Introduction
It is a pleasure to meet with you again this evening. I have always believed that occasions such as this can play an important role in bringing about a shared understanding of changing challenges and opportunities – thereby helping us to manage the change agenda.
Economic Outlook
As a small and very open economy, we in Ireland are of course directly affected by changes in the international environment - whether dramatic movements in international financial markets, the significant depreciation in the value of the dollar, a changing context for corporate investment internationally or, indeed, confidence generally in the global economic outlook.
At the same time, the underlying strength of the Irish economy allows us to respond with confidence to less favourable economic conditions, indeed with greater confidence than many of our European partners. That is not because we are immune, but because of our proven capacity for problem-solving.
The dramatic scale of our economic success in only two decades – not least in effectively doubling to over two million the number in productive employment – means that this very real achievement is perhaps too easily overlooked. But the reality is that the fundamentals of the economy are strong. We have a dynamic and well-educated labour force; low rates of taxation on both capital and labour; and sound public finances, with one of the lowest levels of debt in the EU. And in a few short years, we have seen Ireland become a truly international, multi-cultural society, with more than one-tenth of the workforce now attracted here from abroad.
It is this underlying strength which allows the unprecedented scale of investment now underway in expanding our productive capacity, including a €100 billion public capital programme under the new NDP. Many of your organisations have a crucial role in delivering this investment, which represents a commitment of nearly 6% of GNP over the next seven years to upgrading national infrastructure.
All this is not to deny or even underestimate the reality of new challenges. But a proven capacity to manage transformational change means that we can, and should, meet these new challenges with confidence.
The task of Government, in this environment in particular, is to steer the economy, and the response of various social actors, in a consistent manner, that reinforces confidence, while driving rapid adjustment where pressures or opportunities require it. That is expressed in the Government’s strategy underlying Budget 2008. It will shape our continuing engagement with the social partners, especially in the forthcoming negotiations. It underpins our strategic approach to developing the all-island economy, building on the dramatic developments in political institutions in Northern Ireland. And it is central to our engagement with the wider world, for example, in our determination to stimulate greater acknowledgement of the global context within which the EU operates, whether in the debate on tax policy or support for overseas investment.
A critical element in achieving this goal is the performance of the public service. This is not just about efficiency and effectiveness – critical as these are, especially in a more difficult fiscal environment. But the public service is also a key source of learning and innovation, despite the popular media image of slow and unresponsive bureaucracy. I have always been clear that, for Ireland to perform at its best, the reverse of that image has always been true.
That is why I initiated a comprehensive review of the public service, including the State agencies. The OECD are nearing completion of their review of how our system performs, especially by comparison with relevant competitors. I understand that the report will highlight many strengths and achievements of our system, but will also raise areas of challenge in respect of governance, capacity and performance. While the commercial State companies were not directly covered by the exercise, I believe that all our State bodies have a role to play in ensuring that the full potential of the public sector to deliver what is required can be achieved.
In the same spirit, I have initiated a strategic review of how well our Departments are equipped to meet the challenges they face, today and tomorrow. A pilot review – with outside expertise – is well advanced in the Departments of Enterprise, Trade and Employment; Agriculture, Fisheries and Food; and Transport. While public service pay and efficiency are critically important issues, they are secondary, in my view, to the issue of performance.
In all of this, the critical objective is to remain flexible and responsive, spotting opportunities for development and meeting the needs of those whose activities and decisions are critical to our economic well-being.
Time and again I have met senior figures from major global companies located here who have emphasised the importance to them of confidence that “things get done” when they decide on projects or express concerns about their operations. It is that capacity to decide, act and deliver that will increasingly underpin our competitive advantage. The public service generally, but your organisations in particular, are central to meeting that challenge.
Climate Change/ Energy Security
One of the principal challenges we face as a society and an economy is the agenda of environmental sustainability presented by climate change. This has clearly moved centre stage at all levels. And it is reflected not least in the ambitious proposals launched last week by the European Commission.
The Commission's proposals begin the process which will lead to an agreement on the efforts required of individual Member States. The energy sector, including state energy companies, will have a crucial role to play in delivering on the demanding targets being proposed.
The Energy White Paper and the National Climate Change Strategy outline how Ireland intends to meet our obligations under the Kyoto Protocol. And the Programme for Government agreed last June has already seen the introduction of a number of specific measures.
These include the revision of Motor Tax and Vehicle Registration Tax (VRT); enhancement of the energy requirements in the building regulations; and a strengthened programme of expenditure on energy efficiency measures. Further measures are provided for in the Finance Bill published today.
