 Good afternoon, everybody. Welcome to this IAEA webinar, I'm Donald de Butler, I'm the Acting Director General at the Institute. We're delighted to be joined today by Leverac, our TD, Tonnesden is for Enterprise Trade and Employment who will speak on the future of Ireland's industrial policy. Tonnesden will speak for about 30 minutes and then we'll go to questions and answers. You'll be able to join the discussion using the Q&A function on Zoom, which you'll see on your screen. Please feel free to send in your questions on this topic throughout the session as they court you and we'll come to them once the Tonnesden has finished his talk. You can also participate in the discussion on Twitter using the handle at IAEA. Today's presentation and the questions and answers session are both on the record. Now let me formally introduce the Tonnesden, he's the Tonnesden Minister for Enterprise Trade and Employment. He was elected leader of Finnaweil in 2017 and was the youngest ever teacher from June 2017 to June 2020. He previously served as Minister for Social Protection, Minister for Health and Minister for Transport, Tourism and Sport. First elected to the Dáil in 2007 is the TD for Government West, so Tonnesden over to you. Good afternoon everyone speaking to you from Government Buildings and thanks for joining us. And Donald, thank you very much for the introduction and the invitation to speak here today on the future of Ireland's industrial policy. And I just want to say at a personal level, it was a pleasure to work with you during your time as chairperson of the Low Pay Commission. And I think you can be proud of the fact that during your time in office, the minimum wage increased by well above the rate of inflation, and it didn't have an adverse impact on employment levels. And that was very much the mission that we set for you and the commission. And as I speak, we have higher wages than was ever the case before in Ireland and higher levels of employment than was ever the case before. And that's something we want to continue and improve on. I also want to take this opportunity to offer my congratulations to David O'Sullivan on his appointment as Director General of the IEA. I know David will be a fantastic leader for the organisation in the time ahead. And I also want to commend the Institute for choosing this topic, the future of Ireland's industrial policy. And I look forward to the Q&A a little bit later. It's strange to say it, but even though I am a Member of Parliament, I rarely have the chance to debate topics like this in the detailer depth that they deserve. The government needs to respond to the issues of the day, whatever they are. And of course, the war in Ukraine and the pandemic is rightly absorbing most of our attention at the moment. It's really important that we also find time to think long term and to help us to plan for a world that is changing before our eyes. As Minister of Enterprise Trade and Employment, I find myself in the odd position that enterprise and industrial policy are rarely debated in the dog. Most of my opposite numbers make suggestions about improving workers' terms of conditions and sometimes about providing extra help at a small business, which is fine. But we never really debate enterprise policy. And I have to say this is even concerned that many take Ireland's recent economic success for granted. That companies will continue to expand, that trade and employment will continue to grow, that will attract more investment from overseas, and that will have the skills and talent to underpin that model for years to come. And that's a dangerous state of affairs because we cannot and should not take our economic strength for granted. And whatever about others, the government does not. We won't stay successful by standing still and we have to get ahead of whatever the next wave is and try to catch it. In the past few decades we made the right calls and that wasn't luck, it was good planning. We've attracted and invested in pharma, medical devices, food production, digital ICT and financial services. But what are the right calls for the future? Do we fully understand our economy's strengths and weaknesses? How has the pandemic changed us? And how will climate change and climate action affect us? And of course they're not the same thing. Also, how will geopolitical developments, the divergence of Britain from the European Union, as I often say, Brexit is not an event, it's a process, it's ongoing, the rise of China and the new Cold War started by Russia. How will that change the world for us here in Ireland? And how do we drive productivity and success among our own start-ups and scale-ups so that they can go global too? So these questions of mine, the government has given me approval to develop a new white paper on enterprise policy. We aim to publish it later this year, setting out a vision for Ireland's enterprise policy to 2013 beyond. Consultation will be central and we'll make sure that the white paper is informed and challenged by fresh perspectives and the latest thinking. An advisory panel of international experts will be established, including experts from organizations like the OECD, the World Economic Forum, experts from similar jurisdictions, as well as business people and academics. We want to hear from you, the IIA members, and from any other organizations or people that can articulate different perspectives, identify what we're doing right, what we're doing better, and what we could do better rather and what we are doing wrong. I think it's fair to say that the past two years have been a period like no other. We've had to show pragmatism as a nation, real adaptability, and a willingness to actually do things that we would never have contemplated before. The pandemic has also accelerated pre-existing trends that have reshaped the way we work and live. In particular, it's accelerated the digital transition. The war on Ukraine adds further uncertainties on energy prices and supply. Inflation to cost of living and food supply, and will accelerate the green transition, and particularly the need for energy independence or at least autonomy for Europe. For Ireland as an open and global economy at the heart of the