Address by An Tanaiste to the Annual Dinner of Dublin Chamber of Commerce

Introduction

Madam President, Ladies and Gentlemen, I am delighted to be able to join you this evening for your Annual Dinner. I have to say, Madam President, that the date chosen for tonight’s gathering – coming now as it does two days after we delivered an early Budget – clearly demonstrates either: the level of insight the Dublin Chamber brings to its analysis of likely Government thinking and actions; or, the level of regard the Government has for the Chamber and your many members and guests here tonight. Either way, tonight’s occasion is good timing and I am sure that the Budget and the current global economic challenges have featured heavily in discussions over dinner. The timing is also good for me, in that I get the chance set out in a post-Budget environment a number of my own priorities as Minister for Enterprise, Trade and Employment for the months ahead.

Credit Crunch

Before getting into that however, I do want to say a few words about our response to the remarkable and unprecedented events of the past number of weeks. Major banks and businesses across the globe have been affected, and those here in Ireland have not escaped. I know that many of you here tonight have felt, and continue to feel, the effects in your own enterprises – not least on your and your customer ability to get and retain credit.

The debate around the Government guarantee announcement did, to a certain extent, miss that point and overlooked one of our key considerations in taking the decision. Put simply, maintaining a stable banking sector as the provider of credit needed by business was an absolute imperative. Your ability to get and retain credit impacts directly on the ability of your businesses to function day-to-day and keep your employees in a job. The decisions we took in relation to the guarantee was not an easy one, but one that has ensured that we did not have to deal with a significantly more serious set of circumstances.

The past number of weeks has presented significant challenges for the Government. Not only have we been faced with taking difficult decisions to protect our banking and financial system, but we have also had to address a significant downturn in Exchequer revenue. Our actions to address both of those challenges reflect the fact that Ireland has, I would suggest, arrived quickly at another defining moment in our economic and social history. It is clear that the decisions we take at this time will affect the prosperity and well being of the country for the next decade and beyond. It is therefore a challenging time to be in Government. With every challenge however comes an opportunity, and it is my intention to ensure that Ireland leverages its many advantages to make best use of each opportunity as it presents.

Budget

As a result, this week’s budget contained a very clear and determined message: This Government is committed to stabilising the national borrowing requirement, building confidence in the economy and protecting the most vulnerable in our society. It was tough Budget however, one the impact of which we will all feel in our pockets. It was however a Budget that recognised the importance of Ireland’s business community – our entrepreneurs and our workforce – and their role as the driving force of our economy. Our ability to emerge well from the current difficulties will be dependent to a large extent on the ability of our businesses to compete in international markets. To maintain and further grow a vibrant exporting sector – in both goods and services - we must build and sustain our cost competitiveness. We must position ourselves as a highly competitive location in which to do business. These are key challenges for Government – particularly in the current budgetary environment.

R&D

One of my key priorities as Minister for Enterprise, Trade and Employment is to champion the need for us to develop new sources of competitive advantage through greater innovation. It is my goal to create the best possible conditions in which innovation can flourish, and to support firms and individuals in the development of new services and products and the securing of new markets.

Key to achieving this is the development of Ireland as leader in world-class research, development and innovation. Within my own budget for 2009, I have set aside some €335 million towards achieving this goal and to underpin our Strategy for Science, Technology and Innovation. The objective of the Strategy is to build stronger relationships between the science and enterprise systems, particularly in the application and “commercialisation” of R&D. It also aims at ensuring the sustained development of human resources in science and technology. As further evidence of our commitment to R&D this week we raised the rate of the R&D Tax Credit from 20 to 25%. This is a very strong signal of the importance we are placing on R&D and it is my hope that it will further incentivise such investment in Ireland – both by foreign direct investors and, in particular, by indigenous Irish enterprises. This significant level of investment and commitment to the development of R&D must however produce real results in terms of generating new ideas, new intellectual property, new businesses and ultimately, new jobs and a return on the taxpayers investment.

