No more side-stepping, no more drip-feeding of half truths, no more delays, no more lies. The now infamous four-year government plan may have been rewritten by the storm-troopers of the IMF/EU but the essence of the plan to get Mother Ireland out of her sorry mess must be essentially the same as before. The one change now, of course, is that if the plan and its budget are not accepted by the Dáil, the pretence ends, time runs out and IMF rules, OK.
We must begin to rebuild an economy that has been shattered by the greed of bankers and the total ineptitude of the current government. That requires more than just reducing the budget deficit. Whoever is in power must find a way to separate bank rescue and fiscal reform; they must take into account the impact on short-term growth and long-term potential; and they must correct the issue of the oversized and overpaid public sector.
Whichever way we look at it, cuts must be made and the public sector cannot be omitted from the equation, as the Croke Park agreement proposed. Events have overtaken this agreement and it would be totally unfair to hit social welfare with cuts and not touch the higher pay of the public service.
Another target of the four-year plan should be the difference between the total cost of employing a person and their take-home pay. This tax wedge should be adjusted to assist in the employment maintenance and creation. The second target is increasing the difference between take-home pay from work and income from social welfare. The effect of this social welfare "replacement ratio" for workers on low incomes is acting as a major disincentive to work.
The plan must act as our economic map for the foreseeable future, made up of immediate harsh cuts and a no-nonsense public sector efficiency drive, medium-term stabilisation and a longer view of how we return to the productive country that we were in the 1990s.
The major concern of the enterprise sector over the past year has been that there was no coherent and comprehensive government plan to address the problems that are negatively affecting the economy. Any policies introduced were on an ad-hoc basis with little in the way of joined-up thinking. This has caused a great deal of uncertainty, which is affecting business investment decisions and stifling enterprise in the process.
Decisions on access to finance, late payments, cost competitiveness and specific policies that are tailored to the requirements of the SME owner-manager have been relegated, while the focus was on the stabilisation of the banking system. While the importance of a strong banking sector is obvious, the government has lost sight of the importance of entrepreneurs and innovators in rebuilding the economy. Eventually, the government will have to turn to them to get us out of this sorry mess. They must be given support and direction to ensure they can compete with the best and achieve overseas success.
As world trade recovers and strong markets are established, we must ensure that our enterprise base has the confidence, the people and the funding to grow. We must continue to invest in education and up-skilling and we must provide sound financial solutions for companies with strong potential. Now, more than ever before, we must work together to develop clear measures and timely strategies. We need a careful balancing act between solving short-term problems and taking action that will deliver outcomes in the medium to long term, to ensure we are well-positioned to take advantage of the inevitable economic upturn.
The key, therefore, to returning to economic growth is recognising the vital role played by indigenous business in the development of the economy. It must be acknowledged that SMEs have consistently demonstrated that, when provided with the right economic conditions, they can deliver on employment and wealth generation, combined with a loyalty to the local economies that they serve. It should be remembered that it was the SME sector that created over 450,000 jobs during the real tiger years of 1992 to 2000.
The government therefore must shift its focus from the 'multinationals at all costs' approach to a policy that assists in the promotion of indigenous enterprise, and in particular the development of SMEs.
We need an economy that caters for both, encompassing a strong, Irish-owned business sector, including a significant number of firms of international scale operating successfully in high-growth, high-productivity, knowledge-intensive sectors. These businesses should be able to work more effectively with foreign-owned businesses, which continue to be a major source of output, exports, employment and knowledge-transfer, and which are more deeply embedded in the economy through sub-supply linkages, and the location of deeper functional responsibility in Ireland for areas such as R&D, investment decisions and marketing.
For far too long the SME sector has been the Cinderella of industrial policy. It is essential that there is a fundamental change in the government attitude towards smaller companies and that the sector is viewed in its totality, for the significant contribution it makes to employment, revenues, economic growth, purchasing power and society as a whole. This should be at the centre of a national enterprise strategy so often discussed at government without any appreciable action being taken.
The four-year plan, while being frontloaded with cuts, must place a particular emphasis on the SME sector and the concerns that need to be addressed to get the sector back operating efficiently, as it is the backbone of the economy and the source of future job creation.
Mark Fielding is CEO of the Irish Small & Medium Enterprise Association