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JOINT COMMITTEE ON ENTERPRISE, TRADE AND EMPLOYMENT díospóireacht -
Thursday, 17 Jul 2008

Economic Links: Discussion with Governor of State of Virginia.

We very much welcome Governor Tim Kaine and his delegation. I know he is straight off the aeroplane, so we shall be as easy on him as we possibly can. Governor Kaine is visiting this country to enhance the significant economic and cultural links between Ireland and the state of Virginia. He is particularly interested, I know, in the ICT sector, high-tech industry, education and development. As part of his visit he has requested this meeting with us today and we are honoured and delighted to facilitate him.

I know he has extensive links with this country, in particular, with County Longford. Indeed, the O'Kanes or Ó Catháins were an important family in our history. I suggest that he now addresses the meeting, after which we will have a question and answer and discussion session with him.

Governor Tim Kaine

I thank the Vice Chairman. It is a true delight to be with the committee this morning. What a warm feeling it is to come back home, to the place where my ancestors are from. We have had an opportunity to go to Longford and find the house where my great-grandfather was born. It is a treat to be here this morning.

I thank the committee for according us the courtesy of inviting us to attend. Mr. Patrick Gottschalk is the Secretary of Commerce and Trade for the Commonwealth of Virginia. I appoint a Cabinet of people with responsibilities similar to the Minister system here. Mr. Gottschalk oversees 13 state agencies that regulate, encourage and license business, and he does a superb job. We are here as part of a week-long visit to three countries that includes visits to Warsaw in Poland and to Dublin. We are happy to be in Ireland until Saturday.

I will say a few words about myself and Virginia and, finally, about what we hope to do while we are here. We would then like to talk with committee members about issues in which they are interested. I was in local government as a city councilman and mayor in Richmond, was elected Lieutenant Governor of Virginia in 2001 and have been Governor for two and a half years. I have just passed my 14th anniversary in elective office. Being Governor of Virginia is a wonderful honour. I am the 70th Governor. The Virginia governorship is unique in the United States in that one cannot run for re-election. The other unique feature is that governors are normally addressed as "The Honourable" whereas in Virginia it is "Your Excellency". They give you a nice title but they do not let you stay around — it is the Virginia way.

In the two and a half years I have governed in Virginia, Mr. Gottschalk and I have worked together and have been able to do some strong things. We have a very strong economy. Forbes magazine has named Virginia the most business-friendly state in America in the past two years. We have low unemployment and high median income, and very strong educational outcomes. Governing magazine, in a recent survey, which it undertakes every three years, named us the top performing state government in the United States. We take issues of performance management very seriously.

We also believe deeply that our path to success in Virginia has transformed it from an essentially rural state with a low per capita income and low educational attainment to a very high education state with high per capita income. There might be parallels between Virginia and Ireland in that regard. The transformation has happened in the past 35 to 40 years and has been achieved through a couple of simple strategies. First, as in Ireland, we have invested significantly in human capital development, which has been a significant path to economic success. There is a tradition in Virginia of valuing education from our founding father and most revered Virginian, Thomas Jefferson, who, when ambassador to Paris in the 1780s, wrote about the value of public education. Virginia did not take him up on it, however, and we did not really invest in education in any significant way until the last half century but both our primary and secondary systems, and the university system, have now become very strong and are some of the best in the United States, which has helped our economy improve.

The second aspect of the Virginia economy that is very strong and positions us well for the future is our global connections, which is why we are here. Virginia began, as I am sure members know, with a global trade expedition chartered by King James, that of the Virginia company that came to Jamestown island in 1607. We like to say that when we started, it was not about religious freedom or geographic exploration, but global trade. Globalism has been a part of who we are for 400 years now and we have powerful global connections and assets in Virginia that are somewhat unique.

Members of the committee may have flown into Dulles Airport in the DC area. That international airport in Virginia has 400 non-stop flights a week to foreign cities on every continent except Antarctica. We have the second most active port on the east coast of the United States at Hampton Roads, which will surpass New York harbour within my lifetime. Those two assets connect us to the globe. At a time in the United States when some hear of globalism and become nervous, and there are concerns about trade and whether we will lose jobs to other countries, our attitude in Virginia is that we want to be aggressively global and compete to win because we feel like we can do so. Whether it is the internationalising of our population, the number of foreign businesses that are choosing to invest in Virginia or export markets for our own businesses, we deeply believe in global connections.

