Speech
Opportunity from Uncertainty – Speech by Minister Donohoe to the Irish Times Economic Summit
From Department of Public Expenditure, NDP Delivery and Reform
Published on
Last updated on
From Department of Public Expenditure, NDP Delivery and Reform
Published on
Last updated on
Check Against Delivery
Good morning everyone – I want to start by thanking Liam and all at the Irish Times for the very kind invitation to talk to you today, especially here in the Shelbourne, a venue that has, throughout history, hosted both weddings and uprisings and now today’s economic summit which is probably somewhere between romantic and revolutionary.
Though you never know.
What I would like to do this morning is to talk a little bit about how far we have come as a country in the last few years, a little more about where I think we can go in the future and then to talk about how we collectively get there.
I think doing so in a forum organised by the Irish Times is fitting. Now, more than ever, we need fact-based, unbiased media to sift through the noise that often passes for public discourse, where a tweet or a 'like’ or even a meme can be more powerful than any political oratory or journalistic contribution.
And in that spirit, I will make my remarks today, conscious of my audience here this morning – of journalists, of business leaders, of opinion formers.
But conscious too, of those who are not here and who are helping Ireland to achieve; the start-up entrepreneurs, the community activists and the men and women who provide care and support to our most vulnerable citizens- all of whom are as much a part of this discussion as we are here.
Without wanting to dwell on the past too much, we cannot talk about the Ireland’s current economic condition without reference to the dire situation it found itself fewer than ten years ago.
The context is well known at this stage. The country was borrowing at double digit rates of national output. Unemployment had reached 15% and a programme of financial assistance was required from international lenders.
Now, the improvement is real.
The economy is growing again.
Unemployment is at 6% – a huge achievement and this Government is committed to maintaining the right conditions to keep people in jobs and to create new ones.
Government spending is growing once more but at prudent and sustainable rates of approximately 3% per year and the Department of Finance recently announced that growth of over 4% is expected this year.
So we are on our way.
But the cause of much anxiety in homes and communities around Ireland and indeed around the world is what lies ahead.
In many areas of life we face seismic upheaval and change.
Globally, free trade and the interdependence between nations face challenges that have the potential to alter the world economy.
Mass movements of migrants, resisted by many in the developed world have caused division and, alas, intolerance.
In our working lives, workplaces of all sizes face transformation as artificial intelligence and robotics continue to develop. 3-D printing could up-end how we understand manufacturing, driverless cars will change how we conceive transport.
This level of intense change is moving us into an era of profound unpredictability.
Orders are challenged, norms are shaken and the global political consequences of this could be profound.
I, for example, am no longer certain that my children will enjoy the political freedoms that I have enjoyed or experience the political order that I have taken for granted.
These risks are increasingly acknowledged. For instance, Richard Haass, the former adviser to Colin Powell and United States Special Envoy to Northern Ireland, writes in his new book that “these are no ordinary times. It will not be business as usual in a world of disarray.”
He concludes that “the 21st century will prove extremely difficult to manage, representing as it does a departure from almost four centuries of history, what is normally thought of as the modern era, that came before it.”
Coupled with these overlaying uncertainties are specific risks that add to the feeling of uneasiness at home and abroad.
I understand that a number of speakers at this summit will discuss in detail issues relating to recent events in the United States and the United Kingdom.
I am on record as saying that I was saddened by the decision of the British people to leave the EU. Our historic ties run as deep as our present day links to trade and tourism.
With regard to the new political dispensation in the United States, questions have been asked once more about Ireland’s positions as a centre for international investment in the wake of possible changes to the US tax code
Questions too have been raised about where America now stands in the world, in terms of trade, in terms of action against climate change and in terms of responding to the global challenges of war and global poverty.
And at home, we have the uncertainty of how to respond to the huge but understandable pressures we face on public spending. Pent-up demand, after years of reduced spending, has seen justifiable but unaffordable calls for heightened expenditure in every area of public spending.
Because while we will have some more money to spend in the coming years, we risk throwing away all our hard-gotten gains by returning to the unsustainable, unreformed ways of the past.
The challenge for people like me- and you –is to respond to all this uncertainty, all this risk, by bringing as much certainty as we can.
As Thomas Carlyle said “Doubt, of whatever kind, can be ended by action alone.
And it is through action that we can seek opportunity from the uncertainty that we see all around us.
