Bernard Durkan (Kildare North, Fine Gael)
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Question 108: To ask the Tánaiste and Minister for Finance the measures he proposes to take to address the issue of competitiveness in the economy thereby protecting inward investment; and if he will make a statement on the matter. [16372/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Improving national competitiveness is essential to facilitate a re-balancing of the economy towards more sustainable, export-led growth and to maintain our attractiveness as a location for inward investment. While external factors such as the exchange rate have an impact on domestic costs, these are beyond our control. As such, we must seek to control those costs which we can influence. We must also take steps to improve productivity.

In support of these objectives, the Government is committed to maintaining a low burden of taxation on capital and labour, and has implemented a range of policies aimed at improving competition in product markets and flexibility in the labour market. We are also investing heavily in physical and human capital under the National Development Plan. These measures will help restore competitiveness and ensure that Ireland creates the right environment for foreign investment and export-led growth.

Of course, improving the economy's competitive position will also require sensible wage developments. It is particularly important that the current round of pay talks delivers on this — wage increases that cannot be justified on productivity grounds will, if achieved, only constitute short-term gains with significant long-term costs for all.