Northern Ireland Assembly
Tuesday 28 November 2000
Contents
Term-Time Workers (Education): Retainer Payment
Special Education Needs (Ballymena)
The Assembly met at 10.30 am (Mr Speaker in the Chair).
Members observed two minutes’ silence.
Economic Performance
Dr Birnie:
I beg to move
That this Assembly welcomes the recent announcement of a continuing decline in the rate of unemployment; and calls on the Minister of Enterprise, Trade and Investment and all Ministers whose Departments have an impact on economic performance to continue to develop policies which promote a competitive, dynamic and sustainable economy.
It is important to have this debate now in order to welcome the economic progress which has been occurring. We do this without being in any way complacent as to what policy may be required in the future to maintain this very welcome progress. Certainly, we should all be pleased that, in the last year, the rate of growth in Northern Ireland’s manufacturing output was around 10%. This compares extremely favourably with a national UK average of 1·7% and, indeed, has even been higher than the rate of industrial growth in the so-called Celtic tiger economy, south of the Irish border.
In bringing forward this motion, we hope that this debate will allow Assembly Members to provide indications as to what can be done to maintain this very welcome progress to the Department of Enterprise, Trade and Investment, and, indeed, to other relevant Departments, for this is an interdepartmental issue.
There are three main parts to what I will say. First, I will indicate some of the institutional and structural changes that are still required. Secondly, I will outline the ways in which we should still strive to increase cost-competitiveness and, thirdly, I will mention the means of attaining the type of economic growth that Northern Ireland requires. It needs growth associated with high value added, which would lead to relatively higher wages.
I welcome the review of the industrial development agencies, which has been heralded by the Minister. This is a necessary process because we require a more logical structure than the current demarcation between the IDB and LEDU, which is based on the size of the client company. Also in question is what should be done by the Industrial Research and Technology Unit (IRTU), and whether it could be usefully combined with another agency, to have its main emphasis on small firms and inward investment. Also under discussion are the functions which are allocated to the Training and Employment Agency (T&EA) relative to those allocated to the IDB. I refer specifically to the company development programme, which is currently run by the IDB rather than by the T&EA.
We need to go beyond ‘Strategy 2010’ by providing an adequate benchmarking of these agencies’ performance in the recent past to evaluate what must be done in future. In devising a new structure for our industrial development agencies, we should recognise that, over recent years, the rate of growth of employment in Northern Ireland small firms has been considerably better than the United Kingdom average. We have had a success in this sector, and we should build upon that.
The Assembly will probably need to make difficult choices on how far we wish to promote a more entrepreneurial and risk-taking spirit in the context of our major industrial development efforts. We will have to note the PAC report published in May this year, which charts the past performance of the IDB, and, no doubt, this will be debated in due course. At this stage, it would be wise to move the burden of industrial development assistance away from straightforward grant awards to companies and towards greater contributions to their equity.
We would welcome the application to Northern Ireland of the so-called regional venture capital funds. These involve the use of public money, usually in relatively small amounts, to leverage out bigger amounts of private- sector, entrepreneurial-related capital. Unfortunately, regional venture capital funds initiatives across the United Kingdom have been delayed on account of objections by the Competition Commissioner in the European Commission — perhaps that can be changed.
Given the central importance of e-commerce, the regulation of telecommunications should be made a transferred matter — as an Assembly, we should push for that. At the moment, responsibility lies with Westminster, but that is inappropriate given the central role of tele- communications in long-term economic development.
My second point is that we need to increase cost-competitiveness. Electricity charges to the industry are increasing again. The margin by which they are higher than in Great Britain is considerable, and this was the subject of a very valuable debate here recently. We welcome the liberalisation of the electricity market, primarily for industrial users, which has already occurred. In this respect, Northern Ireland has been ahead of the Republic of Ireland — the rate of liberalisation here has been quicker than that south of the border.
We also welcome the extent of the interconnections of our provincial electricity and gas supply system, first of all, with the Republic of Ireland but also, through Scotland and by implication, with the mainland of the European Union.
Fuel and motoring costs to industry, the subject of a recent debate in the House, are the subject of grave concern. Transport connections between Northern Ireland and Great Britain, and between Northern Ireland and the rest of the world, are very important. They matter in terms of cost, reliability and frequency. In due course, I have no doubt that the House will want to consider our policy with respect to airports in Northern Ireland. That is going to be a difficult decision; we will have to balance customer choice and keeping a number of major airports with attempts to build up economies of scale in one major regional centre.
Company finance matters. Significantly, the Federation of Small Businesses, whose survey of small firms was published last week, noted particular concern among small firms here about the way in which they felt the banking system had dealt with them. We need to do what we can to ease the costs of marketing. This can sometimes be done on a North/South basis, though there is also room for growth in east-west trade.
During the 1990s, Northern Ireland’s exports to Great Britain grew by about 40% while those to the Republic of Ireland rose by 90%. This may suggest a need for relatively more emphasis on promoting trade with the rest of the United Kingdom while not, of course, neglecting cross-border trade. At the same time, we should note that we have some cost advantages. At the moment manufacturing industry here is exempted from rates payments; perhaps this should be reviewed and made more selective. If we were to apply rates to manufacturing industry, we could raise revenue for other pressing uses.
Rental charges in Northern Ireland are still relatively low compared to those in the rest of the UK and much of the EU. We also have relatively low wage rates, though given the wider social aspects, this is not necessarily a cause for celebration. It is therefore worth noting that much can be done on cost competitiveness, however one views the desirability and practicality of imitating the Irish Republic’s relatively low rate of tax on corporate profits.
