I would first of all like to thank Google and Enterprise Ireland for the kind invitation to speak today.
At this seminar you are addressing an issue which goes to the core challenge of the modern economy not just for businesses but also for any smaller country. Given the scale and pace of change, and the enormous competition we face in the globalised economy, how do we get ahead and stay ahead?
And for Ireland at this particular moment there is the added challenge of how do we prosper in spite of our biggest trading partner’s decision to shoot itself in the foot and threaten the rest of Europe with the same.
A good point for us to start is to remember how much we have achieved as a country in the past. There is a tradition of overcoming barriers and opening new opportunities which we too often forget. Yes we have many issues which we are not getting on top of, but we have shown repeatedly that this doesn’t have to be permanent.
From the earliest recorded histories of this island we were categorised as poor and peripheral – and the fact is that we were both.
However this changed dramatically and it did so because of the visionary decision of Seán Lemass and his government to do two revolutionary things.
The first was to invest in the people of Ireland through beginning a rapid expansion of access to education – meaning that Ireland went from having one of the lowest levels of educational attainment in Europe fifty years ago to reaching near the top ten years ago.
If you look at the Dáil debates of the time you see very clearly that there was nothing inevitable about this massive investment in people. In fact time and again it was argued that Ireland couldn’t afford to educate more people when it was already failing to find jobs for those who emerged from our schools and colleges.
Lemass and his ministers rejected this advice and instead argued that only by supporting knowledge could we create new and unanticipated opportunities.
This was exactly the same idea which lay behind our decision to create from nothing a major set of state supports for advanced research – a decision which has had a profound impact.
The policies which attracted Google and many other companies to Ireland, and which helped new sectors be opened up by Irish-owned businesses were developed before those companies or sectors existed.
Over recent decades there is a consistent pattern of Irish industry facing roadblocks due to disappearing markets or new competition. These roadblocks have been overcome through innovation which has at its core the skills and dynamism of individuals.
The second revolutionary decision of Lemass was to say that to prosper Ireland must become a trading nation, open to the world and, crucially, supportive of strong international rules. With the application to join what is now the European Union, he set our country in a direction which has been more successful than anyone could have anticipated.
In the 1960s the main questions about our membership asked were we too poor to survive free trade? No one asks that anymore.
And if you look at the overall economic recovery of recent years yet again you find it resting on the twin pillars of the skills and innovation of our people and our commitment to trading internationally.
This is why we have attracted so much investment from companies at the cutting edge of innovation – and also why so many Irish companies are achieving success internationally.
So whatever problems we face today, we must always remember that we have faced and overcome bigger ones in the past. We cannot avoid the turbulence of international events, but we have the ability to get through it.
As we look forward, we have to understand that we can take nothing for granted. If we stand still we will be left behind and this will have serious social and economic consequences. We have to keep innovating and putting our faith in unleashing the potential of the Irish people and their ability to compete and win internationally.
For most of today you are talking about very practical steps to enable you to open up markets and seize new opportunities. What I would like to do is to focus on the broader economic and political environment which we all face – and what I believe we as a country have to do in order to protect our long-term prosperity.
The first thing we have to do is to get through the immediate threat of Brexit and to limit the damage of that decision. We will do this if we follow urgent and ambitious policies at home and abroad.
Brexit is not the only threat to open markets for trading nations like Ireland. In fact the rules-based international order as a whole is now under pressure.
There is simply no question as to what Ireland should do. We must not only remain a member of the European Union and other critical organisations – we must be more active and vocal.
We have to speak up and defend free and fair trade against those who want to allow more unilateral action by individual countries.
In recent decades freer international trade has been the greatest anti-poverty and pro-growth phenomenon ever seen. Hundreds of millions have been lifted out of poverty and countries like Ireland have been able to significantly improve their living standards.
Whatever deal the UK reaches with the EU it will be the first trade deal in world history which has reduced trade rather than increased it.
While the UK is our main trading partner Europe is a very important and growing market for our country. It’s framework of rules and fair arbitration gives us guarantees and opportunities offered nowhere else.
Even more importantly it shares the values of seeking social and economic progress which go hand in hand.
So we need to become more active in promoting an EU which completes the Single Market and fully addresses key weaknesses in monetary union exposed during the recession.
And on Brexit-specifically we need to step-change our preparations.
There are roughly 6,900 companies which export to the UK. Only just over a quarter have a Brexit plan in place and the take up of many key preparation schemes is extremely low.
Unlike the situation with many other markets, 60% of the value of exports to the UK is accounted for by SMEs – making it an even more serious issue for indigenous companies than it is for multi-national enterprise.
According to the only independent study by the government of the economic impact of Brexit, the current best-case scenario would knock €5 billion off our national income in the absence of some serious mitigating action.
