Mitchel McLaughlin interview: all-island economic recovery

Sinn Féin’s Mitchel McLaughlin discusses his party’s proposed all-island economic plan with Peter Cheney, as the UK starts to cut public spending.

As the tight Comprehensive Spending Review approaches, Mitchel McLaughlin claims that now is the time for Northern Ireland to start raising its own money, integrate with the Republic’s economy and invest to save jobs. These are the main elements of the party’s all-island economic recovery plan, proposed after the UK’s June Budget.

“Clearly there is a considerable amount of concern and trepidation but also a lot of speculation because we do not know precisely what is going to come,” Sinn Féin’s Economy Spokesman comments, “other than a commitment which may or may not be delivered on, in terms of rebalancing the economy here in the North.”

Sinn Féin’s call for devolved fiscal powers has been opposed by unionists, who fear it may upset the Barnett formula. However, McLaughlin finds that unionists also accept that Barnett is “not a fair settlement” as it does not recognise the region’s objective need and its unique economic characteristics.

The South Antrim MLA highlights the over-dependence on the public sector, as opposed to a “creative tension” between strong public and private sectors, and adds: “What people regard as the traditional economic model has not existed in the North for a very long time.”

McLaughlin suggests that the old industries were already declining at the onset of the Troubles. A “security economy” then developed during the conflict, but this was taken away after the ceasefires. In the meantime, the global economy developed during the 1980s and will continue to influence the region but it still has little economic influence.

Cork in the sea

His own analogy is that “people are content to be a cork in the sea” no matter how turbulent it is rather than have “some self-determination” over economic policy. The Treasury’s economic policy, he contends, is too rigid: “What works for the South East of England clearly doesn’t work itself in a homogenous way in the six north-eastern counties of Ireland.”

An all-island economy was becoming increasingly accepted until the South went into recession, which led to unionists claiming that the union stood for economic security. McLaughlin differs and predicts that the South will recover more quickly than the North.

On the Celtic Tiger, he comments: “They did actually construct, despite the scepticism of unionists, one of strongest performing economies in this new economic world.”

The economic problems emerged outside the island and swept across all of it, he adds, affecting the Republic particularly badly.

Unionists, he suggests, need to take a “more enlightened approach” and listen to business organisations such as the CBI which see the logic in an all-island economy i.e. cost-effectiveness, critical mass, avoiding duplication and repetitiveness.

Some major firms with large operations in the North keep their headquarters in the South as it makes more economic sense. Key examples are found in agriculture, the freight trade and among the major banks.

However, Sinn Féin thinks that this can be changed, especially in the financial sector. McLaughlin suggests that as both the British and Irish Governments have a vested interest in the Northern Ireland’s recovery, they should provide incentives to encourage financial firms to move their bases north of the border.

An agreement could allow staff to deliver financial services on either side of the border. This could be supported by continued government investment in telecoms and hi-spec office accommodation.

Ultimately, this could help to even out some of the regional disparity within the North, which led to the civil rights campaign, and in his view, the Troubles.

Self or mutual interest?

It was put to him that nation-states will always act in self-interest and therefore the Republic will look after its own interests rather than those of the North.

Responding, he points out that the senior southern politicians who talked about the “patriotic duty” to shop in the South quickly backed down. They realised that successive Irish governments had invested in the North’s infrastructure e.g. in roads and broadband, so Donegal’s economy could also benefit.

In addition, as the Republic’s economy expanded, investors purchased properties in the North – a portfolio now inherited by the Irish Government, which arguably makes it the North’s largest investor.

Instead of self-interest, he wants ‘mutual benefit’ to be the main phrase in discussions. As an example, he points to InterTradeIreland’s work and how its strategic matrix study has “transformed” the way colleges and universities look at how they can meet economic needs across Ireland.

Also, when it became clear that a fire sale of Nama’s £7 billion northern portfolio would damage the property market, Sammy Wilson and Brian Lenihan rapidly arranged for a northern sub-group to be set up.

Sinn Féin, for its part, has opposed Nama, claiming that the bailed-out banks had served the South’s business and political establishment and should therefore not receive taxpayers’ money. Its alternative is a state-owned bank to aid the recovery, perhaps formed by nationalising and amalgamating Allied Irish Bank and the Bank of Ireland.

McLaughlin is strongly critical of the banks’ “punitive” practices as they try to balance their books e.g. additional charges, withdrawing loan facilities. Again, the banks pay little attention to MLAs as they are regulated in London and Dublin.

The SDLP has proposed similar North/South economic policies but he thinks that their emphasis on creating specific numbers of jobs is wrong and not taken seriously by voters.

Sinn Féin’s approach is instead “measured and reasonable”.

As the green shoots of recovery emerge, he also expects the all-island economy to “move to a different level”. And, in the long-term, “unionists will be re-evaluating the benefits of actually having some say over that process.”

Growing the all-island economy and giving Northern Ireland fiscal powers is also in the Treasury’s interest, he maintains, as this would let it cut down its subsidy to the region “after 90 years of it actually increasing.”

Budgeting for jobs

‘Getting Ireland Back to Work’ is Sinn Féin’s strategy for keeping and creating jobs, published in March 2009. Its main focus is calling for action from the Irish Government. Many commentators are now calling for spending cuts but the document calls for major sums to be invested, including:

• A €300 million ‘jobs retention fund’ for SMEs;

• Continuing an €252 million ICT in schools programme;

• Fast-tracking and expanding a €200 million fund for alternative energy R&D.

McLaughlin stresses that the Executive must invest to retain jobs as companies are being forced to “shed workers” and even stable businesses are “at the whim” of local bank managers. Keeping jobs is cheaper than taking on and training new staff, he adds.

In the North, he calls for the Investment Strategy’s programme to be maintained, to back up the economy with good infrastructure and also retain private sector jobs.