The leader of the Labour Party, Mr Pat Rabbitte, has launched a determined effort to woo the support of the business community, backing efficient public services and properly regulated competition rules.

Willing to stop "fighting old ideological battles", the Labour leader, in a speech to the Cobh Chamber of Commerce, acknowledged that his party's past relationship with business had been difficult.

"Let's be honest with each other. Labour is not always seen by the business community as a natural ally. Sometimes, people think in terms of a stereotype of Labour as a cloth-cap party.

"Sometimes they associate us with a different stereotype, that of supporting public spending, no matter how inefficient," he said in a speech that had been flagged in advance by his office as "significant".

Mr Rabbitte went on: "I want to ask you today to think again about Labour. I want to ask the business community to look again at what Labour has to say, and what Labour policies mean for Irish business."

Accepting the need for change, he said: "We all know the benefits that competition can bring, and the case that can be made for different forms of ownership in some instances, but these are not ends in themselves.

"You have to demonstrate how consumers will benefit when you privatise, and you have to be clear how competition will work in practice before you deregulate. If competition is not possible, then robust and accountable regulation may be an alternative.

"Sometimes it is re-regulation you need, not deregulation. Industries differ and, in each industry, you have to present a case which stands up to scrutiny," he said.

"It is not Labour who wants to waste time fighting old ideological battles. Like the Japanese soldiers who weren't told when the war was over, some Government ministers seem to be stuck in the 1980s, and persist in throwing Thatcherite shapes."

The Minister for Transport, Mr Brennan, "seems intent on privatisation and competition for their own sakes, with no attempt to present an adequate case, and is seemingly intent on precipitating industrial strife", he said.

"That kind of bulldozer approach is just as ineffective as is refusal to contemplate change," added Mr Rabbitte, who had earlier met Cork Airport workers about the Government's plans to split up Aer Rianta.

Yesterday's speech marks a development in Mr Rabbitte's thinking about the future for State companies and about competition, which he first illustrated in a prepared address for the Labour conference in May.

Acknowledging the doubts that exist even within his own ranks by his shift, Mr Rabbitte said: "When I make these arguments, I am sometimes accused of moving to the right. I don't accept that argument.

"Labour is a party that has its roots in representing ordinary people, so it is only logical that we should defend those who are consumers of public services as well as those who provide them.

"Labour has had a key role in the educational revolution of the past 35 years, unfinished though it may be, so it is only natural that we should seek support from the new middle class which it has helped to develop.

"And because Labour has been central to the transformation of the Irish economy, it is only logical that we should seek the support of the business community in continuing that transformation," he declared.

Better public services can and must be created, he said. "They are central to what Labour is about. As well as being motivated by a concern for social justice, we believe that high-quality public services, providing good value for money, are essential for business to prosper."

The Government's "stop-start approach" cripples public services. "It is little wonder that people, and I'm one of them, complain about value for money, if budgets are expanded at 20 per cent plus before elections and then suddenly are being pared back once the election is over.

"Business needs its workforce to be able to get to work. Its needs its workers to have access to high-quality and affordable childcare. It needs to be able to recruit educated and skilled people.

"At a basic level, it needs its employees to be able to access healthcare quickly and at an affordable price," he continued.