Mr. Fergal O'Brien:

On the overall measurement of competitiveness of the economy and how Ireland compares with other high income and high cost economies, when doing international comparisons it is crucial to compare Ireland to countries we are competing with on a day-to-day basis. Our most significant competitor for a range of business activity is the UK. We must be pragmatic when we look at comparisons, whether with respect to inward investment, small businesses trying to sell into the UK market as the first port of call for exports, or imports coming into the country, the majority of which will be coming from the UK. Prior to the crisis, the cost of doing business in Ireland got out of kilter, particularly with the UK and a number of other countries. We need to keep the UK strongly in focus in terms of competitiveness arguments. Comparing ourselves to Nordic countries, which have completely different social models, is not a relevant comparison in terms of its impact on business.

The impact of competitiveness on jobs was somewhat lost in the run-up to the crisis years because so much happened at one time. We had banking and construction crises, an exchange range crisis that added to the competitiveness crisis and, in the run-up to 2007, we were adding jobs in construction but losing jobs in manufacturing. One of the reasons we lost all of the manufacturing jobs between 2001 and 2007 was because our cost base was out of line against the UK. We cannot forget that.

In terms of the comments we have not made, when the crisis hit and the decision was made to reduce the minimum wage in 2008, IBEC did not support the reduction. We felt the minimum wage was an important component of the cost of doing business and competitiveness but we did not support its reduction. We need a competitive minimum wage.

In terms of the concept of a living wage, public expenditure, housing and education in particular, from the business perspective we want to see high-quality jobs in the economy. We want to see more ambitious investment in education and skills development to help people to upskill and gain higher quality employment after entering the workforce. The argument about the living wage is that it is crucial business is not asked to compensate for the high costs emerging in our economy, including housing, rent and health care. That will lead to a spiral of loss of competitiveness and jobs and it will damage economic recovery.

It is the Government's responsibility to make sure it has the proper policy to deliver affordable housing and the supply of housing the economy needs. In terms of how that will be funded, the Senator is correct that we do not favour higher tax rates but we do favour more tax revenue. We can have more tax revenue by supporting activity through a competitive cost base but not by having higher tax rates. This is one of the things we saw in the 1990s and early 2000s. We like to put a lot of it down to a property bubble but there was a solid economy that grew strongly on the back of competitive tax rates. We can do so again in terms of growing a revenue base without higher tax rates. Crucially, the Government must lead policy in terms of investment in housing.

The private sector will support it and there are lots of options for it to support investment in housing. There is a lot of money available in the markets. Workers are looking for jobs and those with money are looking for investment vehicles, but Government policy must lead, as we cannot expect business to bear the cost of policy failures in the housing sector that will cost further jobs in the economy.