European Union, it's critical that we rebuild our European economy and prepare for a new world that is greener, more digital, more resilient, and fit for the future. The fact that we depend so much on the undemocratic regions of the world, like Russia and the Gulf States for energy supplies, is simply not in our interests. An agricultural model that relies so much on imported grain is also a strategic risk we cannot ignore, and the ongoing zero COVID policy in China and large parts of Asia continues to disrupt the supply of goods to Ireland and demonstrates that we are far too reliant on China to be the world's factory. At a European level, the Irish government will advocate for open strategic autonomy. Yes, to developing more products and things for ourselves, diversifying our source markets and destination markets, more stockpiling and storage of things that we may need. However, we cannot allow this to be used as a cover for protectionism. We're closely engaged in this work and this debate at a European level, and we're using our influence in all EU format for an approach to EU strategic autonomy that is open to all economic actors. Ireland is also engaging with EU strategic value chains and important projects of common European interests, also known as IPK. IPKs are large multi-country projects for state-of-the-art innovation to solve market or systemic failures in particular sectors. Favoural state-aid rules apply, allowing for the possibility of public sector funding to be granted for certain projects. The Irish government sees this as an opportunity for Irish and Irish-based businesses to be part of developing and strengthening European capacity and capability in frontier technologies and collaborating with other businesses throughout the European Union. Recently, Ireland was one of 16 member states deciding to manifest towards a health IPK. Other IPKs are under development, such as micro-electronics and communication technologies, and the hydrogen value chain. Acceleration to twin transition, digital and green, will present both challenges and opportunities for enterprises, and we need to be prepared to take advantage of these and ensure Irish businesses expand into new and growing markets in a low-carbon economy. Chairman, I'd like to spend a few moments to talk about themes we're likely to explore as part of the White Paper. To start with the climate change, the Russian invasion of Ukraine has highlighted the inherent vulnerability of allowing our economies to be dependent on fossil fuels, especially when limited supplies are controlled by a small number of states. While weeding ourselves off coal, oil and gas is a global challenge, it also presents incredible opportunities for Ireland, specifically in the area of electricity generated by offshore wind, backed up by megabatteries and interconnection, and of course green hydrogen. The home produced fuel of the future that can replace natural gas, fire our power stations, and heavy industries, and in due course fuel our trucks and ships. I believe we can go from being an energy importer to an energy exporter within a generation, with all of the benefits that come with it. Greater energy security and price stability, employment and regional development. As well as that, by ensuring that we have plentiful energy supplied, multinational and industry will feel more confident investing in Ireland and creating jobs here. I believe the development of synthetic aviation fuels will also be an area of growth, and of crucial importance to us as maintaining our connectivity being an island nation. Retrofitting is another area where we'll see massive growth. The government recently launched a new retrofitting national retrofitting scheme, which offers incentives for homeowners to upgrade their homes to a higher energy standard. And we've committed to a range of initiatives to train and up skill people to carry out what we expect to be significant demand. I see this as a fantastic opportunity for regional development as well, with around 13,000 new jobs forecast to be created in the industry over the next three years in every county. As you know, the government is committed to reducing emissions by 51% by 2030, and to become net zero by 2050. These targets are now legally binding, and the enterprise sector, which I'm responsible for, will be required to maintain within a carbon budget. I'm under no illusions as to how difficult this climate transition is going to be for many businesses, particularly small businesses. And I know many business owners are concerned about what all this means for their business and how they're going to adapt, especially given the past few years. We must help them through this transition with practical advice, grants and loans. Under our new digital strategy, we will drive a step change in digital transformation of business, especially SMEs. The digital economy in Ireland is running at two separate speeds, while a small portion of the enterprise space is fully embraced digitalization. There's a need to accelerate and enhance digital adoption right across Irish businesses and indeed the public sector. We want 90% of SMEs to have achieved basic digital intensity by 2030 and will help them realize that ambition through a multi-annual digital transition fund for business. All Irish households and businesses should be covered by a gigabit network no later than 2028 due to the National Broadband Plan and also private telco investment. And we want to increase dramatically the number of graduates with higher level digital skills. Ireland has a strategic advantage with our rich ecosystem of multinational and indigenous technology companies, and we have incredible expertise within those companies and academic institutions. While Ireland has performed well on international innovation indices, some indicators such as the European and World Innovation Index are starting to plateau. Other advanced economies are prioritizing innovation policy reform and investment and are moving ahead. And on the Global Innovation Index, we've fallen back to 19th position in 2021 from 15th in 2020, and that really isn't good enough. It's also no secret that our high national productivity figures mask a productivity