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5 December 2011

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All-Ireland economy – The Way Forward

Taking control of our own economic destiny

By Conor Murphy MP, MLA

The Fine Gael/Labour Government seems intent on a course of creating an economic wilderness

IRELAND faces many challenges presented by the current global economic recession in addition to the historic legacy of partition where we have two failing economies competing back-to-back on an island with a population of 6.2million people.
In the North, the Assembly and Executive has limited fiscal powers which is both unacceptable and unsustainable. The Dublin governments’ record of squandering unprecedented wealth has created a need for a complete rethink on how Ireland governs its economic destiny. Partition has failed and continued partitionist economics will fail another generation. An ‘All-Ireland Economic Recovery Plan’ is required to deliver sustainable, long-lasting economic growth.
Sinn Féin believes an economic recovery requires a radical reshaping of how government and the financial and public sector have traditionally operated so as to best serve the needs of citizens. We face important challenges as a post-conflict society and the political institutions on this island need to deliver the social and economic change that is required. It is critical that we deliver world-class frontline public services in health, education and transport, invest in capital infrastructure projects, and tackle poverty and disadvantage across urban and rural communities. We need to tackle inequality in the delivery of public policy, and economic plans should be focussed on making our society more equal and prosperous. But the present policies of the Irish Government through its abject subservience to the IMF/ECB and its short-sighted approach of disinvesting in the domestic economy are undermining the potential of such an approach.
For instance, the contrast between the Fine Gael/Labour Government’s insistence that they have an obligation to pay out between €74billion and €90billion of taxpayers’ money to nameless, faceless bondholders for private debt and its arrogant decision to break a solemn agreement reached at St Andrews with the Northern Executive to co-fund the A5 Derry/Aughnacloy dual carriageway, combined with their axing of a further €750million from the capital spend budget, throwing thousands more workers on the dole, shows the disdain with which this government views the needs of the Irish people.
Logic dictates that economic recovery requires consistent consumer spending to encourage further investment and stimulate growth. Removing billions from the domestic economy through paying unsecured bondholders who recklessly gambled on the financial markets and lost while at the same time increasing household charges and taxes only serves to reduce further the disposable income that families have to spend.
This course that the previous Fianna Fáil/Green Coalition set and which the present Fine Gael/Labour Government seems intent on pursuing will not just destroy the fabric of communities but is a certain prescription for creating an economic wilderness.
The capital budget is the mechanism which the Government should be utilising to stimulate the economy, but by reducing this budget by €750million (which will have the effect of putting 7,500 more people on the dole and further increasing the Social Welfare bill) will have the opposite effect. How any Government can think that this approach will have the effect of rebuilding the economy is beyond me.
Sinn Féin advocates economic proposals which will decisively tackle the current public expenditure deficit, avoid unnecessary cuts in frontline public services and save jobs across the public, private and voluntary sectors, and stimulate the Irish economy towards recovery and sustainability.
Our proposals relating to the construction sector will directly assist the recovery process by kick-starting investment in retro-fitting to ensure energy efficiency of our housing stocks will go some distance to ensuring that a balanced economy emerges from the economic recovery measures. More than 5,000 construction workers are currently involved in retro-fitting homes and there is significant over-subscription to initiatives in the field of energy efficiency. These need to be expanded.
The capital expenditure costs could be recouped through the utility companies reduced energy costs and building lifetime costing into business forecasting. In this way the country reduces Co2 emissions (and EU penalties), families save on energy costs and more people would be in employment, reducing pressure on benefit payments and contributing to the exchequer. This virtuous circle model can be extended throughout the island economy.
Duplication and overlapping expenditure on the island of Ireland is wasteful and expensive within both jurisdictions. Actions could be taken immediately to develop a joint approach to addressing the economic downturn by examining areas where savings can be made.
When discussing the issue of an all-Ireland economy we are often confronted by those who use the fact that the North’s economy is heavily influenced by British fiscal policies, which is undeniable. Therefore, in order to build a strong, sustainable island economy it is necessary that in the North we take maximum fiscal powers from London to the control of the Assembly. This would facilitate designing an economic model that could accommodate the equalising of the tax and revenue regimes across the island.
We are also regularly reminded about the North’s dependence on subsidy from the British Government to sustain the local economy and this is used as a political reason against building an all-Ireland economy. But what is never revealed is the amount of tax revenues collected through VAT, Income Tax, Customs & Excise and a myriad of other taxes which go directly to the British Exchequer. One of the effects of partition has been to create the impression that we are irretrievably dependent on subsidy from the British Exchequer.
I believe it would be very interesting and illuminating if we had properly accounted figures telling us how much revenue is actually generated here for the British Exchequer against the finance returned in the form of the Block Grant. It would be beneficial to the debate around the transfer of fiscal powers and the building of an all-Ireland economy if we were in possession of all the facts concerning tax revenue, including the profits of British-based chain stores, oil companies, etc, generated here but taxed as profits declared by the parent companies located in Britain.
I would urge the Assembly Finance Minister, therefore, to request from the British Government that it produce an accurate Revenue/Expenditure Report similar to the one recently produced on Scotland so that we can identify the exact extent of the deficit between the Block Grant and revenues raised. This could then inform the debate on the sustainability of an island economy designed here for here.
Our proposals for an island economy are not about rationalisation of jobs - instead they are about cost-saving directed at reducing administration expenses and the cost of future projects. Our proposals address the following areas that we are convinced demonstrate very significant potential to address the current economic difficulties.

These include:-

Procurement
Joint procurement and tendering by the Executive and Oireachtas for the supply of work, services, and goods for government departments and agencies could be introduced immediately. A common approach to procurement criteria could be adopted to ensure that all public procurement contracts include clauses for the promotion of equality and sustainable social outcomes.

Economic development/Employment
Joint economic development and job-promotion programmes.

Research and Development
Joint approach to Research and Development.

Public information
Joint public information campaigns across government departments.

Education
There is potential in the higher education sector, particularly at post-graduate level, for pooling resources, sharing services in a joint approach by third level facilities across the island.

Health
Implement actions to ensure the best provision of hospital services in border regions. Primary and community care in border areas could be operated on a joint basis; multi-agency planning, looking at sharing specialist or regional facilities, equipment, and clinical and support staff could be implemented. There could be increased co-operation in health research and development.

Planning and Infrastructure
Implement a co-ordinated approach to spatial planning including long-term infrastructure planning on an all-Ireland basis.

Energy
Maximise opportunities in the Energy market on an all-Ireland basis. Develop greater co-operation in the renewables sector and associated infrastructure.

Rural development
Expand and build on rural development initiatives and services.

Waste
An all-Ireland approach to waste management would generate savings.

A motion passed at the recent Sinn Féin Ard Fheis recognised that moving out of recession and into economic growth is dependent on developing a competitive economy, maximising trade, investing in infrastructure, employment, education and innovation, research and development. And that the Irish economy is too small to support two disparate and competing approaches to economic development with partition continuing to undermine the competitiveness of the all-Ireland economy.
We also recognised the potential to expand the all-Ireland Ministerial Council remit to develop the economy and implement an ‘All-Ireland Plan for Economic Growth and Employment’.
It is time that in the North we take fiscal powers away from London and invest them in the Executive and for Dublin to take economic decisions based on its responsibilities to the Irish people and not in the interests of faceless, nameless international gamblers in the form of bondholders. If we are to resuscitate the Irish economy – on the whole island – we must take control of our own economic destiny.

See Sinn Féin’s Budget 2012 Pre-Budget Submission Summary

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