What we must do to stop this country going broke
Business leaders share their visions to pull the country out of recession, writes Daniel McConnell
Where will Ireland's recovery come from? The country is in crisis and needs a plan to get us out of this mess, and quickly.
We have a Government in crisis, a public sector up in arms over cuts, ready to cause civil unrest, and a private sector haemorrhaging workers. Ireland is going broke, but how do we get out of it?
Today, from talking to new entrepreneurs starting companies in the recession, economists, business leaders, and politicians from all over the country, the Sunday Independent explores what Ireland needs to do to emerge from this recession.
After hearing what they have had to say, a few things are perfectly clear. The Government has done its best through neglect and ignorance to run companies out of business. Small businesses are being choked by mindless and needless bureaucracy and Ireland must once again become an export-driven economy and end its reliance on foreign multinational companies. Radical new ideas, new approaches must now be adopted or the country will be consigned to economic disaster.
One of Ireland's leading business successes, John Flaherty, owner of C&F Tooling, and who is the current Ernst and Young Entrepreneur of the Year, says that major changes are needed if Ireland is to survive.
The 43-year-old Galway native, who employs over 1,200 people in five factories across the world, was deeply critical of how the country was being run. He was also strongly vocal about the lack of deep thinking when it comes to planning Ireland's economic future.Mr Flaherty was disparaging on the lack of action by the Government in terms of getting the public finances in order.
"They should have made the cuts six months ago but they pussyfooted around it. They've waited for far too long," he said.
But, as thousands of people are losing their jobs, with thousands more being hit with pay freezes and pay cuts, we asked what he would do to reverse Ireland's fortunes.
Central to Mr Flaherty's vision for recovery is a total re-think of the country's attitude to education. While we do a lot of talking up about how our education system performs, the truth is actually very different.
"Firstly, we must give every kid equal opportunity in terms of access to quality education. Rather than putting money into buildings, put it into teachers. In Asia they stagger their classes, so rather than wasting money on buildings, they run one set of classes in the morning and another in the afternoon. Invest in the real infrastructure, people," he said.
Mr Flaherty feels Ireland is once again suffering a significant brain drain and he thinks this must be reversed immediately to try and keep the country's brightest and best at home.
"In Harvard or in Oxbridge, they pluck out the best and they invest in them because they are the brightest. We don't have any of that here and year after year we lose a lot of our best people to cities like London and New York. It's criminal and it must stop," he said.
Mr Flaherty, who has built his business up since its launch in 1989, said Ireland can't rely on the Government to fund every new initiative, saying private business should replicate the success of California's Silicon Valley.
At the other end of the scale, Dublin businessman Gareth O'Brien ran his own multi-million dollar printing software business in Texas for over a decade, but returned to Ireland last year with his family and is launching a new business here.
Speaking to the Sunday Independent, he was scathing about the level of "hoop jumping" and mindless bureaucracy he encountered in the formation of his new company. He estimates that all the red tape has delayed his launch by up to six weeks.
"It seriously makes you want to pull your hair out when you see what's happening to the country, and it's like everywhere you turn you get stung.
"The way the system works is a massive turn off for businesses starting here."
Mr O'Brien gave a number of stark examples of how chronic red tape currently acts as a major barrier to businesses developing.
"A lot of my business will be done on the internet and so I had to register my domain name. I registered the UK and EU domains in 20 minutes, the Irish one took over a month. It was the same with registering the company name, it all took too long. On top of that you have high energy costs and inflexible employment legislation. It's crazy."
Mr O'Brien's deepest criticism of the Irish system was the removal of the PAYE allowance of about €1,500 because he is a director of his company. He said while the money is not the issue it totally sends out the wrong message to people like him trying to get businesses going in this country.
"It's a clear example of how perverse the system is here. It's like 'thanks for taking the risk to start a business at a time when thousands are closing and oh, by the way, that'll be €1,500 please'. The whole thing is ridiculous," he said.
Publican Conor O'Dwyer, owner of the Stillorgan Orchard, a leading pub on Dublin's south side, echoed much of Mr O'Brien's criticisms of the system here.
"We have taken several knocks in terms of the smoking ban, drink driving and minimum wage, while getting no leeway elsewhere to help us stay in business," he said. "If the chronic bureaucracy was eased and the banks began extending credit to good solid businesses, then things would be a lot better. It's not rocket science."
Such treatment of small business owners and new companies is the opposite of what the Government should be doing to foster new jobs, according to Friends First Chief Economist Jim Power.
He said the Government must ensure that energy costs are reduced, employers subsidised for employing people as opposed to simply paying the dole, and he also feels major tax breaks should be given to small businesses, which he said should be the future of Ireland's business.
"It's ludicrous to burden companies with turnovers of less than €750k or even higher with having to be VAT-registered," Mr Power said.
"If you remove that, it would make life that much easier without costing a huge amount. We must now look beyond the multinational system and look to foster a real indigenous entrepreneurial Ireland." Mr Power also called for Taoiseach Brian Cowen to form an economic war cabinet to make up for the woeful lack of business experience at the cabinet table.
Fine Gael has done its best to offer a genuine alternative and said the key to Ireland's success must be a lasting commitment to research and development. While Fine Gael's finance spokesman, Richard Bruton, has led the charge, others in the party are examining ways to aid Ireland's recovery.
Senator Paschal Donohue, who worked in big business for over a decade before entering the political realm, is convening a meeting of new Dublin entrepreneurs later this week to examine what they want to see happen from Government. "It's time we sought to find out exactly what business guys want from Government, and I hope that the exercise will prove to be useful," Mr Donohue said.
Labour's Joan Burton has also stressed the need for proper upskilling and says that any cutbacks in the National Development Plan (NDP) would deeply damage Ireland's ability to get through the current crisis.
"We need to commit fully to bringing our infrastructure up to speed, but we must also use this opportunity to think of new schemes and ideas to get people off the dole and into the workforce," she said.
- Daniel McConnell