gap between high performing frontier firms often far known and the rest of the economy. Closing this gap must be a focus of the new white paper and enterprise policy. I have to say though, over the past few months and years, I've really been encouraged by the number of Irish startups that have achieved unicorn status from Flipdish to Fenergo and from WaveFlier to Let's Get Checked. And I believe we should set the target of having at least two Irish unicorns every year. To do so, we must broaden and deepen enterprise innovation capability, increasing the number of SMEs investing in R&D, linking our multinational and SME innovation based in public policy, and embedding a culture of continuous innovation. We must cultivate collaboration between industry, academia and research commercialization and simplify the roots for enterprise to engage with the public research system. To enable this, my department is developing an overarching national clustering policy and framework to maximize the potential of clustering as a policy too. Clustering is a strategic focus for enterprise Ireland and IDA to promote balanced regional development and strengthen enterprise linkages and spillovers. I think the 500 million disruptive technologies innovation fund is a good example of how government can encourage collaborations between industry and the research sector on the development and commercialization of groundbreaking technologies. Over 180 products or projects rather under the fund are pushing boundaries, driving change and devising better ways of doing business. And I believe this kind of collaboration is our future. Traditionally, Ireland is lagged behind other countries in our ability to scale up our SMEs into large global companies. The well-documented shortcomings of our seed funding market for starter companies has led to high potential businesses seeking investment from outside the jurisdiction, which in turn needs to apply to technology and skills to other jurisdictions, particularly the US. This is something I want to change. So last month, we launched the Irish Innovation Seed Fund. It will operate as a fund of funds, essentially a fund that invests in specialist fund managers who then source companies with strong potential for a commercial return investment. It's a collaboration involving enterprise Ireland, ISAF and the European Investment Fund. We've also reformed the employment investment incentive scheme to increase uptake and we're examining ways to help smaller companies and startups that cannot afford large salaries or bonuses to keep their staff. It's clear that the existing key program really isn't working, or at least not enough. So these are the kind of things that the white paper needs to examine with a view to pointing out where we can do more. Investing companies can only grow if they invest in their workforce and plan for the skills of the future. Upskilling and reskilling will increasingly become the norm for companies needing to adapt to the challenges that lie ahead. And as you may know, I've set three objectives in my role as Minister of Enterprise Trade and Employment. The first is to help businesses to respond to COVID and Brexit to survive and prosper, and I think you can probably add Ukraine to that too. The second is to restore and exceed pre-pandemic unemployment levels, achieving a target of a record 2.5 million people at work in Ireland by 2024 and ensure their job opportunities in all parts of Ireland. And third to great jobs with better terms and conditions that are more sustainable, secure and valued. These objectives must be underpinned by a series of actions across government to invest in education and widen our skills base. For example, we're trying to reimagine the role of apprentices in Ireland. Our mission is to grow new accredited registrations to 10,000 per annum by 2025, and we're on track to reach that target with apprenticeship registrations in 2021 being their highest since 2007. It's cliche to say that there's a global fight for talent, but recent events mean that that fight is only going to intensify. I'm sure that improving pay, terms and conditions for workers is part of the answer. It's the only way we'll attract and retain the staff we need. I know small businesses have been through a lot in the past two years, and new policies like sick pay, remote working, more family leave, a living wage and auto enrollment just feel like the government adding on more costs. So we will help small businesses and employers to manage these changes by phasing them in over time. Ireland's industrial policy framework for over half a century includes a stable and low rate of corporation profit tax. My colleague, Minister Donahue in an address to this Institute back in November said that Ireland's decision to join the OECD agreement in international corporation tax was an important decision for the next stage of Ireland's industrial policy. And I agree. It underscores the need to remain competitive right across the economy. IDA clients enjoyed a record year of job creation in 2021. And the early signs are that joining the OECD agreement is unlikely to adverse the impact Ireland's existing FDI base. From a tax perspective will remain highly competitive. We'll continue to offer a 12.5% rate to over 95% of companies operating in Ireland. And for those very large companies affected by the decision, the recent changes provide clarity and certainty for investors on the global minimum tax rate that will apply to them 15% and no more. That is assuming the deal is ratified and implemented. I think we also must be creative about how to preserve Ireland's reputation as a world class place to do business. As always, it'll be about talent and track record as well as tax. But it must be about other things too, like security, infrastructure and livability. Compassion is also means providing the basic infrastructure expected in advanced economies, such as energy, housing, water and transport and acknowledge the real shortcomings in these areas and we're determined to change that. With a rapidly rising population, Ireland needs to invest big in infrastructure. And we're doing that. Since 2017, the percentage of gross national income committed to