It’s about a year since An Taoiseach announced plans to develop ‘The Smart Economy’ (the successor to ‘The Knowledge Economy’, remember that?). In those twelve months we’ve heard constant mention, plugging and referencing of the phrase. It has become a Government mantra, said constantly when the state of the public finances is discussed. On Drivetime today Brian Lenihan spoke about it, on the Nine News Brian Cowen picked up the baton and later he handed it onto Eamon Ryan for Prime Time. You can be guaranteed we’ll heard it mentioned every few hours in the next week too.
“We need to settle the public finances with a view to developing a model for sustainable growth through the Smart Economy, going forward”, don’t say it doesn’t ring a bell.
I can’t find an explicit definition of what the Smart Economy would be constituted of, but if asked, I’d guess a Government representative would describe it as something like; “an economy that has a workforce that is able, educated, competent and competitive in areas and skills which will be needed by companies in growing industries, to attract those companies”. Fair?
Government representatives have said time and again that companies which are ‘web-innovators’, green technology developers and companies operating in areas like “nanotechnology” are the types we need to attract into, and keep in, Ireland. This, they say, will revive the Celtic Tiger “going forward” – a.k.a in the long-term. This, presumably, would be done through ‘up-skilling’ our workforce, incentivising the study of maths and science courses at third level, whilst focusing research and development (R&D) funding on faculties working in said areas.
So the Budget should reflect the above… eh, but it doesn’t seem to.
While, as flagged prominently by the minister in his speech, the IDA grants-to-industry budget has been upped by 21% it stands alone against cuts in other “smart” areas. Worth noting before I go on; the IDA is responsible for attracting foreign investment, so I don’t think any of that money will be going to Irish companies. In contrast, Enterprise Ireland which is tasked with nurturing indigenous entrepreneurship have had their grants-to-industry budget cut 7%. In monetary terms this means the IDA gets an extra €15m, while EI loses €7m.
The balance between cuts and investments in the IDA and EI is therefore €8m, which is obliterated by the 7% slash to the Science, Technology and Innovation (STI) programmes fund. In 2009 the STI fund received €318.6m in Government moneys, next year there will be €296.7m available to it; a cut of €22m.
On top that, Fás’s long-term labour force development section – Training and Integration Supports – is also hit, this one for 25% or €21m. Furthermore the biggest budget section in Fás, ‘Employment Programmes’ loses €23m (5%) of its €440m budget from 2009. So on total balance, we’re now down €58m.
Now, I note and welcome the €90m investment in the Fás ‘Temporary Employment Subsidy Scheme’, however, I wouldn’t normally categorise it as the type of long-term “smart economy” measure we’ve been preached to about by the Government. But I will for a moment, for the sake of argument.
Taking the above figures as the “Smart Economy”, including temporary employment, we’re looking at a €32m or so investment via the department of enterprise. But that whole profit figure relies on the inclusion of the temporary employment fund increase, otherwise it is a €58m ‘Smart’ cut. That’s just one department. Note: I didn’t include the €150m cut to the Continuing Professional Development programme because its a pilot fund.
The other department which I’d guess would drive our soon-to-be-Smart Economy is education & science. The funding alterations there are quite similar to enterprise however, some up, some down, but overall it appears to be a ‘smart’ loss.
While the Schools Information and Communications Technologies Activities funding goes up 115% (€30m), the Strategic Innovation fund is cut 31% (€8m) and R&D Activities money (to Universities) are hit for €4m, (or 5%). That leaves a balance of €18m, which is crushed by the 30% lump taken from research grants to Institutes of Technology, a €49m cut.
Over the two departments, including the temporary employment fund figure, we’re looking at a €1m improvement in funding for the Smart Economy. Without said figure, it’s a €58m cut.
So between the two main ‘Smart’ departments, from my back-of-a-Budget-document figures, I’m not so sure it’s smart to call this a ‘Smart Economy’ budget.