Our state energy companies are charged with ensuring competitive delivery of vital energy infrastructure and services, in a market which is undergoing rapid and dynamic change. Delivering secure, clean and competitive energy supplies presents complex and urgent challenges for us all. It requires firm leadership, pragmatism and a strong sense of purpose by all stakeholders.
This is particularly the case with the state companies who are pivotal to delivering energy infrastructure and services, which are efficient, competitive and value-for-money.
The Government has begun detailed analysis of the latest proposals from the Commission and their implications for the period up to 2020. Even before completing this analysis, and regardless of the final outcome of negotiations at EU level, we can be certain that dramatic changes in our economy, and society as a whole, will be required. This extends beyond the energy sector to all parts of society, and I would ask you all to reflect on the contribution your organisation can make.
Transport
The sustainability agenda presents itself in a particularly significant way in our transport sector. A business-as-usual scenario based on current trends would, by 2020, see greenhouse gas emissions rise very significantly beyond their 1990 levels. Faced with this, we will have to develop a level of public awareness which will ensure that, where feasible, the car becomes our travel mode of last resort.
A public consultation process on appropriate targets and actions will be launched shortly by the Minister for Transport, with a view to Government producing an agreed Sustainable Travel and Transport Action Planlater this year.
Progress will, of course, build on the unprecedented levels of investment now taking place under Transport 21, accounting for as much as one-third of the overall Public Capital Programme.
The benefits of the record level of investment in roads – averaging €125 million per month over the 10-year Transport 21 framework – are evident to all of us. The elimination of longstanding bottlenecks has delivered substantial savings in journey times and greater journey time certainty, while also reflecting greatly strengthened project management capability.
Our public transport system is also being transformed. We will see investment of close to €1 billion in 2008 – a striking figure when you recall that, up until 1997, we had limited EU but no domestic exchequer investment in public transport. The major investment in upgrading our railway system alone has already seen passenger journeys increase by more than 50% over the past 10 years.
The bus companies have also risen to the challenge of new demands, supported by capital investment of almost €1 billion since 2000. And while the growth in passenger numbers is not as dramatic, it is bus services which still carry the vast bulk of our users of public transport.
In Dublin, the entire public transport system will be transformed with the development of a Metro; the further extension of Luas; and the provision of increased capacity in suburban rail and bus services. The huge success of our two Luas lines has demonstrated that, when fast, efficient and reliable public transport is provided, people will use it.
The Programme for Government includes a commitment to expediting the establishment of a statutory Dublin Transport Authority. I understand that the Minister for Transport intends seeking early Government approval for publication of his legislative proposals in this regard.
Regulatory Reform
Of course, beyond reform of the bus licensing system, Independent Regulators are now a central part of the broader regulatory environment generally. From your experience of the various sectors represented here this evening, you will know the difference which a quality regulatory environment makes to our competitiveness and to your ability to provide the best possible service to the consumer.
While the regulatory landscape has changed hugely in recent years, there are certain gaps in our knowledge about the performance of these regulatory structures and their continued appropriateness in the face of the evolution of relevant sectoral markets. That is why we agreed in the Programme for Government to review the economic regulatory environment.
We are now commissioning an independent study which will benchmark the key Regulators against their EU and OECD counterparts. This will help us to better assess their comparative efficiency and effectiveness in framing the future direction of sectoral regulatory policy. A complementary development is of course the establishment of an Oireachtas Committee on Economic Regulatory Affairs to strengthen the operational accountability arrangements in the regulatory domain.
Conclusion
It is in the nature of an evening such as this that the issues I have touched on are by no means exhaustive. And given the breadth of your network, I know you will appreciate that it cannot be otherwise!
The shared challenge facing us all is an increasingly knowledge-intensive and interconnected global environment, in which change has become one of the few certainties. That is why the capacity to innovate and adapt has become the only source of advantage that is sustainable over the longer term. It is the development of new ideas, and the willingness to embrace new ways of doing things, that allows us to redeploy our resources more effectively – supporting the economy-wide productivity improvements on which increased living standards ultimately depend.
I believe that our great strength as a society is precisely this capacity to adapt to rapidly changing circumstances, and that it is reflected in no small measure across the range of state organisations represented here tonight. State organisations continue to have a vital contribution to make across all the sectors concerned. However, continued public support and confidence depends on demonstrating a capacity for change and flexibility.
I am confident that you have this capacity and will continue to build on a solid foundation of recent achievement and success.
Thank you very much for inviting me to address you this evening.
ENDS