It is my intention therefore to establish a group to closely monitor the outputs of our R&D commitment and to drive commercialisation of research outcomes within our chosen target sectors. This will, I believe, send out a clear signal that we are not investing so much funding in R&D for its own sake, but rather, Ireland has taken a key strategic decision that R&D is going to drive our economy in the years ahead, and that research in Ireland will be at the cutting edge and focused on achieving outcomes that have significant market potential.

ICT & EMEA

Of course, foreign direct investment continues to play a central role in the development of the Irish economy. Ireland continues to be a most attractive location for global companies investing in Europe. The quality of such investments is also of the highest standard, reflecting the remarkable evolution of the business ecosystem in Ireland as international competition and Irish economic conditions have developed. Investments in the past year, such as those by Cook Medical, Cisco, GlaxoSmithKline, PepsiCo and Georgia Tech are clear evidence of this evolution. Just as implementing the correct combination of policies drove the development of the IFSC, Dublin is now also fast becoming an international hub for a new generation of ICT companies involved in cutting edge software development, the provision of on-line services and e-commerce. Globally recognised names such as Google, Yahoo, E-bay, Amazon, and, just in the last number of weeks despite the ongoing global economic turbulence, Facebook, have made Dublin their home away from home.

The dynamism such names and the calibre of people they bring to the city send out a clear signal that Ireland is a vibrant place to do business, to generate ideas and to be successful both professionally and personally. Key to their decisions to locate here has been our pro-enterprise policies, our low corporate tax base and our ability to attract a world-class and multi-lingual talent pool. It is notable that several of these enterprises have established not just their European headquarters here in Ireland, but have located a headquarters for their entire Europe, Middle East and Africa (or EMEA) operations here. It demonstrates that with the right set of policies in place, Ireland can win not just on the European stage but also at the global level. As businesses continue to grow and think globally, it is my view that we can no longer limit our ambitions for our target sectors to being the location of choice within the European Union, but that we must market ourselves as the location of choice within our global region, EMEA. A successful conclusion to the World Trade Talks round would have assisted greatly in our taking that step, particularly for our many services industries, however I remain confident that with the correct policy choices, Ireland can become the home away from home for many more global names in the region.

Financial Services

I do want to say a few words about financial services sector tonight, given its importance to our economic development over the past two decades, particularly here in Dublin. Prospects for the sector do, I believe, remain robust despite the ongoing economic turbulence. There has been a good flow of business for the IFSC in 2008 to date with, for example, both Allianz and Citi announcing significant projects in the insurance and banking sectors. Other projects are in the pipeline, in particular in the insurance and investment management areas and we do anticipate further jobs announcements over the coming months. I am therefore confident that the financial services sector in Ireland can weather the current storm and has the potential to continue to contribute significantly to the growth of output and employment in Ireland in the future.

Over the past decade Dublin has steadily improved its rating as an international financial centre and it is now a realistic objective to aim to make it one of the premier international financial centres in Europe. This requires a proactive approach however and that is why I am pleased to confirm that the IDA are working very closely with the sector to ensure that we have the most competitive offering. The work will focus on ensuring that all stakeholders in the IFSC come together in an integrated manner, leveraging off each other’s expertise and knowledge in a way that is beneficial to “Ireland Inc.”. A new and cohesive “Team Ireland” approach is to be developed in marketing Ireland to the international financial services sector and I believe that such an approach will contribute significantly to unlocking and maximising the future potential of the sector for Ireland.

Intellectual Property

Of course, the ways of international commerce continue to evolve. One such evolution in recent years has been the growing importance of intangible and intellectual property assets on a global scale. It is my view that there is significant potential in terms of jobs and revenue for Ireland in our incentivising the holding and development of intellectual property assets. Just as Ireland has targeted financial services with the development of the IFSC, we should now target the holding and development of intellectual property assets along the same model. Ireland could ultimately have a form of “International Intellectual Property Services Centre”. Such a move has the potential to significantly enhance our foreign direct investment offering and encourage overseas companies to locate high-value IP business in Ireland. To achieve this however, we must first put in place the correct tax structures and that is why we have now asked the Commission on Taxation to investigate options that would support such a move.