Thirdly, we need to aim for growth driven by high added value and resulting in higher wages. Wages in Northern Ireland are typically around 85% of the UK average, and they have in fact been falling in recent decades. We note that growth performance in the 1990s was good in terms of output, employment and the decline in unemployment. But all this was somewhat dependent on Northern Ireland’s becoming a relatively low wage economy. ‘Strategy 2010’ has set the regional economy a target for raising average incomes per head from 80% of the UK average to 90%. This is a very worthy target, but how will it be done? We await with interest the valuable report which the DETI Committee will be doing on ‘Strategy 2010’.
Boosting research and development is a key component of all of this. We should note that in the Republic of Ireland the rate of research and development has risen quite dramatically in recent years. This is a case of joined-up Government par excellence. I know much has already been done, but perhaps we can do more to promote technology transfer. The example of Israel and the United States exchanging software expertise could be applied to Northern Ireland.
10.45 am
Of course, we need to raise our supply of labour, particularly of skilled labour, and in this area there is a considerable policy overlap between the Department of Enterprise, Trade and Investment and the Department of Higher and Further Education. I commend many of the initiatives that have already been taken.
It is worth noting in passing that it has been estimated that the Republic of Ireland has as many software writers as Germany, and perhaps we could move in that direction.
We need to identify where labour demand is exceeding labour supply for particular skills or occupations. We need to improve careers guidance services and encourage the return to Northern Ireland of people who have left the Province because they could not get a job here commensurate with their skills and abilities, and for this reason we welcome the initiatives promoted last week by the Department. For the first time in many decades Northern Ireland now has positive in-migration — on average more people are coming into the Province than are leaving it.
I recognise that in this overview it is not possible to go into detail on all major sectors of the economy. Sadly, the farming crisis continues. The Northern Ireland Chamber of Commerce recently noted that of 30,000 farming units, only some 10% are viable in the long term. We need to take a responsible and realistic attitude to how we can diversify the economy in rural areas and take people away from producing food when there is a massive oversupply throughout the European Union.
The tourism sector recently published a blueprint which stated that employment in tourism in Northern Ireland is estimated at only 34,500 compared to 120,000 south of the border.
In summing up, let me make two points. First, time and again in coming debates here, the issue of whether money will be available for many worthy initiatives will arise. This has already been hinted at in some recent debates. In today’s debate Members will have the opportunity to contribute to the growth of the economy so that in the long term more resources will be available for all the desirable, socially orientated projects which we may want to promote.
My second point, and here I quote —
Mr Speaker:
May I ask the Member to bring his remarks to a close — many Members wish to participate.
Dr Birnie:
My second point is that economic progress can contribute to political stability, and the reverse is equally true. I have pleasure in moving the motion.
Mr Speaker:
As I have indicated, many Members wish to participate in the debate. The Business Committee has set a time limit for completion by 12.30 pm, so I must impose limits. The Minister will have the usual time to respond, 10 minutes per hour of debate; the Member who winds up will have 10 minutes; all other Members will have six minutes to make their remarks.
There is one amendment standing in the name of Mr Gallagher.
Mr Gallagher:
I beg to move the following amendment: At the end add
"taking account of the wider European economy."
I agree with Dr Birnie’s comment about the importance of this debate, in that it will indicate to our Government Departments how we would like to see our economy unfolding. However, an important debate on our economy should take account of the main factors that will influence our economy for the duration of the present Assembly, and hence my amendment.
We already know that many Northern Ireland businesses have been badly hit by currency differences. We heard in an earlier debate about retailers and wholesalers in the fuel business having to close down. We have seen how large sections of our transport industry have moved across the border where a better climate exists at present for them to operate in. The result is that hundreds of jobs have been lost here because of a slump in economic activity, and hundreds more will be lost as a result of the Chancellor’s new aggregates tax, which is due to come into effect in 2002. That will trigger a substantial increase in construction costs. The tax is to be levied on raw materials such as sand, gravel and crushed rock. The levy on those materials is to be charged at £1·60 per tonne. In other words, the cost of stones will rise from £4 a tonne to £5·60. The cost of building blocks will rise from about £184 for a load at present to £207, an increase of 12·5%. Ready-mix concrete will go up from £20 per cubic metre, which is roughly the present rate, to £33·20, an increase of 10·5%.
The aggregates tax is likely to have severe implications for the construction trade — for employers and employees alike. Ultimately, consumers will inevitably find themselves forced to pay for the levy, through costs transferred to new roads maintenance, to housing and to all construction projects. The Minister for Regional Development recently said that he is putting some major road schemes on the long finger because of a possible shortfall in funding. As we know, many of our roads are falling into quite a serious state of disrepair because of the lack of investment. With an increase of 10·5% in tarmac costs alone due to the new aggregates tax, we are looking at £13 million per year being wiped from actual roads maintenance expenditure. With the aggregates tax set to hike up costs of some raw materials to 40%, we are facing an urgent situation. In England, it is estimated that £70 million of the extra £250 million for roads will be eaten up by this tax. In Wales, it will cost an estimated £40 million per year, and 300 jobs will be lost. My concerns, like those of many others here, are for the people whose livelihoods and jobs are directly affected by the quarrying and construction industry, because they will have to deal with the knock-on effects. As we know, in the end the consumers will have to face major delays of road schemes and witness our minor roads deteriorate even further, while the cost of renovation and the building of new houses rises even further.
Mr Speaker:
Order. I draw the Member’s attention to two matters. First, his time is passing. Secondly, I have been listening carefully to hear the connection between what he says and the amendment that stands in his name, and I am not entirely clear about what that connection is. I am not questioning the content, simply its connection with the amendment.
Mr Gallagher:
The introduction of the new aggregates tax will have serious consequences for our economy. I have mentioned the job losses that will result. In my constituency we have already lost 450 jobs over an 18-month period. The impact of this aggregates tax will be felt throughout every constituency in Northern Ireland, and it will be felt greatest in border areas. Our Executive should be taking measures to counter the implications that it will have for Northern Ireland.
