Lucinda Creighton (Dublin South East, Fine Gael)
Link to this: Individually | In context

Question 31: To ask the Minister for Enterprise, Trade and Employment the steps he is taking to ensure that price competitiveness of industry here is improved; and if he will make a statement on the matter. [16718/08]

Micheál Martin (Cork South Central, Fianna Fail)
Link to this: Individually | In context

Tackling high and increasing costs is a challenge and there are no simple solutions. International commodity prices such as oil and gas are outside our control. It is important, however, to ensure that our domestic cost base does not undermine competitiveness.

The Government's last three budgets have been clearly non inflationary as a measure to help the cost environment for business. The pursuit of sensible incomes policy, and keeping public spending growth at sustainable levels in the medium term are important. Doing this will allow us to keep the burden of taxation low, thus helping to maintain competitiveness and to maximise our economic potential. The Government is playing its part in influencing inflationary trends by implementing responsible fiscal policies, promoting stronger competition and strengthening consumer protection.

In the context of the Social Partnership pay talks, wage price increases can severely damage competitiveness, therefore it will be critical to ensure that labour costs are managed so as to enhance productivity, support employment creation and to safeguard competitiveness.

Strengthened resources and a firm mandate for the Competition Authority is helping deliver more competition in the economy, particularly as the Authority's investigation activities begin to make an impact on sectors where competition is not as keen as required by a modern economy.

Enhancing competition in domestic services sectors is important to improve cost competitiveness. With regard to broadband costs, government policy, e.g. MANs and the Group Broadband Scheme (GBS) has assisted the stimulation of competition in the provision of internet services. There is strong cross-platform competition within the Irish broadband market and there are currently an estimated 80 (ISPs) Internet Service Providers.

Government energy policy envisages a programme of prioritised change to the electricity industry aimed at enhancing competitiveness, sustainability and market operations. My colleague the Minister for Communications, Energy and Natural Resources has asked the management of ESB to engage with the Group of Unions on the closure and/or divestment of power stations as agreed in the CER-ESB Asset Strategy. This measure will have the effect of reducing ESB's market share of the generation market to under 40% on an all-island basis and thus ensure the development of a competitive electricity market across the island of Ireland.

The enterprise development agencies are pursuing a number of initiatives aimed at facilitating client companies to reduce their energy costs by adopting economically sound energy efficiency systems.

Representatives of my Department have established a forum with the Commission for Energy Regulation that includes the Enterprise Development Agencies. The forum seeks to ensure that the issues of concern to enterprise are identified and communicated to the Regulator.

Regarding international price competitiveness, because much of Ireland's trade is outside the euro area, our enterprise development agencies are providing specialised assistance to Irish exporters to focus on developing into the euro-area and emerging markets to win new export sales. Our export promotion policies are exerting a direct and positive influence on the ability of Irish exporters to grow their overseas business. Active measures are also being taken to improve the capabilities of indigenous firms in meeting global competition by greater investment in innovation and other value enhancing activities. Becoming more innovation intensive on the basis of a clear market and customer focus leads to products and services that are better able to withstand purely cost based competitive pressures.

The Government will publish an Innovation Policy Statement shortly, highlighting progress made on a broad range of innovation policy areas, both technological and non-technological, and emphasising how innovative policies will be advanced in the coming years. The Statement complements the Strategy for Science, Technology and Innovation launched in 2006.

Productivity growth is essential to enabling pay increases in firms while maintaining cost competitiveness. To support the continued growth of productivity, our policies are aimed at improving productivity across a range of platforms (human capital, R&D and innovation, infrastructure investment, skills and education). Examples of policies include Enterprise Ireland's Growth Fund and the County Enterprise Board's Tech Check Programme.

The Growth Fund launched in early 2008 is the successor to the Productivity Improvement Fund. The Growth Fund supports Enterprise Ireland SME clients taking on an innovative market-led development plan to increase sales and develop exports through improving their productivity and competitiveness. Funding is available to support a range of activities.

The "Tech-Check" Programme launched in April 2007, provides small businesses with the opportunity to access a highly subsidised independent technology check-up and help them to identify ways to boost their productivity and profitability through the better use of technology. This Programme is being delivered by the County and City Enterprise Board and some 850 of these have been carried out up to the end of 2007.

The Government is very conscious of the need to control costs in order to maintain competitiveness. Through the National Development Plan, our taxation and regulatory policies, the government are committed to putting in place an environment for enterprise that remains among the most favourable in the world. We have the advantage of still being one of the most competitive small countries in the world.