[Text of Peter Bunting's talk which was given on Sunday, 11 September 2011, at the 23rd Annual Desmond Greaves Summer School.

Peter Bunting is Assistant General Secretary of the ICTU with responsibility for Northern Ireland.]

Comrades,

Discussing an all-Ireland economy is a bit like discussing a European-wide currency. On the surface, we can talk the economist talk about synergies and strategies, about linkages and leakages, but not far below the surface of the discussion is politics.

Not even the politics of investment and planning, or market forces and market failure, but the blood and soil stuff - sovereignty, citizenship, participation, ownership.

We could, and others hopefully will, talk about transport corridors, health synergies, shared education, welfare reform, clusters of research and development, shared innovation, workers’ rights, state aid, taxation policy, the cuts and austerity programmes on both sides of the border, the role of the EU and the global impact of what is now commonly called the Great Recession.

I am glad that John Bradley is here today, as he can talk with great authority on the differences and similarities of the two economies on this island. At its core, however, the great difference in the present crisis is that south of the border, debt and the economy are the issues. In the UK, and by extension, Northern Ireland, the economy is the problem.

When one wants to look at how grim things are about to get up North, it is instructive to consider the comments of one of its most prominent economists, Alan Bridle, chief economist of the Bank of Ireland in NI. Alan was speaking to the business brains of the region, the CBI Economic Luncheon last May. The title of his presentation was bleak: “A recovery as painful as recession.”

Gatherings such as that are good to eavesdrop upon, by those of us not on the CBI’s usual invitation list. Alan Bridle had no reason to spin or to boost the figures. He was brutally frank. Growth in the UK economy will barely escape 2% for the next few years and NI will be at half of that level. The block grant is facing a four-year reduction of 8% in day-to-day spending and 42% in capital spending - a total loss to the local economy of £4 billion over four years. We estimate that at least 20,000 public sector jobs are on the line, with 12,000 collateral job losses in the private sector. NI as a region will be the second-worst affected in the UK by the cuts. The private sector has contracted at twice the rate of the UK average.

The ‘squeezed middle’ is more than a slogan. Personal insolvencies have tripled since 2006, housing values have crashed and inflation is triple the rate of wage increases. Ideologically-based pension and welfare reforms are adding to the squeeze, and there is one vacancy for every 12 people on the live register, the official rate of unemployment which excludes another 50,000 deemed ‘economically inactive’ but who are also looking for work.

The young are facing a squeeze of their own. A Quarter of the under-25s are unemployed. Students are preparing for graduation in a state of indebtedness and uncertainty. A generation gap is opening within workplaces and families, with the young having to work longer, for less money and with less job security - and they know it. They will be worse off than their parents or their older colleagues and they resent it - and they are right, too.

The future for NI is as bleak a picture as the past three years have been in the Republic. The summary above is worth repeating to Southern audience who may not have been aware about what faces the North. One lesson is clear. One part of the island cannot lift the other.

There are important differences between the recessions on both sides of the border, and they are because of the structural differences between the two economies. The North has been protected to some degree by its long tradition of manufacturing. The UK welfare state plays its part. The largest single employer in Northern Ireland, as in the UK, is the National Health Service, with 10 per cent of the entire working population.

The biggest long-term problem with the NI economy is that most of its private sector is too small. 95% of businesses employ fewer than ten people. It is too timid, with low rates for start-ups and innovation, and one of the lowest spends on R&D in Europe.

Now, we are faced with the Secretary of State, Owen Patterson, who is determined to make Northern Ireland an onshore tax haven. His oft-stated top priority has been to cajole and lobby for cutting Corporation Tax in Northern Ireland to the 12.5% rate enjoyed by companies and corporations in the Republic.

What has been made abundantly clear is where real political influence lies in Northern Ireland. Our political class reassures us that they will not be swayed by violence. Good. However, the debate on Corporation Tax has revealed what sways their actions and who sways their thinking.

