Speech by the Taoiseach, Mr. Brian Cowen, T.D., at the IBEC President's Dinner, The Mansion House, Wednesday, 23 June, 2010.
I am very pleased to be with you this evening and to join with you in thanking Tom Noonan for his leadership as President of IBEC and congratulating Leo Crawford and wishing him well as he begins his terms as President.
The Government's Job Focused Economic Strategy
This evening is a welcome opportunity for us to review the progress we have made to date in confronting the effects of the worst global recession in the history of the State. As a Government, we have taken and implemented tough and painful decisions. The business community, your employees and the Irish people generally have also had to face up to difficult measures and to the most challenging of circumstances.
The good news is we should return to economic growth during the course of this year. The European Commission and OECD now project that Ireland's GDP will grow next year at 3% which is double the euro area average.
Nonetheless, the continued turbulence in financial markets is a warning that we cannot be complacent. The international outlook in particular is not yet as secure as we might like. That is why we must keep a clear focus on those factors that are ours to control. We will, for example, deliver on the €3 billion adjustment of the public finances required in 2011- as the next step in bringing the deficit below 3% by 2014.
The whole focus of our economic strategy is about the creation and maintenance of jobs. That is my focus. That is the whole focus of the Government. And I know as people concerned for your own families and communities, as well as your businesses, it is at the heart of your work also.
Our future economic growth will be driven by exports of goods and services. Increased exports will generate jobs directly in the provision of those goods and services. Importantly, they will also generate indirect jobs throughout the economy, in domestic services, retail, construction and other sectors.
So, sustainable job creation will have to be driven by the enterprise sector. In other words, by the people around this room tonight.
The Government, for its part, must provide the conditions and environment to allow Irish-based businesses to sell goods and services, at home and abroad. The Government can also support growth in targeted sectors, through appropriate incentives, direct investment and enterprise policy. But fundamentally, sustainable jobs will come from the efforts of Irish businesses and entrepreneurs.
Thirdly, the effectiveness of our labour market policies will play a large role in determining how quickly economic growth translates into new jobs, and the prospects of those jobs being filled by those who need them most.
Our past experience holds clear lessons for us now. We need to ensure that we have the right incentives for employers to create jobs, and that people on the Live Register are incentivised and supported to take-up those jobs.
I want to highlight tonight a number of key areas which are critical to the success of the jobs agenda: confidence, infrastructure, innovation, as well as the role of the business community.
Confidence
Securing confidence is central to our economic recovery - confidence to lend, confidence to spend, confidence to invest, confidence to hire.
The positive assessment of our willingness to face up to difficult decisions - and of our capacity to follow through on a sustained basis with their implementation - has been the basis of wide expression of confidence internationally. The recently ratified Public Service Pay Agreement is a further contribution to the climate of confidence.
Despite the current uncertainties within the eurozone, recent and forthcoming investments by IDA clients are just one sign that international confidence in Ireland has been greatly increased by the difficult decisions we have already taken.
Increased confidence will lead to increased consumer spending as people feel less need to save out of fear of the economic future. The Government introduced VAT and excise reductions in the Budget which have helped to support consumer spending. The car scrappage scheme has also proven its worth, with a resumption in spending which is reflected in tax receipts.
These measures are having an impact with indicators of consumer sentiment improving steadily.
Investment in infrastructure
The second important area to stimulate economic recovery that I wish to mention is our very significant investment in infrastructure. Infrastructural investment can drive job creation in two ways.
Firstly, it generates jobs in the short-term, for example in construction projects.
Secondly, the investment increases the productive capacity of the economy, increasing competitiveness and supporting long-term jobs.
The Government is currently finalising a review of our capital programme to align it more closely with our strategy for sustainable growth and employment creation.
The review is prioritising those productive investments which will support jobs.
This year we will invest €6.5 billion, which is in the region of 5 percent of GNP -- one of the largest capital programmes in the EU15. Our investment this year includes a focus on labour-intensive areas such as school building and maintenance, energy-efficiency measures and investment in our tourism infrastructure. This public investment programme is expected to support approximately 70,000 jobs.
The State Energy Companies - ESB, Bord Gáis and EirGrid - are also delivering multi-billion investment programmes in the electricity and gas networks.
Altogether, non-Exchequer capital investment will support a further 30,000 jobs. I know that the business community would welcome greater clarity about these future investment plans, and the Government is working to finalise the Capital Review programme and we will publish this soon.
Innovation
The third key theme in our strategy to accelerate economic recovery and grow jobs is support for innovation. Innovation is everybody's business. Innovation is about producing goods and services, old and new, in new ways, to address new needs, to access new markets and to create more sustainable and cost-effective business models. For business, innovation is the key not only to growth, but, increasingly, to survival.
The Government is committed to ensuring that Ireland becomes an innovation hub. I established the Taskforce on Innovation which reported earlier this year. Its recommendations focused firmly on what is required to create the conditions in which innovative businesses can be established, can develop rapidly and can grow because of the policies and frameworks which we have in place.
