Concentrate on Dublin to kick-start a strong recovery
The national preoccupation with the interest rate charged for the bailout billions is misplaced, writes Peter Carroll
AFTER a prolonged decline, Ireland has been like a patient in remission in the last two weeks. There is a spring in the national step and a building conviction that, if we can re-negotiate the cost of our borrowings, the greatest hurdle to long-term recovery will have been overcome.
Recovery stories from the corporate world offer a cautionary counterpoint to this prognosis, however. Realism needs to prevail before recovery is possible. In the business world, lenders to distressed borrowers either sell their debts at a discount or re-negotiate terms that the borrower can meet.
The Government -- current and previous -- has done everything possible to avoid grasping this nettle. Arguably, they are waiting for someone to tell the EU what the rest of us already know: our national debt is unsustainable and will have to be restructured. There will be short-term pain but the long-term gain -- a more vibrant and sustainable financial system -- makes it more than worthwhile. Momentous though it will be, this is only one part of an effective national 'corporate recovery' strategy -- an integrated growth and development plan that maximises our assets and recognises the needs of all stakeholders is also necessary.
It is a truism of business that, for any company to survive a financial crisis, it must remain credible to its customers. It has been all too easy to ignore the fact that Ireland Inc's customer is the taxpayer.
Whether employer or employee, whether through VAT, corporate tax or PAYE, taxpayers buy services from the Government with their hard-earned money, and can reasonably expect a quality customer experience in return. Can we honestly say this kind of thinking permeates our public service? Until it does, recovery will be a muted and uneven affair.
The Celtic Tiger may be discredited but it has left many dividends we would be foolish to undervalue. We now have a first-class infrastructure which we must put to better use. In transport, business and tourism, we have quality assets and our new affordability must be leveraged to our advantage as we compete with other business locations. It used to be said Ireland could no longer compete on cost. Now we must be merciless in identifying cost as one of our major bargaining chips.
We must be equally merciless in asserting the primacy of Dublin as the engine of growth and recovery.
Throughout the Celtic Tiger years the needs of our biggest city have been inexplicably glossed over. Capital cities are hugely significant economic drivers and a separate Minster for Dublin, rather than the diversion of an elected mayor, would have been a simple and effective way of putting the city at the centre of government policy and ensuring the co-ordination of key services, as well as providing a platform to market it to the international community.
Finally, if there is one enduring lesson from the Celtic Tiger years, it must be the cost and availability of housing. While it is understandable that many yearn for a recovery in the property market, we must avoid old mistakes.
A sound housing policy is a fundamental requirement of a sustainable economy and its absence has resulted in, among other things, a generation of talented people now burdened with debts that will not allow them to take risks, whether by changing careers or starting businesses. This, in turn, inhibits the development of a stronger and more cost-efficient labour pool and deprives us of a significant driver of growth. Addressing this problem must be a priority.
One welcome development with our new Government is its emphasis on international alliances. A corporate recovery plan for Ireland must, of course, regain the trust and respect of the international business and investment community. However, we must be equally diligent in attracting talented and experienced overseas graduates to enhance our national labour pool.
We face a great deal of competition internationally for this vital resource and it would be easy, at a time of high unemployment, to be less attentive to this issue. Sectors such as fund administration, digital technology and e-commerce require the circulation of international business expertise and, if Ireland is not perceived as an attractive country to locate in, businesses will be forced to follow the talent trail elsewhere.
Ireland's recovery will be built on tough decisions but solid foundations. The current preoccupation with the issue of interest rates is understandable but misplaced. Above all, we must ensure this debate does not distract us from the bigger picture and the positive steps we can take to aid our national recovery. Businesses are about people and Ireland needs to make a priority of harnessing this, its greatest resource.
Peter Carroll is Managing Partner of BDO
Sunday Indo Business