Address by Mr Noel Treacy TD,Minister for Science, Technology and Commerceat the Dinner hosted by Hon. Sandra Kelly MHAMinister for Industry, Trade and Technologyon the Occasion of the CEOs of CCEB’s Visit to Gander, Central Newfoundlandon Wednesday 20th September 2000 at 8.00pm

I am absolutely delighted to be here this evening and I would like to sincerely thank Minister Kelly on my own behalf and on behalf of my Irish colleagues for the hospitality which you have shown us. I thoroughly enjoyed the tour of your town and am looking forward to tomorrow’s workshop where we will discuss local development issues which I hope will be of benefit to both our countries. The first thing that strikes anybody who looks at Ireland and Newfoundland are the similarities between our two lands. We are both located off the coasts of large continents. We have both had to overcome the geographic disadvantage of a peripheral location and we have both experienced the ravages of high unemployment and emigration.

One of the earliest physical links between our two lands was the laying of the first Transatlantic Telegraphic Cable, between Valentia in S.W. Ireland and Newfoundland in 1866. It was a gargantuan task, accompanied by repeated failure and huge costs. When, finally the Cable was successfully laid, it took weeks for people on both sides of the Atlantic, to accept that such a concept could be realised, and years before its implications for economic and social development were truly grasped. A revolution had just occurred. However, we are both now seen internationally as countries at the leading edge of Information and Communications Technology, in another modern revolution.

Of course our links go much deeper than that. We are bound by strong ties of history and common ancestry. Over 40% of the people of Newfoundland & Labrador, including your Premier Mr. Brian Tobin, are of Irish descent. This is the principal reason that a Memorandum of Understanding, between the Governments of Ireland and Newfoundland, was signed in Dublin, on the 8th November 1996. In April of last year Premier Tobin and our Taoiseach, Mr. Bertie Ahern T.D. reaffirmed the Memorandum. One of the major objectives of this Memorandum is to develop close co-operation and enhanced awareness of our respective business, industry and cultural sectors. This is part of our overall desire to enhance and develop, appropriate and complementary activities which are consistent with the needs and priorities of economic and cultural development. Three main sectors are identified where co-operation would be mutually beneficial: information technology, tourism and environmental services.

I have had the honour of visiting Newfoundland on two previous occasions. The first time was in September of 1998. At that time I was most impressed with your country’s expertise in the area of Distance Education and Telemedicine. My most recent visit was in April last. The objective of that visit was to launch the Opportunities Ireland Recruitment Fair in St. John’s and explore e-commerce business opportunities. The purpose of our visit this week is twofold. Firstly, we wish to share experiences with your economic development agencies as to how best to develop remote rural areas and promote entrepreneurship. Secondly, we are exploring a possible joint venture with operation online in relation to e-commerce training for SME’s.I have consistently referred to the fact, that both Ireland and Newfoundland have so much in common and we have a similar goal, in trying to maintain sustainable economic growth, which can be achieved, through increased productivity, across all sectors of our respective economies. The renewed links between Ireland and Newfoundland & Labrador are already delivering concrete results. Several companies from Ireland and from Newfoundland & Labrador have formed business partnerships which will yield tangible benefits for both sides. The Irish Government is committed to developing and strengthening the Ireland-Newfoundland relationship, and I can see by the presence of so many distinguished members of your community here today that you share our commitment. I am delighted to have the opportunity through this visit to build on our relationship.

I would like to speak to you now on the question that I am constantly asked when I travel abroad or when visitors come to Ireland. That is: how has Ireland become what is internationally known as the Celtic Tiger with exceptionally good growth rates averaging some 8% p.a. from 1994 to date, and unemployment falling from an average rate of 15.7% in 1993 to 4.3% today. The first point that I would make is that though our success in terms of employment creation dates back only six years, that the basis for that growth in employment had been laid by us over many years. For example, since the early 1970’s our annual growth rates each year (with the exception of some very bad years in the early 1980’s) have tended to be high by EU standards and, in general, around twice the EU growth rates for GDP. We expect a growth rate of over 10% for this year and currently our unemployment is only half of the EU average.

You might not think that remarkable, given that a catching-up was needed and countries often have higher growth rates when they are coming from behind to converge on the standards of production and investment that apply in the rest of an economic region. However, if you were to think that, I should point out that the performance in Ireland has been somewhat more spectacular than you might imagine: for example, we have gone from having less than 70% of EU average income per head of population in 1970 to a point where economists are now predicting that we will be the third richest nation in the EU (in GDP per head terms) at the end of our current National Development Plan, in six years time.

How did we do it? That's hard to answer. It took lots of things and lots of adjustments in how we did things in Ireland, to achieve that scale of turnaround in our economic performance. I want to mention some macro issues that I believe were critical. I have picked out four main areas plus an over-arching consensus and framework because I think that they are important.

