Dan Neville (Limerick West, Fine Gael)

I welcome the opportunity to speak on the Lisbon national reform programme for Ireland. At the spring European Council meeting last March, EU Heads of Government agreed to refocus the Lisbon strategy on jobs and growth. A central part of the new approach to achieving the Lisbon goals is the preparation of a national reform programme by each member state.

The reality today for the Irish economy is that, having emerged from the Celtic tiger period, the economy has lost cost-competitiveness. The infrastructure, both physical and information technology-related, is clearly inadequate for a modern, developed economy. The whole globalisation process is breathing down our necks as never before. Ireland has gone from fourth in 2000 to 30th in the World Economic Forum global competitiveness report, due mainly to the Government's failure to control prices. The National Competitiveness Council said Irish prices increased 22% more than those in other EU countries in 1999-2003. Economic consultants, Compecon, state that the lack of competition in the banking sector is costing small businesses €500 million per annum. The National Competitiveness Council said in its 2004 annual report that the need to recover cost-competitiveness was crucial to the country's medium-term economic future.

Clearly, the challenge facing the economy in the medium term includes this loss of competitiveness, suffered over the past five years, increased competition from China, India and the EU accession states on both product markets and mobile investments, exchange rate uncertainty due to our unique dependence on the level of sterling and the dollar and the pressures on margins and growth potential in the indigenous components of the economy. These challenges are immense. How we cope with them will determine the country's ability to achieve the economic potential GDP growth rates of 5%. To achieve such growth rates, maintain high levels of employment and continue to generate wealth and prosperity, policy must ensure that Ireland remains a significant recipient of the FDI clause and that a sustainable indigenous economy is fostered alongside the multinational economy. For the indigenous components of the economy, particularly those of the SME sector, the problem is that while they are good at what they do, they lack the skills and resources to find new markets and innovate products. This is the only way they will be able to grow in an environment where their margins are typically under pressure from rising input costs and limited pricing policies. Hence, the emphasis on the marketing capability is to be welcomed, even though one might dread a country where marketing types gain even more influence.

This is where thinking big really comes into its own. Rather then seeing the State as some big player that should try desperately to get out of the way, we should look at the State as a facilitator of business, a tool at the disposal of Irish entrepreneurs and risk-takers. Thinking big means addressing the situation where only 4% of the State's funding for research and development is allocated to the food industry, yet more than 50% of our exports are food and drink. A plus for this State always was its expertise and development of the food industry, its image abroad and the marketing carried out over the years by brands such as Kerrygold, Bord Bainne and Bord Bia. Marvellous work was done in this area, but the failure to invest in research and development, and the consequential failure of higher value products, is a lost opportunity. As someone who worked in the food industry for 23 years, and who was keenly aware of the opportunities in product development, the bulk sale of much of our food products on the export market rather than developing new added-value products is an incalculable loss to the country. I was involved in taking these opportunities. However, there appears to be a rolling back to commodity-type exporting of the food business. Just 4% of State funding for research and development is one of the consequences of this because private industry has a specific role to play in this area. I question whether some of the bigger players in the food industry are taking the easy buck and exporting in bulk rather investing in added-value products which could be sold on the shelves of international food markets.

Thinking big means actively assisting Irish businesses in getting into new markets. The Taoiseach's recent trade mission to China was a breath of fresh air. Something should be done to continue with this in the future. I have no hesitation in saying so, because it was a progressive approach in examining new markets in the Far East. This is the type of investment in which we should be involved.

The recent review of the Lisbon strategy progress, which culminated in the Kok report, was timely. There has been growing concern at the slow rate of progress in moving towards the Lisbon targets. For example, a Centre for European Reform report published in March 2004 concluded that four years into the Lisbon reform agenda, it had become clear the EU stood little chance of achieving its overall goals and went on to warn that rather than catching the US, the EU economy was slipping further behind on indicators such as GDP per head.

The IMD World Competitiveness Yearbook 2005 highlights that Ireland has fallen from seventh in 2001 to 12th this year. Ireland was ranked 54th for Internet costs, 53rd for mobile telephone costs and 52nd for cost of living. That exposes a serious competitiveness problem in the economy, which, if not addressed, will result in a downturn in the number of opportunities for everybody. It must be ensured our competitiveness is restored.

Ireland came 14th out of 15 countries in a broadband survey by the European Competitive Telecommunications Association. Ireland has only 63,610 broadband telephone lines, while Denmark, a smaller state, has 839,170 lines. If Ireland is to remain competitive, keep its markets open and ensure communications are at the forefront of technology, broadband must be available throughout the State. A programme should be introduced to ensure broadband is available at a cost that permits business to compete with our European partners and third countries. It is a disgrace that Ireland should finish second last in a survey of 15 countries.

Broadband is not available in the town where my office is based and its roll-out in County Limerick only began recently. My area is no different from many other rural and semi-rural areas. Broadband is vital to communications systems so that businesses can access markets and keep in touch with customers. The frustration experienced by business people is often expressed to public representatives and we are usually asked what can be done about it. The Government should accelerate its broadband programme and increase incentives to ensure it is expanded in line with its competitors. It should look to Denmark as an example of how to do so. However, if broadband availability does not increase, our competitiveness will slip resulting in a loss of jobs, growth and wealth.

The EPP document, Growth, Prosperity and Jobs in Europe, adopted on 4 March, highlights a number of broad challenges facing EU member states, including the ageing of European societies, unemployment and the need to create a more family friendly environment. However, the document also clearly warns that reform is necessary to ensure the Lisbon strategy is progressed and that Europe will only be fit for the future through bold reforms.

Ireland must recognise the importance of higher education and training. Our recent successes have in no small part been driven by a skilled and educated workforce. I have witnessed the effect of the University of Limerick in creating opportunities not only for people in the mid-west but throughout the State through the ICT programmes it has provided. The university is an example of how education creates the higher value skills and dynamic Ireland must have to maintain its competitiveness. Other member states and third countries will undercut Ireland in sectors where lesser skills are required and it must be ensured everybody has an opportunity to access education in Ireland so that positions created in the future can be filled.

However, our school completion rate at 82% is of considerable concern as it is not improving. In addition, the recent OECD report on higher education policy in Ireland indicated research and development spending and support lags behind international norms, which must be of concern for future economic development. The EPP document stressed the need to improve education and training along with the priority given to research and development.

Deputy McManus referred to our tax regime, which has improved competitiveness. The Government continues to favour a low tax regime to ensure Ireland is competitive because we are losing jobs to low wage economies. When Deputy Bruton was Minister for Enterprise and Employment, 1,000 jobs were created every week.

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