Irish productivity must improve - Cowen

Ireland must pursue improvements in its productivity as an economy with the same commitment it had to secure peace in Northern Ireland, Minister for Finance Brian Cowen told American business interests in Dublin yesterday. Laura Slatteryreports.

Speaking at the American Chamber of Commerce's Thanksgiving lunch, the Tánaiste said the Government was committed to developing "a modern flexible environment" for business and improving its competitiveness.

A major national drive to increase productivity in all sectors of the economy would require multiple policy actions, including a high level of capital investment, he said.

"I believe this must be pursued with the same commitment that we as a nation invested to tackle unemployment and to secure peace in Northern Ireland."

The Tánaiste assured the American chamber that government policies would continue to provide an attractive environment for private-sector corporate investment in internationally traded activities.

Mr Cowen said the medium-term growth prospects for the Irish economy should be driven "in no small part" by the high-technology exporting sector, with US firms playing an important role.

"That is not to say that we in Ireland take this as a given," he stressed, adding that the relationship between Ireland and US-owned firms had proven to be mutually beneficial in the past.

The Government would continue to invest in education at "fourth level" to deepen the pool of skilled labour available to high-technology firms, Mr Cowen said.

The Republic's tax credit scheme for research and development (R&D), which the American chamber wants to see improved, is critically important to the future health of the economy, he added.

Mr Cowen also reiterated his opposition to the European Commission initiative to introduce a common consolidated corporate tax base.

"Corporate tax harmonisation is neither necessary nor good for Europe. We do not see how it will advance European competitiveness," he said.

A common corporate tax base was an "inherently flawed" idea and would be very inflexible, hampering individual member states such as Ireland from taking account of local needs, Mr Cowen added.

In its pre-budget submission earlier this week, the American Chamber of Commerce called on the Government to reinstate the ceiling on the amount of PRSI employers must pay in respect of employee salaries.

It also wants higher investment in infrastructure and tax changes in areas such as patent royalties and intellectual property.