Dáil Éireann Debate, Thursday - 17 June 2004
82 Mr. Durkan asked the Tánaiste and Minister for Enterprise, Trade and Employment her proposals to address the issue of increased lack of competitiveness in the economy; and if she will make a statement on the matter. [18220/04]
View answer87 Mr. Durkan asked the Tánaiste and Minister for Enterprise, Trade and Employment the extent to which she has taken action to improve Ireland’s competitive position with regard to low wage economies; and if she will make a statement on the matter. [18225/04]
View answerI propose to take Questions 82 and 87 together.
Ireland's economy is undergoing fundamental change, which is affecting all sectors of our economy. Ireland can no longer be seen as a low cost location for investment as our strengths and competitive advantages have inexorably changed. High output and productivity together with high returns to labour in the form of wages, salaries and better living standards now typify Ireland's economy. As a result, Ireland is no longer seen as a location for what could be called basic low-tech production and is being overtaken by low-wage economies in terms of cost competitiveness.
A key component of the Government's strategy to tackle the competitiveness challenge posed by low wage economies is to concentrate on increasing the levels of investment in research and development and innovation in industry in Ireland. This will assist companies in moving up the value chain, which will in the long term safeguard employment and provide more sustainable and high quality jobs. As part of this strategy, the Government in the 2004 budget announced details of a 20% tax credit for expenditure on research and development. Another important element of this strategy was the establishment of Science Foundation Ireland to administer the €646 million technology foresight fund, which will lead to increased innovation and research. This will also drive long-term growth and competitiveness by attracting new high technology firms to Ireland while enhancing the capabilities of existing firms operating in Ireland.
The Government is committed to developing a competitive economy that will be resilient to the toughest competitive pressures from today's global economy. This involves providing a pro business environment that will provide firms with a solid stable platform from which they can successfully compete on both domestic and international markets. The Government's continued commitment to the social partnership process and its desire to achieve a virtuous circle of low inflation, moderate wage growth and higher productivity is a testament to the Government's desire to provide a benign environment for businesses operating in Ireland.
Competition in all sectors of Ireland's economy must be encouraged to ensure goods and services are provided at an efficient and affordable price. We cannot afford to have sheltered sectors of the Irish economy immune from price competition. The Competition Authority is charged with combating anti-competitive practice in the economy and is undertaking several studies in key areas of the economy such as the banking and insurance sectors. The Government looks forward to the publication of the authority's reports into these key sectors later this year.
My Department is preparing a report into the implementation of the National Competitiveness Council recommendations for submission to Government later this month. The report will set out progress to date in implementing the recommendations set out in the National Competitiveness Council's competitiveness challenge 2003 report and will enable the Government to evaluate Ireland's competitiveness, as it intends to do twice yearly in accordance with the Government decision of the 25 November 2003.
