Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Question 139: To ask the Minister for Enterprise, Trade and Employment the action he will take on account of the recent report of the National Competitiveness Council; and if he will make a statement on the matter. [25672/05]

Micheál Martin (Cork South Central, Fianna Fail)
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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.

Additional information not given on the floor of the House.

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.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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The Minister has indicated various issues in regard to competitiveness. If he reflects on the replies given by his predecessor in 2001 or 2002 or in any Question Time where the issue was raised, he will find that the answer he has read out is more or less the same. In December 2001 the Taoiseach and Tánaiste were warned about all these issues but they did nothing. In January 2004 the Taoiseach launched a document entitled Better Regulation but nothing has happened since. From his reading of the report of the National Competitiveness Council, where does the Minister think the unwarranted constraints in competition arise from?

Micheál Martin (Cork South Central, Fianna Fail)
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First, it is not the same reply.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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The Minister has them in his notes.

Micheál Martin (Cork South Central, Fianna Fail)
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No. The Deputy would not have been in a position to get the last paragraph because it shows a change.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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I see.

Tom Hayes (Tipperary South, Fine Gael)
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How did he think of that one?

Micheál Martin (Cork South Central, Fianna Fail)
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The Deputy will be only too glad to hear this one.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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If it is so important, why did the Minister not put it at the start of his reply?

Micheál Martin (Cork South Central, Fianna Fail)
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The latest competitiveness 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, perhaps, that we have turned an important corner in rebuilding national competitiveness.

As regards the Deputy's second point concerning better regulation, things have happened.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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What happened?

Micheál Martin (Cork South Central, Fianna Fail)
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One example is the regulation pertaining to directors' compliance. We have referred that to the company law review body and have listened to industry.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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The Minister is kicking to touch.

Micheál Martin (Cork South Central, Fianna Fail)
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Recommendations are coming forward which suggest that a significant and substantial amendment is required. So we are listening to industry as well as consulting business on key issues and will take action in future. The Deputy asked what the constraints are. Issues such as the groceries order constitute a constraint. In dealing with such issues we can create a greater competitive environment in the local economy. I would be interested to hear the Deputy's party's position on that being clarified.

Tom Hayes (Tipperary South, Fine Gael)
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It is quite clear.

Conor Lenihan (Dublin South West, Fianna Fail)
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Now is the Deputy's chance.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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If the Minister answered the question he was asked, which was what he believed were the unwarranted constraints on competition, we might get some information. The Minister has the same document that I have and he has read extracts from it. The recently published document states that the intensity of local competition and the efficiency of competition legislation are perceived as being low. Does the Minister accept that Irish entrepreneurs are experiencing difficulty in obtaining low-risk finance and that we still have a low level of research and development investment? Would he also accept the difficulties outlined in the OECD report on higher education as they relate to an enterprise economy? Will the Minister outline what he intends to do about these issues and other issues outlined in the report of the National Competitiveness Council?

Micheál Martin (Cork South Central, Fianna Fail)
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One area identified by the National Competitiveness Council concerned competition within the domestic economy, be it in the retail, construction or other sectors. Last year, my colleague the Minister for the Environment, Heritage and Local Government made changes to the planning regulations to facilitate greater competition by permitting certain stores to come into the country.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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One store.

Micheál Martin (Cork South Central, Fianna Fail)
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That was a response to a recommendation by the National Competitiveness Council, so action is being taken on foot of such recommendations.

Last year, we had the highest number of small business start-ups within the European Union. I have established a small business forum to prepare for the next decade on issues that we must address to maintain competitiveness. According to the report by the National Competitiveness Council we score highly in maintaining a generally good environment for entrepreneurial activity. I wish to continue in that direction and we will not be complacent on the issue.

We have made significant gains in research and development due to programmes I initiated as Minister for Education and Science, in addition to the science foundation programme the Tánaiste initiated. That has transformed research here.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Where is it now?

Micheál Martin (Cork South Central, Fianna Fail)
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We intend to go up to a further level of research and development input because it is inextricably linked to competitiveness and economic performance.