Harney's last hurrah?

BY ROBBIE SMYTH

Mary Harney

Faltering economic development and a policy vacuum in government - it must be time for a glossy new report. Enter Mary Harney's Enterprise Strategy Group with Ahead of the Curve. Ireland's place in the Global Economy, which was launched with considerable fanfare last week.

Some longterm economy watchers must have felt a sense of déjà vu, as in previous periods of economic turbulence directionless governments also resorted to the politics of hiding behind expert reports.

THIRD TIME LUCKY

In terms of economic development, there were the Telesis and Culliton reports in the early 1980s and '90s, respectively, and now we have a third instalment, with strategy group chair Eoin O'Driscoll's turn to step up and tell us what is to be done.

Eoin was also appointed last week as the new chairperson of Forfás, the 26-County state board responsible for "providing policy advice to government on enterprise, trade, science, technology and innovation in Ireland".

The Enterprise Group's 147-page report has 52 recommendations, many of which make practical sense but raise serious questions about the nature and ideology of economic policy in Ireland. Also positive is that the report actually gives some time to recognising the all-Ireland nature of the economy.

POLICY GAPS

Ahead of the Curve rightly points outs deficiencies and gaps in education and training, research and development, infrastructure and an indigenous business sector performing badly when it comes to exports out of the Irish economy.

The report states that for the period 1990 to 2002 "when inflation is taken into account, the real growth in both sales and exports was negligible".

What the report does make a strong case for is retaining the 12.5% corporate tax rate on company profits. The report details how the tax has been slashed from 40% in 1998 to the 12.5% figure today and also stresses the impact of halving capital gains tax to 20% in 2002.

What it does not address is where businesses have been putting this money, as more profits went into entrepreneurs' pockets rather than government coffers.

One place it hasn't gone is into Research and Development, which accounts for only 1.39% of Gross National Product, half of that of the US and less than a third of Swedish spending on R&D.

The report suggests some comprehensive action on the R&D deficit, including creating a new body, Technology Ireland, "with its own budget and strong leadership, to develop a cohesive, strategic, and focused approach".

INFRASTRUCTURAL DEFICIT

Also of interest in the report's conclusions is the section on infrastructure. Ahead of the Curve says that "enterprise will only thrive if the physical infrastructure and communication networks are efficient".

A World Economic Forum survey found that 26-County infrastructure was "poorly developed and inefficient relative to most other developed countries". However, more interesting is the conclusion that such infrastructure should be built "ahead of demand".

What isn't addressed is how this would happen, as under current government policy communications infrastructure has been privatised and transport is not that far behind.

In terms of the scale of infrastructural investment necessary, the private sector, both Irish and international, has shown itself completely unwilling to make this investment. So what the expert group haven't dealt with adequately is 'the who'. Throughout the report it is clear that it is the government that have to play the core role, through strategy, leadership and most importantly the allocation of resources, as the business sector won't take a leadership role and certainly will not be opening their wallets.

This report has now been handed over to some high level civil servants to see which of the recommendations are actionable. It remains to be seen whether it ends up on the dusty shelf or even whether, when it comes back to cabinet, the government will face up to their responsibilities.

It seems that Mary Harney is to leave the Enterprise ministry in the autumn reshuffle, so Ahead of the Curve will be her parting shot to the next incumbent, who no doubt will wait a suitable time before commissioning his or her own glossy strategy report.