Brendan Ryan (Labour)

I, too, welcome the Tánaiste to discuss this important topic. I apologise for not being present earlier but it was in the interests of hearing everything she had to say. I was about to leave my office when she stood up and I said to myself it was better to wait and listen to everything she had to say rather than leave and miss a few minutes of her contribution.

I want to focus on the issue of competitiveness. Competitiveness is a function of the cost of labour, transport, rent charges, rates, service charges, utility charges, etc., but it is also a function of output and scale, in which regard it is important to be able to spread fixed costs and overheads in terms of the price of a product. It is because Ireland is such a small country, with a small market and a small population, that exports become so important. It is important for us to resolve the scale issue by focusing more on our exports potential and, from a public policy point of view, for the Government and the Department to facilitate companies in getting over this hurdle and exporting their products.

I welcome the Annual Competitiveness Report 2009, Volume Two, which has just been released. With the previous report - we received volume one in August - it is a welcome contributor to our understanding of Ireland's status when it comes to competitiveness and can be used as a driver of change in public policy. It highlights the most important competitiveness issues facing the economy. I am also encouraged by the statement in the Associated Press release made by the chairman of the National Competitiveness Council, Dr. Don Thornhill, that Ireland can have a bright future, provided we confront the challenges we face and exploit the opportunities to create a more competitive economy. We must approach the challenge of competitiveness with a positive can-do attitude, otherwise we will not be successful.

Our ability to recover economically and our future prosperity in terms of job creation will depend on our ability to compete in international markets. This is something I have stated previously and I have heard the Tánaiste mention it: we must improve our export performance. We are likely to see growth in other economies with which we have traditionally traded such as the United States, the United Kingdom and countries on mainland Europe before we witness a return to growth here. It is essential, therefore, that we can tap into this at the earliest possible time. Productivity improvement is essential to allow us to compete in these markets again. Competitiveness improved during 2009, as the Minister stated, and this is positive. However, the recent report contained additional comment to the effect that this was not brought about by any structural changes in the economy but rather by the effects of the recession and that it should not give us any comfort.

The priority policy issues that must be addressed are to create jobs and tackle unemployment. I welcome some of the comments from the Minister in terms of some initiatives she is taking. This must be the number one issue. The haemorrhage of jobs has been a most significant contributor to the state of the public finances. In many ways the Government has been too focussed on the issues of banking and the public finances - obviously that must be done - but to the relative neglect of the unemployment issue. Training and education initiatives must be prioritised to enhance the skills of those in employment and increase the employability of those who are unemployed. An emphasis on both is essential if productivity improvement is to be achieved. We must also incentivise individuals, perhaps by way of tax reliefs, who invest in their own upskilling and education. Many working people in low paying jobs would love to learn new skills at night but cannot afford the fees and we must examine ways to encourage this. We must incentivise enterprise to invest in training and development, an area where Irish industry falls well below international best practice. One of the recommendations of the Global Irish Economic Forum at Farmleigh House, was to invest at least 3% of GDP annually in research and development, a recommendation which should be pursued vigorously by the Government. There must be a focus on innovation at all levels of our economy, a point to which the Minister referred several times in her speech.

We should also put a greater emphasis on innovation through all stages of our education system, a point I have raised at the Joint Committee on Education and Science. I believe innovative thinking can be taught. We should examine the possibility of putting innovation modules throughout the education system including first, second third and fourth level sectors. Another recommendation from the Farmleigh forum was to implement the innovation fund announced in the document, Building Ireland's Smart Economy, and this should be prioritised. We must prioritise infrastructural investment to support enterprise and for its immediate employment potential. It is essential to examine the capital programme to establish what can deliver jobs in the shortest possible time and to examine the infrastructure deficit, which must be addressed as well. This includes such issues as broadband, energy, roads and schools. Co-ordination of such activities must be strived for at all times to achieve savings where possible. There is a need for world class as opposed to the third world levels of broadband that many citizens enjoy. There are rural parts of Dublin not 15 miles from here where a broadband service is not available. I was contacted by a constituent who informed me he is trying to work from home. He has serious business ideas and he is set up but he lives in an area where he cannot get broadband, which is scandalous in this day and age and the matter must be addressed.

