Invited to New Zealand to advise a conference about how Ireland - a similar-sized economy - has transformed itself from near-bankruptcy into the Celtic Tiger, the Tanaiste and Minister for Enterprise, Trade and Employment, Ms Harney, yesterday emphasised competition as the key to prosperity.
"In some parts of the world, people have become over-concerned about ownership," she said. "In my view what is important is not ownership but competition. We have learned that protectionism doesn't protect. The core of our economic success is competitiveness."
To be competitive, she added, "meant having high quality and innovative products and selling them at the right price."
Ms Harney was addressing the Congress of the Institute of Engineers in Wellington, half way through a 10-day trade and investment tour of Japan, New Zealand and Australia. With New Zealand experiencing a falling growth rate (down to 1.9 per cent), the conference organisers wanted to seek some answers from a country enjoying phenomenal growth, said Mr Warwick Bishop, chief executive of the New Zealand Institute of Professional Engineers, as he introduced Ms Harney.
New Zealand has, like Ireland, rebuilt its economy from the depths of depression in the mid-1980s but is currently in recession. Both in Wellington, and later in Auckland where she spoke to the Regional Chamber of Commerce and Industry, Ms Harney found an extremely attentive audience for her account of Ireland's phenomenal progress over the last decade.
Conference officials pointed out that the Republic and New Zealand had a similar population (3.8 and 3.4 million respectively), a shared agricultural heritage and comparable cultures, and both had undergone economic reforms in recent years, though New Zealand had concentrated on inflation and sweeping privatisation and Ireland on education and growth. The privatisation of health services in particular has caused some popular discontent in New Zealand and unemployment is rising.
Ms Harney explained that in the mid-1980s the Irish economy had been dysfunctional, with double digit inflation, 16 per cent unemployment, steady emigration - with 6 per cent of the population leaving in 10 years - and all income tax going to service the debt.
The recovery began when the Government and the trade unions had got together and agreed on pay moderation in a social partnership. She also emphasised Ireland's "extreme openness and its educational policy". The Tanaiste forecast that by the year 2000 Ireland's unemployment rate would fall to 5 per cent and this would be regarded as perhaps full employment.
In prepared remarks, Ms Harney also noted that "Ireland has embarked on the privatisation of state-owned companies, and, while we have had a slow start, this programme will accelerate in the coming years".
In Auckland yesterday evening, Ms Harney was introduced to the chamber of commerce by Mr Cameron O'Reilly of Wilson & Horton, publishers of the New Zealand Herald. Mr O'Reilly joked that "an economist is someone who knows 41 different ways of making love, but doesn't know any women," to which Ms Harney replied - to laughter and applause, that "In the world in which we live in that mightn't always be necessary."
Mr O'Reilly said that progress in Ireland in escaping what had become a "permanent economic melancholia" had been more spectacular than in New Zealand. Ireland's growth rate had been 12 per cent last year he told a large audience of North Island business people, adding: "How would you like a bit of that?" Fifteen years ago Ireland's GDP per capita was 65 per cent of New Zealand's; now it was 108 per cent, he said.
Ms Harney travels to Australia today and returns to Dublin in Thursday.
