Cost of doing business here still too high, report shows

ALTHOUGH THERE have been significant improvements in cost competitiveness over the last two years, business costs are still too high, according to a new report from the National Competitiveness Council.

The organisation said that, while prices have fallen in Ireland since 2008, business-related costs such as legal fees and rents remain relatively expensive compared to other countries.

The report stated that restoration of cost competitiveness is central to any economic recovery. It said many of the recent improvements had been due to the downturn in the economy and warned that prices may rise again once growth returns.

The council said structural reform is needed to deliver enduring cost competitiveness and called for additional taxation measures to be introduced to protect job creation and facilitate a recovery in consumer demand.

“Costs in Ireland are moving in the right direction and, as a result, Ireland has become a more attractive location to do business,” said NCC chairman Dr Don Thornill.

The Costs of Doing Business in Ireland 2011report identifies barriers to competitiveness and sets out recommendations to address the issues.

The council calls for the introduction of a broadly-based and equitable valuation based residential property tax and urges further investigation to see whether legislation could be enacted to facilitate downward rent adjustments for leaseholders.

It also calls for information to be collected on how the National Asset Management Agency (Nama) collects data and says Nama should provide more information on the loans it acquires and how it proposes to deal with unfinished developments. These moves would provide certainty about the commercial property market, the NCC said.

The NCC said that challenge exists to protect those on low incomes and social welfare benefits while ensuring that incentives to return to the labour market are strengthened and support given to firms to take on additional staff.

In addition, the report calls for the phasing out of subsidies for peat generated electricity but urges against the introduction of a waste to energy levy.

The NCC recommended the establishment of an independent regulator for the legal profession. It also said legal costs should be assessed on the basis of work done, rather than on the size of awards.