State needs 'radical' boost at third-level to compete

THE NATIONAL Competitiveness Council (NCC) has called for a “radical” increase in third-level places, the immediate implementation of a property tax and more action to support the growth of exports.

In its annual assessment of the economy, the NCC, which advises the Government on economic competitiveness, said a greater focus on education and exports was urgently required.

Calling for the reform of the Community Employment Scheme (CES) operated by Fás and a review of the quality of all training schemes, NCC chairman Dr Don Thornhill said it was vital to retain training budgets for people in employment, despite “significant pressure” to divert funding towards those who have lost their jobs. Ireland improved its competitive position in the global economy during 2009, but the NCC, which operates under the auspices of State agency Forfás, said it was “worrying” that this was achieved largely due to the sharpness of the recession, rather than any action taken by the Government.

“It is a concern that this deflation is largely the result of the recession, not as a result of structural changes in the economy,” said Adrian Devitt of Forfás.

“There is a risk that inflation will simply pick up again in the future,” he added.

The NCC noted that the contribution of net exports to the economy increased last year, as sectors such as pharmaceuticals and medical devices remained buoyant.

“We don’t talk enough about exports in this country,” said Dr Thornhill. Important exporting sectors had identified skills deficits in key areas such as regulatory compliance, he added.

The NCC, which includes representatives of business groups, unions, multinationals, universities and State bodies, said a “radical” increase in the number of education places available was required and that courses “may need to be delivered in a different fashion” to cater for people with family and work commitments.

If a proposed cap on third-level places had gone ahead during a subdued period for the Irish economy in the 1980s, the recovery in the 1990s would have been “choked off by shortages of skilled labour”, Dr Thornhill said.

The council repeated its call for greater emphasis to be put on the planned development of Ireland’s cities. This should include the provision to high-density areas of the high-speed broadband networks necessary to enhance Ireland’s competitiveness in the services sector. Mr Devitt said that as civil engineering costs accounted for approximately 80 per cent of the cost of establishing advanced broadband services, it would be sensible for the Government to adopt an integrated approach to the rolling out of “multiple infrastructures”.

Internal competition in non-traded sectors such as professional services is required to improve Ireland’s economic health, the NCC said.

“A lot of second-tier law firms have let people go, but have the prices charged by those firms reduced?” asked Dr Thornhill.

“It is strange, for example, that in some areas of professional services, charges were among the most expensive in the world. Now Dublin is not Frankfurt, Dublin is not New York,” he added.

Dr Thornhill said he believed the urgent introduction of a property tax would be beneficial to the economy. A tax based on the floor area of properties would be easier to implement than one based on valuations, he said. The NCC was one of the first bodies to call for a property tax, “which made us very unpopular”, but would have cooled the exuberance in the housing market, he said.