an appreciation of theeffective exchange rate and weaker productivity growth.

However since 2008, Ireland has regained some cost competitiveness.

The price level has fallen relative to our EU competitors: during 2009 and2010 HICP inflation was -3.3% in Ireland, 5% below the euro zoneaverage and over 6% below the average for the EU as a whole.

European Commission data show that, following a 0.6% decline in 2009,Irish unit labour costs are estimated to have contracted by a substantial5.6% in 2010.Ireland is the only country in the euro area in which unit

labour costs are expected to fall over the period 2009 to 2012.

Specific measures to support further competitiveness improvements,included in the EU/IMF Programme of Support and the NationalRecovery Programme include:

reduction in the National Minimum Wage by 1 an hour (effectivefrom 1 February 2011) and an independent review of the REA andERO arrangements which is due to report shortly


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a Legal Costs Bill to implement the recommendations of the LegalCosts Working Group, outstanding Competition Authorityrecommendations and establish an independent regulator fort eh

profession; related measures to increase use of

arbitration\mediation and increase use of tendering for legalservices by the State

a study is to be conducted on the economic impact of eliminatingthe cap on the size of retail premises

Commission on Energy Regulation to impose rigorous efficiencytargets on the ESB, Bord Gis and Eirgrid

competition in the professions to be overseen by an independentfigure reporting regularly to Government; specific measures to betaken in medical and pharmacy profession under IMF\EU

programme

further ways to tackle increases in insurance costs to be identified,building on work of the PIAB

target of achieving 25% reduction in regulatory burdens onbusiness in 2011 (instead of 2012)

proposals for legislation to be developed to overhaul andstreamline the property valuation service

the Working Group on Transparency in Commercial Rent Reviews prepared a voluntary rent review arbitration code. The PropertyServices Regulatory Authority is to develop a public database withdetails of letting arrangements and rent reviews in the commercial

property market

local authorities to improve efficiency and reduce, where possible,charges to business; full information on 2011 Annual Rates ofValuation (ARV) will be available in the near future in 2010, 31of 88 local authorities decreased their ARV, while the majority(55) kept the same rate as 2009.

TheNational Competitiveness Council (NCC) has expressed concernthat price falls are a cyclical response to the Irish and international

recession rather than a response to structural reform in the Irish economy.


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The NCC produces annual reports (i) benchmarking Irelandsinternational competitiveness performance (ii) recommending actions toreduce costs and improve productivity across all sectors. It is alsocurrently working on reports on commercial property costs and the cost

of professional and business services.

The Division is represented on the National Competitiveness Council andits recommendations, and other competitiveness issues are considered bythe Senior Officials Group and Cabinet Committee on EconomicRenewal and Jobs.


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4. Innovation

Summary

Despite our ambitions in this area, and recent progess, Ireland remains aninnovation-follower ranked 9th out of 27 on the EUs InnovationSocrecard.

The Innovation Taskforce set out recommendations to make Ireland aGlobal Innovation Hub including increased commercialisation ofresearch, better access to IP, more focused R&D, funding and assistancefor start-ups, better use of public procurement, and attracting overseasentrepreneurs and fast-growing companies to Ireland.

Significant momentum has been achieved in particular throughInnovation Fund Ireland, major MNC investments here and some high

profile international coverage.

The key challenge is to ensure continued delivery of therecommendations and other initiatives, to sustain this momentum and

perceptions.

Priority Issues

Investment under theStrategy for Science, Technology and Innovation(2006) has delivered significant results:

Total Expenditure on Research and Development has risen from972 million in 1998 to 2.68 billion in 2009

Business Expenditure on R&D (BERD) rose to 1.7 billion in 2009(from 900m in 2001)

Higher Education R&D investment has almost quadrupled incurrent terms over 10 years and is now at the EU and OECDaverage levels

In 2008 EI assisted 794 companies to perform R&D. EI commercialisation activity in 2009 facilitated:

- the creation of 35 spin out companies (up from 5 in 2005)- 421 invention disclosures (up from 135 in 2005)- 144 priority patent applications- 95 licenses/options/assignments

49% of IDA investments in 2009 were in RD&I with approx.500m of investment. Currently there are about 170 IDA supportedcompanies with a significant R&D mandate with a combined spend

of approx 1.7 billion.


