Bernard Durkan (Kildare North, Fine Gael)
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66. To ask the Minister for Jobs, Enterprise and Innovation the extent to which she remains satisfied regarding the ability of the manufacturing and services sectors to compete nationally and internationally with particular reference to their cost base; and if she will make a statement on the matter. [30678/17]

Frances Fitzgerald (Dublin Mid West, Fine Gael)
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Addressing Ireland’s cost competitiveness remains a key economic priority for Government, therefore we continue to monitor Ireland's cost competitiveness on a regular basis.

The National Competiveness Council publishes the Costs of Doing Business in Ireland every year. In its Report of June 2017, the National Competitiveness Council found that Ireland’s cost base has improved across a range of metrics over the last five years (e.g. the cost of starting a business, communications costs and average income taxes). This has made Irish firms more competitive internationally and made Ireland a more attractive location for firms to base their operations in. However, despite these improvements Ireland remains a relatively high cost location and already the return to sustained levels of growth has resulted in upward pressures in property, labour and business service costs. 

Ireland is particularly vulnerable to negative economic shocks which are outside the influence of domestic policymakers. A number of short and medium term downside risks have already emerged that could undermine national competitiveness. Over the past 12 months, we have seen the challenges created for Irish firms exporting to the UK as a result of Brexit, resulting from the weakness of sterling on international currency markets.  The international price of oil has almost doubled over the past 12 months and the low international energy prices, which to date have countered increases in other domestic costs, is now dissipating. To pre-empt such threats we must improve our cost competitiveness.  In this regard, costs are paramount: a competitive cost base helps to create a virtuous circle between inflation, wage expectations and cost competitiveness.

Government is committed to take action to address unnecessarily high costs (i.e. cost and price levels not justified by productivity) wherever they arise. A range of initiatives, as set out in the Action Plan for Jobs, are in train across Government Departments to improve the ease of doing business, reduce the administrative burden, enhance our cost competitiveness and increase productivity and drive greater efficiencies across the enterprise base. The issue of rising cost residential property will be addressed through a suite of measures in Rebuilding Ireland - Action Plan for Housing and Homelessness. The Cost of Motor Insurance Action Plan provides measures to help reduce the cost of insurance cost.

The National Competitiveness Council and my Department and its agencies are continually engaged with relevant stakeholders on the particular policy needs required to support cost competitiveness. The stakeholders include other Government Departments, regulatory bodies and public and private bodies. In this regard, there is a role for both the public and private sectors alike to proactively manage the controllable portion of their respective cost bases, drive efficiency and continue to take action to address unnecessarily high costs. Such actions will ensure that improvements in relative cost competitiveness are more sustainable, leaving Ireland better positioned to cope with external shocks.

As part of these engagements, my Department, the Department of Finance, the Department of Agriculture, Food and the Marine, Enterprise Ireland and the SBCI are working on developing of Brexit Working Capital Guarantee Scheme and to scope out the need for a longer term Business Development Loan Scheme which would assist Irish firms in investing for a post-Brexit environment and increase their competitiveness. Development of these proposed responses is at an early stage, and is subject to resources being agreed as part of the annual budget process, and with due regards to State aid rules.