We are losing our competitive edge and business needs to speak up quickly

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By Eamon Delaney in The Times.ie

Last week, the Taoiseach and the IDA’s Martin Shanahan (above left) visited the US West Coast where Leo was pictured next to Star Wars characters and robots. They also got pictured next to Tim Cook of Apple (above, centre) where they spoke of the deep commitment of Ireland and the global computer giant to each other.

Except that during the visit, word came through that after a long hold-up with the planning permission for the big Apple data storage centre in Athenry, County Galway, the Californian tech company might not be locating the centre in Ireland at all.

It was unfortunate timing, to say the least, and as with our apparently ill-fated bid to host the Rugby World Cup, it makes one wonder how clear the lines of anticipation are in the highest circles of Government about important national bids like this, especially the ones we feel a bit cocky about.

In fairness, since this Apple hesitation over Athenry, the Government has promised to reform our very slow planning process so that such applications are treated as vital infrastructure and can bypass the existing delays. But isn’t it strange that this hasn’t been done already. Why haven’t our ridiculously slow planning delays been reformed and speeded up to protect our FDI?

Interviewed about the decision on radio, the IDA’s Martin Shanahan sounded somewhat nervous and uncertain, not least about the way the company’s reservations emerged just as he and Leo were visiting the US and Tim Cook.

But, more ominously, Shanahan also sounded unconvincing about just how Ireland is actually going to stay competitive for Foreign Direct Intervention (FDI), which was actually what his radio interview was about. And the absurd hold up on the Apple planning appeal is only part of that. You can quickly add in housing, the health service and childcare are enough reasons for foreigners not to come to Ireland.

Martin Shanahan and the IDA are aware of these challenges, and in fairness, there is little they can say or do – these are long term and complex societal problems. However, there are other areas where the Government actually contributes to an anti-business, anti-jobs atmosphere, which flies in the face of what the IDA is trying to do.

Recently, for example, the Government again raised minimum wage and raised job seekers allowance, with which employers have to compete and at a time when employers have unfilled vacancies. It makes no sense and is part of a populism that erodes competitiveness. 

Small business groups came out against both moves but do Shanahan and the IDA make any noises about it, even behind the scenes? Does our too often timid corporate commercial sector ever say it? Or about the fact that our tax rates continue to crucify middle to higher earners – a certain deterrent to FDI.

Granted, protesting about such things is not the responsibility of IDA executives as such : they are public servants. But do they not see the connection in things, and the contradictions in Government policy?

Martin Shanahan was well able to come out in support of Same Sex Marriage in the referendum, for example. As a gay man, Shanahan rightly felt strongly about it, but many felt he should not have used his position as head of our national investment body to make such a political statement. So he has a bit of bottle. Why not use it to speak up against the erosion of Ireland’s business culture?

There is not doubt that the IDA do a fantastic job for Ireland and punch above their weight compared to rival agencies. But it has a tendency to corridor thinking, compartmentalised away from our populist political culture. ‘We must not question, keep going’, is the attitude, like a midfielder who only plays straight ahead and doesn’t question why the game is shaped the way it is.

Nor does a Semi State agency like the IDA tolerate others coming in and playing differently. Thus, it has been involved in a long running dispute with Connect Ireland, an innovative agency set up by Taxback which financially rewards job-finders who bring employment back to Ireland.

The IDA feels that, with the financial crisis over, Connect Ireland, which has received State funding, is no longer needed. But the impression is that the IDA just doesn’t want another organisation working on inward investment and especially not one which takes an avowedly commercial approach, which actually might be just what we need in Ireland– on all levels.

 

Above: Joanna Murphy CEO of Connect Ireland

This week for example, the venture capitalist Brian Caulfield made a stinging attack on the Government’s Key Employee Engagement Programme (Keep), which had been heralded in the recent budget as a great breakthrough for share options for start ups and SMEs.

The new Keep scheme followed an extensive consultation process by Government with experts in the start-up ecosystem, but any hope of real reform of share options taxation evaporated when the Finance Bill emerged. If you already had share options in a start-up, then you were still subject to a penal rate of taxation on any gain and you could be asked to pay tax in advance on money that you have not and may not receive. The restrictions make the scheme useless for all but a small number of companies. Indeed, the most ambitious, high-growth companies are effectively excluded.

But no-one in Leinster House raised the matter. No politician seems to care, even though business and jobs are the lifeblood of their constituencies.

And in the business community itself there is also a serious reluctance to speak out. The hope seems to be that a consensus political system, led by Fianna Fail or Fine Gael, will keep things sort of ‘business friendly’ and buy industrial peace with social partnership, or something similar. But this complacency is greatly mistaken

Decisions by the political culture, and specifically by Government, have a major effect on businesses, and on the rest of us in terms of jobs, wages and livelihood. In the UK, business groups happily weigh in on political issues, such as on Brexit. In the US, tycoons regularly give their views and defend the free market.

In Ireland, business figures do give their views, but it is often after the event or connected to their own specific interests. On the bigger picture, our business people usually keep quiet, even when conditions go against them and we are being made more uncompetitive.

The business community generally let’s IBEC and ISME do the batting for them and they do it very well, in fairness. Both ISME and IBEC’s Small Firm Association provide a welcome balance to debate usually dominated by the soft left. But they can only do much and IBEC is somewhat constrained, by its links to commercial state companies and the unions.

This is a real shame as our business leaders have much to say. In a rare missive before the last election, a dozen business people signed a letter warning that our economic success cannot be taken for granted. ‘Ireland is particularly vulnerable to adverse external shocks,’ they wrote ‘, but if done properly, the country has ‘the opportunity to massively cut unemployment, reduce tax on work and invest ambitiously in improving public services and vital infrastructure’.

This is the sort of talk that Vardakar and Martin should be encouraging, before they next head off to the US. Otherwise, our competitive edge will be as historic as a Star Wars robot.