Address by Mr. Brian Cowen TD, Minister for Finance,

at the official opening of a new facility for

Seabrook Research Ltd in Cork

14^th January 2005

Ladies and Gentlemen,

I am delighted to be here today to officially open this new Technology Centre of excellence which is geared towards the expansion of the three main companies in the Seabrook Group: Seabrook Research, Enterprise Quality Specialists and Seabrook Payroll Systems. I would especially like to thank Mr. Seán O’Sullivan, Managing Director of Seabrook for inviting me. Seabrook was established in 1989 at a difficult time for the economy and it must be recognised that it was through the determination and resilience of a very strong and focused management team, led by Seán, that Seabrook has become the very successful company that it is today.

As an avid sports fan I should also congratulate Seán on his successful and erudite commentary for RTÉ on the basketball competition in last summer’s Olympic games.

Seabrook operates in a very competitive business environment and competes successfully with some of the world’s biggest software companies such as Oracle and SAP. It is a widely respected company and well regarded as experts in the provision of manufacturing software solutions serving both multi-national and indigenous companies in Ireland. Seabrook has used its products including an Enterprise Resource Planning system, Document Management software and Customer Relationship Management to assist Multinationals such as Transitions Optical in Tuam, Genzyme Corporation in Waterford and Moog Ireland here in Cork to achieve excellence in Ireland. It has also helped Irish manufacturers such as QEF Global, Steripack Medical and the Castlemahon Group improve their business processes and software systems in the home market and expand overseas. It is a fine example of an Irish software company which has taken an entrepreneurial approach to its business using a specific focus and skill set to expand its business both at home and abroad.

I congratulate Seabrook on the opening of this Technology Centre today; it is testament to the expertise and skill the company has built up over the last 15 years in the technology sector. Seabrook’s services further enhance Ireland’s reputation as a great place to do business. It is an excellent example of how an indigenous company can be at the leading edge in the continuing development of a knowledge based economy here and how Ireland can be a bigger participant in the global market.

We have a number of enterprise development Agencies including the IDA, Enterprise Ireland, County Enterprise Boards, SFADCo and Údarás na Gaeltachta supporting our national enterprise policy. Enterprise Ireland, for example, provides a series of targeted supports for indigenous industry designed to assist firms explore new opportunities, become High Potential start-ups, expand and build international competitiveness. It has developed Seed and Venture Capital Funds to ease access to capital for new and early stage entrepreneurs and provides equity based finance to start-ups. I am pleased to note that Enterprise Ireland has assisted Seabrook in the past, mainly in the areas of marketing and feasibility studies and that the Agency is currently in discussions with the company about an expansion plan to increase its workforce and exports. I have no doubt you will be able to achieve further success in this regard.

The Government also aims to assist companies at a stage in their development where funding is vital. In this regard, I was delighted to secure recently European Commission State Aid approval to make available up to end 2006, two important tax based schemes, the Business Expansion Scheme (BES) and the Seed Capital Scheme (SCS) which are an important source of finance for start up companies and for small and medium enterprises in Ireland. These schemes are good examples of how targeted tax reliefs can help generate increased economic activity and employment.

While the availability of Capital funding remains a key critical success factor in the future development of industry, this Government has recognised that in a rapidly changing market place, new ventures such as this can face pressures on a number of fronts. This Government has, therefore, carefully nurtured a stable enterprise environment down through the years.

Since the 1990s, we have continued to invest in education. We committed Ireland to low business taxes by moving to a standard 12.5% rate on a general basis to all trading profits. We have kept public finances in order. In the Ireland of today, we have many of the ingredients necessary for future innovative activity. We have a young well educated population, many of whom have experience of either working abroad or working with international companies here at home. Our people are capable of thinking globally. We now have a well endowed public research infrastructure in our Universities and Technological Institutes. We are getting our physical infrastructure sorted out and the infrastructure deficit is being closed.

I assure you that this Government will continue to maintain a business environment conducive to investment and to taking action to address both the shorter and longer-term competitiveness issues, which have been identified by both the National Competitiveness Council and the Enterprise Strategy Group. ‘Ahead of the Curve’ is where we want to be.

The approach taken in my budgetary policy is grounded in my conviction that we must protect our competitiveness and that one way to achieve this is to avoid adding inflationary pressures which give rise to wage demands and set in train a vicious circle for the economy. Our efforts to reduce inflation are bearing fruit; inflation fell to an annual average of about 2.2% in 2004, compared to 3.5% in 2003 thus reducing dramatically the inflation differential between Ireland and the euro area average. The rate of growth of Ireland’s economy compares very favourably with the forecast for the euro area of 2.1% in 2004 and I expect that our strong economic performance will continue over the coming years.