public infrastructure has risen from 2.5% to 4.5%. That's now substantially higher than the EU average and well ahead of peer countries like the Netherlands and Denmark. We're investing in public capital. The revised NDP project Ireland 2014 will see this level of investment continue to grow to 5% of GNI. That is from 12.7 billion this year to 19.3 billion in 2030. And I recall when I first became a government minister, our public capital budget was as low as 3 or 4 billion euros a year. So you can see the transformation that that is occurring and will occur. As a country, we owe our relative prosperity to the goods and services produced by our people and our land, which we then sell around the world. There are over 200 countries in the world and Ireland is always in the top 10 or 20 in terms of wealth, living standards or indeed perceived happiness and help. This of course always depends on how you measure. I know that some other speakers at IEA webinars and elsewhere have sought to characterize Ireland's recent economic success story as a story of prosperity enjoyed by the few at the expense of the many. Some even tried to characterize Ireland as a failed state. I reject those assertions. They are simply in variance with the facts. We have not become a wealthy country because of our vast reserves of oil or gas or diamonds or gold. Our success is based on a formula of trading goods and services internationally and our attractiveness is a place to invest and our ability to enter into international free trade agreements with other countries. That formula might sound simple, but it has to be reinforced day in day out by our enterprise agencies and officials working throughout government. Our position at the heart of Europe, its single market and the Eurozone are crucial to this formula in my view. And Chairman, I believe that Europe must continue to be a champion of free trade, free enterprise and rules based multilateralism. Unfortunately, protectionism is alive and well and indeed in the European Union and plenty of excuses for protectionism are now presenting themselves. That worries me because there's no doubt that Ireland will be a net loser if we start rowing back on free trade and see the rise of protectionism again. We've lost a natural free trade ally in the EU with the departure of the UK, so we'll continue to have to work harder with like-minded EU trade ministers to make sure we strongly articulate our position. Colleagues, it would be remiss of me to conclude without saying something about the inflation and cost of living crisis, which is being experienced by so many of our citizens. For the first time in many years, real living standards could fall this year if prices rise faster than disposable incomes. And that's certainly true for very many households already. It's something the government is very conscious of and concerned about. But this reason we provided over a billion euros in relief already to help ease the pain, increased fuel ounces and 150 euro payment for the poorest households. A 200 euro deduction from electricity bills for all households and a reduction in taxes on petrol and diesel. There are many causes of this bike in inflation and living costs. It comes after a long period of very low inflation and interest rates, which was sure to end, but unfortunately it ended with a bang. Monetary policy decisions by the world's central banks, rightly printing trillions of dollars euros and yen to help pay for the global financial crisis and then COVID. Destruction to supply chains, the pandemic itself and the mismatch between rising demand and adequate supply have brought the world to this pass this new inflationary period. In Ireland, we haven't seen the phenomenon of inflation this high since the early 1980s. And while I might not agree with the exact numbers, I do agree with the SRI's assessment that the spike in inflation is not temporary. It could go on for two years or more. And therefore requires a long term response, as well as temporary measures. As every doctor knows, it's important to treat the symptoms, but you must also treat the underlying disease. And you have to be aware that sometimes treating the symptoms masks them as well. So, yes, pay rises and increases in pensions and social welfare will be needed to compensate people on lowest incomes, at least in part for the higher cost of living. That's necessary. And as the minister who signed off an increase in the minimum wage less than four months ago and the party leader who argued strongly for a tax and welfare package in the last budget, you'll know that I'm sincere in saying so. However, this is not a solution to inflation. Many businesses will simply fund pay rises by increasing what they charge customers for goods and services, thus wiping out many of the gains, the wage inflation spiral that many people talk about. So I believe we need a comprehensive anti-inflation strategy to reduce the cost of living in Ireland. Central banks must do their bit. And I believe it would be better if they range in quantifying at an appropriate pace rather than increasing interest rates at this time. And as a government, we can do more by helping to reduce some of the underlying high costs that Irish people endure. For example, we can continue to reduce the income tax burden on middle income earners, in particular so that they can keep any pay rise they get, or at least get something back in their pockets if they don't. I can't understand why the opposition parties continue to oppose the indexation of tax funds. The case for it is never stronger than now given inflation. And if we're going to have a tax and welfare package in the next budget, which helps those on the lowest incomes, I don't think it's fair to say to workers and people paying income tax that they should get nothing, that they should rely solely on their employer to compensate them for rising inflation, or that employers should bear the entire cost. We can also reduce the cost of services that are influenced by government. Child care is now subsidized in Ireland, but the focus of additional subsidies this year was on paying staff better and improving quality. And that was the right decision. But next year, increased