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TheInnovation Taskforce recommended how to increase the impact of thisinvestment based on the concept of making Ireland a Global InnovationHub. Recommendations which should be focus of efforts in short-term

include:

the IDA is developing a new Programme to attract fast-growingcompanies to locate their European Headquarters in Ireland; Enterprise Ireland is introducing enhanced seed and angel fundingarrangements for innovative start-ups; an expert group will shortly finalise reforms of our Intellectual Propertysystem, including development of a national protocol for ownership andaccess to State-supported IP;

Enterprise Ireland is launching a campaign to attract overseasentrepreneurs to locate in Ireland; improved visa arrangements are to be considered by Department ofJustice; an exercise is underway, chaired by Jim O'Hara (ex-Intel), to ensurethat research funding is more targeted on strategic areas of nationalimportance; industry experts on working on ideas for making Ireland anInternational Innovation Services Centre (IISC) a pilot Flagship procurement initiative in the Silvertech area is includedin the National Recovery Plan.

In addition,Innovation Fund Irelandwas established in July 2010 toincentivise top-tier international Venture Capital firms establish theirEuropean operations in Ireland.

The Fund has up to 250m available: 125m pool of Exchequer funds provided by the Exchequer and managed by EI, combined with thepotential for the NPRF to make a similar level of commercial investments

assuming its criteria are met.

So far NPRF have made 3 commercial investments under the Fund withleading international venture capital companies:

DFJ Esprit has opened an international office in Dublin with aDublin-based partner.

DFJ (parent company) - which is based in Silicon Valley hasagreed to work with the IDA to help bring fast-growing venture

backed companies to Ireland

Polaris Venture Partners has chosen Dublin as the location for itsfirst Dogpatch Labs business accelerator facility outside the United


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States. This is a coup for Ireland and should help bring peoplefrom across Europe to start their companies in Dublin.

In addition, Enterprise Ireland has received 32 responses to its call for

expressions of interest which are currently being evaluated. Textwithheld under section 20 - Deliberative Process, and section 21(1)Negotiation of Public Bodies

AnAdvisory Board(chaired by Damien Callaghan of Intel Capital) is inplace to advise on the strategic direction, progress and performance of theFund. It is assisting Enterprise Ireland with the branding and marketingof the Fund as part of wider Innovation agenda.

Secretariat to Innovation Fund Advisory Board (members participate probono) is provided by the Division.


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5.Labour Market Issues

Context

The latest Live Register figures for February 2011 show a standardisedunemployment rate of 13.5%,. The Department of Social Protectionexpect that if recent trends continue the Live Register could be lower onaverage in 2011 than it was in 2010.

The long-term unemployment rate was 6.5% compared with 3.2% in thethird quarter of 2009 (140,400 people; QNHS figures). As of Q3 2010,long-term unemployment accounted for almost 47.0% of totalunemployment compared with 25.5% a year earlier. Long-term

unemployment constitutes a larger proportion of total unemploymentamong males than females (52.5% compared with 35.6%)

A key part of the challenge is to develop labour market activation policiesto assist and to encourage jobseekers to return to the workforce. A widerange of measures are in place including guidance and placementservices, education and training provision, supports for self-employment,employer incentives, additional employee tax credits and partial retentionof secondary benefits, and work placement/internship programmes.

Key issues

1. Commitments under the EU/IMF Financial Support Package

The Memorandum of Understanding (MOU) agreed with the EU/IMFcontains a number of commitments in relation to labour marketactivation.

The MOU outlines that progress on the Activation measures must bedelivered on reported to the EU/IMF for the first quarter 2011. The

MOU also states that any legislative measures must come into effectby May 2011. In addition, it should be noted that at each subsequentquarterly review the Government are to submit an assessment,including quantitative indicators, of the management of activation

policies and the outcome of job seekers search activities andparticipation in labour market programmes.

2. Departmental Restructuring

Implementation of the Government decision in 2010 restructuring

responsibility for labour market issues continues. Additional


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functions transferred to the Department of Social Protection are asfollows:

The Community Services programme and Rural Social Schemepreviously managed by the Department of Community, Equality

and Gaeltacht Affairs transferred on 1 September 2010 The staff of the Community Welfare Service have now been

seconded from 1 January 2011 to the Department from the HSE.It is intended to complete the transfer by end September 2011.