SMEs

One of the additional pro-enterprise measures we included in the Budget, with a view to encouraging new start-up businesses, was a three-year exemption from corporate and capital gains taxes on earnings up to €40,000 each year. Our thinking behind this move is to help to grow small businesses and to begin to foster a more entrepreneurial culture nationwide. There are many people out there with great ideas and I want to see that they are given every encouragement to take the first steps in the realisation of those ideas trough starting a business of their own. While it is a well-worn cliché, it happens to be a fact that today’s great ideas and fledgling businesses are the global corporations of the future. In my role as Minister for Enterprise, Trade and Employment, I want to take every possible step to foster a healthy entrepreneurial culture across Ireland. That is one of the reasons I prioritised the County and City Enterprise Boards for additional funding, despite the challenging Budget environment. It is why we have developed the Innovation Voucher Scheme and Enterprise Ireland’s Innovation Growth Fund.

Venture capital will also have a key role to play in this regard and we are making progress there also. Just last week, for example, I launched a €75 million Ulster Bank/Diageo Venture Capital Fund aimed at the early and expansion stages of business development across a broad range of industrial sectors.

With supports such as this therefore, when Irish companies then grow and achieve scale here at home, I want to see their ambitions, goals and targets grow and reach abroad. We have had some great recent successes with Irish businesses achieving success abroad in the construction, software, financial services and, in particular, the food and beverage sectors. This is the ultimate aim of so much of our investment in home-grown Irish businesses, and is the key focus of the work of Enterprise Ireland.

We need to grow more international success stories out of Ireland and, to focus our efforts in Government in this regard, we have set ourselves ambitious targets in our new Services Strategy, which I launched last month. Key among those sectors where we see future international growth potential are, among others, eLearning, business and financial services, professional services and consultancy. There is now a great opportunity for Irish companies to expand their operations abroad, and I would ask any of you here tonight of that scale or ambition to allow Enterprise Ireland help you achieve that goal.

Red-Tape

Of course, I know that not all interaction between government and business is seen as helpful from your perspective. I am conscious that many businesses, particularly small businesses, feel that too much time is consumed with government-related red tape. It is to address that very problem that we established the High Level Group on Business Regulation, on which your business organisations are represented. Its aim is to identify and target real and practical ways that red tape for business can be reduced and I would encourage any of you with suggestions or ideas to contribute to its work as we aim to make your interaction with the various arms of government as straight forward and simple as possible.

Upskilling

The role that long-term investments in education and training have played over past decades in creating a competitive workforce has been well rehearsed. However, just as the structure of our economy has changed, the skills demanded of our labour force has, and indeed will continue, to change.  While the provision of skilled human resources has been a primary task of our institutes and universities, it must also be a task for individual enterprises as a fundamental element to supporting long-term economic growth.  Significant Government resources have been committed to upskilling our workforce and we must strive to get best value for money from those investments. This applies equally to the upskilling of your existing employees or managers, or to the retraining of those leaving our older traditional industries where Ireland is no longer a competitive player.

The mechanisms we put in place as a Government to achieve these aims must be kept continually under review. The structures put in place to address the needs of the 1980s are not necessarily the correct solutions for today’s training and upskilling needs. To that end, I have begun a review of the structures and programmes in place within or under the control of my own Department for delivery of training and upskilling. We need to ensure that that value for money is achieved and that we are providing training in the right areas and for the right people. It is clear also that there is also overlap in the provision of training across the various government and taxpayer funded agencies. Together with my colleague, the Minister for Education and Science, Batt O’Keeffe, it is my intention to address these issues over the coming year.

As is clear from this week’s Budget announcements however, the Government remains committed to prioritising those investments that enhance future productivity and competitiveness. Our need for a highly skilled and flexible workforce is key in this regard and, as a result, life long learning and training will remain as an ongoing and pivotal priority for this Government over the years to come.

