Imagine a few years ago, before TV3 and TnaG, cable and digital, when Irish television meant RTE, that CNN and Sky decided to set up European television production facilities in Dublin. Imagine how it would have transformed the domestic, localised Irish media. Imagine then that RTE itself began to compete with the new arrivals and became an international media organisation.
Something like that actually happened in financial services. The Republic has internationalised to an enormous extent over the last 10 years or so, and by no coincidence since the establishment of the International Financial Services Centre in 1987.
Most of the profound changes now affecting financial services arise from international market forces. But one major change is of our own doing, the planned reduction of corporation tax rate to 12.5 per cent in 2003. The effects of this change are becoming more apparent as 2003 approaches. In essence, financial services in the Republic from now on will be dominated by business offered outward. The agreement with the European Commission in 1997 to end the IFSC 10 per cent special rate in 2003 and replace it with a general corporation tax rate of 12.5 per cent was visionary. What was called the "ringfence" around the IFSC is now going fast. And rather than a small, specialist pool being subsumed into in a large lake, it is changing the lake altogether.
The largest life assurance company based in the Republic is now, for the first time since anyone can remember, not Irish Life, but an Italian company, Sanpaolo Life. International life assurance from the Republic has grown more than 26-fold since 1992, when only two companies wrote international business. Now there are 28 international life assurance companies from the IFSC.
The largest investment-management company in the Republic is Europlus, part of the Unicredito Italiano group. Its assets under management, €73 billion (£57.49 billion), tower above the assets of Irish managers.
The assets of IFSC banks are nearly as large as the assets of domestic banks. It is only a matter of time before they exceed the domestic asset base.
The point of what I am saying is that there is no longer any "domestic" and "IFSC" category of financial services, in economic and business planning terms. There is only a financial services sector, the businesses of which, to one degree or another, trade internationally. International business is where growth in employment will come from. It will more than compensate for consolidation in the hitherto domestic-banking sector.
Financial services in the Republic will become predominantly part of internationally-traded services. Banking, investment management and life assurance join with other traded services such as software development, communications and consultancy, which have been radically internationalised. This internationalisation of business here is the real context in which the long-awaited Government decision on a single regulatory authority is taking place. It would be a double-barrelled shotgun blast in our Irish foot if the financial regulator were not given a mandate to facilitate and promote the development of this sustainable new industry.
Political backing for the IFSC has been consistent from governments since 1987. Again, contrary to the impression of recent headlines, political backing for the development of international financial services is high, and shared across parties.
The last word on IFSC banks and tax compliance still belongs to the Comptroller and Auditor General, who wrote in his report on DIRT last year that IFSC banks had "co-operated fully" with comprehensive Revenue inspections in 1998-99. "In fact," he said, they "went beyond their legal obligations by supplying Revenue with a full listing of their non-resident accounts."
And, in case you missed it recently, the C&AG wrote in plain English: "Examinations of IFSC banks did not reveal any bogus non-resident accounts." Zero bogus accounts. Nothing that was said at the Public Accounts Committee - which did not see a need to subpoena any IFSC bank - or since, has contradicted this finding. Irish people and Irish management have proven that they can operate international businesses of all sorts to compete at the highest levels. A wide consensus is that countries will generate wealth increasingly in knowledge-based, internationally traded services. The more financial services are seen as part of this trend and less the old image of "the local banks", the better for the development of a political and social consensus that this is the type of business we should develop here. Because financial services are regulated, the degree to which the Republic remains a competitive location for international financial services will be heavily influenced by the quality and style of regulation. The IFSC has proven that we have it within our ability to get this right. It is within our grasp to do so again.
