During a Seanad debate on the Finance Bill 2010, I said: Senator MacSharry spoke about the suggestion of a subsidy for the traders and retailers near the Border. While I have no idea how this could be made to work, it seems a much better solution than the proposals I have heard from others...

My mother came from County Armagh and my father came from County Down. My only sister married in Portadown. It is anathema to me to hear people suggest we not being Irish if we shop across the Border. I am not a partitionist but people who argue we should not shop across the Border are partitionists and we need to fight very hard to avoid that sort of thing.

I was in Brussels yesterday at a meeting at which 20 of the 27 EU countries were represented and we had plenty of time to discuss the economy. There is clear recognition of what the Minister for Finance has done and what has been achieved in recent months in Ireland. I was impressed that some people knew we had been spending €20 billion a year more than we could afford and that it was costing us approximately €400 million a week. The people present were not economists as such; they were traders, business people, retailers, wholesalers and people in distribution. Greece is the country of which we all know and it is a reminder to us of what has been achieved and how we have managed to get out, but we have no room to relax.

The example of Latvia was cited to me. It had a GDP of -17% and is now down to -2%. Ukraine, whose Parliament’s Speaker visited the House during the Order of Business today, came from a GDP deficit of -15% to +2% or +3%, all inside a very short period of time. It is possible to achieve it. We are no longer part of the PIGS group of countries and I hope we do not get back into it. It is a reminder to us that we need to keep our attention on it and cannot afford to relax. Somehow or other we all - not just the Minister - need to ensure we can convince the rest of our community, especially the public sector unions, which do not seem to understand, how serious it could have been and how serious it could still be if we do not manage to achieve what we have set out to do. It very difficult to explain to them why senior civil servants did not seem to have the same setback that the junior civil servants had. Perhaps the Minister might again explain his thinking on that.

I am concerned that some of the steps the Minister is taking could damage our ability to get on top of things in the long term. One of them is the carbon tax. Senator Twomey has already spoken about this. Yesterday France abandoned the carbon tax because many French business people thought it would put them at a disadvantage compared with other EU counterparts which did not have a carbon tax. One media website stated: “Speaking in Parliament on Tuesday, Prime Minister François Fillon said the country’s environmental policy needed to be ‘better coordinated with the European Union’, particularly so that French companies do not lose ground against their German counterparts.” My attention was only drawn to this at approximately 11 o’clock this morning. It goes on to quote the countries that have introduced or plan to introduce a carbon tax and those which have advised they are definitely not going to do so. It also quotes those countries that do not want tax harmonisation, of which we are one. It is therefore highly unlikely there will be tax harmonisation. We might find ourselves placing our businesses at a disadvantage because we have a carbon tax when our competitors do not.

This brings me on to my main point which is that we depend so much on exports and have been very successful in that regard. I had coffee yesterday with a man from Finland who spoke about the great difficulty that country has had because its exports have dropped quite dramatically. Our exports have not had any such dramatic drop and we must not do anything that might affect that. The danger is that anything that is not involved in exports may be in danger. When I was in college, Professor George O’Brien, who was dean of the faculty of commerce, and James Meenan explained to us that a country is a bit like a household and if one takes in one’s washing for other members of the family but does not actually export or manage to get anything from outside the country, one is not going to be able to afford to live for too long on that basis. We need to focus our attention on exports to ensure we can succeed.

I very much agree with the overall sentiment of the Finance Bill, which aims to help to foster enterprise and employment, hopefully as the entire world economy is starting to improve. A few years ago I met the Secretary of Labor in the Administration of President George W. Bush. She said her job was not to create employment; her job was to create the environment so that the private sector could create the employment itself. When I hear calls for us to create jobs, I feel the jobs are much more likely to be achieved by the environment the Minister is trying to create in this Bill. The world economy is starting to improve, I hope, despite concerns about double dips. There are some positive signs.

The Bill is very supportive of foreign direct investment. I hope the changes to the corporation tax regime made in the Bill will make it easier for multinationals to locate their headquarters, research departments and patents in this country. Experts on taxation have indicated that changes to the tax treatment of royalties will be a major boost. The legislation encourages multinationals to leave their patents and copyrights in Ireland by easing the administrative burden and providing tax credits. As has been shown by research, making the tax code simpler to understand and more fair, not just for multinationals but also ordinary people, actually raises more money for the Government. I strongly believe income can be increased in that way. I have opposed percentages all my life. Sometimes one can increase income by reducing the percentages. I have learned this from business but the same principle also applies in governance.

I recall when the former Minister, Mr. Charlie McCreevy, reduced the betting tax rate. He was howled at by some people who said he was looking after his friends in the horse industry. If I recall correctly, he reduced the betting tax from 20% to 10% and told us the following year that he had made more money from the 10% rate than from the 20% rate. He then reduced it to 5% and returned the following year to tell us he had also made more money from it. I am a great believer that one can sometimes make more money by reducing tax rates. We could also make more money by simplifying the tax code. When one makes the tax code simpler, one eliminates loopholes and opportunities for individuals and businesses to cheat the system. This is an area in which there is room for more simplification for the customer.

The Bill contains measures to enhance the research and development tax credit. I hope this will encourage even more multinationals to locate here. New talent will be attracted to conduct research and development in Ireland because of the measures being proposed. While the Government has made no concrete commitment to research spending beyond 2013, the recent report from the innovation task force commits the Government to investing at least 3% of GDP in research and development until 2020. Not to put a damper on such an aspirational document, but is this wise, given that the traded goods and services sector is dominated by multinationals?

