Dan Boyle (Green Party)

As the Chairman has pointed out, we are making statements rather than engaging in detailed debate, but the statements afford us the opportunity to outline the success and value of inward investment to our economy, as the Minister of State has already done. However, they also afford us the opportunity to point out some of the difficulties that may lie ahead and for which we need to prepare. To be fair to Senator Ross, his contribution was based very much along those lines.

We have been extraordinarily successful in terms of inward investment and we remain on top of the league table in terms of attracting investors to the European Union. Our success combines with that arising from inward investment in other EU countries. As long as this is the case, the signs for the continued health of our economy look good. We need to be aware of certain factors, however, including the accession of a dozen new members to the Union, all of which are in continental Europe and have logistic advantages over an island economy like that of Ireland. They are closer to the broad mass of the European market and attract inward investors that may not have existed before their becoming members of the Union. We need to rise to this challenge.

The other countries with which we are competing have successful education systems and we have lived for too long on the idea that ours was somehow superior. We believed we had a talented workforce that did not exist in other countries but I do not believe this was the case. Not only should we not rest on our laurels, we should also put in place a means to train a workforce that has higher capabilities. Our education system has great gaps in this area. For instance, the uptake of science and technology at third level is too low. If we want the economy to continue to sustain itself, we need to put in place appropriate resources and policy.

Reference was made to the role of our favourable corporation tax rate in attracting inward investment. While there might have been arguments over the level at which this tax could be levied, there is consensus that the 12.5% rate is effective and should remain. The problem, as we all know, is that efforts are being made to have a common corporation tax rate throughout the Union. This move is being led by the German Government in particular. Regardless of the composition of our Government, we should be prepared to fight against this collectively because the removal of the incentive would mean there would be nothing to attract inward investment to an island economy on the periphery of Europe. As long as the threat exists, there is an onus on all elected representatives and political parties to send out a clear message that corporation taxation is a national competence we are not prepared to surrender and which is vital to our economic future.

We must consider striking a balance between services and manufacturing in attracting inward investment. As Senator Ross and others have highlighted, the International Financial Services Centre has resulted in great spin-offs in terms of helping us to improve our infrastructure, education system and the quality of our workforce. The same does not apply to manufacturing, which is becoming an increasingly small part of our economic makeup. We need to challenge this because a strong manufacturing base is needed to sustain progress in any economy. A feature of inward investment in Ireland has been that we have managed to attract elements of the manufacturing processes of many multinational companies, but we need to up our game by having as many of these elements as possible, from research and development to the finished product.

We are particularly lacking in terms of research and development. There have been Government strategy statements thereon and particular references thereto in the programme for Government with a view to promoting them. Our standing regarding research and development is low in European terms and the target we seek to reach by 2010, in accordance with the Lisbon goals, is a long way off. We need to put in place more resources to meet the target. Without research and development, we leave ourselves open to the type of asymmetric shock to which Senator Ross alluded given that globalisation is a reality of world economics.

One euro is now worth $1.42, bearing in mind that the dollar has traditionally been the main currency of the world, and the price of oil stands at $86 per barrel, but these statistics could change quite drastically. Within the next year, the euro could trade at $1.50 and the price of oil could rise to $100 per barrel, thus changing our economic outlook. That said, the work done and which continues to be done by the IDA deserves great credit because it has resulted in a strong economy robust enough to withstand many of these pressures. Members of this House and public representatives in general need to realise the circumstances of the past may not continue to obtain. We must prepare ourselves to do business differently if, as Senator Callely put it, we want to continue to be head of the class in terms of attracting inward investment. We must ask all kinds of questions of ourselves to ensure competitiveness and if we are to have an economy that is rightly more concentrated on high-tech, high-spec and high-quality industry, it will require substantial changes to Government policy and our approach to industrial policy.