THE GOVERNMENT will unveil a framework for economic recovery today against a background of rapidly deteriorating economic conditions that have thrown its budgetary strategy for next year into disarray.
"Building Ireland's Smart Economy: A Framework for Sustainable Economic Renewal" will detail a multi-billion package of tax incentives and spending measures designed to promote economic activity.
It will also outline a strategy for getting public spending under control. It is not expected to spell out a detailed approach to the thorny issue of public-sector pay but will focus on the scale of the economic challenge in the light of unsustainable borrowing, rising unemployment and the sharp fall in economic activity.
The social partners will be briefed on the plan at noon today before the formal launch and they will be told that their input into its development will be welcomed.
Taoiseach Brian Cowen has been working on the recovery plan for the past two months with Cabinet colleagues, as well as senior officials from the IDA and Enterprise Ireland and civil servants from a number of Government departments.
The plan will focus on the concept of a "smart economy" designed to provide incentives for new business ventures, particularly those that involve research and development.
A new variable tax regime will be introduced for venture capitalists, with rates as low as 15 per cent for individuals to complement the 12.5 per cent corporation tax regime.
To encourage start-ups, particularly in research and development, a three-year exemption from corporation tax will be introduced for companies that meet the criteria.
Last night, a senior Government figure said Ireland has 200 of the world's top IT companies based here, along with 600 software firms, both foreign and Irish-owned.
In the environmental area, there will be a focus on the development of wind energy and incentives to encourage the fast-track development of wave energy projects.
Fast-track planning rules for high-voltage pylons and offshore wind-farms will form a key part of the package, which will be announced in greater detail in January by Minister for Energy and Natural Resources Eamon Ryan.
The plan is also expected to include details of spending priorities on critical infrastructure, particularly the school building programme.
Mr Cowen said last night in advance of the launch of the framework that many countries were simply trying to ride out the current global economic difficulties.
"By putting a framework on the table, this Government is showing its commitment not only to lead the country through this once-in-a-century downturn, but also to restructure the economy so that we are in pole position when the global recovery occurs. We must plan for the recovery now," he said.
"The Government intends to work with all who have a stake in our country's future, including the unions, employers and other social partners. I met with the social partners on Tuesday and outlined the Government's thinking. I invited the social partners to work with us in a constructive spirit so as to finalise the necessary actions to develop and implement the framework."
In the Dáil yesterday, Labour Party leader Eamon Gilmore launched a scathing attack on the Taoiseach and the Government for what he termed "incompetence" and a lack of drive.
"This Government is appalling. It is a deadbeat Government. It is not able to lead this country out of the problems it created in the first place," he said.
"It has driven us into the worst economic problem the country has experienced in decades."
The publication of the framework comes against a background of continuing gloomy news on the economy.
Last week, Minister for Finance Brian Lenihan conceded that the economy would shrink by 4 per cent next year, on top of a 2.6 per cent contraction this year.
With inflation due to shrink close to zero and tax revenues continuing to collapse, the national pay agreement now appears unsustainable.