Dáil debates

Tuesday, 19 April 2005

3:00 pm

Photo of Bertie AhernBertie Ahern (Taoiseach; Dublin Central, Fianna Fail)

On the first issue, research and development, I will make three comments. First, because we did not have the resources, effectively until 1998, research and development only had a small budget. Now the budget is several hundred million euro, but probably the budget will never be sufficient. Hopefully, what we have done in Science Foundation Ireland and in the PRTLI programmes will allow people to compete for research projects in the universities and will make the universities set out their case for researchers. This allows them to bring in top class people, Irish and non-Irish, to our universities and to build up a proper research and development base.

We have also had to make the amendment I raised here previously. With our low corporation tax there was a disincentive where people could not write off tax because they were doing so already. The former Minister for Finance, Mr. McCreevy, made changes in the Finance Bill a few years ago to allow this change and it has got us back into a positive position. We spend a sizeable proportion of the budget on research and development. That is not to say that there are not always demands for new projects.

Deputy Kenny's second point is correct, at a European level our figures compared to other parts of the world, not just the United States, are not high. That is why the Commission proposal to seek 1.27% in the financial prospectus shows a significant increase, approximately 2.5 times the increase in the budget. Mr. Prodi, President of the outgoing Commission, felt strongly about that. The Commission believed from its examination that one of the reasons Europe was not reaching the kind of vision set out in the Lisbon target was that is it was not innovative or creative enough and not enough product development was taking place in Europe generally, thereby giving competitive advantage to India in information and communications technology and Asia in other products. I support that.

The Deputy is correct that the US is astronomically ahead of Europe in terms of the contracts available in Europe for quality researchers and research studies and projects. Ireland has stolen the march a little, although we are not the only country, in terms of attracting people back. A good study conducted last year, which was reproduced in The Economist or The Financial Times, demonstrates starkly that Europe is not in the ball park on these issues.

That relates to the Deputy's question on the Lisbon Agenda. If one sets down the criteria by which one wants Europe to be competitive, dynamic and reach certain targets by 2010, when it comes to implementation of policies, these need to be followed. It is one thing to write them into the Lisbon Agenda, they must then be followed. Without mentioning individual companies or products, we have had quite a few battles with the Commission and the system in the recent past regarding the inconsistencies of the policies. This is what I mean by a Lisbon-friendly policy. If one says that is the policy, one should not then work against it when it comes to dealing with companies based in Europe in a way that makes them less competitive in terms of investments in Asia, India or China. That is what they do at times.

While we are all aware of the case of one company, I do not want to mention it. If a large company wants to spend an enormous amount on developing a product, it is hardly likely that it would develop the product because it is not innovative, new or will not control the new market. A company will hardly create, for example, the microphone in front of me and spend billions on it to make sure the microphone is inferior to that which is currently available. I have never seen a person who tried to do that. Unfortunately, the way the criteria work, that is almost what the Commission says. If one cannot prove authoritatively that the product is innovative, the Commission says one cannot prove and, therefore, state aids cannot be used. I disagree with this and that I why I have raised it. The Commission argues these issues forever but I do not think it is helpful.

The result is that we rarely come up against a European competitor for most of the major projects being chased by us in the biopharma and pharmaceutical sectors. We have competed against India, Singapore and elsewhere for the past five or six projects in which I have had an involvement. That is also happening to other European countries. Europe's objective should be to take on outside competition rather than trip itself up internally. Some countries still do not understand that argument.

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