We have wonderful ties of culture and history to Ireland. Scottish and Irish immigrants have been the basis of the settlement of Virginia. After the first wave of English settlers at Jamestown, it was virtually all Scottish and Irish settlers so we have deep cultural ties to Ireland. Our exports to Ireland have been increasing but the volume of exports is not huge so one of the things we hope to do while here is talk more about business opportunities, either inbound or outbound, and strengthen the bonds of friendship and economic commerce between our two nations. I will be speaking tomorrow to the Dublin Chamber of Commerce about opportunities in Virginia and I am also hoping to find opportunities here so we can spread the word to our businesses.

That is who we are and why we are here. The members of the committee are busy people and the fact they took the time to allow us to address them and experience their hospitality is greatly appreciated.

It is an honour and privilege to have the Governor here. It is not often we have such a great privilege and pleasure and we are certainly uplifted by his visit, particularly as he has roots in my constituency of Longford-Westmeath. I hope we will develop a friendly relationship and that the midlands of Ireland, which is known as the hidden Ireland, can be assisted by the Governor's position. A gentleman called Ó Catháin, who is one of the Governor's family tree, is the person presiding over the Athlone Institute of Technology, which is part of my constituency and has 6,500 third level students. As a Government, we are investing very heavily in the midlands area. It has been very uplifting to hear Governor Kaine address the committee. His figures were at his fingertips and he is completely in control of his brief. We were certainly very impressed.

Ireland has a small, open economy. We have relied on the United States of America as a close ally and business friend, and one we could turn to. We were always told the United States was the promised land and many of our generations owe much to what the Governor's people have done over many years.

I hope this is not just a once-off meeting between Governor Kaine and Mr. Patrick Gottschalk and the committee. I would like to think that, as we begin the work of this committee for the next four years of our term, we can have a working relationship on an ongoing basis, and that the Governor would visit us and we could visit him to discover opportunities and forge links. While the world is on a bit of a downturn at present, it is a great time for us to reassess our recent growth of approximately 7% per year in the past ten to 12 years. I note that Virginia also had substantial growth and that we have much in common.

I am grateful for the opportunity to contribute this morning. As Leader of the Seanad, I look forward to forging links between the Governor's state and our country. Something really meaningful can come from his visit. He is very welcome to our country and I look forward to having a close working relationship with him for many years.

I endorse the welcome given to the Governor and his delegation and wish him a successful visit. What does it take to become Forbes magazine’s most business friendly state? One of this committee’s briefs is to make this a more business friendly State. We have issues with red tape and I would welcome the Governor’s thoughts on this issue.

I note one of Governor Kaine's initiatives was to allow a credit report freeze for consumers, which would be particularly important at present. Has he considered extending this to small businesses? What is the current situation in Virginia and the US generally? One of the consequences of the credit crunch is that business capital is being severely restricted. The banks claim they are offering it but they are doing so under terms which are unmanageable.

Governor Kaine was one of the first supporters of Senator Obama. One of his policies would be to force US multinationals to repatriate their profits to the US, which would have severe implications for Ireland. What are the Governor's thoughts in this regard? Governor Kaine's name is being dropped in terms of the stakes - we will not ask him to comment. However, this is one policy of Senator Obama's which is causing some concern. I wish Governor Kaine a good trip and a successful year.

Governor Tim Kaine

I will try to address the issues in order. On our rating as the most business-friendly state, this was an initiative of Forbes.com. While it had previously ranked cities in metropolitan areas, it began to rank states in 2006. This involved an intense analysis of data in six or seven categories, including current economic conditions, future prospects, quality of life and regulation and taxes. The basis of the strength of Virginia’s business community has been a business-friendly regulatory and tax climate. I understand Ireland’s wonderful tax climate for business is one of the reasons for the country’s strong performance in the past ten to 15 years. Virginia has a solid business friendly tax policy compared to other states. We also have a regulatory environment that is friendly to business. We view ourselves as partners in facilitating the growth of opportunity. That has been a bipartisan tradition in Virginia