From 1 January 2011 policy and funding responsibility for FSfunctions in relation to Employment and Community Servicestransferred to the Department. A Framework Agreement is in

place to govern the provision of services by FS on behalf ofthe Department from 1st January 2011 until such time as

operational responsibility is transferred to the Department. The next phase in the transfer of FS functions is to transfer therelevant staff and facilities from FS in order to allow theDepartment to take direct operational control of employmentand community services. An inter-departmental ProgrammeBoard chaired by the Secretary General of the Department has

been established for the purpose of implementing this transfer.

3. Revised National Employment Action Plan measures

At the core of policy is enhanced activation of social welfare recpientsto keep people close to the labour market and therefore better

positioned to take-up employment when it becomes available. Thisapproach reflects best international practice and advice.

D/SP have progressed work in conjunction with Fs on specificmeasures to support the introduction of customer profiling, selection,referral and case management based on profile data for jobseekercustomers.

From 19 October 2010, a group engagement process has been rolledout on a trial basis in 3 areas. Under this initiative, jobseekers areinitially referred in groups to a single location, facilitated by a jointD/SP-Fs team. An evaluation of the group engagement process has

been initiated and will inform the roll-out of the process.

A new case management system has been introduced by D/SP. This provides for the automatic scheduling and case management ofappointments for D/SP Facilitators in dealing with jobseekers. A new

IT system is now developed by the D/SP which will replace theexisting National Employment Action Plan selection and referral


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system. This will include the facility to schedule individual or groupappointments with Fs, Local Employment Services etc. This facilitywill be rolled out on an incremental basis to all Social Welfare LocalOffices over 2011.

An IT solution has been developed to avoid the duplication of thosewho self-present to Fs (walk-ins or voluntary engagers) alsoautomatically being referred to Fs under the Employment ActionPlan (EAP) system when they reach 3 months on the live register.This will rolled out to all SWLOs in tandem with the roll-out of thenew IT EAP system during 2011. A prototype web-service givingaccess to FS case management information (screens) on individualcustomers has been developed by a joint FS/DSP team. D/SP is

testing this service with a range of staff roles in one SWLO.4. Changes arising from Budget 2011 and related decisions

The Work Placement Programme, launched in May 2009 with 2,000places, has been expanded with a targeed additional 5,000 publicsector places and 500 private sector places. The Programme isdesigned to bring employers and unemployed people together for awork experience placement for a maximum duration of up to ninemonths.

On 18 November the Government approved the creation of a newtemporary Skills Development and Internship Programme, aimed atthose who are at least 3 months unemployed. Support will be

provided for up to 5,000 places to be created in the private sector. Theprogramme consists of a training/education element and an internshipin a host organisation. It is intended that the programme will beoperational by the end of the first quarter of 2011.

The Government agreed to extend the Employer Job (PRSI) Incentive

Scheme to end 2011 in the context of the Budget and NationalRecovery Plan.

Ts, a new community work placement initiative for up to 5,000persons announced in Budget 2011 was launched on 21 December2010.

In December 2010 a new 20m multi-annual higher education labourmarket fund was established to enable unemployed people access

innovative part-time higher education opportunities from certificate topost graduate levels (Levels 6 to 9 on NQF). The Fund will be


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allocated by means of a number of Calls for Proposals, the first ofwhich for 5m issued on 26 January.

Implementation

Policy in this cross cutting area is coordinated by the Cabinet Committeeon Economic Renewal and Jobs. In relation to labour market policy it issupported by a Senior Officials Group on Labour Market Issues chaired

by the Department of the Taoiseach .

The Senior Officials Group comprises representatives of the Departmentsof Finance, Social Protection, Enterprise, Trade and Innovation,Education and Skills, and Tourism, Culture and Sport.


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6. Europe 2020 Strategy

Summary

Ireland is required to submit a National Reform Programme (NRP) under

the Europe 2020 Strategy to the European Commission in April as part ofthe new European Semester. (An initial draft was submitted inDecember).

