One of the great temptations when you write about policy and politics for a living is to surrender to your prior prejudices when covering any story. It is fair to say that my prior prejudices about recent Irish policy are as follows: That harmonising our corporate taxation rates was a grievous error, likely to drive away investment in the medium to long term, and that shifting to wind energy too rapidly would imperil the electricity grid, and cause companies to look for locations that are more secure, especially for important work.
So, what do we make, then, of this report from Lorcan Allen in the Sunday Business Post?
Intel’s plans to locate a new €80 billion semiconductor facility in Germany and not Ireland are expected to be confirmed in the coming weeks, the Business Post understands.
Ireland was one of three countries on a shortlist drawn up by Intel, along with Germany and Poland, as the potential home of a major new microchip production facility in Europe as it seeks to gain back market share in the global chip market….
….Had this country been selected by Intel it would have equated to the single largest foreign investment in the history of the state – likely in the region of €80 billion.
However, as reported earlier this year by the Business Post, Ireland only ever had an outside chance of securing the new microchip plant given its scale, particularly after it emerged this year how severely strained the country’s energy infrastructure and water services are at present.
It also emerged that the company had significant concerns about potential delays in the Irish planning system and the rising number of judicial review cases being taken against planning decisions here.
The first thing to say is that tempting though it is, the first reaction to a story like this should not be “I told you so”. The simple fact of the matter is that it is for Intel alone to decide where they locate. It would be dishonest to pretend that even if the corporate tax rate stayed the same, and the energy grid was 100% powered by Nuclear energy, that Intel might not have made the same decision. After all, Ireland was not competing against itself, but against two other countries. And Germany has a lot going for it: Educated workforce, great infrastructure, ideal central location in Europe. Saying that Irish policy lost this investment would be to say far more than is justified.
But to pretend that Irish policy is a non-factor would be equally dishonest. After all, Germany has not substantially changed in recent years. It was always an attractive place for companies to locate. If everything else is equal, it objectively makes more sense for a company wanting to supply the whole EU to locate in Germany, rather than on the west coast of Ireland.
And that is why, for generations, we adopted the tax policy we did. We cannot compete with Germany on location. Or, really, on infrastructure. Nor, no matter how much we claim otherwise, can we really out-compete them on raw talent. The Germans have an educated workforce, too.
The only thing we could out-bid them on was taxation. That was how the Irish state made it more profitable for big companies to locate in Ireland than in Germany, despite higher logistics costs, and all the rest of it. Last year, we decided to give up our right to compete on that field.
The energy question is similarly important, and it is no less tempting to say that this decision is an inevitable consequence of moronic electricity generation policy. On this one, we’re on objectively stronger ground: Intel themselves cite the constraints on the country’s energy and water services as a factor in their decision to say thanks, but no thanks.
Those constraints, as they relate to energy, are 100%, absolutely, and totally, a result of Government policy. We’ve shuttered working power plants, to replace them with windmills and the hope of a stiff breeze. That has real world consequences.
But again, it is not a certainty that energy policy alone would have changed this decision. What is more concerning is that it is a racing certainty that, behind the scenes, the IDA threw every possible carrot Intel’s way to get them to locate here. If you doubt me, consider for a moment what a political coup for the Government an 80billion investment in Galway would be. At a stroke, they’d have undercut all the criticisms and views (like mine, above) that their strategy has been an error. And they’d have won, in the language of my home county of Monaghan, rakes of votes. Nevertheless, Intel said no.
And while we cannot definitively say that the Government is 100% to blame, what we can say, absolutely, is that Intel have stated some reasons why they did not choose to invest €80billion here. And that those things are in areas for which the Government has responsibility: Energy, Water, and planning.
In all three areas, the Irish Government has made bad decisions, or no decisions at all. That has real-world impacts.
The reality of Ireland’s situation, when you look at factors beyond our control, is that we are not a naturally attractive place to build large factories to supply an international market. Everything produced here must be shipped, or airlifted, off the island. Our rail infrastructure isn’t great. Our housing costs are very high, and our personal tax rates are not especially attractive to executive level employees. What advantages we do have, and did have, are things that the Government has a duty to cling onto, and protect.
In the case of this Government, some of those advantages have been consciously tossed in the bin. We do not know if it cost us in this instance, but we do know, for a fact, because Intel tells us, that Government decisions were at least a factor.
For that, they should be held accountable. But sure, they’ll probably get away with blaming something, or somebody, else.