New development model needed in Ireland, says Bruton

The economic crisis is an opportunity to make changes that would be more difficult in easier times, John Bruton, former taoiseach and EU Ambassador to America, said at the weekend in an address to the annual dinner of the ACCA in Thomond Park in Limerick. He said Ireland needs a new development model. "The credit crisis is a symptom of a shift in the world economy that will not reverse itself . We need a new approach that faces realities as they are, not as we might wish them to be. Normal conditions, as we once thought them to be, were unsustainable and will not be returning, ever," the Dunboyne man stated. "We should not focus on defending our individual positions against change. Nor should we simply wait for something to turn up. Instead we should focus relentlessly, not on ourselves, but on what we have to offer the rest of the world - that they might be willing to pay for." Mr Bruton said that the greatest risk we now face is that we may lose a whole generation of young people to emigration, never to come back. "There is a comforting assumption that, just as emigrants returned in the 1970s and the 1990s, this generation of potential emigrants will return too in ten or fifteen years. This is unrealistic. Unless entitlements for the elderly change, Ireland will face a bigger problem between 2020 and 2050 than most other European countries, a problem that dwarfs anything that has been brought about by the banking crisis." To support its aged population on present levels of entitlement, Ireland would have to have levels of taxation far above what we now have, he said. Today's emigrants will not want to return here to pay those taxes, unless we do something big now to change the entire dynamic of our public and private sectors. The long term (2020-2050) public finance implications of continuing present policies, while having proportionately far more older people in our population, need to be laid out fully for our people, including the tax implications of that for those of working age. We also need to change the way we deliver all other tax funded public services too, Mr Bruton said. We should look at one of Ireland's success stories, the attraction and centralisation here of the back office and administration functions of global multinationals of all kinds. "Why does Irish Government need to duplicate separate back office and administration facilities in every local authority, in every state agency, and in every Government department dotted around the country? Just as global multinationals have been able to strip out layers of inefficiency, cost, and duplication by coming to Ireland and centralising here to save costs and overheads, surely Irish public administration can do the same in Ireland?" Mr Bruton said. The critical challenge is to ensure that as many as possible of our well educated 15 to 28 year olds stay here in Ireland, and work here, not just pursue endless courses. A PRSI and income tax holiday might be granted up to the age of 26 to young people who have completed a third level qualification to make it attractive for employers to employ such people. It might be accompanied by a relaxation of the minimum wage rules. An internship programme in all Irish Government services might be introduced as a temporary measure so that we keep talent in the country. We need to change our entire development model as a nation, if we are to keep this vital generation in Ireland. We need to restore competitiveness by cutting costs, the cost of energy, the cost of wages and professional services, and the cost of public services, the former taoiseach says. But that must be accompanied by something more positive, a lifting in the productive capacity and the inventiveness of our public and private sectors. We need to change the culture in every area of activity, from the care of the elderly to legal services, from engineering, to the health services, to the universities. The new culture has to be one which focuses on using new technologies and practice from all over the world to bring new and better products and services to potential customers from all over the world. "What is missing in Ireland is a bridge between the generation of a new idea or a patent, and its conversion into a new product or service in Ireland. Product and service design needs to be made academically respectable. It needs to be able draw on engineering, sociology, psychology and many other disciplines. It should be backed by a new mindset in our colleges at every level. "In essence, we need to apply all our talents to the practical tasks of developing new products and services that people in other countries will buy, or which will improve the efficient use of our own resources here in Ireland."