- With two tax regimes, two legal systems and two competing economic development agencies, PAT McART asks if a 32-county administration would now make economic sense for all citizens on the island.
When Northern Ireland was established in 1922 unionists could point with great confidence to the three rock solid pillars on which their political structure was built – politics, religion and economics. In terms of politics, unionists had a solid two thirds majority in every election; in regard to religion the Six Counties was overwhelmingly Protestant; and in terms of economics, in and around Belfast was the powerhouse, producing almost 80% of the industrial output of the entire island of Ireland.
The logic of the unionist position in any debate on the issue of whether partition was a good or a bad thing was blindingly obvious – they could point out it paid to be a unionist. It was an unassailable argument.
Fast forward to 2017 and leading economist, David McWilliams, writing in the Belfast Telegraph, pointed out the North has an effective budget deficit of 22% of GPD (15% in 2002) while the ROI’s is 1%. That’s just one of the startling statistics that reveal a massive reversal of fortunes between the two economies. Another is that while incomes in the North have grown five times in 60 years incomes in the South have grown by twenty times.
And the bad news doesn’t end there. There has been a massive demographic shift in that four of the Six Counties now have Catholic/Nationalist majorities. And those changes are gathering pace in that Census figures from 2001 reveal the Catholic birth rate is way higher while the Protestant death rate is almost double that of the other community. Put simply, there are more Catholics being born, more Protestants dying. It’s a double whammy.
With Brexit fast approaching and economic upheaval likely - the riddle of how trade will function with one part of the island inside the EU and the other outside has yet to be solved - it would seem the time has now arrived when the question can be legitimately asked: does it still pay to be a unionist?
And a corollary question naturally follows: would unity now make more economic sense for all citizens on the island?
It would seem the evidence is in the affirmative. In a massively detailed study of the impact of Irish unification published in 2015 a team led by Canadian academic, Professor Kurt Huebner, of Vancouver University, came to the conclusion that a combined Irish economy, as opposed to two separate economies, would, in a short number of years, be greater than €35bn a year. It seems somewhat odd that this study, the only one of its kind ever undertaken, has all but been overlooked.
It is also self evident that, in terms of economies of scale, having two separate tax regimes, two legal systems, and two competing economic development agencies doesn’t make sense. Neither does it seems particularly efficient on an island with just over 6.6m. to have two States and three governments – London, Dublin and Belfast – having input into the governance of the people.
Economically, the argument seems well defeated. The Republic has moved massively ahead of the north in terms of Foreign Direct Investment. Since the Good Friday Agreement in 1998 US corporations have invested £312bn in ROI, equivalent to 56 yrs. of UK government subvention in NI.
London School of Economics professor, Dr Christian Kissane, writing in the Irish Times last May, pointed out that the future for the North is likely to change dramatically post Brexit. English politicians and tax payers, he suggested, will likely demand cuts in the subvention upon which the NI economy has become dependent and baulk at picking up the tab previously paid by the EU by way of subsidies and grants.
Failure of North
As far back as 2002 two leading Irish business journalists, Sean MacCarthaigh and Eamon Quinn, writing in the Sunday Business Post, put forward detailed analysis of some elements of the restructuring needed of the NI economy. In their conclusion they observed: “While they appear formidable none of the obstacles to an all-Ireland economy are insurmountable.”
Most formidable amongst those obstacles is the economic failure of Northern Ireland which needs to be addressed; any state that, according to the British government figures, still requires a £10billion annual subvention 100 years after its creation cannot be considered a success or sustainable.
However, the whole question of the subvention is disputed. In their document, Towards a United Ireland, published last year, Sinn Fein decried this figure - they suggest it could be as low as £3bn - and alleged the £10bn figure was purely 'a ploy' by the British government to dampen down debate on a united Ireland - but whatever the truth of the matter it will have to be addressed.
Ten Point Plan
Based on all of the above the following Ten Point Plan might be a useful catalyst to initiate a meaningful debate on the economic issues that lie ahead in regard to any future united Ireland.
1. The British Government agree to apply the Barnet Formula to the six northern counties until 2050. This would give medium term financial security to Northern Ireland.
2. Increase spending on capital projects to bring infrastructure up to modern European standards.
3. Reduce the number of civil servants in Northern Ireland to the same level as the rest of the UK. All redundancy, pension and restructuring costs paid for by UK. This is necessary as the Northern Ireland economy is not only public service dominated but has the lowest output in the UK.
4. A new 32 county administration should be empowered to borrow more for investment at low EU rates based on lower overall GDP debt ratio for a larger economy.
5. A political agreement on a new all-island basis, inside the EU, would attract increased EU funding including assistance with policing and security costs on a par with that of Greece, plus financial assistance in restructuring the NI economy towards being more market orientated.
6. The Republic’s Industrial Development Authority promoting all of the island on the world stage would produce benefits for all. Given its track record in attracting FDI worldwide it should prove to be a major player in turning the NI economy into a world-class competitor with the added benefit for the Republic that the two agencies would no longer be in competition but would be working together to produce economic growth.
7. Improved direct links between education and industry in NI as per the Republic would again lead to a more competitive market orientated economy, over time producing overall improvements in living and working environments. The Republic spends more per capita on health than the North but the efficiencies in terms of numbers treated is not as good.
8. A harmonised corporation tax would make all the island more attractive to FDI and lead to domestic companies throughout the island being more competitive thus leading to economic growth for all.
9. A unified island would probably attract special status from US or help similar to Marshall Plan. Such benefits as pre customs clearance at Dublin airport could be put in place in Belfast. It hardly needs pointing out an all island economy without political instability and civil unrest would be more attractive to US and other international firms as a European base in an English speaking environment within the EU.
10. Separately, economies of scale and increased attractiveness of market of ‘Ireland 32’ would make it more attractive to multinationals due to such things as increased research base (e.g. Queens University and Trinity College, Dublin working seamlessly together), and the promotion of other centres of excellence in healthcare and other industry.
Finally, in 2018 the question has to be asked: Is there enough in these draft proposals to persuade unionists to engage in serious debate in regard to the possibility of giving up the status quo in return for a more prosperous homogenous society with the real potential of a much higher living standards for all?
And if not, anyone out there have ideas on how these proposals can be improved?
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