Forfás urges big cuts in energy and waste costs

FORFÁS, THE national advisory board for enterprise and trade, has called for significant reductions in the cost of domestically provided services, such as energy and waste management, to improve competitiveness.

In its annual report for 2008, the organisation said the cost of doing business in Ireland had to be brought down to a “level competitive with our trading partners”.

Chief executive Martin Cronin said the extent to which costs had to fall here depended on the level of productivity gains that could be achieved.

“The more productive our industries are, the higher the cost base that we can sustain . . . If productivity was to remain static, costs would have to come down a long way, maybe 20 or 30 per cent , Mr Cronin said.

“If we can keep increasing productivity it reduces the degree to which costs have to be brought down.”

While export-focused companies had performed well during the downturn, those operating in more “sheltered sectors” which did not export “don’t have as much direct pressure on them to increase productivity”, he said.

The report notes that last year “Ireland’s relative cost competiveness against benchmarked locations” for a range of business costs such as utility costs, accountancy and legal services, had “not improved in these areas”.

On a more positive note, the report says Ireland’s export performance last year had been relatively resilient and that companies in the State could compete globally in the life sciences, ICT and electronic commerce sectors.

Mr Cronin said there were opportunities for growth in these “high-value innovative activities” if short- and medium-term issues were addressed.

A fall in operating costs was required in the short term and infrastructure investment was required for the longer term.

Mr Cronin identified improved broadband capacity capable of handling next generation web-based communication as being vital.