That is the basis of our success. However, what has taken Virginia substantially ahead is something of recent origin, namely, our significant investment in education. Fifty years ago, a smaller percentage of school age children in Virginia were attending school than in almost any other state. In addition, our higher education attainment rate was less than half the national average. Today, we have some of the best educational performance measures of any state and our higher education attainment rate is greater than the national average. That change has taken place only in the last two generations. The education system is the factor that has rocketed us to the front. We recently announced economic development deals with Polish and Scandinavian firms and with Rolls Royce in Britain. No deal is closed without a consideration of human capital and what we will do to train and retrain the workforce or educate the technicians we need to succeed. These are some of the reasons Virginia has moved from a low-income, agrarian, low-education economy. We have gone from 36th in the nation in terms of per capita income to fifth in 50 years. No other state has moved forward as much.

I was the first state-wide official outside Illinois to endorse Senator Obama's candidacy in February 2007. He and I got to know each other when he helped me campaign for governor. We struck up a good friendship when we realised our mothers were from the same tiny farm town, El Dorado in western Kansas. I am pleased to have worked with him and to see the success he has enjoyed thus far. We face a challenging time between now and election day but I have great optimism about his prospects.

Speaking broadly, Senator Obama is truly a globalist. Being the son of an immigrant father from Kenya and having lived in Indonesia as a young man, he looks at the world as a proud American citizen while understanding that, to be successful, we must be multilateral in our approach to diplomacy, in matters of military defence and in our management of the economy. I cannot comment specifically on the issue of the repatriation of profits from multinationals because it is not an aspect of policy on which I have worked closely with the Senator. I have a great deal of confidence that his basic attitude will be to strengthen bonds with our foreign allies. After a period in which I and many Americans believe the United States has shrunk from multilateral relationships, even with traditional allies, Senator Obama wants to engage with that because it will make our country safer and the world stronger.

We put a credit freeze in place this year not because of the credit crunch we are experiencing but because of the problems we were encountering with identity theft. As more and more information about consumers is transmitted electronically, persons with sophisticated technological skills can gain access to other people's personal information, including social security numbers and credit card details, and use that information to charge bills and use their identities. A credit freeze is one of several steps we have taken to prevent inappropriate uses of identity. A common scam, where a person has gained access to somebody's credit card and social security information, is not to use the credit card but to use the social security number to set up a new credit card account. Purchases can be charged to that account without the person's knowledge as all transactions would be administered to the identity thief's address.

However, credit card companies in the United States do not open up lines of credit without first running a credit check. Therefore, if one can freeze credit checks, one can stop people from misappropriating individuals' personal information and using that to do them harm financially. This was one aspect of a legislative package we passed this year. In addition, we have implemented measures in this year's legislative session to slow down mortgage foreclosures. We have sought to deal with the foreclosure crisis in the United States by providing more consumer protections which should serve to thwart the ability of commercial enterprises and banks to put people in default if they are slow at paying mortgages. We see this as a significant challenge.

Our per capita income growth has been similar to Ireland’s. Members referred to growth in the range of 7% for the past ten or 15 years. We have averaged 7.5% income growth in Virginia for the past 20 years, but we have just completed a fiscal year with revenue growth of some 1.3%. It is belt-tightening time and we expect that to continue during much of the 2009 fiscal year and perhaps into 2010. However, we are trying both to manage our own affairs and to provide tools for consumers so they can protect themselves against challenges such as the restricted credit market.

I welcome Governor Kaine on behalf of the Fine Gael Party. I have my own connection with Virginia. Some years ago, I lived in Alexandria while availing of the opportunity to work in Washington for several months. I have fond memories of my time living in Virginia and I continue to visit there from time to time.

Governor Kaine referred to education as an important factor in Virginia's economic transformation. I understand public education in the United States is of varying quality from city to city and state to state. Which specific measures does Governor Kaine consider to have been particularly successful?

To follow on from Deputy Calleary's question, Governor Kaine may not wish to speak on Senator Obama's policies but I am interested in his own view on the current legislative regime in the United States which permits multinationals to repatriate their profits. Is he satisfied with that regime or would he like to see a change?