The NRP must include a commitment to national target outcomes for2020 in five areas (Education, Employment, R&D, Climate Change,Poverty), as well as measures to help deliver those targets. Stakeholders,including social partners, must be consulted on its contents.

Priority IssuesBefore submitting the National Reform Programme in April, Ireland willneed to finalise targets for 2020 in the following areas:

Employment: EU wide target is to raise to 75% the employment rate formen and women aged 20 64 by 2020. Consultation is ongoing on anappropriate target for Ireland, where the rate is currently 65.5%.

Research and Development: EU wide target is to raise the combinedpublic and private investment levels to 3% of GDP. In 2010 Irelandsresearch intensity is estimated to have reached 1.73% GDP (2.17% ofGNP). Focus will also be on measures to increase outcomes frominvestment.

Climate Change: EU wide target is threefold: to reduce greenhouse gasemissions by 20% compared to 1990 levels; to increase the share ofrenewables in final energy consumption to 20%; and to move towards a20% increase in energy efficiency. Ireland already has binding targetsagreed at EU level in relation to emission and renewables.

Education: EU wide target aims to (i) reduce school drop-out rates toless that 10% and Irelands proposed target is 8%, and (ii) to increase theshare of 30-34 year olds having completed tertiary education orequivalent to 40%, where Irelands proposed target is 60%. These

proposed national targets are based on the existing National SkillsStrategy.

Poverty: EU Target is to promote social inclusion, in particular through

the reduction of poverty, by aiming to lift at least 20 million people out ofthe risk of poverty and exclusion. Irelands approach has yet to be


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finalised, but is likely to be based on the existing National Action Planfor Social Inclusion which has a target is to reduce consistent poverty to

between 2-4 per cent by 2012 and to eliminate it by 2016. (In 2008, 4.2%of the Irish population was in consistent poverty). Further work to

finalise the target is required.

A further round of Consultation with stakeholders, including socialpartners, will be required before submission of the final NRP in April.

Background

The June 2010 the European Council adopted Europe 2020 as the newstrategy for jobs and for sustainable and inclusive growth replacing the

Lisbon Strategy. The overall framework covers a number of elements: outline of macro-economic scenarios and bottlenecks; five EU headline targets in the areas of employment, R&D,

climate change, education and poverty; the setting by Member States of national targets in pursuit of

those EU-wide targets; at EU level, seven flagship initiatives in key areas which will

contribute to the overall effort by the Member States; the preparation of a National Reform Programme by each

Member State, outlining the policies and measures to be takenin pursuit of the objectives of the strategy, including theheadline targets

This is an integral part of the European Semester, starting in 2011,during which the member states' budgetary and structural policies will bereviewed to detect any inconsistencies and emerging imbalances. The aimis to reinforce coordination while major budgetary decisions are stillunder preparation.

The Department of the Taoiseach is responsible for coordinatingpreparation of Irelands NRP, and ongoing reporting on progress underthe Europe 2020 Strategy. Relevant Departments remain responsible fortargets and measures in each area. This includes required consultationwith stakeholders, including social partners on the NRP.


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7.Communications

Over the last two years, Irelands international reputation has beensignificantly damaged as a result of the fiscal and banking crisis. The

quantity of sustained, negative international media commentary coveringsuch a broad global geographic spread is in many ways unprecedented.

Given that Ireland is a small open economy, critically dependant oninternational trade, this ongoing negative narrative has the potential toinflict considerable economic damage. Already we have seen the impactsthat the deterioration in international and domestic confidence has had onthe financial markets and Irelands cost of borrowing.

Feedback from our missions abroad, overseas offices of agencies and theinternationally trading business community indicates that there could befurther damage to FDI, export markets and tourism if this negativecoverage continues unchallenged.

At the same time, Irelands economic recovery and growth is heavilydependant on our export and investment successes. Nothing is morecritical to the economic prospects of the country in the years ahead. It isvital that all necessary efforts are undertaken to support and underpin ouroverall economic strategy and policies including through harnessing tomaximum effect our cultural strengths and heritage.

The Department of the Taoiseach has convened group of officials andcommunications experts from key Government Departments andAgencies in recent months to consider the potential for a more strategicand co-ordinated approach to addressing these image and reputationalissues.

