Andy: The Web Summit, the Government, and Property Interests

Paddy Cosgrave, founder and chief executive of the Web Summit, has, as we all now know, decided to move the annual tech-industry jamboree to Lisbon from 2016 onwards.

He has cited as the reason for the move the failure of the government to engage with him on three key issues.

Firstly, the absence of a traffic-management plan in and around the RDS venue that would have eased gridlock and other congestion problems, including through the increased provision of public transport

Secondly, inadequate wifi connectivity at the venue (though it seems a third-party provider had already been contracted to solve this problem at the 2015 event).

And finally, opportunistic pricing behavior by Dublin hotels, allegedly upping their room rates by more than 600 percent in some cases during the period of the summit.

For others, not entirely unreasonably, “it was unrealistic of any private company to expect what Web Summit was demanding from government . . . the firm was overly pushy, petulant . . . it expects others to provide for free what in reality it should pay for itself”.

And, contrary to seemingly inflated claims of the summit being worth €100 million to Dublin annually, Failte Ireland suggests a figure of closer to €37.5 million.

There is more than a grain of truth to the idea that Cosgrave is overdoing his argument in certain respects: for example, if he was so concerned about the lack of transport to and from the venue, why could he not just hire a fleet of private shuttle buses?

Yes, that would still have needed a public traffic-management plan to be fully effective, but at least one of the problems would have been halfway to being solved.

Where Cosgrave appears to have an unassailable case is the gouging practices of Dublin hotels. Was it beyond the capacity of government to impose temporary rate caps for the duration of the summit? That hotels would not be allowed increase rates by, say, more than 50 per cent? This seems especially feasible given that many of the hotels are state-owned, via NAMA.

But that would have involved the government taking on property interests and, as has been repeatedly demonstrated, this is something successive Irish governments have shied away from – whether it is to solve the crisis of homelessness or to better service the needs of non-property sections of (foreign or domestic) capital.

The tension between rising property prices and rental costs, on the one hand, and the ability of Ireland to attract and retain foreign investment, on the other, has recently been highlighted by Louise Phelan, the head of PayPal Ireland (which employs 2,400 people in Dublin and Dundalk):

“Today I am paying €2,000 upfront to people coming into Ireland to put them into hotels so I can get a chance to get them residential accommodation . . . It costs about €1,500 to hire an individual, but today it’s costing me about €3,500 upfront to find a hotel for at least two to three weeks.

“It’s crisis time for us and for bringing in foreign direct investment overall . . . The reality is that the IDA do an amazing job, but if you don’t have the after-care service for people, FDI won’t invest in you. It used to be about how many people I can hire. Now it’s about how many people I can hire and get schools for their families and get into a home.”

While taxation advantages constitute the principal attraction for firms locating in Ireland, issues like rental (and education, childcare and other) costs clearly also have a bearing.

Una Mullally has made the reasonable argument that “What the summit offered Dublin, was an ego boost for the city, a sense of optimism, and a misplaced projection about the wider tapestry of tech in the capital – the European HQs of multi-billion-dollar tech companies that base themselves here to pay less tax.”

Having billionaire techies drinking in Dublin pubs fostered the illusion that Dublin’s appeal was built on its cutting-edge technological infrastructure, and/or on its intangible coolness factor, when the real deal breaker was the ability to avoid tax.

However, as PayPal’s experience demonstrates, companies may be lured here by tax advantages, but the capacity to keep them (or home-grown start-ups like the Web Summit) in place will be determined by infrastructural quality and willingness to challenge the property lobby.

For an Irish ruling class torn between its dependence on multinational capital and its traditional allegiance to property developers and financiers, that constitutes a formidable dilemma.