Speech to the BGE Inaugural Leadership Conference
I want to start by acknowledging the critical part that Irish business has performed – and continues to perform – in the sustainable recovery that our country is now experiencing.
In doing so, I also want to share some thoughts about the relationship between business – particularly SMEs – and the State. Because I believe that our continued economic success depends, in large part, on the Government supporting and driving innovation throughout the economy. This is in addition to its traditional role of providing the environment, infrastructure and public services that businesses need if they are to enjoy sustained success.
I have responsibility for Government policy on communications and energy – vital infrastructures that every business depends on. But, important as they are, I believe that the relationship between business and government goes far beyond broadband connectivity or energy costs.
Last month I received a very considered email from a constituent. This young commerce graduate, who has established two small start-ups, was concerned that all of his peers had opted to seek secure employment – in other words, they got “real” jobs – rather than becoming entrepreneurs. And he shared some ideas about what Government might do to address this.
But what stuck with me most of all was the line in his email where he said he understood that the Labour Party was “more focussed on social issues” than on encouraging entrepreneurship.
This perception is a challenge for my party and, indeed, for other parties too.
I am happy, of course, that there is strong recognition of our commitment to social progress. But just as important for me is the need to build a strong and sustainable economy – one that is responsive to the rapid technological change that is taking place, change that is literally framing a whole new economy. Government and business – together with employees and trade unions have to recognise this change, and understand its potential for innovation and job creation.
In prioritising job creation, this Government has recognised the important role of SMEs, and put in place a range of initiatives to support the sector.
Start-ups have accounted for two-thirds of the 90,000 new jobs that have been created across the economy since 2012 – that’s 60,000 new jobs from start-ups.
So it’s crucial that public policy continues to foster the successful development of job-creating entrepreneurship, which means supporting the small enterprises that make up over 99% of businesses in Ireland, accounting for almost 70% of employment.
We are doing this through a number of significant initiatives including:
- The Action Plan for Jobs.
- The development of regional enterprise strategies.
- The National Policy Statement on Entrepreneurship, launched last October, which aims to double the jobs impact of Irish start-ups over the next five years.
- My Department’s support for initiatives like the Digital Hub, which has nurtured almost 300 successful companies, and the National Digital Research Centre, which invests in early-stage digital research ideas and projects.
- And next month’s Start-up Gathering, which will promote Irish innovation to national and international audiences with over 300 events planned across five days and five cities.
Turning initiatives like these into tangible benefits takes determined leadership, and effective partnership between business and the State. And, as you’ll appreciate, it also costs money.
There’s a rather simplistic notion – even if it is largely discredited now – that Government support for entrepreneurship amounts, or should amount, just to reducing taxes, minimising regulation, getting off the pitch, and leaving business to get on with it. Frankly I think we should reject this notion as completely outdated and mis-conceived.
Across the globe, governments have often been first to invest in the technologies that developed into economic pillars, supporting millions of jobs.
The examples are literally all around us – aviation and space, semiconductors, the internet, GPS, and green technologies.
In her book The Entrepreneurial State, Mariana Mazzucato reminds us that the US National Science Foundation funded the algorithm that drove Google’s search engine, and that early funding for Apple came from the US Government’s Small Business Innovation Research Program.
Yesterday, along with other EU Energy Ministers at a meeting in Luxembourg, I heard Elon Musk talk about his extraordinary innovations, including his Tesla electric vehicle, and Solar City. These advances are leading the way to a revolution in the production and storage of energy, by deploying advances in technology.
Elon Musk certainly is an extraordinary and gifted pioneer and entrepreneur. But he would not have achieved a fraction of what he has without Government support.
In his review of Mazzucato’s book, The FT’s chief economic commentator Martin Wolf wrote that “The failure to recognise the role of the government in driving innovation may well be the greatest threat to rising prosperity.”
Ireland needs a major renewal in many areas of public infrastructure including smart grid, high-speed broadband connectivity, transport links, water, and other large-scale projects.
I think that Irish companies, for example those in the IT sector, can be part of the energy revolution I spoke about just now. Already, I have met so many young graduates who are keen to commercialise their ideas in this sector. But just like Elon Musk, they can’t do it on their own. They need support and they need investment, and some at least of this must come from Government . This can be directly through agencies like Enterprise Ireland, Science Foundation Ireland, or the Sustainable Energy Authority. Or it can happen through EU funding instruments. And there is incredible work being done in the universities and other research institutions, collaborating with business to drive innovation and to deliver jobs and sustainable growth.
I think all of this demonstrates that there is an absolutely critical, indispensable role for the State in the formation and development of entrepreneurship. And it goes further.
Publicly funded education and health services are also essential – to ensure that we have healthy and well-educated citizens capable of becoming business leaders of tomorrow and skilled employees in a modern, knowledge-based economy that can prevail in the digital world.
And of course the tax-resourced public space includes housing, the arts, culture, sport, heritage, urban and rural development, and so much of what any society needs to sustain human happiness and fulfilment.
As US Senator Elizabeth Warren eloquently put it recently: “We don’t know where the next big ideas are going to come from, but we sure know that the entrepreneurs of tomorrow are going to need electricity, connectivity, water and quality graduates.”
IBEC’s recent Budget 2016 submission – called ‘Invest Ambitiously’ – called for an additional one billion euro of government investment every year, with resources targeted at “productive investments which will result in more and better jobs.”
If that were to be achieved within the current budget envelope, the investment-spending ratio in Budget 2016 would be 75-25.
As you know, the government has agreed a 50-50 balance between tax reductions and spending increases in the forthcoming budget. Income recovery is essential after the recession. But it seems to me that a 50:50 ratio would not deliver the public investment required to develop the recovery beyond 2016, and so we will need to push further in the direction of public investment in the years ahead .
Having survived a near-catastrophic economic collapse, we have the chance now – the duty in fact – to renew our commitment to invest in the next generation.
This requires ongoing stability in public policy to ensure that our economy stays firmly on the path to sustained recovery.
It will not surprise you to hear that I believe this stability can best be delivered by the current partners in Government.
But it also requires a mature conversation about the relationship between tax, investment – public and private – and a successful economy capable of delivering innovation, business success, decent jobs, sustainable growth and high living standards.
Thank you for your attention. I hope you enjoy a fruitful day.