Sean Barrett (Independent) | Oireachtas source

I welcome the Minister of State, as I always do when he visits this House. I shall illustrate one programme where Ireland did lead and does lead. I refer to aviation economics which Professors Ryan and McAleese promoted in TCD. We produced in Mr. Michael O'Leary an outstanding student. His business today carries over 100 million passengers and his model is used worldwide. The previous model was one airline per country which was Government controlled and restricted new entrants. Mr. O'Leary has completely blown the old model apart. The new entrants like him are far more dynamic than the incumbents. They redefined the product by taking out things that people did not really want in the traditional airlines. Aer Lingus is an example of a traditional airline which reformed, unlike Air France, Lufthansa and British Airways which have not grown at all, a fact which has been documented by the OECD. The best place to see how the model was working was to see it in the marketplace. We knew from research that airfares were about three times what they should have been in Europe and could fall by two thirds. They did so virtually from the outset.

During this process one ran up against the propaganda of the incumbents the whole time and fairly conservative civil servants who did not want to see the new research. Happily, the consumer proved it right. No pun intended but it was blue-skies research back in the day. Interestingly, banks were not interested. One of the problems with new products is that banks, particularly in Ireland, only lend on property. I am afraid from what I have learned by working on the banking inquiry I do not see any sign that the situation will change. I would love if banks went to the Minister of State's office asking for good products in science in technology because they wanted to diversify and move away from being property obsessed.

When the Minister for Finance was here he changed the Strategic Banking Corporation of Ireland memorandum and articles of association to say that they were, as far as possible, to keep it out of property and go for the kind of territory in which the Minister of State is interested, a move I fully support.Of all the students we had, we did not know this particular one, Michael O'Leary, would become a world-class innovator and head of the biggest airline in the world without significant support by way of public subsidy. I use him as an example I know of from being closely involved with the people concerned. He did make Ireland the world leader in aviation leasing and it remains so to this day. The person who bankrolled it initially was the late Dr. Tony Ryan. He bore the losses in the business but it all turned out extremely well. On whether we could have more winners, I fully support the aspiration of the Minister of State that we should.

We have been through the input stage, winning the awards and grants the Minister described. However, the concern in the an bord snip report related to when we would have the list of what has been invented as a result of this programme and of how our lives have been made easier because of these innovations and new technologies. Science Foundation Ireland and the other agencies must relate better to taxpayers. It is all very fine that we have won money from abroad and that we have invested money ourselves but the agencies must be able to explain how we are better off in our daily lives because they have carried out and funded this high level research. That is the next stage.

This is not a plea on behalf of a particular sector. However, the failings of the European Union have been in regard to currency and its design, to overall economic policy, banking and in auditing. Trying to make up for lapses in these areas by taking a few leaves from the book of Silicon Valley and technology is not enough. Let us also do some of the basic things well, for example in the areas of public administration and the labour markets. Europe has many policies which cause the kind of unemployment the programme proposed by the Minister of State is trying to cure, such as in the area of the economics of bureaucracy and weak fiscal policy. We have not matched the record of the United States. It is considered a bad month in the United States when 200,000 extra people are not added to the workforce. Europe has not been next nor near that kind of performance. Consider the mass unemployment in places such as Greece and Spain, for example. Let us take a dynamic approach to economic policy and let us carry out research on that also.

Having listened to the evidence given at the banking inquiry, I am afraid that banking has not changed. However, auditing may change next year when the Irish Financial Services Regulatory Authority assumes responsibility for it from the accounting bodies. Many mistakes were made in these sheltered professions which have seriously limited the ability of every Member of this House to deal with public expenditure programmes. I refer, for example, to the €64 billion the banks took from the Exchequer.

The governance of the European Union must change. I almost give up hope in regard to traditional banks taking an interest in the science and technology area. Perhaps venture capital or crowd funding may present a better possibility. It would be interesting if the Minister of State, in his discussion with high tech firms, discovered whether they use traditional banks or whether they ever even have a conversation with them. If traditional banks are declining in importance, why do we bother rescuing them at such a huge cost? One of the figures in the run-in to the crisis concerning lending was that in the two pillar banks, less than 9% of the lending was to industry and agriculture combined. The rest was property-based and personal lending. That is not the kind of banking system that leads to the kind of growth we all wish for.

Firms should carry out more research. I welcome the base erosion and profit shifting studies the OECD has produced. I am sure the Minister of State will work with the Minister for Finance on this matter. We are considering setting up a knowledge development box and that this expenditure will attract a 5% corporate tax rate. There is more work to be presented on that in the next week or so. Perhaps firms will say they will let the Government do all the research, but where is the current European equivalent of the Bell Laboratories, where the Bell company did significant research? Guinness used to carry out significant research. We expect companies, in return for the lowest corporation tax rate that can be found anywhere, namely, 12.5%, to engage in research rather than leave it all up to the national boards or taxpayers to do it on their behalf. Companies should fund more research. A major source of income for US universities, with which we must be able to compete, is philanthropy from corporates. When I hear statements from IBEC saying there should be more money spent on research, I suggest it should take the lead on this. We gave out €64 billion for its members that are banks, so it should now fund some of the research, just as its opposite numbers and the parent companies of foreign direct investment companies do at home in the United States.

Another aspect of concern is that, within universities, knowledge development boxes are displacing research. Members may have heard complaints that the University of Coleraine language school is being shut down and that there are 1,250 fewer people studying languages. That is part of economic growth. The vice chancellor shut down the language school. It states on his CV that he chaired a research project elsewhere which had 300 researchers. I would question whether that person has lost touch with what the role of a university is, which is to prepare the next generation of 18 to 22 year olds so that they can become the Michael O'Learys of the future and so they can speak continental and other foreign languages.

There is concern with regard to universities. Blue-sky thinking is neglected. Maybe the solution is that we should choose priority areas. Perhaps 80% of the budget could be provided to specific areas and 20% could be free range. We could then compare how the 20% free of the priorities tag worked. Priorities do not last for ever. They should shift, but the view is that some people get control of the money and declare themselves a national priority. We all tend to do that from time to time, to think what we do is important. However, there are dissident voices, particularly in universities, with regard to how research should be funded.

We need more funding for the social sciences also and the Minister of State mentioned that. We also need more for economics. We need more spent on contrarians. One of the key issues in regard to the banking inquiry was that contrarians were marginalised. Morgan Kelly had done research on 40 previous bank busts. It is a pity his research did not gain more credence and traction and we might have been able to deal with it. Part of the deal in research funding is that we do not want people to opt out of teaching. It has been said "You could use this money to buy out your teaching", but no way should anybody use the research money to do that, because we want the next generation of 18 to 22 year olds to be the next scientists winning prizes.

The Minister of State has come to the House in a great week, because William Campbell from Donegal has won a Nobel prize for medicine, which is a great honour for the country. I wish the Minister of State well and assure him that we will be delighted to provide any observations or assistance we can to help him to fine tune the programme.