Such an insider’s view was expressed recently by Kate Barker, the chairperson of the Economic Advisory Group, which doles out ‘impartial’ and ‘independent’ advice to the NI Executive, just as she gave ‘impartial’ advice to the Confederation of British Industry, the CBI, from 1994 until 2001. Kate Barker admitted “there would be no mechanism put in place to stop companies retaining the savings or paying them back to shareholders as dividends, rather than reinvesting in the economy”. The implication being twofold. It is still worth the risk of taxpayers money, and there is nothing government can or should do about it anyway.

A huge cut in Corporation Tax will not guarantee a single new job - the CBI admitted so. It will guarantee big increases in profits for large businesses. The only other consequence we can be sure of is that hundreds of millions more will be cut from public services and investment and procurement.

This is not a ‘cost’ however, according to Neil Gibson, whose 2006 model showing the nirvana which awaits Northern Ireland as a tax haven has been replicated by all of the boosters. In the current issue of Agenda NI, he chides those of us who worry about taking £300 million off the block grant annually and punting it on a horse called “Lichtenstein on the Lagan”. This concern is “short sighted”, writes Neil Gibson, because “it is a transfer of money from the public to the private sector, not a straight ‘cost’.”

One would love to debate neo liberal ideologues with exactly that logic applied in the opposite directions. If we tax the rich until their pips squeak and spend all of the revenue on council diversity officers and mansions for asylum seekers, it is not a straightforward ‘tax’ - just a transfer of money from the private to the public sector. That is, and has been, the level of economic debate in Northern Ireland.

It is a straight upward transfer of wealth - no stealth required. Almost every spokesperson for that campaign, with the exception of a few academics, will materially benefit from this transfer, as company directors or as tax consultants.

Now let us look at a parallel campaign for an item which most political parties once supported, which is part of the Belfast/Good Friday Agreement and which is supported by the public every time the public is asked.

What happened to the Bill of Rights? Why was it stymied and stopped? In whose interest was it for us to not have a Bill of Rights? Where was the Bill of Rights in the recent election to the NI Assembly? Or the General Election last year? Why are those parties which said that they backed a Bill of Rights so silent now?

The case for a comprehensive Bill of Rights was sidelined and derided when mentioned at all. It was portrayed as a far-left plot to tie the hands of government and hand huge powers to judges. Its advocates were parodied as out-of-touch academics and strange special interest vehicles containing such species as feminists, trade unionists and assorted leftie eggheads - the people usually derided as being ‘out of touch’ with that ghostly figure, the ‘man in the street’.

The ‘people who matter’ in our political economy decided that a Bill of Rights was not in their interest, and therefore not in our interest either. Trade unionists and citizens outraged by the scale of the cuts can hold occasional protests at the steps of Parliament Buildings but we should adapt the warning of the great US radical journalist IF Stone - the rich march on Stormont every day.

It is our duty not to let the campaign for a meaningful Bill of Rights wither and die. It is not a choice - it is an obligation under an international treaty that 85% of the people on this island voted for.

There are more sensible and fairer means of expanding the private sector than handing out a deadweight bonus to big business: By promoting investment in Research & Development through intelligent and EU-compliant tax credits, by rewarding innovation, by generating quality jobs in manufacturing and services and by encouraging exports. We are at the heart of the campaign for a Green New Deal and are constantly promoting uptake of EU programmes such as the Globalisation Adjustment Fund.

Instead, we are very likely to get a cut in Corporation Tax. Another neo-liberal solution to the problems caused by neo-liberalism.

In other words, we are firmly back in the realm of politics.

Prediction one: We are likely to have a unified rate of Corporation Tax on this island within five years. It would be far sooner if the Tories and their local cheerleaders had their way, but I suspect that the EU Court of Justice could delay matters.

Prediction two: We are very unlikely to see a Unified Bill of Rights operating on this island - ever. Nor are we likely to have parallel Bills of Rights either side of the border, operated and maintained by effective and well-funded Human Rights Commissions.

Those two predictions are based on the present willingness to carry them out in the corridors of power. A similar passivity to the Bill of Rights can be noticed when you look at the development of North-South structures and an all-Ireland economy.

