Speaking at the ITLG convention in the University of Limerick Mr Lenihan, who now works as an adviser to the Skolkovo Foundation, said since the 1960s, Ireland has incentivised property at the expense of business.
“If you look at the performance of the Irish state on tax, we spent enormous amounts of time and effort since the 1960s onwards incentivising property.
“We now need to look at those incentives and direct them towards the enterprise sector, and that’s the challenge here,” he said.
Mr Lenihan now advises a multi-billion dollar Skolkovo Foundation on how to develop and commercialise companies and research in Russia. He has overseen the vast amounts of money that Russia is putting into creating its own version of Silicone Valley.
He believes that unless the EU and Ireland reform how they are spending their capital, the EU will fall behind the emerging nations in the Far East.
“Mr Lenihan said that the EU needs to address the huge amount of money it is spending on welfare and redirect that money into productivity.
“George Osbourne created this very interesting statistic. Europe has 5% of the world’s population, yet it has 25% of the world’s GDP and 50% of its social welfare spending.
“This is a big elephant in the room in this country and in Europe, how do you make Europe more productive, how do we actually shift spending like these emerging economies are doing... in the direction of entrepreneurs and start-up companies,” he said.
He warned that if Europe failed to act we will all end up working for companies in Asia.
“This is a huge challenge for Europe and if action is not taken in five to 10 years in terms of the reform of current systems and the redirection of productive capital towards the enterprise sector, there is going to be problem and we will all be basically working in the Far East,” he said.