Mr Speaker:
I draw the Member’s attention to the wording of his amendment — "taking account of the wider European economy." I have yet to make that connection in my mind. Please continue.
Mr Gallagher:
The implications for the wider European economy are that employers and employees in the quarrying and construction industry have advised me that, in anticipation of this tax, they are already taking steps to move their operations across the border. That is an implication for the wider economy and it is the reason for my amendment. I believe it should be taken into account.
Mr Paisley Jnr:
First, I must register my disappointment at having only six minutes to speak on what is a crucial issue for all Members. Nonetheless, we will use the time appropriately. I congratulate the Member for South Belfast (Dr Birnie) for bringing the motion, and his Colleague from North Antrim (Mr Leslie) for supporting it.
I have less support for the amendment than I have for the motion. It may have looked good on paper, but I did not follow it or understand it as it was proposed, and I do not believe that Mr Gallagher understood it either. Therefore, I am unable to support the amendment as it was not articulated in a way that would give it any sense.
I do not share Dr Birnie’s optimism about Northern Ireland’s economic performance to date. I agree we have low inflation because we are part of the United Kingdom. Also, our medium growth rate has been good, but it is still essential to set targets for low inflation and high economic growth and we should pursue those goals. It must be understood that this will be a long haul, mostly caused by the 30 years of violence that the Province has suffered — 30 years of violence against economic targets and investments. Of course, the Members opposite have been at the cutting edge of that economic warfare. As political representatives, we must repair the quite deliberate damage they have done to the Northern Ireland economy.
Many aspects of economic performance are beyond the Minister’s control. Unfortunately, he will be blamed for poor economic performance even though he cannot influence the price of sterling or the weakness of the euro. Neither can he do anything to address the over 50% drop in farm incomes. In my constituency, so much depends upon a thriving rural community. I wonder if any cross-cutting measures are being considered to link industrial and business development issues with rural farm businesses. That is essential if we are to see an upturn in farm development, which is an integral part of business and economic performance in my constituency. The Programme for Government has paid only lip-service to that concept.
Over the summer, 300 jobs were lost in my constituency at the Agivey and Ahoghill pig processing plants, and to date these have not been replaced. I urge the Minister to press the Minister of Agriculture and Rural Development for a fulsome agrifarm regeneration scheme or farm retirement scheme that will allow for the redevelopment of farm businesses. Farm businesses need young blood, and that can happen only if the Department puts its money where its mouth is.
Yesterday, we were disappointed to learn that, according to the Department of Agriculture and Rural Development, the time is not right to press for low-incidence BSE status. However, if we had that, it would help rejuvenate farm businesses in Northern Ireland. I do not share Mr Gallagher’s confidence — he did not express any, but it was inherent in his written amendment — in our European partners helping us out of this hole. We are in this by ourselves, and we must get out of it ourselves. We have no confidence in our European partners helping us.
11.00 am
A more flexible approach to farm land development would have a sound impact on economic performance. I agree with Dr Birnie, who proposed the motion, about the importance of rural diversification. Such diversification is necessary, and I have stated many times that farm land is an under-exploited asset. It is essential to realise the economic benefits that can be derived from that asset if we are to have a more flexible approach to its development. I appeal to all the Departments referred to in the motion to work together to realise the economic potential of farm land development.
Northern Ireland has much ground to make up. Lack of entrepreneurial skill or drive in the Northern Ireland business community is not to blame for the economic deficit. That deficit derives solely from an orchestrated terror campaign against business development in Northern Ireland. That must go on the record. We are failing as representatives if we do not make that point. It is the people sitting under the Gallery opposite who have destroyed economic investment in our country for so long. We are now left with the long haul of trying to make that up. Other countries have moved forward while Northern Ireland has been so disadvantaged and handicapped. I agree that the Northern Ireland business sector is determined to move forward in spite of terrorism and failed political initiatives.
Dr O’Hagan:
Go raibh maith agat, a Cheann Comhairle. I do not think anybody would argue with the concept of a competitive, dynamic and sustainable economy. However, we need to closely examine the unemployment figures. I fear at times that there is a sustained campaign to paint a brighter picture than actually exists. Are the unemployment rates decreasing because people are getting decent, high- quality jobs, or is it just because the figures are presented in such a way as to paint a better picture? How many young people and adults are being forced onto New Deal programmes to bring down the unemployment rates? What is the quality of the work coming in? Instead of providing high-quality jobs with decent wages and working conditions, we are becoming a society that is dependent on a low-wage economy — an economy which depends on contract labour and in which workers’ rights are continuously eroded.
What about the job losses in the traditional industries? As a member of the Enterprise, Trade and Investment Committee I hear evidence on a depressingly regular basis from people in the textile industry, the bakeries and the agrifood industry about the problems facing those sectors. We still have a war economy. We are in receipt of a huge subvention from Westminster, and we are over-dependent on the public sector and the huge security and military industry which has been built up.
What are we getting to replace this? It seems to me to be call centres and supermarket chains. We are losing our manufacturing base as a result of years of neglect. Can we, as a society trying to achieve normalisation, sustain this?
The figures also reveal huge geographical and community differences. There are pockets of serious disadvantage. In the main, these are Nationalist working- class areas, disproportionately adversely affected by decades of institutionalised discrimination and sectarianism. That is not to say that Unionist and Loyalist working-class areas are not also suffering high levels of unemployment and the associated socio-economic deprivation. They are, and these areas need to be equally targeted and uplifted.
However, the reality remains that young Catholic males are still 2·5 times more likely to be unemployed that their Protestant counterparts. This figure has not changed despite a raft of fair employment legislation. The lack of change is not because of the innate inabilities of those suffering from such discrimination. It is the result of the lack of political will to seriously address these issues. There are serious disadvantages being suffered west of the Bann. They do not just relate to unemployment, but go right across the board in relation to issues such as infrastructure, health and social services.
