11 May 2006 Edition

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Tax cuts and INI won't save Six-County economy

BY ROBBIE SMYTH

North economy: Flawed analysis gains ground

The Six-County economy has been on the political and business agenda over the last week. Peter Hain, George Quigley, Roy Beggs, INI chief executive Leslie Morrison, and chairperson Stephen Kingon have all made interventions, between them a new economic convention is gaining ground and it is a seriously flawed analysis.

The emerging logic is that a salve all to the problems of the Six County economy is merely to implement huge cuts in corporation tax while increasing funding for Invest Northern Ireland.

The unaddressed years of discrimination, of over dependence on textiles, engineering and agriculture, of a badly structured public service as well as the wasted investments and inefficiencies in the operation of Six-County economic development agencies are all, it seems, not factors in the poor performance of the economy.

Neither is the low rate of new business start ups, the below average participation of women in business or the high proportion of unskilled workers in the economy. Tax cuts first, blank cheque to the INI second and everything will be ok.

Six-County secretary Peter Hain started the ball rolling in late April, he said the reconvened Assembly would have an opportunity for "real meat to be discussed" and that he had "arranged for the business community to come and make an early presentation to the Assembly on its case for economic reform".

George Quigley, chairperson of both Bombardier Shorts and the Industrial Task Force, a new business lobby group, said this week that "if the Assembly is going to discuss serious issues then there is no more pressing issue than the economy".

Quigley who met with Hain along with representatives of the Confederation of British Industry in the North, Institute of Directors (IoD), Chamber of Commerce, and Federation of Small Business also said that "we felt we were being listened to seriously" and that "the message that the private sector needs to be massively enhanced came through clearly".

Top of the task force's list is a massive cut in corporation taxes on the basis that this is what worked in the 26 Counties and higher taxes in the Six Counties are hampering economic development.

UUP enterprise spokesperson Roy Beggs Junior has another view. Speaking at an IoD lunch last week that was also addressed by Sinn Fein's Mitchel McLaughlin, Beggs said that "weaknesses in the Northern Ireland economy can be traced back to terrorism that wracked society for over 30 years", and that those "involved in terrorism" have contributed to "weak localised economies".

Beggs also found time to make a case for continuing blanket industrial de-rating and that the local economy is not getting a good deal from a "disconnected" direct rule government. "We must become business friendly", said Beggs.

Invest Northern Ireland released their fourth year of results last week and chief executive Leslie Morrison wrote in the Irish Times glowingly of the Agency's performance. Mentions of the all Ireland dimension in Morrison's article just the one line. Mentions of it Roy Begg's tirade - well none on the UUP website record of the address.

Finally INI chairperson Stephen Kingon entered the debate with his belief that the campaign to reduce Six County corporation tax levels to 26-county levels will not succeed. Kingon proposed enhanced tax credits, tax breaks for R& D and the creation of enterprise zones which are all worthwhile proposals but his core message was around the reduced INI budget down to £150 million annually compared to £180 million four years ago.

Last week in An Phoblacht, Mitchel McLaughlin outlined, as he also did at the IoD, the benefits and opportunities of a more all-island approach that would take account of the unsustainable Six County economy and the inequitable 26-County one. This has to be the starting point for any real debate on economic strategies north or south, any other lobbying or shadow boxing is wasting everyone's time, tax cuts and the INI cannot save the Six-County economy.


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