Tuesday 25 October 2016

Adrian Weckler: High price for failure to remove basic barriers

Published 16/10/2016 | 02:30

Minister for Finance Michael Noonan and Minister for Public Expenditure Paschal Donohoe during the announcement of Budget 2017. Photo: Gareth Chaney Collins
Minister for Finance Michael Noonan and Minister for Public Expenditure Paschal Donohoe during the announcement of Budget 2017. Photo: Gareth Chaney Collins

'In Ireland, you need a big idea." The person I was talking to last week is trying to find an office. Joao heads up an expanding startup team of 15 people in a financial technology firm based in Dublin.

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But finding an office among Dublin's closed shop of lawyers and property administrators is proving too hard.

"We were offered a 25-year lease with a break after 15 years," said Joao. "This was presented to us as some sort of special deal, too. Fifteen years? We're a funded startup. I can't put a 15-year lease commitment on the books. I don't know whether we'll be alive in 15 years."

The Budget passed by in a different reality. There was no apparent big idea. Instead of a plan, most people got a fiver.

As such, an Irish industrial Brexit dividend is starting to look like a pipe dream. There is nowhere to put new, growing companies like Joao's.

"If you're between 20 and 40 people, it's so difficult to find somewhere," said Joao. "And you don't really have the equivalent of WeWork here."

Dozens, if not hundreds, of growing companies say the same thing. Ireland isn't modernising its business infrastructure.

It will wheel jobs ministers and Taoisigh out for handshakes and single transferable speeches, but there's no reform of archaic planning, property and legal strictures that tie an economy's growth down to a few landlords.

As such, Budget 2017 ignored three basic barriers we have:

1. Dublin can't take many Brexit jobs if it is passive about modernising its creaking infrastructure and locked-up property market. (Frankfurt and Berlin can, though.)

2. We will never compete at the top if we don't do something about the relative decline of our third level institutions.

3. Industrially, areas outside cities are almost dead already because of a lack of regional broadband.

Of these three things, only regional broadband is a politically active issue. I've written ad nauseam over the last three years about the importance of regional broadband to overall economic survival so I won't bore readers with much more of it here. Suffice to say that, when one in four rural residents is now considering relocation away from their home to a big town because of broadband (as recent Amarach research shows), it is not just a tech hobbyhorse. And, while last week's Budget 2017 statement by the Government upgraded the National Broadband Plan to fibre-in-the-home, it also admitted that connections likely won't now start until 2018 (probably finishing in 2023).

That means huge swathes of Ireland sucked dry of young people and skilled workers for years to come.

But at least we're talking about broadband in Ireland.

It is astonishing how little we discuss our lack of ambition in infrastructure and planning. Beyond housing for first-time buyers (the sons and daughters of swing voters), we all imagine we're stuck with what we have.

It's a similar case with education. Our universities are slipping down the international ranks, largely because of a scarcity of resources. But, in Ireland, there is almost no one who will publicly bat for an unashamedly top-tier, elite third level education system. We seem trapped by an idea that supporting an elite institution is a suspicious, bad thing. The very term 'elite' raises hackles here more than it does admiration or pride (unless it relates to sport).

Yet the biggest job and wealth creators congregate around the world's better universities like flies on a day-old snack box.

Two weeks ago, I interviewed Microsoft's president Brad Smith. He said that one of the brakes on Microsoft pulling the plug on a post-Brexit Britain was Cambridge University. Microsoft, like so many other top companies, needs to be where the best emerging brains are.

For some reason, that basic economic dynamic isn't appreciated by Irish policymakers or the public here. Instead, keeping fees down so that kids can qualify as accountants or solicitors seems to be a far higher priority than boosting universities' world-beating facilities, which would eventually produce export-oriented, wealth-creating Stripes, Intercoms or Spotifys. (And which would also need to employ the accountants and solicitors we so crave our children to become.)

For this and other reasons, Irish universities are sinking compared to other countries. Ultimately, that will result in less-talented students and teachers going through the system here which means a greater likelihood of having to fall back on grants to multinationals, call centre jobs and emigration.

Of course, it will be argued that we are making do with limited funds in a still-recovering Ireland. That is completely true. As is the argument that there are many deserving requests for state funding.

I'm just saying that letting a city and a country limp along with relatively basic attributes is a recipe for staying in the outsourcing, 'here-because-of-the-low-tax' tier of industrialised nations.

The countries that have the best universities, the best transport systems and the best building stock will always be the ones calling the shots.

We may always be the ones leasing out our Taoiseach to seal a few dozen sustenance jobs in one of our regional towns.

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