Bernard Durkan (Kildare North, Fine Gael)
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Question 89: To ask the Tánaiste and Minister for Finance the action he proposes to take to improve the competitiveness of the economy; and if he will make a statement on the matter. [15847/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Government recognises that, in a small open economy such as Ireland's, it is imperative that sustainable export growth is maintained. Such growth can only be realised through ensuring that our economy and exports, in particular, remain competitive. Our competitiveness determines our ability to trade in international markets. In order to maintain or indeed to improve our competitiveness it is necessary to ensure that increases in costs do not outstrip increases in productivity.

In support of this, the Government has implemented policies which are aimed at rewarding both work and enterprise through maintaining a low tax burden on both capital and labour. Furthermore, the continued roll out of the National Development Plan remains a key priority for both myself and the Government as a whole, including substantial investment in capital which is helping to eliminate bottlenecks which hinder economic efficiency and thus enhance competitiveness. While we have seen productivity increases in recent years, costs and particularly labour costs have risen faster.

As measures designed to enhance productivity are slow to bear fruit, if Ireland is to recover lost competitiveness it is imperative that the cost of doing business here does not become prohibitive. Therefore it is vital that restraint is shown in the forthcoming wage negotiations. Pursuit of unsustainable wage increases that cannot be justified by their productivity will, if achieved, only constitute short-term gains with significant long-term costs for all.