Governor Tim Kaine

Our efforts to increase human capital through education began with investment. Fifty years ago, we did not allow women to attend our universities and African-Americans were obliged to attend segregated schools. We had to break down the barriers that were keeping people away from the table. It was a major step forward for Virginia, given our history, to make education truly equal.

We have made significant efforts to improve quality from a curricular perspective. Before the No Child Left Behind Act focused at a federal level on quality, Virginia adopted a Standards of Learning initiative, where, despite a history of local control of schools by counties and cities, we put a uniform curriculum in place as a base level. The objective was that no child, whether born in Alexandria, Richmond or rural Virginia, should endure an inferior quality of public education because of where he or she was born. We set out, therefore, to standardise the curriculum across the state in a significant way. This was a change for us and many others who have tended to leave curriculum matters to local governments.

Over time, once we had standardised the curriculum and established minimum expectations for primary and secondary level, we set out to improve standards to attain a higher quality of educational provision. Since becoming Governor, I have put across the message that achieving minimum standards is merely the first step and that base competence is not enough. To ensure we have a system that rewards excellence rather than merely encouraging competence, we have introduced incentives to encourage our school systems to go beyond the competence level. It should no longer be deemed adequate that 85% of pupils pass the competence test. Whether through advanced placements in high school, the international baccalaureate curriculum or having high school pupils jointly enrol in college courses, we have tried to push excellence measures.

In addition, under my administration, we have tried to revitalise career and technical education. We had let go of that in the United States as we sought to train everybody to go to college. However, there are many great technical places available, many of them going unfilled. We have done much to advance training for a career in technical opportunities in the school system.

Those are two things we have done on a curricular level that have helped us to improve. To give members some examples, I do not know whether there is an equivalent to the advanced placement test or whether it is used in Ireland. It is a nationally normed test to measure the excellence of high school students. Those who pass the test with a certain level receive college credit at virtually any college they wish to attend. It measures proficiency in college level work even when one is still in high school. Virginia now ranks third in the nation in the percentage of our students that take and pass these exams, which for a state that was so far back 50 years ago, is remarkable. As for other nationally normed tests, such as the scholastic aptitude test, SAT, which is the common college admission test, Virginia ranks near the top. Ultimately, this was about beginning by investing and breaking down barriers and thereafter putting in curricular requirements and continuing to elevate them. We wrestle with this every day.

While I do not hesitate to speak about the Senator's policies, it is simply that I know some of them in intimate detail, because I am involved, but know less of others. However, I certainly can provide my own views in this regard. I believe we need to do all we can to promote free trade among nations, both because it helps the economy and because such economic ties also build relationships. It is diplomacy by other means and one builds relationships that can be helpful. Among American politicians and in my party in particular, I am a little more on the free trade side than most.

However, as the saying goes, while I may be a free trader, I am not a sucker. We try to make sure, as we examine trade policies, that environmental and labour policies are considered and that intellectual property is respected. Moreover, in respect of tax policies, we want to make sure we do not unwittingly set up policies that, for example, encourage the offshoring of jobs. While we want to treat businesses fairly, we do not want to put in place policies that provide an incentive for businesses to avoid hiring Americans and going elsewhere. It is tough to find the right balance, particularly at a time when the dollar has been weakening, which has affected trade deficits, etc. However, I believe that more trade and greater commercial relationships are positive, both on the economic side and in terms of building up strengthened ties of friendships that can accomplish diplomatic ends.

Has either an education voucher system or performance pay for teachers been used in Virginia?

Governor Tim Kaine

No. Although we do not have a voucher system, Virginia has charter schools, which are independent schools that operate within the public framework but that often are free of some of the restrictions that would apply to the normal public schools. However, although we have set up that framework, we have not used it very much. The bull's-eye is quality in student outcomes. We have decided that our primary strategy to hit that bull's-eye is to escalate curricular requirements in the public schools. The voucher or charter school movement comes at it in a different way and advocates using competition to drive escalating outcomes. We have chosen to require all schools to try to meet increasing curricular requirements and have had some success in that regard. I cannot state it has been a complete success. As members might imagine, the fact we do well on average does not mean every part of the state does well. There tends to be disparities between regions depending on income and other factors. However, we have seen very significant escalation in averages and most regions have seen such escalation. We consider the performance, for example, of our new American, Latino or African-American students to try to close achievement gaps and have had some success there. However, there is much more work to do.

