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New peace brings need for an overhaul

Ashley Milne-Tyte Jul 12, 2007

New peace brings need for an overhaul

Ashley Milne-Tyte Jul 12, 2007


Kai Ryssdal: Over here it’s just another day in the middle of July. Over in Northern Ireland, it’s the height of what’s called the marching season.

When Protestants parade to mark the victory of King William of Orange over the Catholics in 1690. Today, the two religions share power in a regional government. But with political peace comes some questions about whether Northern Ireland’s economy is due for an overhaul too. From Belfast, Ashley Milne-Tyte reports.

Ashley Milne-Tyte: On the surface, Northern Ireland’s economy is thriving. Unemployment is lower than the U.K. average. The Belfast skyline is transforming as the city undergoes a post-bombing building boom.

Leo O’Reilly is budget director in the new power-sharing government. He says these positive signs mask the fact that Northern Ireland is dependent on the public purse.

Leo O’Reilly: We have public spending levels that far exceed the levels that, for example, now exist in the former East European communist states. So we have a very, very difficult position to address.

O’Reilly doesn’t expect the flow of funds from U.K. central government to dry up all at once. The politicians don’t want to undermine the peace. But, he says, it’s bound to slow.

And less funding would hurt the province disproportionately. A third of Northern Ireland’s employees work in the public sector, versus a fifth for the whole of the U.K.

But expanding the private sector is a challenge, O’Reilly says. Pay and benefits there are worse than in the public sector.

O’Reilly: Which means that young people with skills and talents are taken into the public sector and work there, rather than moving into the private sector and using their skills to grow the economy.

Michael Smyth teaches economics at the University of Ulster. He agrees that Northern Ireland must make the private sector a more rewarding place to work. For starters, he says, the region needs to attract financial services and high-tech firms. They’d bring more highly skilled, well-paid jobs.

Both those industries have helped the Republic of Ireland double its economy in the past 17 years. But Smyth says people in the north too often lack confidence in the region.

Michael Smyth: Northern Ireland’s people are its own worst critics. You see for 30 years, more than a generation, we haven’t had to sell ourselves to anybody. Nobody wanted to come here while bombs and shootings were going on.

Money-making projects have languished for years. Take Northern Ireland’s most famous product, the Titanic. Smyth is overlooking the dry dock where the Titanic was built, and from where she set out on her fateful maiden voyage.

A couple of tourist signs are up in front of the old pump house, but the area still pretty much resembles an industrial wasteland. Looking down into the dry dock is like peering into a vast, rusty bathtub.

Smyth: All you can say is that we’ve very, very big weeds growing here, y’know. I would say this, in any other country in the world that had a world emblem of despair, of hope like the Titanic, they would be shouting it from the rooftops.

There are major plans for the site to be a tourist and business hub. Citigroup already has an office nearby.

Smyth says to get more international firms to invest in Northern Ireland, U.K. central government must allow the province to lower the tax companies here pay. It’s currently 30 percent, as in the rest of the U.K. That’s more than double what companies pay in the Republic.

Graham Brownlow teaches economics at Queens University Belfast. He’s skeptical that a lower-company tax would do much to improve the north’s economy.

Graham Brownlow: It would do nothing to solve the problems of our long tail of unskilled workers. It would do nothing to re-balance the public sector with the private sector.

Brownlow says what’s needed is better education, investment in research and development and a genuine commitment to free markets. He doubts Northern Ireland’s new government has that commitment.

Brownlow: They will pay a lot of lip service I think to free markets, because it’s currently necessary, but I don’t believe that their heart’s in it, And it’s not a vote winner on the door.

Brownlow doesn’t mean to sound unduly pessimistic. After all, Northern Ireland has overcome massive hurdles before. But shaking off this tradition of state bankrolling may take the same kind of courage it took to bring about peace.

In Belfast, I’m Ashley Milne-Tyte for Marketplace.

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