- MINISTER OUTLINES OPPORTUNITIES FOR IRELAND TO BECOME EUROPEAN HUB FOR PENSION FUNDS
- BRENNAN SAYS GOVERNMENT AND BUSINESS CAN INFLUENCE THE DIRECTION IRELAND GOES-OR ALLOW THEMSELVES BE SWEPT ALONG BY CHANGE.
ADDRESS BY SEAMUS BRENNAN T.D.
MINISTER FOR SOCIAL AFFAIRS
BERKELEY COURT HOTEL, DUBLIN
WEDNESDAY 26th OCTOBER 2005
I welcome the opportunity to open this annual investment conference hosted by Goodbody Stockbrokers.
'Inside Irish Business' is the inviting theme for this year's conference and, let's be honest, who could resist the opportunity to be given an insight into the companies from whom you have drawn your panel of distinguished speakers.
Today, we live in an Ireland that is changing, and changing fast. It is an Ireland that has got into its stride. An Ireland that is brimming with confidence. An Ireland overflowing with opportunity. In the past emigration drained us of our young people. Today, we are close to full employment and the fastest growing economy in Europe .
Today is an opportunity to acknowledge and salute the enormous contribution of business, through employers and employees, has made to Ireland's success story.
It's worth recalling that between 1997 and 2004 the Irish economy (
GDP) grew by an average of just over 7 per cent per annum. This was one of the best economic performances in the world and compares to an average of just over 2 per cent in the
Since 1997, the number of people employed in Ireland has increased by over 525,000. Unemployment has fallen from 10.3 per cent in 1997 to 4.2 per cent at the start of 2005.
Ireland is now undergoing a period of adjustment from double digit growth in the late 1990's to a more sustainable growth rate in the medium term of around 5 per cent. Last year, for example, GDP growth was 4.5 per cent, with
GNP growth of 4 per cent. The labour market performed very strongly, with employment growth of 3 per cent.
For 2005, GDP growth is forecast to be 5.1 per cent, with GNP growth of 5 per cent – which is broadly in line with our sustainable medium term growth rate.
Our efforts to reduce inflation are working. The differential between Irish inflation and the euro area average has narrowed dramatically and Ireland is now somewhere in the middle of the range of euro area countries.
In the same way that our success just didn't happen, it is also true that the "good times" will not stay without renewed effort and a commitment to change.
There are a number of challenges and risks facing the economy.
- High oil prices, which if sustained, could negatively affect world and Irish growth.
- The possibility of renewed exchange rate appreciation, in particular against the dollar, which could weaken export growth.
- The risks that the losses in competitiveness over recent years pose. In future it is critical that wage growth reflects productivity growth, a key challenge for the next social partnership agreement.
- And there is also the whole pace at which new housing output adjusts downwards to more sustainable levels.
Recently the Government spent some time assessing challenges that must be faced as increased competition worldwide - such as the new EU States, China, India - begins to encroach while at the same time we are finding it harder to attract new business internationally.
There is acceptance that we must speed up the roll-out of our communications infrastructure, stimulate greater interest in research, untangle our cumbersome planning process, assess our cost base, and develop a immigration policy that can absorb, support and integrate the some 50,000 non Irish workers that will need to be recruited each year, for years to come, to meet expected employment requirements.
This Government is committed to investing in the future of our economy.
- To making sure that our expanding infrastructure can better support our thriving business sector.
- To delivering a high quality education system that helps our young people to achieve their maximum potential.
- To ensure that our tax system rewards success and effort, while making sure that people on low or very modest incomes do not pay much taxes.
Our economic success is the very bedrock on which Ireland is thriving and expanding. We must never endanger that prosperity. Instead, we must strive to sustain that once seemingly impossible goal of economic strength and stability. Because it is the opportunities that flow from that economic strength and stability that offers real hope for brighter tomorrows for those who remain vulnerable or marginalised in the midst of the 21st century Celtic Tiger Ireland.
It is well established that the best route out of poverty and welfare dependency is through employment. That is why we must continue to drive economic performance and create the employment opportunities.
I have no doubt but that future generations will judge us on how we harnessed the great prosperity and wealth of the Celtic Tiger Ireland to reach out and reach down to help those who, for whatever reason, were left behind by the rising tide of economic buoyancy.
The problems, particularly the social problems that Ireland now faces are the results of greater prosperity, changing attitudes and different lifestyles.
Pensions are a good example. The good news is that our life expectancy is improving all the time. We can now expect to live up to 12 years longer than we did in the 1950's. The downside is that pensions for people in their later years is going to be one of the real challenges of the decades ahead.
I am strong of the view that everybody should be entitled to a decent pension in later years. How we achieve that level of coverage, and more important, how we fund it, are fundamental questions that must be addressed by all the players, Government, the pensions industry, employers and employees.
The strategic review of pension's strategy that I asked the Pensions Board to undertake will, I believe, deliver a roadmap to needed reforms and fresh initiatives. I will be publishing that report in a matter of weeks and would welcome your views.
Pension's policy and structures going forward also opens up new business opportunities for Ireland . Recently I announced that Ireland has now implemented in full the requirements of the EU directive on the activities and supervision of Institutions for Occupational Retirement Provision, or the IORPs directive, as it is better known.
As most of you will be aware, this directive sets out a framework for the operation of occupational pension schemes in all EU Member States. Equally important, and where new opportunities can open up for Ireland , is the fact that the IORPS directive will facilitate pan-European pension arrangements by creating a single market in pension funds.
By implementing in full the requirements of the directive, Ireland is now well ahead of most other European countries and well placed to position itself to avail of this new and evolving pensions market. We already have an impressive track record, developed over the last 10 years, of being one of the leading Mutual Funds Administration Centres in Europe .
Right now in the
IFSC we have over 40 international funds companies and some 20 global custodians servicing almost 700 billion Euro in funds assets. The IFSC has grown in less than 20 years from a vacant site into a globally recognised location for international financial services with almost 11,000 employees.
On the pension's front, we must all strive to establish Ireland as one of the major centres in Europe for the centralisation of pension funds.
As I said, Ireland and Irish society is changing. We in Government have a choice to make. For you in Corporate Ireland there are also choices. The pace of change that is now taking place at all levels of Irish society can either overwhelm us, or make our lives better and our country stronger. We can passively allow the many fundamental issues that now confront us to wash around us. We can allow the currents and cross currents buffet us in all directions. Or we can set out to influence them. We can be leaders or we can be dragged along as followers.
My own view is that whether in Government or in business, the most important ingredient of all is leadership. Corporate Ireland can take a massive bow for its part in the transforming of this country. But we in Government, and you in business, cannot allow ourselves become complacent. In the past it was leadership, determination and commitment in Government, and in the boardroom and the workplace, that fed, nurtured and reared the Celtic Tiger.
We did it in the past and together we can sustain and maintain that stability and strength further into the 21st century.