subsidies should be used to reduce costs considerably for parents. This will increase disposable family incomes and make it more attractive for parents to return to the labor market, thus helping to fill vacant positions and moderate wage inflation. The same applies to charges for health care. And while we've made real progress in recent years in reducing the cost of medicines and extending free GP care, Ireland remains an outlier. It's simply the case that other Europeans don't have to pay as much to see their doctor attend a hospital or buy medicines, no matter what they are. And the same is true of the cost of higher education. We can also strengthen our competition laws and consumer protection laws to help control prices. And my department is doing exactly that with a major overhaul of consumer law and competition law due to be enacted this year. I'm also chairing the Interministerial Committee on the Cost of Insurance. Thankfully, motor insurance is now coming down. Home insurance will come down this year. And we need to see business insurance, ELMPL, falling soon also. And I think more needs to be done on legal and professional fees. We can accelerate the transition away from buildings and industries heated by fossil fuels to well-insulated warmer homes and businesses powered by electricity and hydrogen. And I elaborated on the actions we're taking on this a little earlier. Of course, housing costs and rent in particular are very high in Ireland. We've already acted by capping rent increases at 2%, which is now well below the rate of inflation. And while the temptation is there to go further, I'm concerned that doing so would result in making the availability crisis worse by pushing more landlords to sell up and discouraging others from providing or investing in rental properties at all. So I think the best actions that the government can take is to scale up social housing construction, thus freeing up private rental properties and scaling up our cost rental program, which offers rental properties at below market rents to low and middle income individuals and couples. It goes without saying that ramping up supply of new housing in all forms is now more important than ever, especially with increased demand for accommodation that will arise from the refugee crisis. And it is encouraging to see that new commencements have risen to 33,000 in the past 12 months. And there must be an end to people opposing new housing because it's not perfect. We just need new developments to be good. These are not simple solutions, but they are perhaps sustainable ones that will work in the long term. I understand the need to get the balance right between responding to these cost pressures and avoiding adding to demand in the economy and making our challenges harder. So this is why all of this will have to be done within the existing fiscal and budgetary framework agreed by the government, which involves ensuring that we continue to reduce the deficit, that we stay in the pack in terms of the deficit level among our peer countries, and that we ensure that public spending does not rise faster than the economy is growing in the absence of new revenues. And I believe that is achievable. So to conclude, I believe our industrial policy for the last 60 years has served us well. I don't think there can be any doubt about that. But the pace of challenges and the range of changes now facing us is so fundamental that we must reevaluate that policy. The outcome might be more of an evolution than a revolution, but either way, I'm looking forward to the challenge and the work. Thank you very much. I look forward to hearing your questions and comments. Thanks very much. Honestly, just remind people if they want to see any questions, we try and we try and get to them. And the first question is from Peter McClune, who's an IEA board member. How big a risk does the current runaway price spiral resulting from the war in Ukraine present for the domestic economy and the government starting long term plans for future industrial policy. Yeah, well, thanks Peter for the question. I think it creates a big risk. There's no doubt about that. I don't believe it's solely down to the Ukraine and Russia crisis. Inflation was over 5% before Putin started his war. There are a number of factors at play here. Some of it is due to monetary policy by the central banks. I think central banks have printed nine trillion dollars euros in yen in the past couple of years. And that much money is going to become work less. That's the way these things work. I think those who believe that we would have low interest rates and low inflation forever were just wrong about that. It was inevitably going to end and then obviously some of the supply chain disruptions caused by COVID and even the problems in the port in LA and Suez have contributed to all of that. So it can come down. It is a big risk. And I don't think the short term thing. As I mentioned the speech, I think it's probably, as the answer I says, a phenomenon that could be with us for two years. And that's why I think we need to have that anti inflation strategy at the five points of which I outlined a little bit earlier. There's a question here from Peter Defroy from RWE renewables. Do you see the need for specific industrial policy for offshore wind? And if so, how do you see that developing? Short answer is yes, I do. And I don't think it's just offshore wind. I think it's offshore wind to generate electricity and hydrogen. Because hydrogen, assuming the technology develops and works the way we think it will, is going to be a dispatchable fuel that we can use in trucks and ships and heavy industry as well. So I think you have to put the two together, offshore wind and renewables. And that's kind of what I'm touching on today in terms of the new enterprise policy, because I'd love to see IDA in particular. And Enterprise Ireland getting more involved in encouraging Irish companies to do that work and encouraging international companies to come into Ireland. And I was in Chile last week as part of the St. Patrick's Day visits. And they have done so much, both Chile and Colombia have done so much in the last couple of years to dramatically increase the amount