Action so far simply isn’t of the scale and impact required to deal with a €5 billion threat.
We have raised this issue with the government and have urged a step-change in existing plans which simply are not effective enough.
I would encourage anybody here who has not sought advice and funding for Brexit preparations to do it urgently – and in doing this to look beyond the immediate regulatory costs which might emerge and focus on what can be achieved through diversifying both products and markets.
Enterprise Ireland has a very good support programme available to you and there are short and long-term financial options available to you which are largely untouched so far.
While the chaos in London means that we are unlikely to have any certainty until January 21st about what will happen during the next two years, we all have to be prepared for any eventuality.
And remember that no preparation will be wasted because under all possible scenarios Britain is leaving at the very least the Single Market and probably the customs union within the next two to three years.
You may not face new controls at the end of March, but they will come at some point.
I remain convinced that there will be a transition deal simply because no one whatsoever benefits from a chaotic Brexit next March. Equally that would put an enormous hole in the EU’s Budget and would maximise the sort of uncertainty which always damages economies.
My sense from meeting with various European leaders yesterday and during recent months is that there remains a strong determination to do a reasonable deal which protects the single market but limits the immediate damage of Brexit as far as is possible.
In terms of Irish politics I have always believed that there are issues where we cannot afford business as usual.
That is why we’ve been very active internationally in promoting a common front for Ireland. And it is also why we believe there must be no risk of an election campaign or lengthy government-formation in the critical months ahead.
There are many critical national issues which need to be addressed and where political conflict is both inevitable and desirable – however Brexit is different and the next three to five months demand a different approach.
And in speaking up for a more effective and dynamic European Union we shouldn’t be afraid to criticise it when necessary. One of its clear faults has been its approach to major technological disruption and the wasted time and effort involved in certain causes.
Who can forget the decade wasted on insisting that Microsoft was a monopoly because no one could possibly rival it in web browsing? Europe is too often a cold house for real technological innovation and it needs to steal back the momentum in an area where it has the people and the potential to do much better.
The next thing which is key to staying ahead is that we must urgently address key infrastructural deficits.
For example we can only expect a business to trade internationally – or even outside of its locality – if it has access to a reasonable broadband service.
I have met many businesses throughout the country who are desperate to get access to a reliable and fast internet connection. The failure to deliver for them has now gone on for six years.
I will leave the politics of this to other fora, but I don’t think anyone can disagree that we can’t let this keep happening.
We know today that when the broadband roll-out is actually finished, Ireland’s core technological infrastructure will need to keep developing. And it will need to do this in new and different ways. We simply cannot afford to lag behind in this crucial area.
20 years ago Ireland became the first country in the world to connect every school to the internet. This roll-out was achieved in less than 12 months – and before it was finished the need to move on to ISDN technology emerged, which in turn needed to be replaced.
Unless we understand the need to continually upgrade and innovate our infrastructure we will keep having a stop-start approach.
The next thing we need to do in order to be ahead of international competition is to double-down on our commitment to training and research as drivers of innovation.
The critical thing which worked in the past was to limit the amount of state-direction which went into deciding who would be supported.
As Minister for Education I instituted a policy which actually removed ministers from any role in allocating research funding and also which encouraged colleges to work with industry to develop new courses and research cooperation. Of the billions spent on both applied and basic research since then not one Euro was awarded because of lobbying.
The core principal was that we had to give people the maximum space in which to innovate. By definition you will never lead in building new sectors if your focus is on replicating existing ones.
I think many policies are becoming too prescriptive and we are not there yet when it comes to opening up the research potential of our institutions to all businesses.
One of the greatest strengths of the German SME sector is how companies form long-term R&D partnerships with public institutions – often enabling companies to have a level of innovation impossible if they had to rely on their own resources.
And a final step we need to take to compete and prosper is to better understand how important it is to have a balanced and diverse economy.
We are world-leading in attracting long-term multinational investment, but we do not yet do enough to encourage our SMEs.
There have been many good stand-alone initiatives but we need to have a coherent strategy for valuing and supporting SMEs. We have to remove some of the financial barriers, for example by delivering full equality for business creators in the tax and social protection codes.
More secure and more tailored financing is absolutely needed. The sort of long-term approach which is central to how banks treat the hugely important SME sectors in many European countries should be replicated here.
And we have to go up another gear in terms of our support for upskilling and product innovation in SMEs. The Trading Online Voucher Scheme is good, but it could achieve a lot more if funding were expanded significantly.
Few countries have come from so far back to achieve as much as Ireland has. We got ahead through our people and our openness and this remains our route to future success.
The need to get more companies active in the international market and to help them to innovated and diversify should be a major national priority at this time.