Tommy Broughan (Dublin North East, Independent)
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184. To ask the Minister for Jobs, Enterprise and Innovation if Irish competitiveness is being adversely effected by rising costs, including the costs incurred by companies in transporting their goods and services; and if he will make a statement on the matter. [41402/15]

Richard Bruton (Dublin North Central, Fine Gael)
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Ireland’s improving competitiveness performance since 2011 has been central to securing the recovery in economic growth and employment. Improved competitiveness has made Irish firms more cost competitive internationally and made Ireland a more attractive location for firms to base their operations in. The recovery in jobs to date, with 135,800 more employed than at the beginning of 2012, unemployment down from over 15% in 2012 to 8.9% in October and the record levels of indigenous exports being achieved, is in large part due to the considerable improvements in the business environment for enterprises. Overall, Ireland has moved from 25th to 16th on the IMD Competitiveness rankings, with progress being made in areas such as the environment for start-ups, regulation, and access to credit.Addressing Ireland’s international competitiveness is a key economic priority for Government. Since 2012, the Government’s Action Plan for Jobs has set out a comprehensive set of measures to improve our competitiveness performance. We continue to monitor Ireland's cost competitiveness and take appropriate action to address fragilities as they emerge. The Action Plan for Jobs 2015 requires the National Competitiveness Council to “Benchmark key business costs and publish a report highlighting areas where Irish enterprise costs are out of line with key competitors”. The Council's 2015 Costs of Doing Business in Ireland report benchmarks key business costs across over fifty indicators and focuses on areas where Irish enterprise costs are out of line with key competitors, and on costs that are largely domestically determined.

The NCC's 2015 report concentrates on the costs that are largely domestically determined such as labour, property, energy, water, waste, communications and business services. The report finds that while relative cost competitiveness is improving (i.e. although costs are increasing, they are increasing at a slower rate than in many of our competitors), this improvement is largely being driven by external factors beyond the control of domestic policymakers. In particular, a weak euro exchange rate, low ECB interest rates, and low international fuel prices have all combined to improve Irish cost competitiveness. The NCC report concludes that Ireland’s industrial cost base has improved but pressure points are emerging in labour, property and business service costs.

We will continue to take corrective action where particular issues emerge. As an island nation for whom competitive transport services are essential to getting our products to market, as part of Budget 2016 the Minister for Finance announced plans to simplify the rates of commercial motor tax by replacing the existing 20 rates with just five rates ranging from €92 to €900, with effect from January 1, 2016. The changes are set to benefit operators of about 28,500 commercial vehicles and address anomalies vis-à-vis the regime in the UK and Northern Ireland.

Now is not the time to be complacent about our competitiveness as we have further progress to make if we are to achieve the ambition in the Government's recent enterprise policy statement Enterprise 2025 of achieving sustainable full employment. We must maintain an intense focus on reducing costs that are out of line with those in competitor countries. There is a role for both the public and private sectors alike to proactively manage their cost base and drive efficiency, thus creating a virtuous circle between the costs of living, wage expectations and cost competitiveness. Measures that ensure open and competitive markets are essential. Improving productivity performance is also key.

The policy implications of the Costs of Doing Business and associated structural reforms required to address Ireland’s cost base, will be included in the Council’s annual Competitiveness Challenge report which will be published before year-end.