And we are well-placed to turn that vision into reality. We have dramatically increased our commitment to support for science, and technology. What we are ensuring is that overseas investors continue to regard Ireland as the location of choice for key investments in growing sectors. We will encourage and support our existing businesses to become even more ambitious for growth and development, especially in new markets.
We must encourage entrepreneurs, whether Irish or from overseas, to see Ireland as the place where they can establish and grow their businesses. It is important to connect entrepreneurs to the intellectual property which can be the source of new business models and new markets. We are encouraging the providers of capital, in its various forms, to recognise the opportunities that exist here. And we need to view the State as a smart consumer to encourage innovation on the part of its suppliers, so that they have a home market which encourages them to develop products and services with a global potential.
Innovation in the Public Service
Innovation is also critical to the performance of the public service, at a time when our society, more than ever, requires a high performance public service.
We face huge challenges in ensuring that we can do more with less, that we can redesign our services to address new realities, and that we can restructure our ways of doing business to reduce the costs of public administration, both direct and indirect.
Last week, the Public Services Committee of ICTU ratified the Croke Park Agreement. I believe that this is a very important step in our collective efforts to meet the challenges we face and I want to acknowledge the contribution of many people in the union movement for their leadership in securing ratification. The Agreement provides a basis for stability and progress to the benefit of public servants and citizens alike. We now have an agreed vision for Public Service transformation, and an agreed path on how it is to be achieved, that will ensure that the Public Service continues its contribution to the return of economic growth and prosperity.
Of course, the really hard work starts now. It is incumbent on all concerned to work together so that the Agreement is implemented in a timely and ambitious manner. For its part, the Government has directed senior management across the entire Public Service to accord the highest possible priority to implementing the agenda for change set out in the Agreement.
I will shortly announce the membership of a new Public Service Board. The majority of the members of this Board will be from outside the Public Service. Its role will be to advise the Government on further opportunities and priorities for transformation and efficiency, and on the capacity of the Public Service to lead change and to deliver a high standard of performance.
The Contribution of the Business Community
I want to turn now to the role of the business community itself.
I know that businesses across all sectors of the economy are facing significant pressures as a result of current difficult domestic and international trading conditions.
However, I am heartened by the evidence which clearly shows the agility of Irish businesses, and their capacity to adapt and respond quickly to unprecedented challenges. There is no question but that people have had to adjust their expectations and become more flexible in response to the economic downturn. Some of the scale and nature of this adjustment has been difficult to take and that should be acknowledged.
I believe that workers and management deserve credit for this in equal measure. What we are seeing is that, where employers and employees work together towards a common goal, it can deliver a win-win situation for all. We have seen labour costs moderate and available work shared, in order to secure employment and the viability of many firms.
I would like to acknowledge the successful efforts made by IBEC, and ICTU, earlier this year to put in place a national protocol for the orderly conduct of industrial relations in the private sector. The protocol provides a fair and sensible framework for resolving issues in dispute and is delivering real dividends, in terms of ensuring industrial peace in workplaces across the country. It is helping to ensure that the focus is correctly kept on the key tasks of supporting recovery and the protection of jobs.
In a small open economy it is critical that we are consistent in our policies and our behaviours. Economic recovery, and job creation, requires sound policies from Government, effective management and leadership from business, engagement and flexibility from employees and their representatives, and a climate of understanding and confidence on the part of the wider community. The business community, and IBEC in particular, have an important role to play across this broad agenda. Your views on policy and policy priorities reflect the experience and insights of your members. Your engagement with your employees and with the trade union movement are critical to securing industrial peace and economic development. Your role within your communities and within society at large is influential.
The framework for that engagement for many years has been largely provided by the institutions and procedures of social partnership. While it has proved impossible to secure a broad measure of agreement on the detail of a national strategy for economic recovery, I believe that the social partnership experience continues to be important. There is a shared understanding of the realities of the Irish economy and the requirements for sustainable jobs and decent living standards. We understand the high price to be paid for inconsistency of policy and behaviour. We recognise the damaging effects of industrial disputes and distributional conflict.
I believe that social dialogue is an important ingredient in any successful society. I believe that it has a particular role to play in building confidence and momentum at a time of severe challenge, such as the present. I believe that the business community can make an important contribution both through social dialogue and through wider community engagement, not least in developing practical responses to the jobs challenge. I will shortly be reconstituting the NESC and I believe that, as in the past, its work can be an important vehicle through which better understanding and a platform for concerted action can be developed.
Concluding Remarks
There is much on which we can build to secure employment and prosperity for our people. The business community, and its leaders, have a hugely important role to play in turning that potential into reality. IBEC has an important leadership role in channelling that energy and experience. I look forward to working with you in the months and years ahead so that our shared vision for our country can be realised.
I want to thank the IBEC team, led by Danny McCoy, for their engagement with us across the full range of public policy and public organisations. I want to repeat my good wishes to Tom Noonan and to his successor Leo Crawford, and I want to wish all of you, and IBEC, well for the year ahead.
ENDS.