This Group is close to finalising a proposal for consideration by the new

Government for embarking on an integrated international marketingstrategy including a business case.

While there will be some costs associated with implementing this strategyit should be noted that industry and Government experts suggest that thecost of doing nothing to challenge Irelands current negative image islikely to be a significant multiple of this and could include a loss of FDIopportunities, damage to the credibility of our indigenous companies andcontinued decline in our tourism industry.


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The detailed Report will be available for consideration by Governmentshortly.


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8. Climate Change

Summary

Ireland faces challenging EU targets for reducing Greenhouse Gas

emissions and increasing renewable energy output by 2020. Even moreambitious reductions will be required in the longer term, posing aparticular problem for the agriculture sector.

Immediate priorities are: preparing an updated plan with measures to meet our

greenhouse gas reduction target for 2020 negotiating at EU and international level for a new way to

address emissions from agriculture

ensuring renewable energy policies are consistent withcompetitiveness goals

Context

For the purposes of the Kyoto Protocol, Ireland is committed under EUlaw to limit the growth in national greenhouse gas (GHG) emissions to13% above 1990 levels in the five-year commitment period of 2008-2012.

Latest projections suggest that Ireland will meet its Kyoto target on thebasis set out in the National Climate Change Strategy 2007-2012,reflecting both the impact of policy initiatives implemented and in morerecent times the impact of the economic crisis.

EU Obligations (2013-2020)

Beyond the Kyoto Protocol commitment period (2008-2012), Ireland hasa number of distinct and legally-binding obligations under the EUClimate and Energy package agreed in December 2008. These relate to(i) the Emissions Trading Scheme (ii) Effort-sharing by member states in

relation to GHG emissions not covered by the Emissions TradingScheme; (iii) Renewable Energy.

Under the Effort-Sharing decision, Irelands emissions reduction targetfor the sectors concerned (primarily agriculture and transport) is at the topof the range set for Member States, i.e. a reduction of 20% by 2020,compared to 2005 emissions.

This target must be achieved on foot of domestic actions and the use of

the flexibilities provided for in the decision. The relative size of ourtransport and agriculture sectors (approx. 69% of total non-ETS


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emissions) means that our binding emission reduction target of 20% by2020 is very challenging.

The latest draft emissions projections show that Ireland will not reach its

2020 non-ETS emissions reduction targets without an appropriate mix ofadditional policy measures and/or use of carbon credits. While theheadline target relates to 2020, it is important to note that Ireland willhave an individual target in each year from 2013 to 2020, i.e. emissionreductions must follow a strict trajectory.

Priority Issues

(i) New\Updated Climate Change Action Plan

There is a need to prepare a comprehensive strategy/plan to map out agreenhouse gas emission reduction pathway to 2020 which will ensurecost-effective achievement of our 2020 target under the effort-sharingdecision.

This will require development and assessment of policy options (in theareas of transport, agriculture, waste, commercial, low carbon-intensityindustry and residential) for meeting our 2020 target, to allow fordecisions based on the cost\benefits of each option, including the optionof using international carbon credits.

Assuming a new Government may wish to implement national ClimateChange Legislation, it would be important that this underpin and support,rather than supplant, the development of necessary policy measures forthe period up to 2020 and beyond.

(ii) Energy Policy

Irelands binding EU energy targets are ambitious. The main policyframeworks in place are the National Renewable Energy Action Plan and

the National Energy Efficiency Action Plan (NEEAP). Irelands secondNEEAP is due for submission to the Commission in summer 2011.

Irelands energy policy will continue to need careful consideration giventhe tight fiscal constraints, cost competitiveness concerns, and a positive

but challenging outlook on energy demand in the period to 2020 (latestSEAI energy forecasts).

Renewable energy policies, particularly involving offshore renewable

energy, need detailed evaluation given the large associated infrastructuralinvestment costs.


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(iii) Possible Future EU Step-up

The EU has signalled a willingness to step up to a 30% GHG emissionsreduction commitment for 2020 (compared to 1990 levels) as part of an

internationally negotiated agreement. The EU has also recently publisheda possible emissions reduction roadmap/pathway to 2050, whichmaintains the focus on the need for further reductions in the period to2020 and beyond.