The Superficial differences in the economic structures of both economies and consequent effects on trade have been expertly outlined by John Bradley. There is an excellent summary of his research and that of his colleague Michael Best in the most recent edition of the Journal of Cross-Border Studies, which is available online and free to download. If I may summarise, however, the trading situation at present could be described as ‘a lot more than a few years ago, but not nearly as much as we expected or hoped’.

The article also notes that “the decade following the Agreement was characterised by excessive optimism on the part of Northern policy makers, often accompanied by a benign passivity on the part of Southern policy makers, when facing into the challenge of repairing the human, social, and economic ravages of three decades of violence.”

This is a common theme for those of us who have worked to bring about deeper links between South and North, not necessarily for nationalist purposes, but for simpler reasons such as economic efficiency and simple human communication. There exists what could be called a ‘benign partitionism’ at play in the South. Many people in Dublin and Cork and Galway have enough on their plates already, and that is understandable. But the lack of interest in the details of daily life in Northern Ireland is all too common among senior policy makers as well as the general public.

Let me offer this as an example from Germany, a country divided for decades. On November 28th 1989, the then Chancellor Helmut Kohl addressed the Bundestag and outlined a ten-point plan for German unification - a process which would be ratified by referendum one year later. This was two-and-a-half weeks after the shock of the collapse of the Berlin Wall, but was not scribbled in haste.
Since the foundation of the German Federal Republic in 1949, there was a small office in Bonn whose sole task was the planning for Germany’s hypothetical reunification. A similar discreet office exists in Seoul, and operated even when South Korea was a military dictatorship and the public advocacy of Korean unity meant a long prison sentence for being a stooge of the North Korean regime.

There has never, in the history of the Irish civil service, been a single such plan or proposal, despite sixty years of Articles 2&3 and Proclamations in every classroom.

A rare exception arrived at the end of the boom, when a report called Infrastructure for an Island Population of 8 Million was prepared by the Irish Academy of Engineering and Engineers Ireland, with the facilitation of InterTradeIreland, one of the more successful cross-border bodies.
It is, indeed, a document of rare beauty, advocating quite radical methods of social engineering, as much as physical engineering, aiming to address climate change as much as demographics and economics.
The report proposed a focus on eight City Regions, increased urbanisation, a Dublin-Belfast corridor along the lines of Copenhagen and Malmo, development of Dublin airport as an international hub and “the use of innovative financing to fund infrastructure development.”

That last one caught my eye, and predictably enough, it proudly advocates using Public-Private Partnerships, or the Private Finance Initiative, for this bold remoulding of the land and people of this island. Last week the House of Commons Public Accounts Committee endorsed the long-standing trade union view that the Private Finance Initiative was a boom time for financiers with chump change for the public. For all its worthy intentions, this master plan for the island was firmly within the narrow confines of neoliberalism.

That is not to dismiss the report out of hand, but I suspect that there are two reasons why very few people ever heard about this report. One is political will, on behalf of the benign partitionists south of the border and the harder partitionists in the Unionist parties with possession of the economic ministries in Stormont. The other is money. PPPs and PFIs depend upon raising the initial money from the banks and the lenders of credit have been on strike for the last four years.
But in the meantime, an even bigger economic player has come to dominate the fledgling all-island economy.

Many in this room many not realise this, but taxpayers in the South own Dromore. Almost every blade of grass in this sleeply townland just after Banbridge on the M1, is owned by you, compliments of NAMA.
Earlier this year, the National Asset Management Agency published its list of Properties Subject to Enforcement Action. It is 37 pages of very small print, telling the what, and the where, and who the receivers are. Northern Ireland takes up five pages and 78 properties, of which 49 are in county Down, all the results of one developer, Sam Thompson, whose speculation was bankrolled by Anglo-Irish Bank If you are quick, you could snap up a seven bedroom palace in Dromore for £400,000 - down from £1 million.

According to Jim Fitzpatrick, BBC NI’s Economics Editor, this is the tip of an iceberg worth £3.5 Billion. “The property market in Northern Ireland is in a huge slump. NAMA controls more property here than anyone else - by a mile. The big worry for local politicians was that NAMA might sell everything at a knock-down price.

