Matt Shanahan (Waterford, Independent)
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I welcome our guests this morning. I congratulate Mr. Hughes on his appointment. As has been said, I think he and the very strong team around him will manage to give good leadership in the area. I will go through some notes I made and I might ask the witnesses to reflect on a few points at the end.

Mr. Hughes has touched on the macro picture. Employment is at full capacity and our exports are buoyant. The FDI sector is racing away and the enterprise sector is resilient. We have diseconomies countrywide, with challenges including housing, inflation and the difficulties in trade skilling and the cost of living.

I want to first address the GDP-FDI sector versus our own. GDP is now almost double GNI in the economy. Foreign direct investment is twice what is being done in the domestic economy. Much of the intellectual property, IP, registered in Ireland is driving FDI. We have invoice discounting and third-party manufacturing all appearing in FDI and inflating it beyond what is being developed at core. It is fair to say the employment being generated is not the same as it would be if that money were being developed in the domestic economy. There is also the Silicon Valley syndrome, which I am sure Mr. Hughes is aware of, where there is a concentration of large employers which raises the boats for a number of people but also inflicts significant costs. It causes a brain drain from the regions into the centres. We see that happening, in particular in Dublin. Frank McDonald wrote an article in the The Irish Timesabout ten days ago - I am sure Mr. Hughes saw it - where he was talking about the need to look at the national planning framework because we are not levelling up, the regions are falling way behind and Dublin is marching ahead.

We need to look at how we support the SME sector. It appears to me we need to be adventurous with tax laws, which will have to be looked at to try to support indigenous operators. What is happening with most of the them is sale not scale. It is easier and better for a promoter to take the money off the table and sell the business, and the main buyers are international. The result is that all the future development of revenues and IP is invested offshore, or it might be here but profits generated are going offshore. Mr. Hughes might say this a matter for the Department of Finance, but I think his Department must take a leadership role in applying pressure for favourable tax policies for management buyouts and executive purchase of companies going forward. This obviously applies to the IT sector in the main, which is the fastest growing sector, but it also applies across the board. It is the ability of people working in companies to try to generate and scale those places. They must have ownership and it must make financial sense for them to do that. Being an entrepreneur is difficult. It is years of 90-hour weeks. If a favourable tax policy is not there, why bother?

In touching on the national planning framework, I again ask Mr. Hughes to look at what Frank McDonald said in his article. He had statistics that really show how Dublin is racing away. Our tax and general strategic development policies do not reflect what is in the programme for Government. My own area of Waterford, which is the economic driver of the south east, is a laugh, to be quite frank, when you look at what is happening with State investment in Waterford as a driver of FDI.

We have spoken in this committee a number of times about what I see as the general challenges. I am concerned about two main areas. The first is the general balloon of climate action and the speed at which we are developing wind, solar, regenerative and the rest. We have not yet developed the maritime area regulatory authority, MARA, after three and a half years of this Government. I know Mr. Hughes has spoken about the White Paper, but how can we drive that situation forward? The second area, which Ms Carberry has spoken about, is artificial intelligence. It will be one of the biggest challenges across the world in terms of the displacement of jobs. We are not different from anybody else.

I will come back to climate action and the construction sector. Another area that needs real concentration is finance activity in the construction sector. Only the big players, obviously, can make it work. Smaller builders and others cannot access finance. So much development could happen in the country, but we do not have a financial model to allow developers get ahead and execute their plans. The pillar banks, unfortunately, are not a source of finance worth talking about anymore.