Text withheld under section 24 - International Negotiations

(iv) Emissions reduction targets in Agriculture

As detailed above, the scale of emissions from the agriculture sector

(relative to the overall economy) presents a unique challenge for Ireland.This is particularly acute given that theFood Harvest 2020 reportcontains ambitious growth targets for the agricultural sector as animportant part of Irelands economic recovery strategy.

Scientific evidence suggests that there is only limited scope for increasingcarbon efficiency given the extensive, grass-based nature of Irishagriculture. There is a strong case that reductions in Irish agriculturaloutput would be replaced by increased production in South America andelsewhere with higher levels of carbon-intensity.


(v) Land Use, Land Use Change, and Forestry (LULUCF)

An immediate issue at EU level is the possible inclusion of LULUCFemissions and removals in the EUs targets for GHG reduction.

There are obvious interconnections between the emissions fromagriculture livestock, the level of afforestation in Ireland and our other

lands dealt with under LULUCF, i.e. croplands and grassland.Understanding the implications of these interconnections is complex andis a highly specialised area; research is ongoing.


Current Co-ordination Structures

Responsibility for Climate policy rests with the Department of theEnvironment, Heritage and Local Government.


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The Cabinet Committee on Climate Change and Energy Security, ischaired by the Taoiseach, and oversees cross departmental work in thisarea. The Cabinet Committee is supported by a Senior Officials Group(SOG) which is chaired by D/Taoiseach.


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9. Housing Market

Summary

Challenges arising from the collapse of the housing market include:

current level of mortgage arrears and economic\social impacts responding to the problem of so-called Ghost Estates stimulating activity in the construction sector

Priority Issues

Housing completions have collapsed a high of over 93,000 in 2006 toestimated 14,600 in 2010. The ESRI is forecasting a further fall to10,000 in 2011 and the same again in 2012.

The total number of vacant units either completed or nearly completedhas been estimated as roughly equal to 18 months construction output ofnew housing at 2009 levels. Migration and credit shortages will continueto constrain short-term demand and recovery of activity.

Apart from the wider economic impact in terms of lost output,employment and tax revenue, the collapse in the housing market givesrise to some specific problems.

Latest data from the Financial Regulator shows that in Q4 2010 nearly80,000 mortgages were either 90 days in arrears or have beenrestrucrured.

The Expert Group onMortgage Arrears issued its final report lastNovember. Its main recommendations included:

- a Deferred Interest Scheme for borrowers who can pay at least 66% ofthe interest. This would give borrowers up to 5 years to get back on theirfeet. Lenders representing more than half of the market agreed to take

part in a scheme along the lines of the Group proposal;

- lenders should consider facilitating borrowers in negative equity whowish to trade down to a more affordable home;

- where a mortgage is unsustainable, assessment for social housing shouldbe done before repossession takes place;

- a mechanism should be put in place to allow repossessed borrowers to

remain in their homes for a time, allowing the housing authority time tosource appropriate accommodation;


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- new bankruptcy legislation should be introduced (also in IMF\EUprogramme); a statutory non-judicial debt settlement system should beestablished and the time limit for discharge of debt should vary in line

with the total value of debt.

The Group did not recommend debt forgiveness, nor a State fundedMortgage to rent scheme.

These recommendations, and those of the Groups earlier report, areprimarily focused on managing the problem through a structured and fair process which gives people time to stabilise their situation. This isreflected in the very low level of repossessions to date.

Completing implementation of these recommendations is the currentpriority, but it seems likely that further measures will be required in thenext couple of years, as interest rates rise while there is unlikely to be anyrebound in house prices.

A recent survey of so-called Ghost Estatesfound over 2,800 housingdevelopments where construction had commenced but had not beencompleted, translating into over 180,000 housing units for which

planning permission is granted.

Of these 33,000 homes are either completed and vacant (23,000) ornearly complete (requiring, for example, final fit-out and connection toservices (10,000)). This equates to the total amount of real overhang ofnew un-occupied houses. A remaining 10,000 dwellings are at variousearlier stages of construction, from preliminary site clearance tofoundations up to wall plate level.

