Vol. 561 No. 4
102 Mr. Hogan asked the Tánaiste and Minister for Enterprise, Trade and Employment the new initiatives she will bring to Cabinet to tackle the deterioration of national economic competitiveness that is resulting in a major loss of employment; and if she will make a statement on the matter. [4559/03]
204 Mr. Durkan asked the Tánaiste and Minister for Enterprise, Trade and Employment the steps she intends to take to enhance the competitiveness of Irish industry; and if she will make a statement on the matter. [4758/03]
I propose to take Questions Nos. 102 and 204 together.
The annual competitiveness reports, produced by the National Competitiveness Council, comprehensively survey the competitive position of the Irish economy on the international stage. These reports examine key competitiveness issues, presenting a picture of the unfolding competitive position across the economy.
The 2002 report confirmed many of Ireland's strengths but the council also highlighted the many challenges we face and the difficult choices which we have to make as we face an uncertain economic environment. It is clear that both the domestic Irish economy and the global economy face difficult times ahead. Given that Ireland is one of the most open economies in the world, it is important that steps are taken to position the economy to maximise the benefits and growth potential from any upturn in the global economy.
The Government is already taking action to address the deficiencies identified through strengthening competition across the economy and implementing specific measures to tackle cost pressures in key areas such as insurance, continuing to invest in key infrastructure such as roads and broadband telecommunications and increasing investment in research technology and innovation which will provide the basis for future productivity growth.
Sustaining competitiveness is a dynamic process and it requires sustained attention and ongoing commitment to achieving progress over a wide spectrum of areas. It has been a key underpinning element in the proposed new social partnership programme. The issues of concern in a competitiveness context, therefore, cover a wide range of issues and are the responsibility not just of Government but of all economic players.
It is clear from the Tánaiste's reply that she has no initiatives to propose which will tackle the rapid deterioration of our economic competitiveness. Does she agree that by deliberately increasing cost pressures the Government is causing job losses directly? Over the past eight months there has been an 18% increase in costs to Irish businesses and households while the Government has binged on an increase of 40% in public expenditure. We have a tax and spend Government and many of our firms are seeking tenders for world-wide business from low cost locations in eastern Europe. Given the national pay talks she has just concluded, will the Tánaiste indicate clearly the initiatives, if any, which are to be taken to improve this country's competitiveness and to ensure the recent trend in job losses will stop?
Deputy Hogan is somewhat ill-informed. The Irish economy is a very open one and 60% of our jobs depend on our export performance. The economy has grown substantially because we have embraced export growth and because we have been attractive to foreign direct investment. That continues to be the case. The Irish economy is doing far better than any of our competitor economies in Europe and the world but the reality is that ours is not a low cost economy. We do not have a low wage economy and I do not want us to return to being a low wage economy. We compete in high value-added activity and if we want high value-added jobs with good salaries and conditions then we must develop our skills base and productivity, which will be based on skills.
That is why, notwithstanding the relative reductions in public spending, the Government has spent so much on science and innovation, for example. We recently attracted 80 of the top research teams from around the world – from Japan, the US and other countries – to carry out research in Ireland. That is an investment in competitiveness and the future. There is no doubt there are pressure points; inflation is a huge pressure point and much of Irish inflation is caused by low interest rates, oil prices and external factors but much of it is also caused by domestic factors. The Government is determined to ensure we introduce competition in areas where we have artificial constraints and there is no competition. I hope we have Deputy Hogan's support in that regard, as I read some worrying things—
I am worried about what the Tánaiste is doing.
—about people trying to introduce competition. I am not sure the Deputy wants to embrace that.
The people have more to worry about regarding what the Tánaiste is doing rather than what I am doing. Despite going through the process of social partnership in recent months she has no initiatives with which to tackle inflation or deal with our competitiveness.
We were fifth in the league of nations according to the World Economic Forum report on competitiveness in 1996. We are now twenty-fourth. That is an indication of the Tánaiste's failure. When it comes to the Finance Bill will she reverse the decision on the abolition of CGT on roll-over relief which was proposed in the budget? Will she reverse the budget decision on the 1% increase in VAT? Will she devote more resources to State agencies whose funding was cut in the budget, such as Enterprise Ireland and the IDA? Will she accelerate publication of some of the reports commissioned by the Competition Authority in order to deal with some of the blockages in the economy? Does she agree that the increase in stamp duty from 6% to 9% for non-residential businesses, which is hitting the commercial sector, is a real slap in the face for those who are innovative? It is doing irreparable damage to improving indigenous job creation.
No Government or party in government has done more to create a favourable tax environment on both the personal and business taxation fronts than the current Administration and its predecessor.
Tax and spend.
The Deputy talks about tax and spend and the rise in public spending but then asks me to do a whole host of things.
The Tánaiste is the cause of this.
We are running out of time. Deputy Hogan should allow the Tánaiste to answer the question.
The Deputy criticises what he calls public spending increases and then suggests a host of areas where public spending should be increased.
I am pro-enterprise.
If grants were to solve the problem—
I am not talking about grants.
The Deputy asked me to put more money into Enterprise Ireland, among other suggestions. If grants were the answer to our problems we should have had full employment in the 1970s and 1980s, when we were heavily dependent on grants. The reality is that there are pressures, which is why we must be conscious of the wage deal. That focuses on wage moderation and while it is an 18 month deal regarding wages, it is a three year deal for the rest of the programme. That is realistic in the current uncertain environment.
We live in uncertain times and notwithstanding the Deputy's comments, the economy continues to perform very well. We are conscious of the pressure points and regarding the 87 indicators examined over the past year, we did better in 24, we were constant in 14 and we worsened in 29. The story is not as black as the Deputy paints it. There are difficulties but they are being tackled.