Social Partnership / Public Sector Reform

I want to say a few words also tonight about the recent social partnership agreement. While external factors such as energy prices are beyond our control and impact significantly on our competitive position, it is essential that we seek to control those factors which we can more directly influence including the level of wage growth in our economy. That is why the successful conclusion of negotiations last month by the social partners on a new national pay agreement is, in the Government’s view, so significant. Social Partnership has contributed greatly to the level of economic and social progress we have achieved in over two decades. The latest pay agreement under the Towards 2016 Social Partnership Agreement seeks to safeguard living standards of workers, while providing stability, certainty and confidence to the business community at this turbulent time. I hope that the Social Partners ratify the new pay agreement once they have considered their positions, notwithstanding that there may be individual aspects of the overall agreement with which they may not be entirely happy. The agreement represents a mature and responsible outcome in current difficult times.

I know that the issue of public sector reform is a topic of debate for many in the private sector at the moment, particularly in the current economic climate where you are having to look carefully at the structures of your own businesses and perhaps make tough choices to let employees go. Many in the private sector are raising questions over the terms and conditions enjoyed by public servants. It is notable that this is in marked contrast to the situation only a couple of years ago where it was public servants who were raising concerns about the widening wage differential between those in the public and private sectors.

I have to say that it is my own view and experience that there are many excellent people working within the public service, many of whom receive modest salaries in return for a lifetime of dedicated service to the public. That said, very real problems do exist. There is a need for more flexibility in the delivery of services to the public. There is a need for much greater efficiency and better value for money. There is a need for further modernisation of systems and working practices.

The Government is keenly aware of these issues and has listened to views from all sides of the debate. We chose to invite the OECD to undertake a review of the Irish public sector and its report, which was launched in April of this year, contains a set of key recommendations that we have now committed to implement. We have established a Task Force, whose membership includes respected figures from the private sector, to help us drive this agenda and I, together with my all of my colleagues in Government, will not be found wanting should difficult decisions on reform be required over the coming months.

My view on such reform is clear - we need to put the public at the centre of our public services. That is our ambition in Government and is at the core of how we are going to approach the process over the coming months.

Merged Consumer and Competition Authority

One of our Budget initiatives falling within the ambit of public sector reform was the announcement of our decisions on the amalgamation of certain State agencies and boards. I was pleased to be able to confirm the merger of the National Consumer Agency and the Competition Authority. Consumer policies and competition law are highly complementary and share a common goal of enriching consumer welfare. The merger of both agencies will ensure improved co-ordination of these two policy areas and achieve important synergies that should ultimately serve both the consumer and business better.

The merger of both agencies also coincides with the review already underway of our competition law code, where I intend to address issues raised in the report of the Mergers and Competition Review Group and ensure that Irish competition law, in so far as is possible, is capable of being applied in pragmatic way, reflecting the realities facing both the consumer and business, while protecting competition within the relevant market. I should also add, which may be of interest to those of you in trades or professions the subject of a review by the Competition Authority, that I intend that reports of the new Authority addressed to Government should receive a published response from Government addressing the Authority’s findings and recommendations within a set period of time. This, I believe, should bring more transparency to decision-making, bring certainty to business and result in a healthier and more competitive business environment.

Leadership

Ladies and gentlemen, in approaching the various topics I have touched on this evening, my focus has been on targeting areas where reform is needed and where work that has commenced must be accelerated, to ensure that Ireland is well positioned when the current unprecedented global turbulence draws to a close.

While as a Government our immediate objectives have to be to restore confidence and stability in our economy, safeguard the significant achievements of recent years and protect living standards, my specific role is to look to the future and to put policies in place that lay the foundations for a return to sustainable growth in the years ahead.

I believe that, working together, Government and the social partners can deliver on this objective. The months and years immediately ahead will require that both Government and Social Partners work in concert to tackle the competitive challenges we face, both nationally and internationally. And I believe this week’s Budget was an important milestone on the way to making further economic and social progress in Ireland against a tough global backdrop. I look forward to working together with Dublin Chamber of Commerce in the years ahead in delivering for Dublin and for the Irish economy nationwide.

Thank You.

ENDS/ETE1956