“That is not happening - because it is not in NAMA’s interests to do so. But effectively NAMA sets the level of the Northern Ireland property market so every move it makes is carefully watched and scrutinised. We have much, much more to learn about NAMA and its ultimate impact on the value of not just these properties, but every home, office building, and piece of land in Northern Ireland.”
Unionists got terribly exercised a few months ago when the ESB started talks about buying out Northern Ireland Electricity, because, as Tom Elliot said, “the ESB is owned by the Irish Government.” That may sound a bit ‘extreme’ for sensitive Southern ears, but Dromore is far more ‘extreme’. It elected to the local council a member of Jim Allister’s TUV, rejecting the DUP as ‘sell-outs’ to Sinn Fein.
And yet, there has barely been a peep about £3.5 Billion of the land and buildings of Ulster in the hands of NAMA, a body impressively described by Conor McCabe as a “gentlemen’s club” which would achieve one thing: “the decisions surrounding Irish banks would remain the preserve of Irish bankers.”
By the way, the head of credit risk of NAMA’s Northern Ireland operation is a former credit risk executive at the Ulster Bank, itself part of the Royal Bank of Scotland, which is, in turn, 84% owned by the British taxpayer.

Perhaps that is a sign of the times and the way in which the two economies are converging, Manufacturing used to be the backbone of the NI economy, now it is the poor relation, despite performing better than most sector of the economy during the Great Recession - far better than property, construction and retail, those great white hopes who proved to be while elephants after all the hype.

Why? Perhaps the structure of power and influence in the RoI and NI has shifted, especially in the North, from manufacturers to middlemen.

Culturally, NI has a political class which has been out of power for 35 years, and is striving with mixed enthusiasm and results at replacing the permanent secretariat at top of Civil Service in making the key decisions. For example, Sammy Wilson demanding a say in NAMA, as no RoI politician has dared.
Perhaps the big question is on power relations and who really has clout. Who can change things? Who can get things done?

It could be said that we on the left have been looking in the wrong direction, but for all the right reasons. Michel Foucault remarked some 40 years ago that it took us until the 19th century before we understood the real nature of exploitation. The challenge for us now is to understand the nature of power.

The answer to that quandary is easier to understand in the South, as Conor McCabe remarks in his recent book, Sins of the Father. The book’s central argument holds up so well because it reminds us of the old wisdom of IF Stone: “A scandal isn’t an interruption of business-as-usual; rather it is a revelation of it.”

The creation of NAMA, the bungled EU/IMF bailout and the granddaddy of all policy blunders, the blanket bank guarantee, all ensured that “the logic was to cushion Ireland’s financial vested interests from the fall.” Those vested interests were the “financial dealers and property developers, the glorified Maitre d’s who meet and greet multinationals as they arrive on our shores, aided and abetted by the main political parties, who are unable, or unwilling, to see any alternative.”

And there we were, believing the Sunday Independent that the damage was caused by hospital cleaners with gold-plated pensions.

What McCabe is describing here as Ireland’s “controlling forces” are a ruling class who differ quite markedly from those in other western democracies. They are not big landowners, haute bourgeoisie or large industrialists.

They are rentiers, middlemen, greasers of palms and flatterers of egos. They have held sway for decades in Ireland, from the cattle exporters to Haughey’s Golden Circle and beyond the realm of the senses, with the millions being made by NAMA’s platoons of consultants, property valuers and legal eagles. ‘Committee’ is the collective noun for vultures.

The rise of the rentier has become a global trend, amplified by the current Great Recession which the same shysters caused. “Consciously or not, policy makers are catering almost exclusively to the interests of rentiers - those who derive lots of income from assets, who lent large sums of money in the past, often unwisely, but are now being protected from loss at everyone’s expense,” noted Paul Krugman recently. “This is the class which makes big campaign contributions, it’s the class that has personal access to policy makers, many of whom go to work for these people when they exit government through the revolving door.”