I also welcome the Governor and his Secretary of Commerce and Trade. I have one question relating to the mix of Virginia's exports to Ireland in 2006. The top four categories included plastics, chemicals and pharmaceuticals, which represent process-type industries. Does the export mix going in Ireland's direction reflect the strengths of those industries in Virginia? If so, why did that develop and will it continue?

Governor Tim Kaine

Interestingly, for 400 years and until recently, the primary export from Virginia was tobacco. This has not been the case only in recent years. Processed or manufactured goods and technology now have overtaken tobacco as our primary export. The only product that is somewhat equivalent to tobacco that we export in significant quantities is coal. We have coal reserves in the south-western part of Virginia. All the aforementioned industries are strong. The plastics industry is represented by a number of polymer and plastic production firms, some of which are foreign parent firms that have invested in Virginia and we tend to have strong business in this regard. On the chemicals and pharmaceuticals side, DuPont, for example, is a major employer in Virginia. Many of the same pharmaceutical companies that have found a good home in Ireland have a significant presence in Virginia. Those industries have been made to feel at home in Virginia by low taxes, business-friendly regulations and a belief we can make things happen quickly without tying up folks in red tape.

Another point I will make about our economy is that even in this tough time we are fortunate because it is pretty diverse. We used to lean so heavily on tobacco and some other agricultural products that Virginia's economy really suffered during tough times. However, we now have a highly diverse economy. While agriculture and forestry still is the number one industry overall, manufactured goods and some of the high technology manufacturing of processed goods have become a real staple of our economic success.

I have three or four questions for the Governor. A massive debate is taking place in respect of energy costs to business. What direction is Virginia taking in this regard? What will be its programme of activity during the next few years to try to address it? Second, I refer to the role of industry and business in education and its funding. This is an area that is not exploited sufficiently in Ireland. What are the Governor's thoughts on Virginia's experiences and future prospects in this regard? Following on from my colleague's questions regarding the Governor's experts here, what opportunities does he see for Irish businesses in his state? I acknowledge he intends to address the Dublin Chamber of Commerce and while I do not wish to hear his entire speech, he might provide a few ideas in this regard. Finally, what does Virginia do to encourage the growth of small business? Does it provide fiscal support, advice or tax breaks? What is its main tool to stimulate growth of new jobs in the small business sector?

Governor Tom Kaine

As I now am thinking about the last question, let me work backwards. As for small business, Mr. Patrick Gottschalk has an agency called the Department of Business Assistance that reports to him, whose charge is specifically new and small businesses. We have tried to do a number of things to help small businesses to be successful. One example, of which I am very proud and on which Mr. Gottschalk and another of my Cabinet Secretaries have worked hard, pertained to state procurement. The state buys goods and services all the time from private industry. When I became Governor the percentage of the state procurement budget, which amounts to billions of dollars per year, going to businesses that were small, minority-owned or owned by women was approximately 12%. At present, almost 40% of state procurement goes to small, women or minority-owned, businesses. The overwhelming proportion of it goes to small businesses.

There had not been an official policy of encouraging the state to use its purchasing power to help businesses succeed. We now have put that in place and it has worked out very well. Through his agency, the Department of Business Assistance, Mr. Gottschalk also operates a number of programmes offering technical advice, workforce training programmes and specialists who work with state government and can help small businesses. To return to a question I did not answer, while capital access for small businesses is tough, we also try to help in that way. However, we decided we should begin with that over which we have most control, namely, how we procure goods and services, which is sizeable, and that has been very helpful to a number of small businesses.

As for energy, when I was elected Governor in 2006, Virginia did not have an energy plan. During my campaign statewide for Governor in 2005, I can only remember one occasion on which a citizen asked what I intended to do in respect of energy. The world has changed dramatically since then. We now have crafted an energy plan for Virginia that tries to balance four goals. As these goals can be contradictory, finding the points of balance will be a challenge. The first is to have an energy supply that is reliable and of relatively low cost. In the United States, southern states such as Virginia have had relatively low costs when compared to others and maintaining this has been of huge value to consumers and businesses. We want to maintain this as best we can.

