Micheál Martin (Cork South Central, Fianna Fail)

The National Competitiveness Council's annual competitiveness report for 2005, benchmarks Ireland's competitiveness relative to our 15 main trading partners and competitors using a compendium of 170 indicators. The indicators contained in the report are published by a wide variety of international sources.

The NCC's annual competitiveness report is published separately this year while the council expects to publish its annual competitiveness challenge in late October. That document, which will draw on the analysis of the annual competitiveness report, will highlight the main challenges facing the economy and the policy options required to meet them. The NCC provides a valuable input to the formation of Government policies through its work on competitiveness benchmarking as it highlights where the economy is strong in competitiveness terms but also warns us about competitiveness issues. Upon publication of the competitiveness challenge the Government will give careful consideration to the policy recommendations proposed by the council.

The NCC highlights some important indicators of robust economic performance that show that we have broadly implemented the right mix of policies. In 2004, the number of people in employment in Ireland grew strongly with almost 1.9 million in employment by the end of the year. Consumer inflation stabilised and by mid-2005, Ireland's rate of inflation was below the eurozone average. Government finances remained healthy and our investment in infrastructure as a percentage of gross domestic product is approximately twice the EU average at 5%. Ireland remains highly competitive in terms of taxation with Ireland ranked first for both personal and corporation taxes.

The report also shows that Ireland has performed remarkably well in terms of growing national incomes. The indicators reflect that living standards in Ireland both in terms of GDP, where we are first out of 15, and gross national product, where we are sixth out of 16, have grown significantly.

However, despite these notable successes the NCC's annual competitiveness report highlights several areas where Ireland's performance can be improved. It should be noted that the council acknowledges that given the different economic, political and social goals of various countries and their different physical geographies and resources, it is not realistic or desirable for any country to seek to outperform other countries on all measures.

I have noted the NCC comments on competition policy and I reaffirm the Government's commitment to removing unwarranted constraints on competition in the economy. A lower level of competition here compared with competitor countries has been cited as a limiting factor in competitiveness. We need to do more to intensify competition in the provision of products and services.

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The information and communications technology sector is a vital component of the economy accounting for 82,100 jobs and 17% of total value added in industry and services. The Government recognises the importance of this sector and is undertaking significant investment in the roll-out of broadband through the metropolitan area networks and the schools broadband programme.

I draw some very strong conclusions from the report and in particular recognise its importance as an input which should inform the forthcoming partnership talks. In the context of concerns about the pace of growth in labour costs, wage moderation combined with a renewed emphasis on increased productivity levels will be critical in maintaining national competitiveness. This is at the core of the NCC message and I look forward to the council's specific policy recommendations in these areas when the council produces its competitiveness challenge report later in the year.

In the meantime our emphasis on competitiveness is having some impact. The latest competitive rankings compiled by the World Economic Forum, which were published today, show that Ireland has moved up four places from 30th to 26th out of 117 countries. The higher ranking suggests that we have turned an important corner in rebuilding national competitiveness.

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