I thank the Cathaoirleach and the committee for the opportunity to discuss the White Paper on enterprise.
By way of background, in March of last year, the Government approved a proposal by the Department and the Minister for Enterprise, Trade and Employment to undertake a review of enterprise policy, and this culminated in the publication of the White Paper in December of last year.
The context for the review was one where the enterprise sector and the wider economy was performing well, having recovered strongly from the Covid-19 pandemic. By way of example, the Government’s economic recovery plan, published in mid-2021, set a target to exceed pre-crisis employment levels by having 2.5 million people in work by 2024. In the event, this target was met in the fourth quarter of 2021, three years ahead of schedule.
While the economic backdrop to the decision to review enterprise policy was a positive one, the Department was cognisant of a number of external risks and domestic vulnerabilities that needed to be considered. These included geopolitical developments and a degree of fragmentation in globalisation which might present risks to the open, export-oriented economic model of small, advanced economies like Ireland; a sense that changes in technology and business models could be disruptive, particularly those arising from digitalisation and the net-zero transition, both of which presented opportunities but which could entail significant adjustment costs; and finally, the need to address lagging productivity levels in parts of the indigenous sector of the economy, allied with concerns around concentration risks in the multinational sector.
Against this backdrop, the review facilitated a timely assessment of our approach to industrial or enterprise policy. It enabled consideration of the fundamental changes under way across multiple dimensions – economic, geopolitical and environmental - with the clear objective of ensuring that our enterprise sector was appropriately positioned to tackle the challenges and avail of future opportunities.
The development of the White Paper was an open process, informed by external stakeholder perspectives, and by international best practice. This collaborative approach was supported through a series of key engagements during the consultation process. I will mention a few of these, including: bilateral meetings with various stakeholders, including the engagement of various standing groups such as the Labour Employer Economic Forum, LEEF, the Enterprise Forum and the SME task force; discussions and debate at the national economic dialogue, as well as a dedicated national symposium held in October of last year, where domestic and international experts and stakeholders exchanged views on enterprise challenges; an open public consultation process, which generated more than 120 submissions from a range of individuals and organisations; a review of enterprise or industrial policy direction and thinking in other small advanced economies, commissioned by the Department; and an international advisory panel which we convened, made up of a number of international experts, established to ensure that fresh thinking and international perspectives on policy direction and priorities was brought to bear. We also engaged with our counterparts in the Small Advanced Economies Initiative. This is a network of senior officials from countries with a similar economic profile to Ireland, including Singapore, New Zealand and Finland.
The White Paper represents the outcome of this deliberative process. It sets out the Government’s medium- to long-term ambitions for a vibrant, resilient, regionally balanced and sustainable economy made up of a diversified mix of leading global companies, internationally competitive Irish enterprises and thriving local businesses. Its vision is to ensure that Irish-based enterprise succeeds through competitive advantage founded on sustainability, innovation and productivity, delivering rewarding jobs and livelihoods. To deliver on this vision, the Government agreed on seven priority enterprise policy objectives set out in the White Paper, and I will run through these very briefly.
The first priority is integrating decarbonisation and net-zero commitments. The White Paper argues that decarbonisation should not be seen as a threat to our competitiveness; rather, it highlights the risk in not acting quickly to embed it in our enterprise policy. Policy will be oriented to help existing firms meet the costs of decarbonisation and position them to exploit the opportunities of a low-carbon economy. Offshore wind is called out as a major future industrial development opportunity, and investments will be made to facilitate the green transition and support emerging sectors.
The second priority is to place digital transformation at the heart of enterprise policy. The White Paper reaffirms the Government’s commitment to the Dgital Ireland Framework strategy, and we will take action to sustain Ireland’s attractiveness as a location of choice for cutting edge global technology businesses, as well as driving a step change in digital adoption across enterprise and nurturing digital start-ups. Digitalisation can be a key enabler of productivity growth and the decoupling of economic growth from resource consumption.
The third priority is advancing Ireland’s foreign direct investment, FDI, and trade value proposition. The White Paper affirms the Government’s view that FDI will remain critical to our economic model and economic strategy. However, the approach to FDI attraction will need to evolve to reflect net-zero objectives and have regard to the carrying capacity of economy. Greater domestic value capture will also be achieved through stronger linkages and spillovers between multinationals and domestic firms.
The fourth priority is to strengthen the Irish-owned exporting sector. The White Paper calls out the need to enable the Irish-owned exporting sector to fulfil its potential and to build a strong domestic growth engine of Irish companies of scale. Policy action will seek to increase the number of exporters, particularly from the existing large cohort of non-exporting small and medium enterprises.
The fifth priority is to enable locally traded sectors to thrive. The enhanced focus enterprise policy has had in recent years on the locally traded sectors is reflected in the White Paper. This includes the expansion of the role of the local enterprise offices, LEOs, enabling them to broaden the cohort of firms to which they can provide training, consultancy and mentoring services. The LEOs will continue to enhance their advisory services for locally trading firms to improve productivity, particularly around digitalisation and the reduction of energy use and carbon emissions.
The sixth priority is to step up enterprise innovation. The White Paper recognises that for an advanced economy like Ireland, innovation is the best way to generate sustainable, long-term productivity growth. In line with the ambition set out in the Government’s research and development strategy, Impact 2030, Government will consolidate and build on the progress that has been made, and redouble efforts to broaden and deepen innovation capability across the enterprise sector, in particular the innovation performance of our small and medium enterprises.
The seventh priority is to build on our strengths and opportunities. This includes the introduction of a centrally co-ordinated, cross-government approach to driving firm productivity through clustering, accelerating our decarbonisation objectives, and enhancing the overall capacity of firms and sectors to respond to new opportunities and challenges.
In addition to these seven policy priority areas, the White Paper highlights the importance of key competitive framework conditions that impact enterprise. A key consideration here is the carrying capacity of the State and the economy more generally. This concept covers not just the adequacy of physical infrastructure such as transport, housing and energy, but also essential social services and an efficient and responsive system of regulation. These framework conditions are the focus of other Government strategies and initiatives such as the national development plan.
Finally, a set of 15 targets are included in the White Paper. These capture ambitions of maintaining full employment, and each of the seven priority enterprise policy objectives which I have gone through. These will form the basis for how progress on the White Paper is measured between now and 2030.
Regarding implementation, as set out in the White Paper, the Department is leading the development of consecutive two-year implementation plans of cross-government activity to enable the commitments set out in the White Paper. The first implementation plan, covering the period to the end of 2024, is currently under development by the Department. This is expected to be finalised by the end of March and will be published shortly thereafter.
Progress will be reported on then every six months to the Cabinet committee on economic recovery and investment, with the first progress report being prepared by the Department in quarter 3 of this year. These biannual reports will include updates on progress towards the 15 targets that I have mentioned, with new data under each of the measures included as it becomes available from the relevant sources.
Close monitoring of performance and target delivery will enable a dynamic approach to the implementation of the White Paper, having regard to external developments as they unfold over the lifetime of the White Paper.
My colleagues and I look forward to assisting the committee with its deliberations.