We must promote better conservation. When compared to some states and certainly compared to western Europe, Virginia has not promoted conservation. Low energy costs have hurt us in this regard and have enabled people to think they do not need to conserve. We must build in conservation promotion as the second goal.

Third, we want to ensure that the production of energy is ever cleaner. We are a coal state. A total of 48% of our energy in the non-transportation sector is coal and this is the national average. We are trying to push coal to ever cleaner standards and make that portion of the pie smaller. How do we do that? We expand other portions. We are at the front of the line when it comes to permitting the next nuclear reactor in the US. At an existing nuclear reactor site, we would add a third reactor as a greenhouse gas-free form of electricity. We are also looking at other research into alternative energy sources that we can use to bring down the coal portion of the pie.

The final goal we are trying to balance in Virginia is energy security and independence. We have become so reliant on energy from other counties, including countries that mean us ill, that we must through research and technology make better use of sources of energy in the US. This means that coal is a good thing but cleanliness means that we must work with coal.

These four goals are challenging but we have made an ambitious effort to conserve, reduce greenhouse gases, use our native sources better and maintain costs at least relative to other states in a favourable position. This is driving so much of state policy and it has been a night and day shift in the two years I have been in office. Those are two of the Deputy's questions. What were the other four?

I asked about the role of industry and business in education.

Governor Tim Kaine

There has been a great passion on behalf of industry to get involved but the state and the educational school boards have not always known how to get it involved in meaningful ways. Businesses can get frustrated by that.

We have some good forums in Virginia. We have an organisation called the Virginia Business Higher Education Council which was started 20 years ago. These are key business leaders in the state whose primary focus is to push quality expansions of our higher education systems and who see higher education as our greatest economic development asset. In my legislature this year, we pushed through a $2 billion bond package for capital improvements at our universities, largely supported and driven in partnership with the business community. At the higher education level, the business community has been very involved in promoting it and funding particular lines of research or curricular endeavours that it feels are most appropriate. Our community college system, which trains the workforce of Virginia, is run by boards that are heavily represented by the private sector.

On the K-12 side, as we look at the basic curriculum for our students up to the age of 18, the business community has had less involvement but is starting to become more involved with this increase in career and technical education about which we talked earlier. The business community has been heavily involved in that and has been very supportive of our efforts to take a curriculum that had been focused on competence measures and really push excellence measures. We used to feel that our competition was Maryland and North Carolina but we realise that this is no longer the case. It is Ireland, Singapore, India and China so we must push excellence measures that really use the yardstick of world standard rather than that of our surrounding states. The business community keeps our feet to the fire and does not let us get complacent as we wrestle with what those international standards should be.

I understand that the governor has a busy schedule so I ask members to be concise in their contributions.

I endorse the welcome given to the governor and his secretary and thank them for attending. There are many parallels between his state and country and our country. We wish him and his state every success. In respect of aviation, we have six international airports, five of which have huge capacity. As a State, nation, Government and Parliament, we are totally committed to joint ventures, partnerships and alliances and see much potential there to perhaps grow our aviation industry. We have a very strong industry, authority and aeronautics industry so there is great potential and we see that as an opportunity.

We have a growing plastics industry. Ironically, the plastics institute in Ireland is headed up by a man of the same surname - Kaine, Professor Ciarán Ó Catháin. That industry is growing here. We are very much in infancy with considerable capacity in that area. Perhaps there is opportunity for us to have some parallel research that we could go forward together with a lot of opportunities.

We salute Governor Kaine on the work he has done, particularly in credit information. We believe our national information commissioner might be interested in having some follow-up on that. It would be to the advantage of our consumers to ensure we can protect their private information and credit situation.

There are 250,000 jobs in this country which are very much dependent on US investment, of which we are very proud and for which we are very grateful, both in direct employment and in the sub-supply sector. The strength of our economy and the incentives we have are very much based on our tax situation, as the governor already alluded to.