of offshore wind they produce. And some of it's been done by Irish companies like Mainstream Renewable Power. And I'm a little bit, I was kind of scratching my head, you know, in Santiago and Bogota, wondering why these companies are doing so much in South America. We're not doing more in Ireland. And when I discuss the name of Ryan, I get lots of reasons and explanations. But it's related to the last government, which he wasn't part of, in fairness to him. But I really think we need to get going on this. And I think we can. A question again on the cost of living crisis from Jennifer Bray of the Irish Times, who asked, will the carbon tax increase go ahead in May? And will the carnage to best happen energy crisis? Yeah, well, like the plan is, you know, the carbon tax increase in May is legislated for. The intention of government is that it goes ahead and there's no proposals to change the legislation at the moment. But we are examining other ways that we might compensate people for increased gas prices and energy prices. In general, we've set aside a billion already to do that. As I mentioned earlier, it's a much bigger response than most other countries. You'll see the UK talking about a 5p decrease in excise. And some of you countries weren't too happy with us because we did much more than they are going to do. And we got a little bit of criticism from European friends about that, but the scale of our response is so much greater than what they're doing, or they can afford. So I think anything else we do kind of has to be done in coordination with European partners at a European level. The reason why we want to retain the carbon tax is that it is hypothecated and that money is going into a pot for a particular purpose. And that is to pay for the fuel allowance, pay for the retrofit program and to pay for other things like green farming. And it's all very well for people to say that you should defer the carbon tax increase. But what they won't do is be honest about it and say that you should then reduce the fuel allowance, reduce funding for farmers and slow the retrofit program. That would be an honest position. They're kind of saying, do the nice thing and don't do the unpopular thing, which is a populist position. And I think that should be called out. On the price cap issue, I actually looked at this, there is a power under the Consumer Protection Act to impose price caps on traders. The problem with that is, is that if we imposed a price cap, let's say, let's say we said to petrol stations that you can't charge more than 175 per liter. We can set that price cap, but we can't control the price that they buy the petrol and diesel in the first place. So you could have a price cap, but you might find that it's just not viable for those traders to operate. So you then end up with no petrol or diesel. And that's the risk. And if you look at countries where they do have a price cap, like Britain, precisely for that reason, every couple of months they're increasing the price cap because the input costs go up, they can't control them. So what do they do? They just keep increasing the price cap. So for that reason, I don't think it would achieve what we'd like it to achieve. Many submissions said the Commission on Tax and Welfare highlighted the issue of people hitting the high rate of tax at relatively low level of income. Now the share of income tax as a percentage of total tax in Ireland is the fifth highest in the OECD. Given the tax levels may have to rise in the future, how can we address this issue? Well, as you know, we're a low tax economy in the round, but we're not low tax when it comes to income tax. And particularly for people on middle incomes, those who earn more than 38,000, maybe a couple earning more than 60,000 or 70,000. If that's the case, if you're paying the high rate income tax during the 20% top income earners, it doesn't feel like it, I think, for most people who are in that category, because your bills match your incomes in many ways. You don't qualify for a lot of government subsidies and benefits, and you pay a very high rate of income tax. And Minister Dunny and I are committed to improving that situation by raising that threshold and raising that band every year. And we still intend to do that in the forecoming budget and it's very much in the programme for government. I know some people will be critical of that and say that we shouldn't be reducing income taxes in the current scenario. But I don't really see indexation as an increase or decrease rather. I see it as just making sure that if people get a pay rise that they're allowed to keep it. And that if you have a welfare package for people who generally aren't at work but with some are, of course, you need to have a tax package for people who are working. It wouldn't be fair budget otherwise in my view. I think one thing we should take a look at, and I've asked Minister Dunny to look at the pros and cons of it, is whether we should have a middle rate of 30% because you do suddenly go from 20% to 40%. And there might be a case for having a middle rate of 30% for people on middle income so that you wouldn't maybe hit that highest rate of 40% until you earn a little bit more. But that's only an option that he's working through. And as always the case, these things are more complicated than they may sound. Thank you for that. Paul Sweeney, who is a former chief, I think, two chief economist asks, with the threat of a wage-priced buyer, is it time to renew social partnership which he says worked well for 22 years? Oh, that's the controversial question for the day, isn't it? It worked well some of the time. Certainly, I think worked very well at the start. I'm not sure we would have got out of the mess we were in in the late 1980s, had it not been for the program for national recovery. And you'll know under the rainbow government that by John Bruton we had partnership agreements as well. So it's not something that we're ideologically opposed to. But there can be problems with it as well because it means decisions are made by those who are in the tent. And that's often big business and unions and certain NGOs. But outside the tent are consumers and children who go to school