Let’s put some honesty as well as vision into our discussion of the
economy both in terms of NI itself and in terms of its all-Ireland dimensions.
First of all I don’t accept that our economy is in imminent crisis as is
frequently suggested.
With virtually full employment and labour shortages that can only be met
by significant numbers of migrant workers, with manufacturing output and
productivity increasing even with a decline in the numbers involved in
manufacturing, with a positive outlook for the construction industry, with a
gradual increase in r&d in several sectors, with a significant increase in
visitor numbers, and with more companies engaged in N-S business than ever
before, the situation cannot be described as all gloom and doom, nor the
outlook painted in extremely negative terms.
Indeed whether we look at the situation in Northern Irish terms alone or
in the wider context of all-Ireland developments there is much that gives
ground for optimism.
But let’s also remember that while a more peaceful and a more stable
political situation has provided a benign context for the economy over the last
decade the preceding decades of violence were times of lost opportunities, the
scale of which can be measured by comparisons with the South where
opportunities were being created and taken at a time when huge leaps forward
were being taken in applying new technologies to virtually the entire
industrial sector as well as creating completely new sectors and new services.
In the language of economists the opportunity costs for progress in
Northern Ireland were huge and are still being paid today. Indeed the huge
over-dependence on the public sector that has emerged over the past two decades
is a direct function of the absence of a stronger and more vibrant private
sector than the one we have.
Since the focus for today’s discussion is the opportunities provided in
the all-Ireland context that is where my comments are focused. In saying that I
don’t ignore other relationships the most important of which is the global
context where continued growth is essential to our own growth. Obviously upturns
and downturns in that wider context and/or in the more immediate British
context will impact positively and negatively on our local economies, in the
North as well as in the South.
So to the factors we can, if not control at least we can influence at a
policy making level.
The pace of North-South co-operation has undoubtedly intensified over the
past decade. Evidence is to be seen in increased volumes of trade, the success
of Tourism Ireland in boosting tourist numbers, the development of the
Belfast-Dublin road and rail networks, the increasing number of cross-border
hospital contracts for service provision, co-operation on educational
initiatives and projects, movement towards a single energy market for the whole
island and plans to create an integrated North-South gas and electricity supply.
Even cross-border roaming charges have figured as an important issue with
Ireland now forcing the argument within the rest of the EU.
These initiatives – and many others - highlight the ‘normalisation’ of
practical co-operation with mutually beneficial outcomes.
Indeed, the success of North-South co-operation in recent years is such
that there is no longer a question over its capacity to deliver economic and
social benefits on both sides of the border. Instead the question is how best
to maximize those benefits.
Notwithstanding increased co-operation there is a huge imbalance in
developments North and South. In the South economic growth continues at a rate
almost three times that of the North (GDP: North, 2%, South 5.5%).
These contrasting rates reflect the huge differences in investment in the
wealth creating sectors of both parts of the island. In the South continued
investment in manufacturing and services is encouraged by very favourable
fiscal incentives which the North cannot at present match. The result is an
economy in the South which is nearly half as much dependent on the public
sector (35%) as is the North’s economy (61%).
While we need to press for a portfolio of fiscal incentives to enable us
match those in the South and so better assist investment, we must also develop
new alliances and new business opportunities in the South and with the South in
selling to the wider world as well as joining with the South in developing
packages that will attract investors to either or both parts of the country
taking appropriate advantage of the incentives in each.
So while North-South trade is growing it is clear it
is not growing to its full potential. A recent survey by the Economic and Research
Institute indicated that while considerable progress has been made in
developing new North-South business links, there is much scope for further
development.
To make this happen barriers must be tackled and overcome. The
North-South Ministerial Council began to address this problem in 2001 but
little progress has been made since. Some of these barriers include difference
in financial services, in telecommunications, in different regulatory regimes
affecting labour, VAT, tendering procedures in the public sectors – most of
which could be effectively addressed if the political will existed.
So let’s mobilize that political will.
To maximise the benefits of North-South co-operation let’s
also make a step- change towards the integrated planning and delivery of
projects with an all-island dimension. Nowhere is this more needed than in
infrastructural development where between 90 and 100 billion euros are to be
spent over the next decade. Joint planning, joint procurement and joint
delivery must surely have considerable benefits for both North and South in
road development, in the modernisation of water supply in border areas, in the
provision of major hospital services etc.
A critical area for joint planning of an integrated kind is
energy policy over the next twenty to thirty years. The recent Forfás report in
the South highlights the growing urgency for long-term planning, an urgency
that applies not just there but to the North as well. Joint planning for the
energy needs of the whole island over the next thirty years and beyond is
something that must be developed as soon as possible.
The SDLP’s detailed proposals include plans for a new Transport and
Infrastructure body, an all-Ireland Research Alliance, an Energy Planning Unit,
Marketing and Investment co-operation, a Public Safety body and a joined-up
anti-poverty strategy. In addition there are many other recommendations
covering issues in health, education, the environment, agriculture, etc. where
enhanced forms of co-operation will yield enormous benefits.
We can - and should - have a shared economy, shared in a spirit of mutual
respect and with a commitment to bring about mutual benefits as intended in the
Good Friday Agreement.
Finally, beyond the political and practical case for economic and social
co-operation, there is growing acknowledgement of the important role such
co-operation plays in building trust and good relations between our communities
within the North and across the island. As Co-operation Ireland has stated -
“The promotion of effective North-South co-operation is an integral part of
building peace on the island of Ireland.”