Firstly, because we were small in population terms we recognised early on that we could not generate our own growth just from within. We have been enthusiastically and unambiguously in favour of our participation in a broader European endeavour. That has paid off for us in terms of Foreign Direct Investment. We owe our growth to the fact that we had a broader European view of our destiny. In addition, without the support of EU structural funds in Ireland over the past decade congestion in public infrastructure and constraints in third level education would have limited our recovery.

Secondly, we have made education and the skill level of the population a high priority. We have tried to do this in a way that was truly developmental of the individual person. We are, for example, seeking to have 90% of all of our 18 year-olds complete the Leaving Certificate which is our highest second-level qualification. Currently some 83% only do so. Our Leaving certificate course gives a broader educational base than its equivalent in many other European Union member countries in that six subjects are taken by all students. That is appreciated by investors who come to Ireland. In addition, we want third-level and continuing education to be another high priority also. So, at a time when others countries are charging for third-level courses and introducing cost-accountants and "rationalisation" into colleges, we are providing free access to primary degree courses and we are still increasing the number of places available at third level institutions. At this time of year our 60,000 or so school-leavers are looking at their options. There are, however, 40,000 third-level and continuing education places for them here, because its our aim to have a high-skill economy.

For the future we are going to have to attend to the up-grading of the skills of those who are currently at work. The signs are good, however, because, whereas in 1991 only 20% of the workforce had a third-level qualification (from a University or Institute of Technology), we believe that 40% of the workforce will be so qualified by 2011. We will seek to improve on that too, as time goes by. Thirdly, we have tried to develop an industrial relations infrastructure to reinforce competitiveness. In the 1970’s and the early 1980’s when inflation was up to 20% p.a., our industrial relations record deteriorated. We have, since 1987, had four national partnership agreements between unions, employers, farmers, the unemployed and other disadvantaged groups and national Government. Irish unions have, as a result, become flexible and adaptable. The agreements covered pay, tax and public expenditure. With these national agreements, we have been able to reach a consensus on programmes that have underpinned competitiveness, job creation and actions for social inclusion. Public expenditure was brought under control through these agreements. Exchequer receipts now exceed current and capital spend.

Fourthly and lastly, our success has been assisted by Foreign Direct Investment, by the development of indigenous and micro industry, by developing an infrastructure for sophisticated, high-technology industry and by introducing competition into previously protected service sectors of our economy. All of these things have made our productive sectors very modern and competitive. For example, with the arrival of the "Global Crossings" and "360 Networks" transatlantic fibre optic cables this summer, Ireland now has, according to the reports which I have read, between a third and a half of all of the high speed telecoms capacity in Europe. We have invested in this with a view to making ourselves a full part of the new world of global e-commerce. It matters to us that we succeed in this endeavour. At the same time we have focussed on start-up companies and indigenous services at a time when they needed support to build up that sector of the economy at both a local and regional level. The formation of the County and City Enterprise Board network by us in 1992, was fundamental to this aim and achieved considerable success. We are now in a position where we can re-position their activities further up the micro-enterprise chain.

Those four macro areas (Europe, skills, industrial relations and creating the best business friendly infrastructure for global players/modernising the infrastructure for the most productive global players to find us the best place to do business) are complemented by the fact that there is cross-political party support for a business-friendly legal and tax environment. Our 12œ% corporate tax is not the lowest in Europe but it is predictable and straightforward. This national consensus for a competitive economic environment, plus the four macro issues that I mentioned are the main elements of our formula for the success of our modern and growing economy.

However, there are still a number of challenges facing us. As a result of a recent review the focus of policy has now shifted decisively away from the simple objective of job creation towards the following interrelated objectives.

Firstly, achieve a more even geographic distribution of employment, where a substantial level of net job creation remains a necessity. This is being achieved through investment in Infrastructure as set out in our National Development Plan for the period 2,000 to 2,006;

Secondly, increasing job quality; and

Thirdly, increasing foreign-owned companies' embeddedness and linkages in our economy through substantial investments in research and development.

I hope that this address has given you all a greater insight into our Government’s policies, to tackle the many issues facing us all, at this moment. I would like to sincerely thank you all for your generous welcome to your wonderful town.

Hopefully, I will be able return the hospitality next month when your local Minister, the Honourable Sandra Kelly M.H.A. leads a Trade and Business mission to Ireland. I would also like to thank Mayor Claude Elliot for the welcome which you have given to me and my colleagues from Ireland, on the occasion of our first visit to Gander.

The Ireland Business Partnerships, under the Chairmanship of my great friend, Mr. Vince Withers and under the outstanding Direction of Mr. Kirk Tilley, has a vital role to play in the future to ensure continuing growth and success in Economic and Trading Relations, between Ireland and Newfoundland and Labrador. I wish to reiterate again my deepest appreciation for inviting us all here this evening and for giving me this opportunity to address you all in your beautiful and historic city.