Long-term unemployment rates in Derry City remain at the level of 30 years ago. We must be realistic about all this. The Minister, Sir Reg Empey, has also referred to and given evidence to the Committee on the 60,000 people not included in official unemployment statistics. What are the reasons for the hidden unemployed not being on any register, and where are they? There are very serious issues to be tackled. Are these 60,000 people among those who cannot escape from the poverty trap?
I also point to the fact that there has been no real attempt by Government agencies to redress serious unemployment imbalances. The Industrial Development Board in particular is failing to live up to its targeting social need and policy appraisal and fair treatment (PAFT) obligations, merely replicating patterns of disadvantage. I therefore welcome the review of agencies and hope that whatever new structures are put in place herald real and fundamental change.
Returning to the motion, we all want an economy which is "competitive, dynamic and sustainable". No one here would argue with that, but we must be realistic. Let us not massage the figures or pretend that everything in the garden is rosy or equal. We want a society where issues of economic justice and equality are central. Go raibh maith agat.
The Deputy Chairperson of the Committee for Enterprise, Trade and Investment (Mr Neeson):
While the purpose of today’s debate is to produce an overview of the economy, I feel somewhat restricted in what I can say since the Enterprise, Trade and Investment Committee will be finalising its report to the Assembly on ‘Strategy 2010’ and the recommendations therein over the next few days. We shall also be finalising our response to the Minister on the proposals to create a single development agency.
If one is among the large band of long-term unemployed in Strabane or Moyle, two council areas we visited during our investigation into ‘Strategy 2010’, or even in Carrickfergus in my constituency, which has the fifth-highest level of unemployment in Northern Ireland, one cannot take much comfort from what the motion proposes. However, I do not wish to be wholly negative about the issue, for there has clearly been an increase in inward investment into Northern Ireland in recent times, one of the main reasons for it being the region’s greater perceived stability. While I welcome that, there remains uncertainty about the future — even about the future of this Assembly.
I earnestly believe that those people who can deliver should do so. I am thinking in particular of the IRA’s May 6 statement that it would re-engage with John de Chastelain. That could be a major step forward in itself to ensure that people in areas of high unemployment such as west Belfast, east Belfast and Strabane get the jobs for which so many of them are crying out. I welcome the fact that President Clinton has taken the decision to visit Northern Ireland once again. I hope that all those who can resolve the difficulties which we are facing at present will take advantage of the opportunity afforded by that visit.
However, one of the important aspects, if we are to move forward and develop a progressive economy in Northern Ireland, is the need for joined-up Government. I recognise the close co-operation we have seen so far between Sir Reg Empey and Dr Farren in trying to develop the skills required for the new industries coming here. We only have to look at Nortel Networks with the huge expansion in Monkstown and the benefits that can be gained from that. Other companies are supplying them and other new companies are investing in the area. There are great opportunities. I also appreciate that quite a large number of further education institutes are now trying to develop the skills of their students to meet the needs of the new industries. That is to be welcomed.
Other Members have mentioned infrastructure and that is vital. If we are to have joined-up Government as well, it is also important to look at ‘Strategy 2010’ in conjunction with the ‘Shaping our Future’ document, which deals with the whole question of future infrastructure developments in Northern Ireland.
In essence, the main message I am giving to the Assembly is that if we are to move forward and maximise the benefits of economic development, it has to be on the basis of liaison and partnership between the different Departments in Northern Ireland. I appeal to the Minister of Further and Higher Education that there is an urgent need for a substantial increase in university places here.
The question of energy is one which myself and others have dealt with both inside and outside the Assembly. It is vital that the gas pipeline goes to the north-west. There could be problems if the Irish Government insists on a special levy for a North/South gas pipeline. There are opportunities there, but what I want to see in Northern Ireland is a level playing field so that all areas can benefit from the opportunities I see being created by the new political disposition in which we find ourselves.
I could say lots more but I have run out of time. I will look very closely at the amendment put forward by the SDLP.
Mr Roche:
I had hoped to deal with some general aspects of the Northern Ireland economy, but due to the time constraint I will focus on a specific issue relating to the Northern Ireland labour market that is worth detailed comment.
The ratio of Catholic/Protestant unemployment in Northern Ireland of 2·5 to 1 has persisted for over three decades. This unemployment differential constitutes a chronic labour market problem in Northern Ireland. The solution of this problem requires, at least as a necessary condition, a proper diagnosis of the cause or causes.
The politically dominant view, and the most important in terms of policy formulation, is the understanding that this Protestant/Catholic unemployment differential is due to a single cause — systematic discrimination by Protestants against Catholics in the Northern Ireland labour market. The political dominance of this understanding of the causality of the unemployment differential has given rise to the so-called fair employment legislation of 1976, 1989 and 1998. This legislation has and will continue to impose a heavy administrative cost on business in Northern Ireland.
This cost would be socially justified if in fact the differential were due to systematic Protestant discrimination against Roman Catholics. The leaders of business in Northern Ireland and Unionist politicians failed to effectively counter this allegation. That is an inexcusable failure for the simple reason that the claim was never based on anything more sophisticated than anecdotal comment and theoretically and empirically inadequate research.
11.15 am
Prof John Whyte, in a highly revisionist evaluation of the extent of discrimination published in 1987, nevertheless resorted to mere anecdote in retaining the claim of systematic labour market discrimination against Roman Catholics.
This theoretical and empirical inadequacy was exemplified by the work of the Policy Studies Institute, sponsored by the Standing Advisory Commission on Human Rights and published in 1987. Politicians in the House of Commons, such as Kevin McNamara, applauded that research as highlighting
"the appalling levels of inequality in Northern Ireland."
