Notion of the smart economy 'just a fiction'
Our ailing small business sector needs a radical three-point action plan, Ulick McEvaddy tells Ronald Quinlan
THE 'smart economy' is a "fiction". That's the view of Ulick McEvaddy, one leading businessman who, despite the gloom, fully intends to double his company's workforce over the next 18 months.
"There's only one smart economy and that's the economy that's innovative. To say that we're going to have a high-tech smart economy overnight; it's not going to happen. It's going to be a gradual process over five or six years with a concentration on education in that direction. So let's get on with what we're good at already, innovative things. Give me a good team of Irish men and I'll take on the world," says Mr McEvaddy says.
But what of traditional manufacturing, and its place in the Irish economy? The 'official' line is we can't compete with the lower production costs of other countries.
Mr McEvaddy doesn't accept such 'wisdom'.
"I think there's a huge amount of manufacturing we could do here. We shouldn't just look at the low-cost bases like China and India for manufacturing," he says.
"We could do lots of things. I mean there are loads of guys doing successful manufacturing in this country, being very competitive and winning the game. The pessimism that's pervading right now is incredible," he adds.
That pessimism was certainly heightened last Monday with the publication of figures from the Central Statistics Office showing one in three men under the age of 25 are now unemployed. What can be done right now to get this vital group in our society working?
According to Mr McEvaddy, Small and Medium Enterprises (SMEs) -- the "lifeblood of the economy" as he describes them -- will be the key to getting our young people off the dole queue. He has a three-point plan to help SMEs.
The first part of the aviation entrepreneur's plan would see the recapitalisation of the banks through the introduction of a new SSIA scheme.
On this, Mr McEvaddy says: "Recapitalising the banks doesn't necessarily have to be done by government alone. Now suppose you had SSIA II. This is how it would work. Supposing you invested €50,000 or €100,000 in bank shares; let's create a 'B' share which the Government guarantees. In other words, you won't lose your original investment, but you will leave it in for five or six years, and if you make a profit on those shares in that period, you can make that profit tax-free.
"There's €11bn on deposit in Bank of Ireland, and a similar amount in the AIB. Just working out the numbers, we have the money to do it. Recapitalising the banks could be done overnight with an innovative structure that doesn't involve the Government putting taxpayers' money in."
Part two of the McEvaddy plan would see business owners being allowed to tap in temporarily to their firms' pension funds to source much-needed working capital without penalty from the Revenue Commissioners.
"The biggest thing we have to do is look at what small and medium enterprises need right now, and that's quick cash because a lot of them are going to fail, not because they're not profitable, but because the cash flow isn't there to support their needs. For the next three years, the directors of SMEs could be allowed to use pension funds to support their business in the short term, and once they replace that cash that they use within three years they would not be taxed on it. Now the SMEs would have access to cash that they don't have from the banks."
The third and final element of the plan is directed at fixing the property market.
"We need to restore the property market to equilibrium. What I would do with the property sector is to take stamp duty off all property sold over the next 12 months. And I would do one more thing. On each of those houses I would give the purchaser back 50 per cent of the VAT," he says.
Asked how his three-point plan would help our unemployed, and specifically those men under the age of 25, he is clear.
"The first thing we have to do is stabilise. If we don't stabilise, then these young men can't be re-employed. So we have to start the stabilisation process urgently, and then we should start seeing people coming back to work. SMEs are the lifeblood of the economy. They're the big employers. If we can get them back employing again, using the cash they have in their pension funds, we're done."
So what of the Government's so-called 'smart economy' plan?
On this, Mr McEvaddy is blunt in his dismissal.
"That's crap in my view. I think we should stick with our last. The cobbler should always stick with his last. We're good at some things. The problem is we're competing with the Indians and the Chinese in cyberspace. They're very clever people. We're very clever, but in different facets.
"The one thing about the Irish is they'll find their way out of any problem if they put their minds to it," he says.