and patients who use hospitals and very often the self-employed, very often the taxpayers. And it's the producer interests that tend to dominate in that scenario rather than the consumer ones. Now it's not as black and white as that. I'm not saying that. It's much more gray. But I think what we can through that is when we must give some consideration to is a national incomes policy, whether it takes the form of a partnership agreement or not. I don't know. But you could say we agree to industrial peace. We agree to certain pay increases, but that would be pay moderation. In return for that, the government does more in areas like childcare, for example, the cost of healthcare and so on. And if you could have a tripartite agreement in that space, pay increases to partially compensate for the rate of inflation, industrial peace and reform, and the government doing its bit with tax and welfare and reducing the cost of childcare, healthcare and education. That could help being part of the solution. But the devil is devil is in the details to whether the agreement itself is a good one. And secondly, we'd have to understand and know that unions and employers can take can take their constituencies with them. I'm sure they would. So I wouldn't really have to go that way. And there's a question here from the French ambassador to Ireland to thanks you for a very interesting presentation. And he says, where should we draw a line between free trade and protectionism when it comes to environmental protection. And it refers to the EU Mercosur trade agreement and the strategic autonomy for key production such as batteries and chips. Yeah, I know, I know, I know France has been at the forefront of pushing the idea of Europe being more sovereign and having strategic strategic autonomy. I think sometimes in Ireland, we see that as a cover for protectionism. I don't think it necessarily always is, as I said in my speech, we become too dependent on China to be our factory. And we see so long as they persist with the zero covid strategy, we're going to see interruptions and supplies coming from China. And we're far too dependent on other parts of the world for our energy. So if strategic autonomy, if being less naive to use the French term around our trade policy is meaningful, well then it is about doing some more things for ourselves, the up case investing in infrastructure and innovation and new projects. And what I wouldn't like to see is it being used for use as a cover for protectionism. So for example, I'd be in favor of something like a carbon border adjustment mechanism, because we don't want to introduce environmental standards in Europe, which then cause production to be displaced to another part of the world, whether it's beef or chemicals or aluminium, which we then import back again. Like that would be insane and self-defeating. So a carbon border adjustment mechanism, that corrects for that, I'm in favor of. But that has to be the reason and has to stack up and be true. I just get worried sometimes that it's a cover to protect existing or inefficient industries and that's not what we should be doing. Ireland's economy is exposed to a high dependence on a few companies to pay corporation tax. The question is, what can the government do to diversify Ireland's economic dependence on multinational investment? Yeah, I think we are very dependent on multinationals. A huge amount of our corporation tax comes from a small number of multinationals. When you add to that the PRSI and income tax that their staff pay and the amount of money that they pay suppliers that are Irish, it's enormous. I don't know what the figure is, but it's well over 10 billion. So that's a huge part of your tax base and it is a vulnerability. I'd still rather have them here than not here, but it is a vulnerability we need to be wise to. And we project that corporation profit tax receipts will go down not up over the next couple of years. It hasn't happened yet and we're waiting for it to happen, but it will happen. So I think in terms of how we can diversify, we do need a more diversified tax base. We've done that to certain extent with the carbon tax and the local property tax. And we'll do it as well with the land taxes as well. And I think the other area that we can do a lot on as I mentioned is energy, becoming an energy exporter rather than an energy importer. And also making sure that more Irish companies themselves start up and scale up and go global so that we see Irish companies becoming multinationals and hopefully paying their taxes in Ireland. And when we started using the taxes in 1956 to attract FDI, we hit a zero rate compared to the average rate of 50%. We'll now be at 15% for the large companies, but others are around 25%. So the differential is a fifth of what it was at the start. What steps do we need to remain relatively attractive for foreign direct investment? Yeah, you know, I talk to the big companies and the multinational companies all the time. And what they'll say to me is two things really. They'll say to me that it isn't all about tax and things like talent and infrastructure and track record or place in Europe are openness to trade and are openness to migration, to economic migration. All of those things are big pluses, particularly now talent being so mobile. I think what's going to be increasingly important is good living standards and quality of life. We have to make sure that our cities and towns and villages and rural areas are more attractive places for people to live and raise families because it's going to become easier and easier to work from Lisbon or work from Ibiza or somewhere else. And that's something we've to bear in mind. And what they would say to us about tax is it's actually more about the certainty than anything else. And that's why our decision to sign up to the OECD agreement I think was the right one, because a lot of countries already have a lower rate than us. European countries have rates of 10% and zero. A lot of countries that have a higher rate on paper don't really because if so many ways out and around it. So what I think attracts companies to Ireland when it comes to taxes is that it is low, but also that there's a certainty about