However, the research was publicly rubbished by two external reviewers in an article in ‘Fortnight’ magazine in January 1988, on the grounds of obvious theoretical and empirical inadequacies. That criticism was reinforced by Prof Tom Wilson — one of the most eminent economists in the United Kingdom — in his book ‘Ulster: Conflict and Consent,’ published in 1989, in which he showed that inferences about anti-Roman Catholic labour market discrimination in the Policy Studies Institute research simply could not be sustained.
The fact that the religious unemployment differential has persisted for three decades — despite so-called fair employment legislation and massive changes in the Northern Ireland labour market, including the significant reduction of unemployment in the 1990s — prima facie suggests that this unemployment differential is not significantly due to discrimination. The key to isolating the real cause of persistent religious unemployment differential was set out by Prof Paul Compton in a contribution to ‘The Northern Ireland Question: Myth and Reality,’ a book that I co-edited, in 1991.
Prof Compton’s core argument was that
"The explanation of high Catholic unemployment and under- representation in many types of employment lies not in discrimination but primarily in the structure, attitudes and aptitudes of the Catholic population."
That is in characteristics self-chosen by the Catholic population, such as exceptionally high fertility rates and geographical labour immobility.
The work of researchers such as Dr Graham Gudgin and Prof Richard Breen has now made it intellectually impossible to argue that discrimination is the only or significant cause of the chronic religious unemployment differential. Dr Gudgin set out the detail of this research in an accessible form in a contribution to ‘The Northern Ireland Question: Nationalism, Unionism and Partition.’
Mr Speaker:
Order. The Member obviously has some things that he wishes to say. I appeal to him to connect his words as directly as he can with the wording of the motion.
Mr Roche:
The fact that the religious unemployment differential can no longer be understood as significantly due to systematic discrimination by Protestants against Roman Catholics must be accepted by those who genuinely wish to alleviate this characteristic feature of the Northern Ireland labour market. That characteristic is also a significant feature of the Northern Ireland economy, because the labour market is part of the economy. That logic could hardly be clearer.
Unfortunately, it was apparent from Mr Mallon’s statement on this issue on 20 November that he refuses to abandon the old Nationalist sectarian dogma. His mindset on this issue can only be accurately described as a state of invincible ignorance that bodes ill for the alleviation of some of our long-standing economic problems. That mindset was used repeatedly to justify 30 years of IRA terrorism on the basis that Protestants discriminated against Catholics, but there is not a shred of evidence to support it.
Ms Morrice:
I will try to lift the debate on to a higher, perhaps more global, plane.
Economic development strategists have a very important decision to make. Should we prepare the Northern Ireland economy to play catch-up in the high-tech revolution? Or should we try to leapfrog the dot-com wave and move into much more interesting, more exciting uncharted waters? The catch-up option is the easy option. The role model is, as Mr Roche is very aware, just 100 miles away.
The Republic of Ireland has shown us that it can be done. All we have to do is follow suit and wait for the Celtic tiger to come hunting north of the border. I agree that the leapfrog option carries more risk, but it could be more interesting. It is about preparing the way for the next wave of industrial development without knowing for sure what it is going to be. It is about leading the market instead of following it.
As Northern Ireland moves out of conflict and into a new phase of political stability, there is a golden opportunity to rethink our economic development strategy and set a blueprint for the future. We have two choices: play it safe and chase the "dot", or relaunch ourselves as the global pioneer of truly modern socio-economic development. We have to think big.
The Northern Ireland Programme for Government and the economic consultation document ‘Strategy 2010’ call for a sea change in economic attitude, from the fear- of-failure society to a new risk-taking culture of innovation and creativity. If this strategy is to succeed, those sitting in the economic driving seat must lead by example.
Northern Ireland is perfectly positioned in both human and physical capital terms to take advantage of what is now an unstoppable move towards a new direction in socio-economic thinking. Our island situation at the northern part of Europe, with nothing beyond but ocean, gives us a clean, green image, so essential to, and the envy of, environmentalists the world over. We must not let that be tarnished and we must take advantage of it.
Our position at the English-speaking intersection of Europe and the Americas, and our ability — as will be demonstrated by the arrival of the President next month — to win friends and influence people on both sides of the Atlantic is hugely important and gives us an incredibly valuable edge.
Also, our young and increasingly educated population — and as has been said, our young people are now staying or returning — is an incredible reserve of energy and know-how, which is second to none in human terms.
Finally, our worldwide reputation for manufacturing excellence, our solid industrial skill base and our high quality of life gives Northern Ireland the reputation it requires to relaunch itself into a new global economy where quality, high-value-added specialisation and diversification will compete over price.
Time is short, but I want to give five pointers on the way forward for economic policy thinkers. First, there is the increasing awareness of the effects of industrial and domestic pollution on our climate. We have seen the effects of global warming — flooding — and we have seen the consequences of the collapse of the climate change conference. We must grasp the nettle and head right down the line of pioneering new, clean, green technology. That is the leapfrog into the new areas. Secondly, we need to be aware of the changing trade and investment patterns that will emerge as a result of single European currency arriving on our doorstep. It cannot be ignored. We are already severely handicapped by — [Interruption]
Mr Roche:
What are those patterns?
Ms Morrice:
The changing trade and investment patterns caused by the single currency are very clear. Investors who want to use Northern Ireland as a stepping stone into Europe may have to think twice when they realise that we have sterling and that the rest have the euro. I hope that explains that.
Northern Ireland’s export potential is already hugely handicapped by the strength of sterling. Innovative ways to overcome that must be found.
Dr Birnie:
Will the Member give way?
Ms Morrice:
On a point of order, does giving way take up my time?
Mr Speaker:
Of course.
Ms Morrice:
In that case I will not give way.
I have two final points, but they are not necessarily the most important. First, we have to take account of and accommodate female participation in the workplace. Secondly, social responsibility and traditional industry is the way to go.
Mr Speaker:
Order. The Member’s time is up.
