Launch of the National Competitiveness Council’s Annual Reports

On Thursday 14 October 2004

Thank you Chairman [William Burgess] for the reports and for outlining the key messages and recommendations for 2004.

Before I comment on these Reports I would firstly like to acknowledge the very significant contribution, which William has made to the work of the Council. You have been working with the Council both a member and as Chairman since the creation of the Council. On behalf of the Government I would like to thank you for the commitment and effort, which you have shown in the important work of the Council. You have indeed done the State some service. You are retiring from the Council and I would like to wish you well in the future.

I would also like to thank the other members of the Council here today for the contribution that they make. As members of the Council you bring your own insights and knowledge to bear on the critical issues, which we must face to underpin our competitiveness. I know you are all busy people and it is sometimes onerous and demanding of your time. The first thing I would like to say is that I fully support the work that you are doing. I want you to continue because I recognize that it is of central importance.

Ireland is a small, open economy. This has been said many times before. What this means is that we tend to do well when global conditions are favourable. The corollary is that we are also vulnerable to shocks. But we have weathered the recent downturn with some resilience. In 2003, the labour market was particularly resilient, with employment growth of 1.9 per cent creating 33,600 new jobs. This strong employment growth, while much lower than some of the rates recorded over the last decade, kept average unemployment for 2003 at a comparatively low rate of 4.6 per cent. Despite the appreciation of the euro, the Irish economy grew last year by 2.8 per cent in GNP terms and 3.7 per cent in GDP terms. These positive trends are continuing this year.

We have, in addition, encouraging evidence that oversee investors continue to look positively at this country as exemplified by my announcement earlier this morning that Business Objects, one of the world’s leading provider of business intelligence (BI) software solutions, is to establish a new Operations Centre at Park West Business Park in Dublin which will result in the creation of 350 high skilled jobs. We continue to have a pro-business tax and regulatory environment. Inward foreign investment has begun to recover. This is of course very welcome news. But we cannot be complacent.

Our improved ability to withstand a downturn in global conditions is perhaps not a coincidence. It is I think the result of a determined effort to address competitiveness issues not just on the part of the government but by all the social partners who have very important role to play.

In the context of Sustaining Progress – the current Social Partnership agreement I think there has been a clear recognition that sustaining progress is about sustaining competitiveness . I hope we can maintain and build on this valuable consensus.

This year the NCC has identified immediate issues for recovering cost competitiveness and longer-term issues, which will help raise productivity and build the innovation driven economy. In addition to today’s reports the NCC last month issued a Statement on Prices and Costs. This made very stark reading and clearly showed that with only some exceptions (for foot-ware and clothing for example) Ireland is an expensive country for goods and services. While our rapid growth in employment and average income per person has made us the envy of Europe there is a gap between costs here and elsewhere in the EU. The recommendations, which the NCC has offered in today’s reports, will give us guidance on how best to tackle these issues.

While there is not a lot we can do about oil prices or exchange rates, we can take steps to influence our cost base. And we can lay the groundwork for future prosperity and growth such as investing in R& D and essential infrastructure.

We have already made good progress in terms of infrastructure with €140 million being invested between last year and 2007 to provide high-speed, open access broadband infrastructure in all cities and towns in the State with a population greater than 1,500. The Government is also committed to investing in R&D.

The establishment of Science Foundation Ireland is a central component in this commitment. Through its investments, Science Foundation Ireland is supporting knowledge creation and human capital development, which are the corner stones of a knowledge economy. The funding is being used to recruit and retain researchers and research groups capable of developing high-impact, internationally significant discoveries in the fields underpinning Biotechnology and Information and Communications Technology (ICTs).

Since its establishment in 2000, Science Foundation Ireland has awarded over €396 million to support more than 1,038 individuals, research teams, centres, and visiting researchers in creating the knowledge and driving the discoveries to underpin future competitiveness in key industries. The intention is to have these people innovate here in Ireland and in this way ensure that Ireland is recognised as an economy at the cutting edge of research and innovation. All of this will work towards ensuring that Ireland is successful in its effort to support the creation of a knowledge-based society and is able and willing to profit from the opportunities that arise from such innovation.

Following the Competitiveness Council’s analysis and recommendations last year the government, for its part, took care to introduce a non- inflationary budget last year. We introduced a tax credit for R& D to stimulate investment in this area. And we confirmed the Seed Capital and BES schemes, which are important for entrepreneurship and business growth. Budget 2004 also provided €83 million for the recommencement of the Programme for Research in Third Level Institutions (PRTLI). These were all recommendations from the National Competitiveness Council.

I note this year that the Council suggests that we integrate the EU Lisbon Agenda into Domestic policy. The drive towards increased competitiveness in Ireland does find a strong resonance with the Lisbon Agenda of the European Union. Many policy areas are already strongly influenced by the Lisbon Strategy for a competitive Europe including our Employment Action Plan and our R & D Action plan. The future is about making knowledge work for the benefit of all our citizens. This will involve us in completing the transition from an investment driven economy to a knowledge driven economy. This will not be easy and is a real challenge for all engaged in policy formulation and execution. Government policy has to be targeted in a focussed manner to achieve this goal and I intend to pursue this agenda with vigour in the coming years.

I am not here today to announce instant solutions or to say that we will do everything that is contained in these reports - it would be wrong to suggest that there are easy or instant solutions. Many of the issues are interlinked and involve many government departments.

In the context of the work of my own Department, a strong competition and consumer policy will underpin the drive to tackle costs. That is why in recent years we have strengthened the powers and resources of the Competition Authority and significantly enhanced the Authority’s ability to enforce competition law and tackle of anti-competitive behaviour in the economy.

Also, earlier this year, the Government established the Consumer Strategy Group to advise on the development of a national consumer policy. That Group will report to me at the end of this year and it’s recommendations are likely to play an important part in shaping Government policy in this area in the years ahead.

Enterprise development issues and recommendations on innovation and creativity in today’s reports will be taken forward together with the issues raised in the Enterprise Strategy Group Report (O’ Driscoll Report) earlier this year. In doing this I want to see a new engagement by Government with enterprise.

What I want to emphasise today is that I am committed to taking the issues forward and to ensuring that the Government responds effectively. It is my role to be the voice for enterprise and competitiveness at the cabinet table.

By publishing these competitiveness reports and by taking an up front approach this shows that we are serious about addressing the challenges and open to the best advice as to how this might be done. I think that business welcomes the fact that we openly address the issues of most direct concern to them and to future welfare and employment in this country.

I have already brought these 2 reports to the attention of my colleagues in government at my first cabinet meeting as Minister for Enterprise Trade and Employment. These are compelling reports and they demand the attention of government at the highest level. I know that William himself will be briefing cabinet ministers individually on the issues in these reports that are of relevance to their Departments.

I want all of government working together on the enterprise and competitiveness agenda. It is only in this way that we can build on current growth and steer a path towards future prosperity.

Thank you.

ENDS/ETE 1266