There has been massive emphasis on promoting the idea that research and development in our universities will somehow mean we can create the new Google or eBay overnight. Government policy appears to have overlooked the obvious. Innovation policy should be focused on the needs of the customer, as is the case in Cambridge. Mr. David Connell is one of the authors of a very interesting report entitled, Exploding the Myths of UK Innovation Policy. In it he states: “The business of carrying out research and development contracts to solve customer problems and develop new products has been highly tuned by leading Cambridge firms.” What happened in that case was that the universities had developed the product and the multinationals had taken it on and created jobs on that basis. We should heed this important report which emphasises that paid research and development to solve customers’ problems often leads to ideas for standard, brand name products that can be commercialised through subsidies or separate spin-off companies. It is called a “natural, demand-led innovation process” which leads to high wage rate, export intensive industries - exactly the type of industries that are ideal for Ireland. I said earlier that I was in Brussels yesterday. I spoke to a man from Finland who told me how Finland’s exports had dropped dramatically in the past year - the Finns are hoping to revive them - because they were based on basic products and not focused on the needs of customers in terms of research and development. That is a much better way to proceed and we must work hard to do this.

Our indigenous food industry is an example of where research and development are important. Food production is a massive area with potential that is often overlooked. I was a member of the group which set up Bord Bia in 1994. Ireland is renowned for food production. The United Nations Food and Agriculture Organization, FAO, has stated global food production will have to increase by 70% - I was amazed by that figure when I read it - to provide for an additional 2.3 billion people by 2050. In spite of this, I was disappointed when the Minister for Communications, Energy and Natural Resources, Deputy Ryan, said we should not even discuss genetically modified food. The world must produce more food and this is Ireland’s strength. We should be able to debate the issue and discuss whether crop productivity can be improved with science. We should debate it, rather than say it is not open for discussion. I accept that Senator Boyle and I do not agree on genetically modified food. I am not sure who is right but I am sure we should debate the issue. We should not ban such a debate.

Our farmers must compete with others who are employing modern methods of production, otherwise we will be left behind. We need to find a way to be able to handle that. Ireland is the 24th largest milk producer in the world and the 17th largest beef producer. On the other hand, New Zealand is the 8th largest milk producer and its co-operative Fonterra is the world’s largest dairy company which had a market share of 2.7% of world production two years ago. Glanbia was the 20th largest, with a market share of 0.4%. New Zealand is not as big as Ireland. Why can Irish producers like Dairygold, Kerry and Glanbia not be the biggest in the world? Why is a country like New Zealand much more successful than Ireland? It depends on our investment in research and development.

An area on which I wish to touch, which was mentioned by the Minister, is the potential for the expansion of Irish education. Educational services is another area where there is much room for expansion. We are world renowned in the field but Irish education exports do not even have a separate category when it comes to service exports. What must also be borne in mind is that education is Australia’s 3rd biggest export earner, while in New Zealand education accounts for 7% of its export earnings. My contribution today concentrated on exports because, to a large extent, we have to depend on them. According to a new European Commission study of third level education international recruiters believe that Ireland produces the most highly-employable graduates in the world, which is a great compliment to us. Universities in other countries have rated Ireland’s universities as excellent. Another report from the European Commission stated that, considering their size, Finland, Ireland and Sweden are the countries with more universities pointed out by peers as being excellent. In analysing the efficiency of the various third-level systems worldwide, it found that Ireland, Japan, Sweden, Britain and the Netherlands were top of most efficiency lists. We have major opportunities to do things in that area.

The University of Phoenix, North America’s largest private education provider, has increased enrolments from 384,000 to 455,000 in one year, which has been done without an increase in physical buildings. I am an adjunct professor of marketing in NUIG - I asked what “adjunct” meant and was told it means I do not get paid. I gave a lecture to five classes last year. One was in France, one was in Russia, one was in Virginia, one was in another part of the United States and one was in Galway. They were able to question me. It was very interesting to see what one can do with modern technology. The University of Phoenix has increased its enrolments by a dramatic amount which has been done without any increase in physical buildings. It was able to use electronic means of communicating and lecturing. In Ireland, Hibernia College is pioneering on-line education and exporting its knowledge to foreign universities.

As I have mentioned before in Doha, the capital of Qatar, there are branch campuses of a number of universities from the United States, including Cornell, Georgetown, Texas A&M and others. The University of Sorbonne in Paris has set up a campus in Abu Dhabi. The Royal College of Surgeons, long open to foreign students, has set up branches in Malaysia, Bahrain and Dubai, but there is much more that other Irish institutions like UCD, Trinity College or renowned second level or third level schools could do.

We could promote Irish exports through new European Union embassies. This country relies massively on exports. I have always argued that St. Patrick’s Day is a brand which we should continue to use effectively around the world. We need to better promote our products, such as food, abroad. The formation of the European Union diplomatic service, the European External Action Service, and the new embassies that will be established could provide a really significant medium to promote Irish exports. There are a lot of Irish companies which want to expand but face some difficulties in doing so. How can we help such companies on the ground in the international arena? The External Action Service is meant to focus on diplomatic issues, but there is great scope for the service to get involved in business issues. In particular, small and medium Irish enterprises need help on such issues.

For instance, what does an Irish company which wants to expand in a country where there is no Irish embassy do? The European Union will have more embassies than any other country in the world, including the United States, so a massive opportunity is provided by the European Union embassies for Irish companies to expand into unexplored markets. I urge the Government to promote the idea of using the new European Union embassies to provide assistance to Irish companies which need some initial help to expand internationally.

I have touched on five different areas which are all related to the Finance Bill and what we should be doing. I said I support the Bill. We need to do a strong job in order to ensure we identify and maintain our reliance on exports and make sure we do not run into the same problems which could happen if we do not keep a determined, objective view on how we can manage to balance our economy.

For the full debate, please click here.