Remarks by Minister Cowen at the IBEC Lunch, Part 1
Ladies and Gentlemen
This is a challenging time for our economy. After the huge success of the past decade, and in a difficult international environment, we have to ask ourselves how we can best maintain our momentum. How do we build on what we have achieved, while recognising that we, and the world around us, have changed and continue to change? It is a time of transition – a time for debate on the best way ahead, and critically also a time for action.
I don't intend here today to repeat the speech given by the Taoiseach at the IMI Conference in Killarney when he clearly set out the plan of action this Government has to protect our achievements in the short term and position ourselves to take advantage of any growth in world output in the medium term. I commend his speech to those of you who may not have yet had an opportunity to examine it.
From my perspective as Minister for Foreign Affairs I want to say something today about how my Department is working to help meet the Government's broad economic objectives. But I also want to look at how these objectives fit into the wider European Union agenda.
But before doing so, I want to turn briefly to cooperation between North and South on this island in the economic arena. For many years, IBEC has been doing invaluable work in this regard with its counterpart, CBI Northern Ireland, under the umbrella of the CBI/IBEC Joint Business Council.
The importance of such practical linkages to mutual benefit are recognised in the Good Friday Agreement and the institutions created under its aegis. In particular, the Government attach high priority to the work of InterTradeIreland, the new North/South Trade and Business Development Body. Under the visionary leadership of its Chairperson, Martin Naughton, and Vice Chairperson, Barry Fitzsimons, the Board and staff of InterTrade are bringing a new focus and energy to economic cooperation on this island. In doing so, I know that Martin and his team greatly value the contribution that has been made, and continues to be made, by IBEC and CBI, through the Joint Business Council.
In my view, the real value of what IBEC and CBI have been doing is in its underlining of the truth that practical cooperation on economic issues of common concern threaten nobody and benefit everybody. The economic dimension is, and continues to be critical to the consolidation of the peace process, and to the full implementation of the Good Friday Agreement. While much of the focus of the intensive work currently underway on the part of the two Governments and the parties is on the political and security areas, the economic dimension will be equally central in the medium to longer term.
Peace must be able to demonstrate tangible dividends - more and better jobs, a more stable climate for investment, increased economic opportunities for all.
A partnership between North and South will be an essential piece of all of this. As IBEC and CBI have been quietly demonstrating, there are so many practical issues where it makes sense for two relatively small economies to work together rather than in isolation of each other. The kind of issues that you have been working on – transport infrastructure, telecommunications, energy, waste management, supply chains and so on – can surely be better tackled together than separately.
That is why I want above all the early restoration of the Northern institutions of the Good Friday Agreement, so that the Northern Ireland Executive can resume its cooperative work with the Irish Government in the North/South Ministerial Council. That is why I have such high hopes for the role of InterTradeIreland and indeed Tourism Ireland Limited, in the critical tourism area – whose work, of course, has continued during the period of suspension.
IBEC and the private sector generally have a crucial role in all of this. Governments and public bodies have an essential job to do. But the energy, drive and commitment of business, together with the contribution of the other social partners, will be critical ingredients in ensuring that the process of cooperation between North and South is real, durable and tangible.
The essence of the Good Friday Agreement is a new beginning, based on partnership and mutual respect. I know that IBEC looks forward to playing its full part in tackling the challenges and opportunities provided by that new beginning, and in ensuring that the exciting potential of the Agreement is realised to the full.
The European Union, like Ireland, is in a period of change and challenge. In just over a year, ten new Member States will join. This will expand the European zone of peace, democracy and stability. It will contribute to the further economic development of the continent as a whole. The success of the referendums to date in the accession states shows that their citizens are enthusiastic about the opportunities enlargement will bring. I am proud that the Irish people, by voting Yes to Nice last October, helped to open the door to our future partners – and I am deeply grateful to those non-party groups and organisations, including very importantly IBEC, which made such an important contribution to the campaign.