There are some broad risks facing our economy however and we will need to maintain sufficient flexibility to deal with them. These risks include the possibility that increases in oil prices will be sustained at current levels and that the world economy might slow significantly this year. Countering these risks requires us to focus on domestic factors over which we have some control. Any sharp appreciation of the Euro vis-à-vis the Dollar is always a challenge to the economy as a strong Euro reduces the competitiveness of the exporting sector. In this regard, it is important that businesses take necessary measures to cope with currency fluctuations, such as hedging against these risks as well as enhancing their flexibility to cope with currency movements. Keeping pay increases in line with the terms of the current national wage agreement is important in this regard.

As shown in my recent Budget, the Government is continuing the policy of prudent management of public finances and we aim to ensure that spending on public services is kept at a sustainable level into the medium term. Within this framework, we are continuing to provide targeted resources for key priorities.

Moreover, I am determined to get better value for money for the major levels of expenditure we are providing. We are seeking to maintain capital investment at a high and sustained level to accelerate the provision of much needed infrastructural development and to sustain our potential for continuing economic growth into the longer term. We are continuing to focus on developing high quality transport links, linking our environmental infrastructure, and upgrading our communications networks. All these are necessary for continuing enterprise, social and regional development.

Looking at the global picture, Ireland’s future economic prosperity will depend to a large extent on investing in science, research and innovation. Innovation is the driving force of economic and social progress. Whether it is in the delivery of public services locally or in selling into global markets, creativity and innovation must be in everything we do. We need to instinctively add knowledge to everything we produce and trade.

As part of this Government’s strategy to develop Ireland as a knowledge and innovation based economy, the Government has allocated €2.5 billion to Research, Technological Development and Innovation across a range of sectors under Ireland’s National Development Plan 2000-2006. The funding includes:

·        €698m to be invested through the Programme for Research in Third Level Institutions (PRTLI). This funding is directed to world class research being carried out in Universities and Institutions of Technology

·        €646m to be invested through Science Foundation Ireland (SFI) in the strategic fields of Information and Communications Technology (ICT) and Biotechnology. At end 2004, SFI already had funding commitments amounting to €396m allocated across 360 projects with commitment to support more than 1038 individuals, research teams, centres, and visiting researchers. Some €130m has been provided to SFI in 2005 to expand its support for research;

·        Enterprise Ireland is scheduled to spend €85m in 2005 on Research, Technology, Innovation and Development through R&D grants to individual firms, support for third level colleges and Institutes in respect of collaborative projects with industry and research infrastructure.

The introduction of the generous tax credit of 20% for R&D is a further indication of our commitment. This tax credit will help to enhance our competitiveness as a location for new internationally mobile, research-related investment, and will encourage existing overseas and indigenous firms to add research functions to their operations in Ireland or to increase their level of research activity. The tax credit is in addition to the support already provided by the IDA in the form of R&D grants. This is another good example of how tax reliefs can be used to increase economic activity.

Clearly substantial progress has been made towards making research a core pillar of our national enterprise policy but there is more to do. Building Ireland’s Knowledge Economy - the Irish Action Plan published in 2004 for promoting investment in R&D to 2010 sets the Vision that Ireland by 2010, will be internationally renowned for the excellence of its research and be at the forefront in generating and using new knowledge for economic and social progress. In order to realise this vision, the analysis reveals that R&D performance:

·        in the higher education and public sectors should increase from €422m in 2001 to €1.1bn in 2010 and that

·        Business investment in R&D should increase from €917m in 2001 to €2.5bn in 2010. This will entail doubling the number of companies with minimum scale R&D activity and a quadrupling of the number of enterprises performing significant R&D.

These are very challenging targets but the R&D Action Plan is a very positive signal that stakeholders are willing to come together to develop the agenda and set clear goals. The new Cabinet Committee on Science, Technology and Innovation and the structures underpinning it, as well as the newly appointed Chief Science Adviser, have a central role to play. If our business sector is to continue to thrive in the face of international competition, then we need to see both our indigenous companies and our Multinationals rising to the innovation challenge and instilling R&D into the core of their activities.

Finally, it is left for me to formally open this new facility and to wish every success to Seabrook Research in this Business & Technology Centre. I look forward to hearing of positive results emanating from here in the future.

Congratulations.