More to do for cost-competitiveness

MUCH done — more to do. That’s the verdict on the cost of doing business in Ireland, according to the latest study by the National Competitiveness Council.

The annual report, published yesterday, finds that while there have been significant improvements in cost competitiveness over the last two years, further progress is needed. The study also finds that cost reductions have resulted primarily from cyclical factors like the collapse in consumer demand, both at home and abroad.

“Costs in Ireland are moving in the right direction and as a result Ireland has become a more attractive location to do business, but we cannot rest on the oars,” said NCC chairman, Dr Don Thornill.

“If we are to face down emerging threats such as increasing global oil prices and a resumption of inflation, Irish policy must deliver outcomes which embed lasting, structural reform. Only structural reform will ensure that the gains are permanent and will not be quickly be eroded upon any resumption in growth.”

Even though prices have fallen since 2008, the cost of a range of business services remain relatively expensive compared to other jurisdictions, including property, calls from landlines and legal fees.

Recommendations to Government in the report include: the introduction of a residential property tax; the establishment of an independent regulator for the legal profession; the phasing out of subsidies for peat generated electricity; new taxation measures designed to protect job creation and facilitate a recovery in consumer demand.

The report highlights that restoration of cost competitiveness is central to any economic recovery. The results were welcomed by Martin Shanahan, chief executive, Forfás, Ireland’s policy advisory board for enterprise and science. However, he added: “Implementation of the Council’s recommendations would represent a major step in ensuring Ireland’s future competitiveness and prosperity.”