Mr McCartney:
Of course, everyone has difficulty in giving up their old shibboleths and beliefs, and Paddy Roche may have touched a nerve when he suggested that perhaps the unemployment ratio between Catholic males and their Protestant counterparts was not entirely, or not really, because of discrimination.
It was interesting that one vital piece of evidence that supported him in this debate came from, of all sources, Sinn Féin. The Sinn Féin Member said that over the last 30 years the rates of unemployment in Derry City have not changed. We have been told that Derry City is the "jewel in the crown" of the economic achievement of John Hume’s SDLP. We have heard of the myriad jobs that have been brought to Derry.
What do we find? The rate of employment of Catholic males has not changed, and the reason is not difficult to see. Between four and five thousand new jobs would be required annually in Derry City alone to meet the number of wage earners coming in to the labour market. Think about that when you jeer or sneer at suggestions that Catholic male unemployment may not be due entirely, or at all, to discrimination.
Let me move on to some of the other valid points made by the Sinn Féin Member in relation to industries like textiles, bakeries, agrifood and heavy industry. This Assembly gives itself a competence that it should well question. A lot of our problems will not in any way be solved in any circumstance by anything that this Assembly may do. That is because they are occasioned — for example, in relation to heavy industry, textiles, and agriculture — by global markets and by policy decisions in Europe and the United Kingdom over which this Assembly does not, and will never, have any control.
What can we do about the question of competition with Denmark and Holland on the importation of pork, when the British Government decides that it will impose certain measures on tethering that make our pork industry uncompetitive? What can we do about the textile industry, when it is quite plain that even those, like Marks & Spencer, who wish to support British and Northern Irish manufacturers, find that it is impossible to compete in the market place unless they purchase from Sri Lanka and other places? What can we do about the competition between French and German shipyards and Harland &Wolff, or about textile manufacturers that compete with the virtually defunct Mackies, or about the Sirocco works? Nothing.
As for the visit of President Clinton, the "Old Mother Hubbard" president, it is quite clear that every president, and particularly those who have served two terms, wants to leave some legacy. Roosevelt had the "New Deal," Reagan had "Star Wars," and even poor Dick Nixon had the détente with China. Poor old Billy has got absolutely nothing. He has put no major legislation through Congress, and the Middle East is in an infinitely worse situation than he found it. As for Northern Ireland, many people think that he is really scraping the barrel and that, like Old Mother Hubbard, he will find absolutely damn all in the cupboard when he comes here.
Let me deal with some other matters. We want real jobs here. We do not necessarily want call centres or supermarkets. I agree with that. The Industrial Development Board and other agencies seem to be entirely within the control of the propaganda department of the Northern Ireland Office.
Every time there is a wobble in the peace process the ‘Belfast Telegraph’, the ‘News Letter’, the BBC and Uncle Tom Cobbleigh and all announce a wave of new jobs which mysteriously disappear as quickly as they appeared. The Audit Committee has investigated the IDB and its virtually fraudulent claims about jobs that have been produced, of which the situation at Montupet UK Ltd is one example. There needs to be some honesty in the business of job creation.
11.30 am
What is the North/South Ministerial Council doing about the massive smuggling operations that are illegally supplying one third of fuel consumed in Northern Ireland? That smuggling is putting many of our workers and industries under pressure. What is being done about that? I asked the Deputy First Minister, and he skilfully evaded the question. If we are going to have any relations with the Republic of Ireland let us hope that they will be honest.
The Assembly’s objective is not to prattle, as some people do, about major visionary projects, but to consider the level of its own competence and what it can do within those limitations.
Mr Byrne:
I welcome the motion and the amendment. It is important to place the objective of a sustainable regional economy in the wider European context as matters concerning ever-closer European economic integration and the single currency have far-reaching consequences on the economic competitiveness of this region.
Joined-up Government is fundamental to the success of the economic performance of the region. ‘Strategy 2010’ states that its key objective is the creation of a knowledge-based, value-added economy, building upon the opportunities provided by the information and communication technologies (ICT) sector. That area of economic activity has been developed very successfully in the Republic. That key objective can only be achieved if the 10 Government Departments that have a direct or indirect impact on the North’s economic performance work together to develop and implement economic policies with all Ministers playing a co-operative and constructive role.
The need has never been greater for the devolved Administration to develop a coherent and integrated economic development strategy to inspire the confidence of all sections of the community that the new political dispensation can really make a difference to their lives.
With regard to the development of the infrastructure of the region, the Programme for Government has taken an imaginative step forward and adopted joined-up government as its guiding principle. If this Administration is to implement a successful economic development policy it is critically important to ensure that the proper standard of infrastructure is in place to facilitate and sustain economic growth.
A competitive regional economy also requires a competitive energy market. The recent announcement by the Minister of Enterprise, Trade and Investment that he is to present a Utilities Bill before the House should put the electricity regulator in a position to make statutory price recommendations. Northern Ireland Electricity (NIE) must abide by those recommendations, and that will lead to a reduction in the electricity bills of industrial and domestic customers.
In April 2002 central Government will introduce an aggregates tax or quarry tax that will be charged on a weekly basis of around £1·60 per tonne, as Mr Gallagher already mentioned. That may hamper the creation of a competitive economy and place a burden on the Roads Service budget. Products for export will be taxed, but exported aggregates will be exempt. Even though imported aggregates will be taxed, imported products such as blocks, kerbs, lintels and mixed concrete will be exempt. That will result in a large increase in construction costs, and the Roads Service will experience a reduction in spending power of between 10% and 15%.