Our corporation tax policy, overseen by Minister Michael Noonan, is a case in point. What we have learned is that predictability of the rate and the certainty that it will not change is as important as the 12.5% rate itself, because it allows businesses to plan, invest and grow.
This approach can be applied elsewhere. Certainty matters in a new way. At a time of volatility, offering predictability and order to citizens, employers and investors is incredibly valuable.
We can develop this approach across a small selection of other policy areas. The process for setting public pay will be the most important example of this in 2017.
Employees in the public service need to know where they stand with their wages, now and in the future. Crucially this then gives the government the required order to plan both public service improvements and pay changes.
Order with over one third of government expenditure can then help set the right tone for decisions across our economy.
We will take a prudent, sustainable, multi-annual approach that will give certainty to public sector workers, certainty to the taxpayer and certainty to the wider economy about what is affordable and what is fair.
In terms of Brexit, let me say that Government’s commitment to the EU is not in doubt; it has been vital to our economic success as a nation and has supported social progress over the last generation.
The Government has been proactive in dealing with the potential implications of the UK’s decision and our priorities are clear:
We have a plan of deep analysis and engagement with our European partners, that has already borne fruit in the priorities set out by the Barnier Task Force.
With regard to President Trump’s plans, I have already said that Ireland’s corporation tax rate will not change.
I would also say that we are confident in the ability of our State Agencies such as IDA Ireland and our highly-skilled workforce to continue to successfully compete for investment opportunities on an ongoing basis.
And lest there be any doubt, trade is a two way thing- Enterprise Ireland estimates that there are more than 430 Irish companies operating in all 50 of the United States, employing more than 80,000 people.
Not bad for a small country like Ireland.
And a small country, embedded in the European Union, facing the twin challenges of Brexit and the new White House would do well to heed the words of the German Chancellor at the weekend – “to take our fate into our own hands, fight for our future on our own, for our destiny as Europeans."
That destiny is not one defined by the exit of a member but one that faces the future with confidence.
So too must we face the future with confidence at home. With regard to the need to spend well and spend sustainably in our own country, I would point to the ongoing Public Spending Review being conducted by my own Department across Government.
I would also point to the review of the Government’s Capital Plan which will see an additional €5 billion of funding allocated to capital spending in the period to 2021 – over €2 billion of which is already allocated to Rebuilding Ireland, the Government’s plan to tackle the housing shortage.
The Review will fit within the new National Planning Framework that the Department of Housing, Planning, Community and Local Government is currently drawing up, which will spell out a long term strategic plan of investment in our towns and cities to bring about balanced regional development in our country into the future.
All of these initiatives are designed to ensure we spend money well, on the right projects, in the right places so that we never again make the mistakes of the past with the public’s money.
And with the public’s money we will invest further in what is called intangible infrastructure- health, education and policing- things that help small countries like ours grow and act as a buffer from the uncertainties that globalisation can bring.
We will prove Carlyle right and show that through action, we can work to end doubt.
I have spoken on a number of occasions in favour of centrist politics and the role centrism can play in steadying the ship of state in the face of volatility and crisis.
The uncertainty that we now face, and the opportunity that it may bring, makes it more important than ever that the centre of Irish politics holds.
We must offer citizens a “holding centre” that provides choices without creating the anxiety and uncertainty that has been experienced elsewhere in recent months and years.
I consider it my job, but not mine alone, to continue to work for the incremental change that in recent years has seen more and more people find jobs, more and more communities benefit from investment and more and more young people return to Ireland or come here for the first time, to work, to study and to build a life.
I am gratified that election results in Austria, Holland and France have pointed once again towards openness, but we can take nothing for granted.
This is undoubtedly an uncertain time. But I believe this country’s best days lie ahead. If I did not, I wouldn’t be here.
Uncertainty, and change, has always been with us.
If you doubt that, consider the fact that in 1990 China accounted for just 3 per cent of global manufacturing output. Today, four out of five air conditioners are made there, as well as nearly three quarters of mobile phones and nearly two thirds of the world’s shoes.
If that is not an advertisement for seizing opportunity and showing ambition, I know not what is.
Before I go, I should say that Thomas Carlyle whom I quoted earlier is the Scotsman who is also credited with giving economics the moniker “the dismal science”, so perhaps he is not the best person to quote at an economic summit.
We have, as a country, shown great resilience in the past and will do so again.
Right now, we are building a new economy now, from the ashes of the old.
And we will overcome the challenges that face us now.
Thank you.
ENDS