The NI variant of this class was described a few years ago by Congress as “The Cash Nexus.” Another way of saying the same thing was said last week by Laurence Crowley in that incredibly revealing interview with the Irish Times. Dean Swift could not have done better than pearls such as this: “You’d normally be hesitant to choose somebody you’d never heard of,” he said of the process of appointing new directors, adding that selecting the wrong person can mean “risking the cohesiveness of the board”… Last year, a report by think tank TASC found that between 2005 and 2007, Crowley was one of 11 directors in the country’s top 40 private companies and State-owned bodies who had 10 or more links - via multiple directorships - to other companies in the network.

As some might say: Your Country - Your Call.

Without naming names, that reminds me of not a few powerful figures north of the border, despite the image of the northern capitalist and his enablers as dour but honest. All you have to do is look at the personal interests of many - not all, but many - who are declaiming loudest for a cut in Corporation Tax in order to attract foreign direct investment. Taking NI on the route to becoming an onshore tax haven within the UK, and taking investment not from the south - NI could never offer Google the chance of 3.4% effective tax - but other regions of the UK.

In fact, an argument could be made why the south’s establishment could whinge about partition from one side of its mouth for 80 years while never thinking of planning for the evil day when the British announce that they are leaving 1 million protestants to their fate in a United Ireland.

Could it be that the rentier class held a dark nightmare? That the border would collapse, that partition could not be blamed for our problems and backwardness, just as dozens of corrupt and now tottering oligarchs and tyrants across the Arab world blamed Israel for the misery of their subjects, and that they would face competition from Northern Ireland’s ruling classes to be top dogs? That is conjecture, of course, but worthwhile nonetheless.

Still there must be some institutional memory of the fate of Patrick Gallagher, how he was nabbed by the RUC in Northern Ireland for using his Merchant bank as a personal piggy bank, and jailed in Crumlin Road in 1990. There were no such charges brought in the Republic. Instead, Tony O’Reilly paid the school fees for Gallagher’s son. Gallagher told the Moriarty Tribunal that his payment of £300,000 to Charlie Haughey, two days after he became Taoiseach in 1979, was made “out of a sense of duty.”

That this corrupt, and corrupting, figure was imprisoned at all, is one of the great credits to the justice system of Northern Ireland. That Gallagher, like almost all of his ilk, remained scot-free in the streets of this Republic speaks volumes about ownership, and entitlement, and citizenship.
Of course, one of the reasons why he remained free and respectable in the South was that no-one blew the whistle. They too, had their sense of duty, such as Laurence Crowley. He was receiver to the Gallagher Group, and discovered a £300,000 payment made some years before by Mr Gallagher to then (and future) Taoiseach Charles Haughey. I shall, on legal advice, simply quote the Irish Times report of his own account of events:

“The Revenue Commissioners had been unaware of the transfer, until Mr Crowley informed its chairman, Séamus Páircéir, of its existence. A “brilliant letter” came back in return, outlining Páircéir’s belief that it wasn’t in the national interests to pursue Mr Haughey through the courts but that the liability should instead be assessed as a capital gain. A lengthy pursuit ensued, with the receiver and man who had kicked it all off standing by as polite observer.

“In the end, Crowley decided he had done enough accountancy and, with offers of non-executive roles in no short supply, he exited the business, with no regrets.”

The issue is not sovereignty, but ownership. The amount of cross-border economic activity which is under any democratic scrutiny is minimal. That represents a failure of those we elect to watch over us, and watch over those whose decisions affect all of us.

There is one political party in both parliaments on this island, but the policies they oppose in the Dail are very similar to the policies they impose in Stormont.

The great failure for progressives on this island is the dearth of functioning all-island civil society bodies which promote the interests and inclusion of active citizens working for their communities and for the common good. Business organisations and networks proliferate, with over 50 such bodies. If the ‘other side’ can manage this, why can’t we?

That is the challenge for progressives, for trade unionists and for people who are serious about uniting the people of Ireland, challenging the real partitions of power and pomp and privilege.

We are still divided by religion and politics, by life chances and life experiences, and they are crucial parts of the barriers to an all-island economy, let alone a shared society.

That legacy of failure will define the all-Ireland economy for years to come, and how we as citizens of Ireland, rather than being passive subjects to forces beyond our control, respond to the state of our states.

Thanks.