We have sustained that and have received absolute legal guarantees from the EU that our corporation tax will remain at 12.5%. That is ad infinitum as we go forward together. The future for opportunities for international investment, particularly from the US, is very much mirrored in that and we would be very anxious that, as Senator Obama goes forward and we wish him every success, he will be mindful of the fact that there is huge opportunity here in a market of 500 million people in Europe to which Ireland is the gateway. We are confident in the long history of relationships from Jefferson, and I am interested to note that US politics are very like our own as all politics are local, and referring back to the great Tip O’Neill, we hope that together we can partner in many ventures in the future. We thank the governor for visiting our country.

Governor Tim Kaine

I thank Deputy Treacy. I think my secretary, Mr. Patrick Gottschalk, would love to follow up on some of those items, particularly some of the work we are doing in aviation where there might be some good natural partnerships we can strike in that area.

I welcome Governor Kaine to my country. He is the second governor from the US who has visited Ireland in recent weeks. I had the privilege of meeting Governor James Doyle of Wisconsin who I believe is a colleague of Governor Kaine but who was on the other side of the divide at that time in the US primaries so Governor Kaine won out. It is a bit like Irish politics in a way. We have personalities here as well. My colleague, Senator Terry Leyden, agrees with me.

I read in Governor Kaine's curriculum vitae that one of the areas he has zoomed in on is health. We in Ireland have a very serious crisis in health. It is the biggest spending Department in our country, followed by education which is still very low. We spend approximately €16 billion or €17 billion on health. Cancer has been one of the major issues here, as well as primary care. I see that the governor specialises in that as well. Given the time constraints, I will not elaborate on that.

Governor Kaine's country has been very complimentary to us and we, of course, have great connections with it. We are the sandwich in the meat at the present time in a world recession because we are a very open economy. We had a growth rate of between 6% and 7%, as the governor has been told. This rate has gone down 1.52%, like that in the US. Our concession was based on members of the EU and the single market with England on one side.

I have much to say to Governor Kaine. What has Virginia replaced tobacco growing with, given that this was one of its main crops? Some people from the governor's country visited here and spoke about the advantages and export value of soya bean across the world. They said that 30 million tonnes of soya bean was going to China. Has Virginia replaced it with growing soya or sorghum or whatever it is called? We have a keen interest because we import a considerable amount of soya from the US for both the food and animal feed industries.

Our economy is a victim of the governor's economy which is so huge and such a powerful force in the world. When does the governor see this being corrected so that we can go back to boom periods again and have low interest rates and low unemployment?

Governor Tim Kaine

I will deal with health, agricultural exports and the economic cycle. We are a leader in many areas, such as education and the economy, but not in health. The health of our population tends to be mid-range and in areas like infant mortality, we would be in 30th place out of the 50 states. Traditionally, southern states have some of the poorer health records. We decided that we need to push health care but before we do so, we really need to push health. Some of these behaviours, such as smoking, childhood obesity, exercise and nutrition, are areas we are really trying to promote. We are also working to expand access because the health system in the US is very different from that in Ireland. Almost 1 million of Virginia's 7 million people do not have health insurance because there are so many poor individuals, primarily low-income workers and their families. We have been trying to push new strategies to help those on low incomes to access health care while ensuring that we include incentives for healthy living.

Agriculture and forestry comprise the number one industry in Virginia, but not its number one export. That said, there is a good amount of agricultural exports through the port of Hampton Roads. Tobacco, an industry in the south of the state, has been in significant decline. However, we did something that proved smart. Ten years ago, a set of law suits taken against tobacco companies in the United States led to a sizeable annual settlement paid by the companies to states. While most states took the money and invested it in their budgets generally, we reserved half of the income stream to re-invest in our tobacco growing communities. For example, we built broadband access and invested in higher education centres throughout rural Virginia. We have used the settlement money to try to transform the tobacco growing regions to give them a different economic future.

Regarding the turnaround, I have been receiving e-mails about what the numbers and revenues look like at the close of our fiscal year, 30 June, while I have been in Europe in recent days. It is a time for tightening belts. This year, revenue growth has been approximately one quarter of the norm and we are not predicting that the 2009 fiscal year will be much better. Regarding our 2010 fiscal year, our assumption is that we should keep revenue projections low and, if there is a surprise, to hope that it will be a pleasant one. Our different industrial sectors are telling us to tighten the belt during the 2008 and 2009 calendar years, which is the basis for our forecast on spending decisions.

