Remarks by Tánaiste Mary Harney at the Central Bank Media Conference on the Euro Changeover - Wednesday 20th June 2001- TÁNAISTE URGES BUSINESSES TO REDOUBLE CHANGOVER EFFORTS TO ENSURE SMOOTH CHANGEOVER TO THE EURO -

I would like make a few brief remarks about the euro as our single currency in Europe and what it means for Ireland.

The euro is our currency already. People in international business, financial services and government know this very well, since it was brought in on 1 January 1999. The broad public awareness of the existence of the euro will increase greatly in the next six months as we prepare to introduce euro notes and coins. The Forfás EMU Business Awareness Campaign is contributing greatly to that.I do believe, however, that people are already aware of the real and tangible benefits of the euro in the last few years, even if they do not yet associate those benefits with the euro currency in a tangible form.

The people are fully aware that we have had low and stable interest rates in recent years. They appreciate and fully support the sea-change this has brought in their financial circumstances. The benefits of membership of the euro are real and tangible in the lives of every person in Ireland. Many people owe their jobs directly to our being an open trading economy within the euro zone.

We hope never again to see the days of personal loan interest rates of over 20 per cent, of rapid and frightening increases in mortgage interest costs, and of a small and defenceless currency being buffeted on the high seas of international financial markets. No-one wants to return to that.

Ireland is benefiting greatly from the stability that is being achieved by the pooling of our monetary sovereignty in the single currency. That is a fundamental fact. And I believe the people recognise it implicitly.

Our membership of the euro and our commitment to its success was never an issue in the Nice Treaty referendum, even as many red herrings were introduced in the Nice Treaty debate.

The benefits of the euro are one way that Irish people can assess how our full and active membership of the European Union is in our immediate and practical interest. We must engage in active, responsible participation, promoting what we genuinely believe to be the right policies for Ireland and for the whole European Union.

In the context of financial stability brought about by the euro, we have brought unemployment below 4 per cent. A third of a million new jobs have been created since 1997. We have ended emigration. Our tax rates are much more reasonable than before.

There is, I would suggest, a real connection between our way of engaging with Europe and how we sustain continued progress. Any disengagement from Europe would be disastrous for jobs and prosperity. At the same time, we must preserve the ability to set fundamental policies for our economy and society. What this means is the right balance. I would encourage people to reflect on this over the coming months and I will be interested to hear their views.

The debate we are going to have on our engagement with Europe and the future of the Union must be orderly, reasoned and also robust. We must take time. That is why the Government is setting up the Forum for Europe. It must be close to the people, open and fair to all points of view. I hope our debate will reflect well on active citizenship in Ireland. I hope it will confirm my strong conviction that we as a people are strongly in favour of giving the people of Central and Eastern Europe the same chances and benefits we have enjoyed. The European Union is fundamentally about securing peace and prosperity on the whole continent, and removing forever the threat of war and oppression. I hope that the Forum on Europe will bring our debate about European issues and policies to a new level, one that will benefit Ireland and all of Europe.

The Department of Enterprise, Trade and Employment has specific responsibility for providing Irish businesses with the information they need to make the necessary preparations for the changeover to the euro. The EMU Business Awareness Campaign, which is managed by Forfás at the request of this Department, has undertaken this task since it was launched in December 1996. To-date, the Campaign has produced a comprehensive range of publications of relevance to all sectors of the Irish economy that have been, and continue to be, widely disseminated to Irish businesses.

• Included among the activities of the Forfás EMU Business Awareness Campaign, which have increased significantly since the start of this final year before the changeover to euro notes and coins, are the following;
• A major advertising campaign using television, radio, press, trade publications, and Internet advertising.
• New guidelines to assist retailers in planning for the changeover, produced in February this year. To-date, 190,156 copies have been distributed through a wide variety of channels including direct distribution by post to 40,000 retailers.
• New guidelines for SMEs that provides information to businesses on preparing for the changeover, produced in May. The guide incorporates detailed background information on the euro and covers such areas as accounting in euro, software issues, payroll, dealing with the Revenue Commissioners, banking issues and staff training. A total of 158,871 copies of these guidelines have been distributed to businesses throughout Ireland so far.
• The Campaign has also distributed almost 50,000 copies its supplementary publications (newsletter; strategies guide; IT guide; case studies brochure and cross-border document) since the beginning of this year alone.
• The Campaign also provides speakers to address conferences and/or seminars of professional, trade and business organisations, as well as participating at exhibitions and trade shows particularly those that represent companies in the SME sector.
• A LoCall help-line is provided by the Campaign to assist businesses with their changeover queries. In the first five months of this year, the Campaign has dealt with 3,040 queries (compared with a total of 1,700 queries for 2000).

An integral part of the Campaign has been the Loughrea Euro Town Project, which was launched in March 1999. This project was intended as a demonstration exercise whereby 30 businesses in Loughrea in Co. Galway were helped to change over to euro-based trading at an accelerated rate. The project was based on an original concept by the Loughrea Chamber of Commerce and was developed by the Forfás EMU Business Awareness Campaign with the support of the Euro Changeover Board of Ireland and the Department of Enterprise, Trade and Employment. The results of the Project were presented at the National Euro Conference held in Loughrea in February this year. The Project, which highlighted the changeover experiences of the SME firms as they changed over to euro, has identified practical solutions to many of the problems facing small businesses in making the changeover. Further information on the Project can be found on the project web-site www.eurotown-loughrea.ie.

