Feargal Quinn (Independent)

I do not disagree with the Senator. I refer to the book written by the Senator's husband in which he states those facts. A number of elements came together at the right time and created the success.

The Minister of State referred to the report by a major Irish bank but he emphasised the favourable points made in the report. However, Ireland in now in 13th place out of 30 as an attractive country for foreign investment. I think we may have rated higher in the past. This is a reminder that we are in a competition.

It is now 40 years later and the situation is almost totally reversed. When a potential investor is considering the attractions of competing locations, he or she will find that Ireland is not at the top of the list under almost all the headings. Every one of our basic costs are out of line with those obtaining elsewhere. We are now at a disadvantage. We still offer a very competitive corporate tax rate but our position is under threat from countries which offer our low tax approach. A head of steam is building inexorably which will see the harmonisation of European corporate tax rates. I am aware we will fight and have done a good job to date but we will be unable to resist forever.

We are uncompetitive in our cost base and potential investors know this. They will want to know our long-term attitude to these costs. They wish to see whether this is a country that is determined to work hard to close that cost gap between itself and the rest of the world or whether this is a country always talking about containing costs but not taking any action. If official policies tend to aggravate the situation rather than improve it, then potential investors will have a very different attitude. They will take their money out and will run to more hospitable locations for their investment. We fall into the second category rather than the first. If we continue in the same manner, we might as well disband the IDA because it will never be able to do its job with a hand tied behind its back, so to speak, with regard to costs. The situation is as stark as this.

If a start is made on addressing the issue of competitiveness, the other mountain to climb is that of cost. We will never again be able to offer a cost advantage to a potential inward investor. The most we can ever hope to do is to neutralise the opposition by offering a highly positive advantage in some other direction. It is generally agreed that any advantage we offer must be based on the calibre and skills of our people. We aspire to leadership in the knowledge society but, unfortunately, we do not accompany our rhetoric with the action necessary to achieve our aspiration. The calibre and skills of our people depend on how much is invested in education, but not enough is being invested to realise those aspirations.

The OECD landmark report called for a quantum leap in the amount of funding for third level education but there is a need for a quantum leap at all stages of the education system, from preschool education through to research stage at university and institute of technology level. We must catch the attention of the Government and of the powers that be. The phrase "a quantum leap" is not just a soundbite; it describes what is needed. It is not enough to increase spending on education in step with the increased amounts expended in other areas of Government spending and it is not enough to put education at the top of the queue. Education must be recognised as the most important national priority and it must be funded properly. This is the status which investment in education must receive if we are to succeed in attracting direct foreign investment in the future. Current policies do not reflect that situation. Spending on education is not given sufficient priority in the national development plan.

The choice before us is stark. Either we begin to recognise that education is our first national priority or we will waste all of the money we pour into new roads and other physical infrastructure. We will never attract outside investors with motorways as investors expect them as a matter of course. The only way to successfully compete in the world market for investment is through the quality of our people and if we want to do so we must pay the price to achieve it.

It was interesting to hear Mr. John Bruton, the EU Ambassador to the United States, at the National Forum on Europe yesterday. He spoke about the success of the United States where jobs are being lost but better jobs are being created. This is done through an investment in innovation and this is the challenge we have. The Minister of State's heart is in the right place and we must support him.