Richard Bruton
Ceist:1 Mr. R. Bruton asked the Minister for Finance his views on the slide in Ireland's competitive ranking; and the implications for the Government's strategic management objectives. [25995/03]
Ceisteanna – Questions. Priority Questions. - Economic Competitiveness.
Many factors have an impact on competitiveness in the economy. Those include fiscal policy, income developments, competition and regulatory frameworks, infrastructure and labour market policies. There is also the overriding consideration that we are a small, open economy which is highly integrated into the global economy through our strong trade and investment links. Therefore, economic conditions in Ireland are largely determined by our ability to supply goods and services to our major trading partners.
I would naturally be concerned at any slippage in our competitive position. That is why we have consistently been pursuing policies designed to strengthen the economy's competitiveness and thereby its capacity to resume trend growth in more favourable international conditions. Those policies include: the effective management and control of growth in public spending so that it does not add to inflationary pressure; increasing competition in certain sectors of our economy; and continuing to build on the work of the anti-inflation group, which has targeted sources of domestic inflationary pressure. As an economy, we also need to ensure that we limit wage increases to those set out in Sustaining Progress if we are to be in a position to compete in global markets.
I am confident that those policies are appropriate to sustain non-inflationary economic growth, high levels of employment and conditions in which investment and enterprise can flourish, thereby supporting our competitiveness.
Has the Minister examined his own conscience under the headings which he enunciates as key to Irish competitiveness? Let us take the control of public spending growth. Since 2000, has public spending not grown by over 50%, three times the rate of growth in the Minister's tax base? He advocates an anti-inflation policy. In the past 12 months, has almost 90% of the inflation that we have experienced not come directly from the Government sector, not exclusively from him in indirect taxes, but also from the various State agencies which have secured massive increases in their charges, far ahead of those that apply in the private sector, where price squeezes are experienced?
Does the Minister not agree that in technology availability we now rank 38th and are behind every single new entrant to the EU? Is that not undermining our capacity to continue to attract important strategic investment to Ireland? Is it not the case that Government policy on broadband, insurance, inflation and waste management is the key to securing long-term competitiveness? In all those areas, we have been found seriously wanting.
The specific question concerned the slide in Ireland's competitive ranking. I assume the Deputy was referring to the document recently issued by the World Economic Forum. It is not too clear how that analysis was arrived at, and I can go into that in some detail if the Deputy likes. Regarding the matters he raised in his supplementary question, the main purpose of the national development plan is to ensure that we maintain and improve our competitive position – that was commented on last week by the Economic and Social Research Institute, ESRI.
The reason that we are spending so much on infrastructure in the areas of which the Deputy speaks is to ensure that we maintain our competitive position. I certainly agree that we increased public spending by fairly substantial amounts in the years between 1997 and 2002. That was possible owing to the success of the economy and the enormous resources at our disposal. We used them to good effect. In the past two years, we have brought current and capital spending to a sustainable level, in line with the new economic situation. In 2001, the growth in public and capital spending was in the order of 22% over the previous year. In 2002, that was down to 14%, and this year the growth is 7%. That is in line with the new economic reality.
Does the Minister not agree that, while he might put a spin on the experience of the past two or three years, that is very different from the view of the majority of the public, this objective assessment shows that our competitiveness has slid from fourth in the world to 30th, and is falling rapidly? Many of the areas of weakness concern confidence in public institutions and the ability to use money to good effect. I do not wish to encroach on Deputy Burton's next question, but does the evidence not suggest that poor cost control, project selection and management and vast overruns are the litany of our experience? We are now the third highest spenders on health in the European Union and we must have one of the worst public services for those who need care. How can the Minister say that we are getting it right?
The competitiveness index about which the Deputy speaks is produced by the World Economic Forum. In its analysis, we have moved from 23rd to 30th on the growth competitiveness index, but on the business competitiveness index we have moved from 20th to 21st. That seems to be based on the replies and perceptions of those interviewed. I will make a few points. If the survey applied to all other countries, I suppose we could judge that people thought that. However, we are not aware of the detailed analysis regarding the Irish situation. On the website, only five countries' reports have hitherto been published, namely, Finland, the USA, Sweden, Denmark and Taiwan.
As the Deputy says, the report takes into account several issues, and I will quote only some. The perception of Government waste deteriorated drastically, marked with lower scores for public trust in politicians. Ireland was ranked 57 there. For the extent of distorting Government subsidies, Ireland was ranked 32. The quality of public institutions was the worst across the board, with the most notable declines evident in the assessment in the independence of the Judiciary and favouritism in the decisions of Government officials. For the former, we were ranked 26 and for the latter 40. I leave it open to Deputy Bruton whether he would think the same about those two categories of public perception. I do not think he would, and neither would I. This type of survey is based on replies and people's perceptions. In the Irish context, it is carried out on behalf of the World Economic Forum by the economics department of UCC. While I do not wish to understate or overstate matters, people should treat it with a certain degree of caution, which is why I have given those two examples.