There was an interesting exchange in the Dáil yesterday, that shed some light on the attitude of the major party leaders in the Republic towards the campaign for a corporation tax cut in the North:
Enda Kenny: What progress has been made in equalising the corporation tax rate? Some 68% of the economy in Northern Ireland is driven by public administration. With a limited number of exporting companies, it needs serious attention if it is to grow in comparison to the growth rates in the Republic during the past ten years. The Taoiseach realises that one cannot have an imbalance between the Twenty-six Counties and the Six Counties during the next decade. Are there discussions on the matter or is Chancellor Brown making progress? It is difficult, as others may want investment in different parts of the British Isles.
Will the Taoiseach update the House on the provision of the North-South interconnector? For a long time, the interconnector has been needed to apply downward pressure on electricity prices. It would not be physically difficult to provide the infrastructure.
I agree with the Taoiseach on the dual carriageway from Derry to Donegal, as it is a necessary and major piece of infrastructure. The N11 or N16 road from Enniskillen to Sligo, which the Taoiseach visited recently, is bad and has seen a number of serious accidents. Does that cross-Border infrastructure not deserve attention? Despite the North-South business, that major artery is clogged and the NRA does not give it the priority it deserves.
In the next decade, does the Taoiseach foresee a convergence of the economic development of the island of Ireland? In due course, there may be political convergence, but ours is a small island on the edge of Europe, which is facing challenges from the United States and the Far East.
The Taoiseach: The Deputy raised a number of issues. Work on the interconnector is continuing and is well advanced. Money in the national development plan has been provided for it. We have been supportive of the Border corridor of Sligo-Enniskillen-Dundalk, as it is hugely important for the economic development of the region. The last three Border roads will be open by the summer and will allow far more contact and activity, whereas many of the towns and villages were separated for three decades.
On the tax issue, two good things have happened. We will not see a change overnight, as I predicted. I urged the parties not to get into that space on it. The Chancellor of the Exchequer, Mr. Gordon Brown, indicated in his budget this day last week that he intends to reduce the UK rate of corporation tax from 30% to 28%. That, in itself, is a move in the right direction. More importantly, during the discussions with Mr. Brown last week, to which we contributed, a commitment was made to carry out a review of the different tax rates between North and South. I am pleased about that because that is what we required. Until now, the groups lobbying for this change were talking about it in a general sense.
The economic case needs to be made, as Deputy Kenny said. The huge over-dependence on the public sector is the difficulty, as is recognised now by the political system. The business community in the North has always acknowledged that. There is an enormous imbalance in that regard. I hope the analysis will not bear out the British Government’s big fear about making the change. It cannot be compared with Wales or Scotland. That was not just going to happen as a political decision, the case had to be proven by economic analysis. I am pleased about that. It will not just be good for tax, it will also be good to see how we can integrate far more of the economic realities without upsetting people.
I have been advocating co-operation on these issues for a long time, again without creating difficulties. We need the same type of co-operation we have seen in areas like agriculture, fisheries and disease eradication. There is no way we can sort out certain problems without working on an all-island basis. We should try to do so in the health sector, for example. The North has made advances in some areas, just as we have in other areas. It is an ideal issue for co-operation. In the education sector, the universities have been co-operating for the past seven or eight years. Other organisations like the chambers of commerce need to get involved. The trade union movement has always been organised on an all-island basis. We need to focus on the dynamics of trying to get co-operation to work in a way that helps Northern Ireland and the South. Labour market issues will be hugely helpful. (Parliamentary Debates (Official Report – Unrevised) Dáil Éireann)