In addition, the Campaign has also regularly undertaken surveys to monitor the extent of business preparations for the changeover. Initial evidence from the latest of these surveys, which has just been completed, indicates that Irish firms are significantly engaged in the process of planning for the changeover. 64 per cent of Irish firms have prepared, or are in the process of preparing a plan to manage the changeover, up from 46 per cent in the last survey, which was conducted at the beginning of this year.

78 per cent of firms have received information on the euro, up from 72 per cent , while 79 per cent have someone with specific responsibility for managing the changeover (an increase from 69 per cent).

73 per cent of firms have now decided when they will change over to the euro as their base currency, up from 66 per cent in the last survey. This does however leave 27 per cent of businesses that have yet to take a decision as to when they will make the change. Of the firms that have decided when to change, the majority (61 per cent) have decided to make the changeover on 1 January next, with 25 per cent indicating that they would switch in the last quarter of this year.

However, there is also evidence that this increased level of preparations has still to translate into practical action on the part of firms in undertaking specific steps to implement the changeover in their businesses.

While businesses are aware that the plans and preferences of customers and suppliers may have an impact on their own plans for changing over, only 29 per cent of firms have discussed the changeover with their customers while 22 per cent have raised the issue with suppliers.

In the area of computer software, almost 40 per cent of all firms relying on software have still not undertaken an audit to determine its euro functionality to see if it will be sufficient to meet the company’s changeover requirements. On the positive side, of those that have undertaken such an audit, 81 per cent feel that their current software will be sufficient for their changeover requirements.

In relation to the practical actions to be undertaken in changing over to the euro, such as dual pricing, dual display on invoices, making tax returns, paying staff salaries, changing annual accounts, there has been little increase in overall activity since the last survey was conducted. In particular, results in this area would indicate that a majority of firms are intending to leave the changeover of these specific tasks until 1 January.

A note of concern arises in relation to staff training and in particular the significant number of firms that currently indicate that they do not intend to undertake any training. At 58 per cent, this is a considerable increase from the 49 per cent who expressed the same view in the last survey. Without doubt, the success or otherwise of the changeover for every Irish business will depend on its staff. Staff will be in the front line of the changeover dealing with customers’ queries, explaining the new euro values, ultimately maintaining the confidence of customers. Irrespective of the type or size of a business, training will be vital if this is to be achieved effectively. This is particularly true for those involved in a retail or cash–based businesses, where many consumers will come into contact with the new currency for the first time and where retailers have the added task of physically managing two sets of notes and coins during the six-week dual circulation period. With this in mind, a kit to assist retailer owner-managers with the task of staff training is currently being developed by the Forfás EMU Business Awareness Campaign which will be provided to each retail outlet. Included in the kit will be a one-function calculator, ready reckoner, conversion chart, posters, dummy notes and coins and a training manual. A training pack for general use is already available and can be downloaded now from the ECBI web site, together with a range of other materials suitable for staff training such as posters, leaflets etc. that is available from either the ECBI or the Forfás EMU Business Awareness Campaign.

In overall terms, the results of this latest survey indicate that a significant number of firms are aware of the need to prepare for the changeover and that the levels of preparations have increased since the last survey was conducted. However, the latest results also show that a majority of firms have decided to make the changeover to euro € based trading on or near € - day itself. This may well be the most appropriate course of action from the firms perspective. What is essential is that each business has made the necessary preparations well in advance in order to enable them to make the changeover successfully on that date.

Irish businesses must be prepared and ready to operate in euro by 1 January ( € - day ) at the latest. From pricing in euro to invoicing customers, paying staff and suppliers, maintaining internal accounts and making all tax returns, every firm must be ready to do business in euro by € - day.

Being ready for € - day means that all planning and preparations for the changeover must be undertaken well in advance, in order to ensure that there is sufficient time to test out any proposed changes to business systems, procedures or practices, and ultimately to ensure that the changeover is completed smoothly and efficiently. The time left for preparations is clearly diminishing and firms that delay run the risk of having to compete for key external services to assist with the changeover that may be required in areas such as IT and accounting and finance.

The information to assist all firms with this task is available, and has already been provided in significant quantities, by the Forfás EMU Business Awareness Campaign. The Tánaiste urges all businesses to redouble their euro changeover efforts and avail of the information provided to ensure that the changeover is achieved smoothly and efficiently by all Irish businesses.

• The figures outlined above are taken from the latest survey of the Forfás EMU Business Awareness Campaign to assess the level of preparedness among firms in Ireland for the introduction of the euro. The survey, the seventh in a series undertaken since 1996 by the Forfás Campaign, was conducted by the ESRI. Fieldwork was carried out between May 24th and June 1st 2001 while the previous survey referred to was undertaken in December 2000/January 2001.
• The survey was based on 1203 completed questionnaires with the data re-weighted to represent the universe of firms in Ireland. Data was provided for six enterprise sectors: - Traditional manufacturing - Hi-Tech manufacturing - Construction - Wholesale/retail - Business services - Hotel/restaurant/other personal services
• On a sectoral basis, companies in the Construction sector, while showing progress since the last survey, continue to lag behind the other sectors.
• In addition, the results were also broken down by company size. In line with previous surveys, SME firms remain behind the larger businesses in the extent of their preparations but again, show progression since the previous survey.
• Interviewing was conducted on the telephone by ESRI interviewers.
• Detailed tables, providing sectoral and size breakdowns for each of the indicators are available directly from the Forfás EMU Business Awareness Campaign.