it that governments might change. We might go through periods of recession and boom, but that low tax rate, whether it's 12.5% or 15% isn't the most important thing. But the fact that it's there low and constant gives them the certainty to make the 30 and 40 year investments that they'd be less certain making in a country where a change of government might result in a major change in tax policy, for example. And what are the impacts you foresee within the Irish economy and the Irish business community arising from Russian economic counter sanctions? It's hard to know. You know, there have been counter sanctions already as you're aware. And we've done a kind of exercise in the department indicating those areas that might be most affected. A lot of that's commercially sensitive, so I can't say very much about it, but people will be aware already of the hammer blow that the aviation leasing sector has experienced, you know, largely because Russia is holding onto the planes and not returning them. And that's a breach of all sorts of laws, but they're not too concerned about laws that would appear. And there's obviously the impact on farmers because of the increase in fertilizer prices and the supply fertilizer. And then there's issues around grain and there's also issues around one big, not quite Russian owned, but partly Russian owned facility in County of Emerick, which we're engaging on and determined to keep that, keep that operating no matter what. Another question, what sectors or industries do you see as being key to Ireland's growth over the coming years, both in terms of multinational investment and indigenous enterprise? I think a lot of them are the ones that are already doing well for us. You know, digital pharma, medical devices. These are the geese that lay the golden eggs and we need to look after them. I think financial services is in there as well. The kind of growth areas I would see one would certainly be energy. I think on food and drink as well as potential for growth, although we need to understand I think that customers are going to be much more sensitive to climate impact and we should try and get ahead of that and not fall behind it. And as I mentioned earlier, really trying to encourage those small Irish companies to get set up, start up and scale up. And I think, I think, you know, nothing I'd like to see more than an Irish company set up by Irish people going global itself, from, you know, from Fenergo to Canberra, if you name it, it's great to see that level of success. And people often don't appreciate how successful a lot of Irish companies are, you know, over 200,000 people working in enterprise Ireland companies, it's not all about the IDA and FDI. And again, you know, having just come back from South America, one of the biggest employers in Columbia is Merford Kappa, which is, you know, cartoned to Columbia in Columbia, over three and a half thousand people employed in one plant alone. And then, for example, in Chile, Dole, which some people will know are Dole, this enormous food company, which is a massive global company now owned by Total Produce, which is an Irish company. And I don't think, I wasn't before I became enterprise minister quite aware how many big successful international Irish companies there are. I think we're probably not aware of that enough in Ireland, more generally. Okay, this question here from Emily Binchie, who's a researcher here at the IEA. Does the tonnage to see divergences in the industrial policy of EU member states, particularly bigger ones like France and Germany, creating obstacles to achieving European strategic autonomy? Good question. Hard to answer that. I definitely think the departure of the UK creates a difficulty because they were so like-minded with us previously on trade issues and enterprise issues. We've tried to form a new kind of informal block of northern European countries that are, we have the, we meet with trade ministers, we have the very like-minded group and the like-minded group. And the very like-minded group, obviously, include a number of Nordic countries and Belarus countries in Ireland, some of the Eastern European states, and then the like-minded group is broader, including Germany and others. I think Germany is crucial to this. You know, Germany is 80 million people. It's, it's, it's the biggest economy in Europe, where they go really matters. And I had a concern that the change of government to, you know, a Social Democrat, Green Liberal government might result in a change of view on things related to trade and enterprise and so on. I'm really sure that I'm not seeing that yet. Anyway, that Germany is still a little bit more in the free trade, free enterprise camp than other countries. That's not a good answer, I'm afraid. So I'd love to hear your researches. There's a, maybe one to end on the call from Omar Al-Ghazi, who's a five-year business student at the Technology University of Dublin. And his question is, how as a student do you think we can best contribute to Ireland's goals and future? And any advice for people just starting out on their career? To people just starting out in your career, I suppose there'll be a few things. Opportunities come along when they do, not when they see you. So seize opportunities when they arise, because they don't just come along when you want them, they come around when they do. You only live once, I think that's a pretty good motto. And certainly if you can take the opportunity to work and study abroad, that's something I haven't yet got to do. I hope to do it at some stage in the future, but I can see the extent to which that broadens the mind and makes you a better person and better at the job that you do. So I suppose that would be that would be my toppings for it. Thank you. We'll call it a day there. Thank you very much for taking the time. I know you have a hectic schedule, and we really appreciate you taking the time to talk to us about a really important issue. And of course, if I can make a promise on behalf of my successor here, anything the Institute can do to help in dealing with these tricky issues, we'd be clearly delighted to do. So thank you for that. Thanks. Thanks. I'll see you in person soon. Thank you.