The study issued yesterday by Forfas, Shaping our Future, is not a blueprint for industrial development. It will not form the basis of a Government White Paper, but it will make a major contribution towards heightening the importance of the competitiveness agenda. Its authors and Mr Ruari Quinn, who requested it, deserve commendation.
There is always the possibility that the Forfas tome (the summary report alone runs to 64 pages) will be left up on the shelf. Successive governments have displayed much enthusiasm over other major studies (Commission on Taxation, Culliton Report, Commission on Social Welfare) only to shelve and then forget them.
For the last two decades there has been a regrettable tendency to evolve economic and industrial planning on an ad hoc basis; long term planning meant, at best, a three year programme agreed by the social partners.
Such an approach was never ideal but in the climate in which Ireland must compete today it would be foolish in the extreme. The merits of long term planning were fully recognised by the Irish Congress of Trade Unions in their Managing Change document. The Government's triennial review of industrial strategy, due out after the summer, can and must focus particularly on planning, on encouraging enterprise and establishing the competitiveness agenda.
People in business, when questioned on competitiveness, are prone to reply that interest rates, currency rates and, of course, taxes are what put Irish industry most under competitiveness strains. This is undoubtedly true, but input costs such as these are short term factors only. Process - how research, design and human resources are managed - is vital too. Performance in the provision of the goods or services is also vital. Shaping our Future amply illustrated the enormous possibilities for encouraging enterprise and competitiveness.
The document falls down on education. Enterprise is a culture which is insufficiently valued in secondary schooling and it offers no suggestions to counter this. The potential is there; the County Enterprise Boards and the Young Entrepreneur Awards 7,000 entries - are proof of it. The study also makes controversial suggestions on taxation, especially that VAT be extended (to include food) and that there is scope for more revenue from property taxes. But these suggestions must be read in context. VAT on food must be accompanied by compensatory measures for low income groups. Property tax must relate to the level of services provided and the ability to pay income tax rates are absurdly high and greatly diminish the incentive to work. So too are capital taxes. As Forfas says, they can play a key role in the development of enterprise because they affect the willingness of entrepreneurs to invest.
If our politicians are serious about creating a better climate for enterprise, thereby increasing living standards and significantly cutting unemployment, Shaping our Future shows them the way it can be done. The Dail has its opportunity now to benchmark Irish business with the best international practice.