The Minister referred to credit flow. Credit flow from banks to viable business is essential if we are to achieve our potential for recovery. The Government must take full advantage of the stakes it now holds in the banks to ensure this takes place. We must improve public service delivery through a major reform agenda. Although the Government may have set back this potential, possibly irreversibly, in the negotiations before Christmas, the unions showed a willingness to address this issue in the right context. It is now up to the Government to recover the trust of the unions and I wish it well in this regard.

Skills shortages in our economy were highlighted in the competitiveness report, including in the food and drink sector, where process efficiency and commercialisation capability have been identified; in the medical technology sector, where there is a shortage of skills in regulation and quality control; in the chemicals and pharmaceutical sector, where skill sets are seen as being possibly too narrow; in the ICT, information and communications technology, sector, where it seems there is a lack of skilled graduates; in the financial services sector, where higher specialisation and skills in innovation are seen as lacking; in the environmental sector, where skills related to new technologies are seen to be lacking; and in internationally traded services, where generic skills, humanities and social science skills and hybrid technical business skills are seen to be lacking. I was astonished that such skills shortages could be lacking in Ireland today, some of which would appear to be basic. There is a serious gap which must be tackled urgently by the Government in terms of encouragement in this area.

Productivity improvements can be brought about through education, training, incentivising technology and addressing capacity issues and issues of scale to which I have referred previously. Quality improvement and a focus on doing a job right first time is important as well. Many companies spend too much time re-doing and re-working, which adds to the costs of business. There should be a continued focus on this area of quality improvement in Irish industry. A continuous improvement culture will deliver continuous improvements in productivity. Every process must be examined and waste must be eliminated from our enterprises.

There are many fine, experienced people who are experts in these areas but who are now unemployed. Such people have received thousands of euro worth of training from multinational companies over several decades. Certain people who have worked for ten, 20 or 30 years with multinational companies are now unemployed. There is potential to be tapped in this area and the possibility should be considered. There should be a strategy to identify such people who may be receiving social welfare payments for doing nothing. How can we creatively use such people? They could be used by Departments and public bodies in activities such as process mapping, as part of a transformation and service improvement initiative that has been discussed previously. I have spoken to some such people and they are interested in making a contribution. This could be remarkably cost effective in comparison to the option of using consultants, the option of choice for Departments in the recent good times and a very costly option indeed. The Minister should consider exploring the opportunities this would present.

The culture at enterprise level in Irish industry has changed for the good but at too slow a pace. Management and workers must work together and must not be engaged in combat if the potential of the enterprise is to be realised. There is a role for trade unions in providing leadership in this regard. I recognise there is a commitment at the top in the main unions in Ireland but that must trickle down to enterprise level.

State support for productivity initiatives such as world class management, excellence through people and gain-sharing initiatives may be useful in this regard and may assist in driving productivity gains as well. A partnership approach is essential but very often there is a lack of trust which must be addressed. This support used to be available to manufacturing companies but I am unsure to what extent it is still available. Such support makes a difference but it must be results-driven and funded and care must be taken that resources are not squandered. This can take place easily if the correct controls are not in place. The cost of doing business in Ireland, especially the costs of energy, waste and professional services must be brought down. Energy costs in Ireland are too high. This is the message we hear from a variety of business interests who have made submissions to the Joint Committee on Enterprise, Trade and Employment, of which I am a member. This must be addressed urgently if we are to recover competitiveness.

The report states there are positive signs in respect of the costs of doing business here but few examples are given. One such example is that rental costs are reducing but we need more. Local authority charges have a major impact and they are a major factor for businesses throughout the country. In this regard I congratulate Fingal County Council, the local authority that covers my area and which is Labour Party controlled, for the double digit percentage reductions introduced this year to assist business. This should be mirrored throughout the country.

I refer to pay levels, a matter to which the Minister adverted. The competitiveness report acknowledges there is an adjustment underway in pay levels. Unlike previous competitiveness reports from Forfás and the National Competitiveness Council, it is notable that this report does not call for a reduction in income levels throughout the economy. There is no call for a cut in the minimum wage. Many employer bodies and people on the political right in Ireland have been engaging in a campaign to reduce the minimum wage rate in recent times. This is a campaign to which the Labour Party is inextricably opposed. The challenge for Ireland in respect of wage costs is to focus on the other elements that contribute to productivity, not on wage rates. The NCC has made its recommendations and many other recommendations emerged from the Farmleigh summit. The Government is not short of advice. It is now time to facilitate, encourage and implement it.