There is a growing recognition, in Ireland, as in Europe, that competitiveness is central to our economic future. The OECD has clearly spelled out the message. The international downturn has had a major impact on our markets and on our sources of investment. The strengthening of the Euro has not helped our cost competitiveness. Our infrastructure is struggling to keep pace with economic development. We need to continue with up-skilling our workforce through lifelong learning. The Government is acutely aware of these challenges and is committed to equipping our people and businesses with the tools to succeed in a hyper-competitive marketplace.
Part of the answer lies in nurturing a culture of entrepreneurship and risk-taking. Part of it lies also in recognising that we simply must embrace change. European enlargement is a key part of such change. And that change gives Irish business the opportunity to seek new partnerships, to tap new markets and to continue to enhance change.
Some may, understandably, fear increasing competition from Central and Eastern Europe. But we had those arguments and fears before during previous enlargements, and we saw that they were unfounded. It was past expansion which generated the momentum necessary to complete the internal market, a crucial development for Ireland. As a result, our industry reaped the economies of scale, and invested in new technology. Foreign investors were not just attracted to a dynamic and growing European Union but, within it, found that Ireland was an ideal base from which to sell into the wider European market. I am confident that the next phase of enlargement should see us reaping similar benefits.
For the Government's part, we will actively assist business to identify sources of competitive sub-supply globally, especially in Central and Eastern Europe. While in the past Government agencies were charged exclusively with promoting exports, we now have a broader, more holistic view, which recognises that efficient outsourcing and supply chain management is crucial to business.
In this critical work, my Department works closely with Enterprise Ireland. Through its network of Embassies and Consulates, the Department actively seeks to identify sources of competitive supply. Very recently, for instance, our newly opened Embassy in Estonia successfully identified a number of suppliers for an Irish-based automotive component manufacturer with extremely cost conscious clients.
Since becoming Foreign Minister, I have placed the highest priority on the value added our Embassies and Consulates can and must bring on the trading and business front. The Department can be of particular assistance to companies in countries where Enterprise Ireland is not represented. Embassies can also provide more general assistance, including with regulatory issues in markets that are often unfamiliar to Irish companies. In short, our Embassies and Consulates are a resource that is available – and I emphasise enthusiastically available – to Irish business.
Of course, our future competitiveness depends also on ourselves. As IBEC is aware, the Government is working hard to tackle the rate of inflation. Some of the increase has been due to external factors, such as the exchange rate and oil prices. But some has, of course, been due to domestic factors, and this is where we can make a particular impact.
The adoption of the pay and productivity arrangements set out under the new social partnership agreement, Sustaining Progress, is particularly important, including in sustaining our competitiveness. The anti-inflation initiative in the agreement is equally important. The Government, in partnership with IBEC and ICTU, will work to keep downward pressure on inflation. Issues such as excessive pricing, competition - especially in the more sheltered areas of the economy - and public awareness must be vigorously pursued. Overall, however, and on the positive side, I am pleased to say that it is generally expected that inflation should fall over the course of the year, due to both an easing in domestic cost pressures, the impact of the strengthening euro, and our own determination to keep public spending increases within the budgetary limits.
Europe can also be crucial to our efforts to maintain and grow our competitiveness. Much has already been achieved under the Lisbon agenda – including opening up energy markets, creating a single European sky in the aviation sector, modernising competition policy, putting in place elements of an integrated Europe-wide financial market, and agreeing a Community patent. As a result, significant numbers of jobs have been created.
However, we must equally acknowledge that the ambitious objective agreed at Lisbon - of making Europe the world's most competitive knowledge-based economy by 2010 - was forged in a climate of strong global economic growth. The current phase of sluggish growth now forces us to devise new, effective solutions if we are to achieve our targets. The reality is that not enough progress has been achieved on tackling and reforming structural barriers to competitiveness. If we are not ready to grasp the nettles threatening growth, we run the risk of falling significantly short of our objectives. IBEC is fully aware of this, and your position paper for last month's European Council was an important contribution, for which we were very appreciative.