Posted tagged ‘inward investment’

Keeping out of recession: the role of universities

September 9, 2008

Last week the Irish Government announced a key measure in its programme to deal with the downturn that has overtaken the economy and which has had such a dramatic effect on public finances. The announcement of the annual Budget and of the Book of Estimates (which sets out the public spending programme for the coming year) has been moved from December to mid-October. This decision is designed to show a determined approach to the management of the economy and also to convey a sense of urgency. It was generally praised in the media.

One of the consequences of this change in the calendar of events is that anyone who might have hoped to lobby the government on expenditure r Budget measures can now forget it – the timetable is too short for any such lobbying to be capable of having a practical effect. From the point of view of the universities, therefore, whatever has been decided on university funding is what we will get; what we say now won’t have much further effect. We don’t of course know what has been decided, but we can have a pretty shrewd guess. We know that, in common with all parts of the public service, we are to cut our pay bill by 3 per cent. And we know that fees (paid for students by the government under the ‘free fees’ scheme) are to raise by a small amount, significantly less than the rate of inflation. So we can guess that the other main component of public funding, the recurrent grant, will also be cut back significantly.

The government is in a difficult position, and must act decisively to correct the problems that threaten to undermine public finances. But it must also ensure that it takes the steps to enable the economy to avoid recession and to resume significant growth. Two of the key elements of that aim are the stimulation of new inward investment, and the encouragement of indigenous business through entrepreneurship and innovation. All of this needs to happen within a high value knowledge economy; we cannot any more return to a cheap labour market or low cost services.

The most important ingredient in all this is confidence: confidence in a consistency of policy, and confidence in the capacity of the institutions in Ireland to deliver high value. All of this requires strong and ambitious universities; if doubts emerge about the capacity of the universities to deliver highly skilled graduates and world class research, then it is unlikely that we can succeed in attracting business activity of the kind we now need. The Irish universities already operate on budgets which are typically half (on a proportionate basis) or less than are available to universities in the UK and the US; but we need to be able to persuade potential international investors that we are as good as those other universities. If our resources are cut even further that will become impossible.

It is, I suspect, difficult to make this case without it sounding like special pleading. But it is nevertheless true that, to a much greater extent than was the case in previous economic cycles, Ireland’s prosperity is now tied up with the health and confidence of the university sector. Much progress has been made on that in recent years, but it is now at risk, and if it falters it cannot be corrected quickly and easily. Universities are willing and eager to work with the government and with bodies such as the IDA to help lift us out of the economic downturn, and to do so while managing our resources prudently. But we also need the government to work with us, so that we can achieve these ends.

The right decisions need to be taken in October.