Recent labour market statistics show that unemployment in Northern Ireland is on a downward trend. The number of those out of work and claiming benefit in the North is currently around 5·7%. That is still higher than the Irish Republic’s unemployment rate, which is 3·7%, and Britain’s, which is 3·5%, but nevertheless it is a welcome development. However, we should not be complacent. New TSN highlights that there are many areas of economic deprivation in this region which require special assistance. For example, in my constituency of West Tyrone, Strabane has 12·6%, the highest rate of unemployed males claiming benefit in Northern Ireland, and overall has the highest unemployment rate in the region. Also in the Omagh District Council area we have three of the most deprived council wards in Northern Ireland. This persistent long-term unemployment has been further compounded by the crisis in the agricultural sector, the decimation of the textile industry, and the punt- pound disparity which is wiping out border petrol retailers and damaging the retail sector along the border zone.
The IDB’s 1999-2000 annual report gives a very positive assessment of the North’s current economic situation. It shows a growth in manufacturing output and increase in manufacturing productivity, and a significant increase in the new projects negotiated by IDB. There are 52 new projects in total, with an anticipated 7,000+ new jobs. However, as a public representative from West Tyrone — a new TSN area that has seen very little from the IDB in recent years — one has to emphasise the importance of the Department of Enterprise, Trade and Investment’s ensuring that TSN areas also receive their fair share of inward investment projects.
Joined-up Government means not only co-operation between the Departments and Ministers in the Executive, but also listening to the views and working alongside local government. The recent launch of the ‘Omagh 2010’ strategy, and its endorsement by the First Minister and the Deputy First Minister, is an example of how local communities can develop a vision that fits in and complements existing regional frameworks such as ‘Shaping our Future’ and ‘Strategy 2010’. It is an example of how local communities can collectively seize the initiative and put in place a vision to shape their own future. An increase in this sort of interaction between the two tiers of Government will enable the Executive to listen to the public’s views at ground level. The challenge now is how can we develop the regional economy so that it is more productive and less dependent on the public sector as a percentage of overall GDP output with increased employment and general prosperity.
Mr Wells:
It is extremely frustrating having to cover such an important issue in six minutes, but I will try my best in the time given. Implicit in this motion is a subtext that the present encouraging trends in economic development in the Province are somehow linked to the Good Friday Agreement, or to the appointment of the Minister. It is important to emphasise that many of these trends were occurring long before the signing of the agreement in 1998. Therefore, while we have enjoyed the benefits of those trends continuing, it would be totally wrong to lay them at the feet of the accord.
The IDB report states that the upturn in industrial production commenced in mid-1991, and has continued ever since. The trend in exports is even more apparent. In 1991-92 exports worth £1·78 billion were shipped out of Northern Ireland. That rose to £3·13 billion by the 1997-98 financial year. That is a very clear and welcome trend. The point that has not been made is that we are inextricably linked as part of the United Kingdom to the United Kingdom economy. As it has expanded we have enjoyed the enormous benefits that have accrued from being part of the United Kingdom.
In the rush to indulge in North/Southery and in all the cross-border bodies linked to the agreement, the Minister and the Department have failed to grasp that Great Britain is our main market. Thirty-five per cent of our trade is with the rest of the United Kingdom, and that is where concentrated efforts should be made instead of running down South where only a small proportion of our trade comes from.
I had some direct experience of the IDB’s work when I expressed concerns about B/E Aerospace in Kilkeel. I found IDB extremely co-operative, and that was during direct rule. Lord Dubs, the then Minister of the Department of the Environment also moved mountains to facilitate the development of that company with very obvious success.
It is totally wrong to attribute all of this to recent developments. Once again, it has to be emphasized, that the economic upturn has been very unevenly distributed. I have a few statistics from a recent IDB report.
In 1999-2000, the most recent financial year, 2,400 jobs were created as a result of inward investment in Northern Ireland. In reality, over 70% of those were created in Belfast — 1,879 of them. The previous year, 2,657 jobs were created, again, over 2,000 of them in Belfast, which means that great swathes of Northern Ireland benefited very little from inward investment.
Is it any wonder this has happened, given the number of visits by potential investors to Northern Ireland, which are sponsored by IDB and LEDU? To give an example, in 1998-99, there were 299 visits, yet how many of those went to South Down? We know that five went to Down, one to Banbridge, and seven to Newry and Mourne District Councils. Of course, those councils cover parts of other constituencies. From what I can see, about four out of 299 visits that were made by potential investors came to South Down. I have to agree, for once, with the Member for West Tyrone; it is quite clear from the statistics that very few of these visits are made outside the Greater Belfast area and Londonderry.
There is enormous potential in the areas south of Belfast and west of the Bann for inward investment. Unfortunately, when an investor rings up, he seems to be pointed in the direction of Greater Belfast. The problem with that is that Belfast is becoming congested. There is a huge demand for housing, and people have to wait an enormous time to get into Belfast during the rush-hour period. All we are doing here is storing up considerable trouble for ourselves by concentrating investment in one part of the Province.
While we all welcome the large call centre, which I understand will employ 1,500 people on the Ormeau Road, in south Belfast, one has to think of the implications of an extra 800 or 900 vehicles going in and out of that part of the city. How on earth can the present road system cope with that? That investment could have easily have come to Banbridge, Kilkeel, Omagh or any one of our rural towns. It would have had the most enormous impact on the economies of those towns, without a huge increase in congestion.
I have to come back to the one nettle that we have not really grasped, and the Assembly must grasp it if we are to have a meaningful impact on unemployment, and that is of decentralisation. Why is it that we are still concentrating most of the Civil Service jobs within half a mile of this Building? That is totally unacceptable. Already, some parts of agriculture and education have been successfully decanted to Londonderry with very few difficulties, and that has increased the economic performance of those areas. Why is the Department of Agriculture’s headquarters in Dundonald House and not in South Down, Mid-Ulster, or West Tyrone? Why do we need to have that Department there? We must grasp this nettle and mean business about getting jobs into Northern Ireland which are out of the Greater Belfast urban area.
