OUR inability to reform tax policy so that it promotes innovation and hard work is a failure of political will "for which we may yet pay dear", according to the chairman of the institute of Personnel and Development (IPD).

Mr Frank Brennan told delegates at the annual conference in Galway yesterday that, "tinkering with tax rates is not a solution. Profound reform based on the new economic realities is required."

Turning to the rising public sector pay bill, Mr Brennan said: "The industrial war fare that passes for the management of change in some sectors of the public service is a national scandal." Constant cost improvement is part of every day working life".

"We cannot afford the luxury of `payment for change' - the only payment for change in the new Millennium of Global Competitiveness is survival - whether at national, corporate or individual level."

He also said he is becoming suspicious of the Celtic Tiger image, which conveyed a sense of economic power that Ireland does not possess. It could lead some economic interests to "abandon good sense and sound management".

Mr Brennan preferred the image of "the Celtic Fox small, hardy, clever, adaptable, indigenous and wary for its own preservation. Like the fox, we can take nothing for granted in our environment - times and fortunes change. incidentally, tigers are now an endangered species, the ever adaptable fox has even become urbanised."

The Celtic Fox has to survive in a new economic order where, "yesterday's certainties are being blown away and replaced by great and unpredictable challenges". Besides the challenge of EMU, there was the prospect of a rapid erosion in EU Structural Funds and increased competition from Eastern Europe.

This competition would not just be in the battle for export markets, but for foreign investors as well. Meanwhile, "technology changes so fast that it sweeps us along with it almost imperceptibly".

Mr Brennan said human resource managers had a key role to play in adapting the Celtic Fox to this new environment. "We as individuals, can constantly add value to our organisations so that our current economic boom is not blown away."

Key areas to be addressed were partnership, the concept of intellectual capital, diversity, technology and "our responsibility to the society in which we operate".

Managers must develop the skills to manage change, "but they must also have the courage to seek changes in the social and economic infrastructure, when these impact on the welfare of people at work or the economic success of organisations".

Managers had particular insights into the educational needs of the economy and how far the educational system reflected these.

"It is my strongly held belief that the absence of a comprehensive system of vocational qualifications has already placed us at a serious competitive disadvantage to our nearest and most important competition, the United Kingdom.

He welcomed the publication last week of the White Paper on Human Resource Development and said the IPD would be making a considered response shortly.

If change was the way of the future, Mr Brennan said that, "the bedrock for this new norm has to be trust, partnership, sharing and consensus. Sterile war games, whether practised by management or employees, are stale, flat and unprofitable. Partnership is not easy - its skills must be learnt by all parties.

"It requires unlearning as much as learning, but it must be the way forward for our Celtic Fox in the long run, if the aspirations and needs, sometimes conflicting, of all sectors of society are to be met."

Mr Brennan welcomed the new national agreement, Partnership 2000, and its emphasis on partnership in the workplace.