Signs of recovery are evident in many quarters and business leaders in Ireland are now more confident about the future, writes Shaun Murphy.
Business and government have largely moved from crisis mode to taking a longer view of what needs to do be done to secure the futures of both individual businesses and the national economy.
We have weathered a remarkable storm. Whilst in many instances our options remain limited by fiscal and monetary constraints, there are lots of things we can do. For example, there are clear signs that innovation is becoming an even stronger factor in both the thinking and behaviour of Irish-based business and Irish entrepreneurs at home and abroad.
From the success of companies such as Stripe − blazing a trail in the payments sector − to the investment commitments of our global players in agribusiness, we are showing an innovative and entrepreneurial side of our national character that should be hailed and encouraged.
The most recent KPMG Ireland/RedC Innovation Monitor − a regular health check of attitudes towards innovation in Ireland. Released in early September, it shows that Irish companies continue to be more positive about the impact of the recession on levels of innovation.
Impressively, 95% of respondents believe that Irish companies are either more innovative, or the same, since the onset of the recession, an increase of 5% on 2013/14 and 10% on 2012/13.
Given our national habit of being curious about how we compare with some of our neighbours, it is also encouraging that 85% of those surveyed believe that Irish companies are either more innovative or the same as other countries, an increase of 5% on last year. So can Ireland do more to help encourage innovation? The answer is most certainly yes.
R&D tax credits
The 2013 OECD Economic Survey of Ireland noted the uncertainty surrounding the acceptance of R&D tax credit claims and urged Revenue to work closely with enterprise support agencies, such as Enterprise Ireland and IDA Ireland, to develop a clearer set of guidance on the eligibility of R&D activities for the credit.
This is an example of where it is completely within our control to fine tune something to ensure it delivers all of its potential benefits.
By definition, policy choices provide government with real dilemmas. Exchequer funding is limited and the spending opportunities almost limitless. As is the case with governments the world over, there is enormous pressure to tax more and more to fund spending.
Impressively, 95% of respondents believe that Irish companies are either more innovative, or the same, since the onset of the recession.”
However, history shows that it isn’t a sustainable way to fund the services our society needs to function. Nowhere is this more evident than in the case of helping create the conditions where employment can thrive.
Addressing the challenge of high personal taxes at a relatively early stage on the income ladder, vis a vis our competitors, must remain a priority for government in future budgets.
Other key elements of our corporate tax offering, including our IP regime and the provision of real tax incentives to mobile talent wanting to locate in Ireland, also need to be prioritised.
These measures, viewed dynamically, rather than statically, would increase Exchequer funding through increased employment and likely reduce the need for spending.
These areas reflect just some of the policy options we have. They are fundamental to how we address the vital issues of risk and reward. Inevitably, they also influence attitudes towards innovation and other key factors in economic success such as entrepreneurship.
As Ireland proves that it is possible to survive an economic storm and emerge stronger and more competitive, it is imperative that we don’t inhibit our potential future successes through inertia or a failure to take the right decisions.