Mr McHugh:
Go raibh maith agat, a Cheann Comhairle. I would also agree, along with most other people, that six minutes is a very short time in which to contribute to this debate, but it is useful in that at least it allows continued debate on the same subject. The motion mentions the unemployment figures and the fact that they are declining, but I would question that to some extent, because while there can be unemployment figures of the like of seven per cent, we should use the re-unemployment figures as a barometer. In certain areas of deprivation, such as were mentioned by Dr O’Hagan, the situation is similar to what it was years ago with very high unemployment or low-paid jobs, and working in menial jobs at very low pay is almost as bad as being unemployed. The New Deal or jobs schemes of that nature are not much better than an excuse for leaving people locked in to unemployment for years to come. That needs to change. Those areas need to be targeted in a different way to try and give them real jobs. The idea that areas have been designated exclusively for New Deal and that that is their lot, must change. There has to be change in the mindsets of those Departments and cross-departmental structures, which has been mentioned.
11.45 am
We are emerging from a conflict situation that has perhaps affected Nationalist areas in particular. The Robson deprivation indexes and the incidence of school meals are still very valid in terms of those areas. Nationalists, for decades did not have the crutch of subvention in the security economy that others have been able to make use of.
The motion mentions "competitive, dynamic and sustainable economy". Ministers, and especially politicians and heads of Departments have to change their present mindsets. It has been mentioned that if IDB or LEDU want to target jobs they will have to change from the idea that jobs have to be centred in Belfast, or the larger built-up areas, and move the economy to all areas. That would solve a lot of problems at once.
The North/South institutions have a tremendous amount to offer regarding our future. If people do not change their present political mindsets, in which they are only willing to look at this as a situation where Northern Ireland can survive on its own and without looking wider, they are going to be wrong. However, they have to bring their people along with them. Politicians need to bring their own people with them in this. It is not simply good enough to have your political tract when elections come up and then talk about the economy as if it is a totally different subject.
There are certain realities concerned with competitiveness and the dynamic economy of today's world that have to be put across to employers and ordinary people. The global market is a reality, and you will have the continual business of mergers, which is standard practice of global industries at the present time.
People feel angry, as I know from experience. Fermanagh Creameries is closing and that is causing a further increase in local job losses. We have had that ten-fold in Fermanagh. It happens in rural areas for reasons of distance and roads structure, all of which come into vogue when people decide to stay in an area.
I also think that pushing forward indigenous small industries is the way forward for rural areas, perhaps more so than trying to bring in large industries which will move out at the first sign of difficulty.
Mr Gallagher mentioned the quarries, and the quarry industry is a very important one for people in Fermanagh. It is a very high employer, at a time when our local agriculture industry is declining. We will lose hundreds of jobs in the quarry industry if that tax lands on us because quite a number of quarry firms will simply move South. That is the only option they will have if almost one quarter, or one third, of the price of a tonne of stones is added. It will have a knock-on effect. Many small industries are attached to the quarry industry and that issue needs to be highlighted. It was a tax designed to put pressure on the number of roads being built in England and it has to be stopped with respect to our area. People should at least look at that.
Overall, there are those in the political situation who are not prepared to move forward or to bring their people forward. We have Mr Paisley Jnr talking about the economy. He met delegates recently and told them that the polity of the situation was not going to work, the agreement was going to break down, and he asked them to invest with us anyway - [Interruption].
We had another politician earlier who perhaps has no time in his diary to meet President Clinton when he visits here, a meeting that would be of great importance to this area in terms of how the people outside look at us. That is very important. Go raibh maith agat.
Dr McDonnell:
I regret that time is limited as I am sure all of us could contribute a lot more. The motion welcomes the decline in unemployment and all I can add is that it has not declined far enough or fast enough - it has a good bit farther to go.
I have particular sympathy with unemployment black spots, regardless of what side of the sectarian divide they are labelled with. Somebody who is unemployed suffers a considerable loss of dignity, worth and personal credibility, and that can never be measured in absolute terms. The motion calls on all the Ministers to develop policies that will promote a competitive, dynamic and sustainable economy. I would like to enter into a detailed critique of the strengths and weaknesses, the opportunities and the threats to our economy, but time does not permit it.
We must systematically remove the obstacles, bottlenecks and restrictions to economic growth. There are many of those scattered right across our economy; outdated, bureaucratic, restrictive practices that may have had a place in the nineteenth or possibly even the twentieth century, but certainly not in the twenty-first century. We must do more than pay lip-service to our own particular narrow interest or whatever angle any of us as individuals might have in the economy.
We must all make sacrifices to help move the economy forward. We have just seen the exchange across the Chamber here; we heard the pot calling the kettle black regarding who did what to whom first. Instability is the biggest threat, and if there were stability here, the unemployment rate would be halved. Some have raised the question of the Northern Ireland Office and all sorts of manipulative things, but the biggest obstacle has got nothing to do with the NIO and manipulation. I have had the good fortune, on numerous occasions, to be in the United States - usually on behalf of Belfast City Council but subsequently as part of the Enterprise, Trade and Investment Committee - and those who are considering investing here are, at times, tottering on a knife-edge about whether they will or will not. However, when the circus - the carnival - takes place at Drumcree every July, that certainly persuades them in the wrong direction.
There has been a significant failure here to consolidate the peace. We can all point the finger; we can all poke each other in the eye; but most of the parties in this Chamber could do a good bit more to consolidate the peace. If they were genuine and wanted to back up the rhetoric, they could go that extra mile to underpin the peace that we have, thereby encouraging a further reduction in unemployment.
All of the political jockeying that has taken place here at times - and in any assembly there will always be political jockeying, but some of ours goes a bit far, whether it be blocking Ministers from going to meetings of North/South bodies or suing Ministers for not being allowed to go to North/South meetings - sends out a disastrous message -