I join my colleagues in extending a céad míle fáilte to Governor Tim Kaine, Mr. Gottschalk and the delegation. This exchange has been interesting and energising. The Governor speaks with confidence about what has been achieved in the United States and, in particular, Virginia. I congratulate him and wish him continued success.

The Governor referred to allies of the US. Many of my colleagues can recall the infamous 9 September 2001 events. The news broke in Ireland at lunchtime when we were in Leinster House. The transatlantic telephone communication systems were choked by people desperate to make contact with relatives and friends. Ireland was the only European country to hold a day of mourning to express our solidarity with the US. Ireland has long and treasured links with the US and Virginia.

The great thing about the Irish is that, as a small island nation on the periphery of Europe, we have a great determination and we are well educated, as proven in the past ten years by our economic success. Given the Governor's comments, there are considerable opportunities to forge links and to have joint ventures so that we can share our knowledge and information. This will be the test of the Governor's visit. I look forward to working with him, his colleague and his delegation. While we are entering challenging times, the good aspect of Ireland is that we are solid, strong and well-braced for an economic downturn. We are looking forward to the challenge and are confident that we can work with people such as the Governor and derive something positive.

Governor Tim Kaine

I thank the Senator, who probably views the matter as we do. We make people happy when times are good, but we earn our pay when times are tough. Sometimes, challenging economic times give an impetus to change in ways that would be difficult were times rolling along well. My poor Cabinet Secretary, Mr. Gottschalk, is doing his third round of budget cuts in the past year. However, as revenues slow, the need for budget cuts makes us more creative. We have come up with some ideas that we would not otherwise have devised. They can position one for success when the economy starts to turn around.

Governor Tim Kaine

Today's visit was designed to begin the dialogue on partnership, which will continue beyond today.

I join my colleagues in welcoming the Governor to Ireland. I am delighted that he visited County Longford. It is wonderful that he found his grandfather's house. What part of the county was it in?

Governor Tim Kaine

Killashee parish, south of Longford town.

Wonderful. Given that it is close to Lanesborough in County Roscommon, we are neighbours. It is good to see his success and that of his wife, Anne, and the Holton family. His father-in-law was Governor before him.

Governor Tim Kaine

Yes.

I visited Richmond, Virginia, which is a wonderful and vibrant city with many Irish connections. I wish the Governor and the Secretary of Commerce and Trade well in their tour. With a name like Patrick, Mr. Gottschalk must have some Irish in him.

Mr. Patrick Gottschalk

Half.

I wish Mr. Gottschalk every success as well. I hope that Senator Obama considers the Governor as his running mate during the election, as the latter would do good work were he to run for the vice-presidency.

Governor Tim Kaine

I thank Senator Leyden.

I thank members for their contributions. The social and economic parallels between Virginia and Ireland are striking. There are opportunities for dialogue on how to advance during stringent times. For many years, I had the pleasure of being taught Irish in a Dublin school by Mr. Ó Cahán. He has kept in touch with me over the years. This is my claim to a connection.

While the committee wishes both presidential candidates the best of luck in the forthcoming election, I am sure that Senator Obama will perform admirably.

I would like to introduce the Chairman of the committee, Deputy Penrose, who has joined us.

I apologise for being late, but I had made an appointment a number of months ago and could not reschedule. Deputy Cyprian Brady was a fine and able Chair in my stead. I join my colleagues in welcoming the Governor and, given that he has other appointments, I thank him for taking the time to visit the committee. We have been delighted to host him. My erudite colleagues are sharp and have questioned the Governor closely on various important points. It is also important that we continue to foster links.

Governor Tim Kaine

I thank the Chairman for his graciousness in allowing me to address the committee. It has been a good start to my visit.

I wish the Governor and his delegation the best of luck on their visit. We look forward to meeting them again.

The joint committee went into private session at 11.15 a.m. and resumed in public session at 11.20 a.m.

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