A high-levelAdvisory Group is in place and recently published an interim

report focusing on the immediate issues of public safety and the livingconditions of residents in unfinished developments. There areapproximately 400 housing developments, which are particularly

problematic and will be the focus for initial action. 5m is being madeavailable to Local Authorities to help deal with immediate safety issues.

The longer-term focus is on getting stakeholders to work together onpractical steps to complete unfinished developments and the groupintends to complete a comprehensive code of practice with buy-in from

developers, the financial institutions and local authorities in managingand resolving unfinished housing developments.


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The National Recovery Plan and Budget contain a number of measures tohelp stimulate short-term activity in the sector, including the move to asingle rate of Stamp Duty of 1%.

However the main initiative is the national retrofitscheme. A new programme will be ready to launch in thenext few months following extensive negotiations withenergy suppliers. The programme will entail the transitionof the existing energy efficiency and renewable energyprogrammes, such as the Homes Energy Saving scheme,Greener Homes scheme and the Warmer Homes scheme,into a single framework that is partly delivered by energy

suppliers. The programmes objective is to achieve500GWh of energy savings in 2011.

Budget 2011 also introduced a tax credit for energyefficiency measures. It is anticipated that given thereduced budget allocation for the Retrofit Programme,some measures in the existing Home Energy Savingscheme will need to transition to the tax relief. Discussionsare ongoing between the Department of Communication,Energy and Natural Resources and the Department ofFinance to finalise the programme prior to its launch.


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10. Central Statistics Office (CSO)

Summary

The Central Statistics Office (CSO) is a statutory independentorganisation under the Department of the Taoiseach. Day-to-day politicalresponsibility (primarily PQs) is normally delegated to the Chief Whipand Minister of State.

The main challenge facing the CSO is delviering and improving itsservices, including the 2011 Census, given resource constraints.

Priority Issues

The most significant issue facing the CSO at the moment is preparationsfor the Census of Population which will take place on Sunday, 10 April,2011. Launch of the Census is planned for 10 March and will involve anextensive promotional campaign to encourage returns. A separate

briefing note on the Census is provided at Appendix XX.

The fundamental challenge currently facing the CSO is increasingdemand for statistics while resources are contracting. The ability of theCSO to reduce its programme is constrained by the fact that around 90%of statistical outputs are required by the EU. A major focus is thereforeon organisational efficiency improvements.

The CSO has committed to the target of reducing the administrativeburden on business by 25% by 2012. The CSO annually measures thestatistical burden it imposes on business through its questionnaires. Whilecomparable data are not available for burden imposed by other publicauthorities in Ireland, results are in line with findings in other countrieswith statistics accounting for approximately 1% to 3% of the overalladministrative burden. CSO believes that the perceived burden imposed

by statistics is far higher than the actual burden.

During 2010 the CSO/Revenue Liaison Group established a sub-group toexamine the feasibility of introducing a common business identifier tooperate between the two organisations. The sub-group has identified anexisting Revenue identifier that could operate as a common businessidentifier. This development reflects recognition from both sides of thevalue/benefits of having a common business identifier in place betweenthe two organisations. It is hoped that this project could give momentum

to the creation of a unique business identifier across the public sector.


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The decision by the previous Government to develop a system ofpostcodes for Ireland would facilitate further reduction in the statisticaladministrative burden and give rise to further efficiencies in datacollection and reuse.

[More detailed briefing on CSO activities will be provided separately bythe CSO]

Background

The CSO performs its functions in accordance with the Statistics Act1993 which provides that the Director General has sole responsibility forand be independent in the exercise of the functions of deciding:

a. the statistical methodology and professional statistical

standards used by the Office;b. the content of statistical releases and publications issued bythe office; andc. the timing and methods of dissemination of statisticscompiled by the Office.

The principal role of the Taoiseach (or Minister of State) is politicalaccountability on matters of public interest relating to the work of theCSO including, in particular Parliamentary Questions. The Divisionliaises with the CSO for this purpose, as well as providing replies torepresentations, media queries etc. The Division also acts as contact

point between the CSO and other Departments for the purposes ofadvance briefing on statistical releases etc.

The Minister is also responsible under Section 19 of the Act for reachingagreement with the National Statistics Board (NSB) on guiding thestrategic direction of the CSO.

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