Joint Committee on the Implementation of the Good Friday Agreement díospóireacht -
Thursday, 28 Sep 2023

Finance and Economics: Discussion (Resumed)

An Cathaoirleach

I will just explain to our guests or witnesses that some people will be online, appearing from different locations, while participating. On behalf of the committee, I welcome from the Irish Business and Employers Confederation, IBEC, Mr. Fergal O'Brien, executive director of lobbying and influence, and Mr. Michael D'Arcy, programme lead with the IBEC-CBI joint business council. Today, we are continuing our series of meetings on finance and economics and will be discussing the all-island economy. I thank the witnesses again from coming in.

Before we commence, I have to read a note on parliamentary privilege. There are some limitations to parliamentary privilege and the practice of the Houses as regards references witnesses may make to other persons in their evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected, pursuant to both the Constitution and statute, by absolute privilege. However, witnesses and participants who are to give evidence from a location outside the parliamentary precincts are asked to note that they may not benefit from the same level of immunity from legal proceedings as a witness giving evidence from within the parliamentary precincts does and may consider it appropriate to take legal advice on this matter.

Witnesses are also asked to note that only evidence connected with the subject matter of these proceedings should be given and that they should respect directions given by the Chair and the parliamentary practice to the effect that, where possible, they should neither criticise nor make charges against any persons or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the person's or the entity's good name.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him, her or it identifiable.

I now call Mr. Fergal O'Brien to make his opening statement.

Mr. Fergal O'Brien

I thank the Chair and members for this opportunity to meet with the committee again. We were here earlier this year and it is very good to see the committee continue to work on this very important matter.

Our previous presentation very much focused on IBEC’s campaign, For Peace + Prosperity. That was a campaign we delivered over the first half of this year to recognise the 25th anniversary of the Belfast or Good Friday Agreement. I am delighted to report that it was one of the most successful campaigns IBEC has run. The feedback from our members and stakeholders, both domestically and internationally, has been exceptionally positive and really supportive. All of the events were well attended and we had very positive engagement throughout. The overall purpose has definitely been accomplished. That purpose was to remind the business community and other stakeholders of the importance for them of the stability and prosperity that the agreement continues to underpin right across the island. Just to let the committee know, we took the campaign off the island and held successful events in the Irish Embassies in Washington and London. There was also a very well-attended event that saw much engagement at the IBEC office in Brussels earlier in the year.

The committee has asked us here today specifically to discuss economic opportunities and enterprise in the all-island economy, IBEC’s work on its joint business council with CBI Northern Ireland and the Economic and Social Research Institute-National Institute of Economic and Social Research macroeconomic modelling project that is currently under way. I will take these issues in reverse order.

IBEC and the Economic and Social Research Institute, ESRI, are undertaking a joint research programme in collaboration with the National Institute for Economic and Social Research, NIESR, in the UK to provide additional insights on the economy of Northern Ireland, the all-island economy and links to the wider UK economy and beyond through the development of a macroeconomic model. This research programme will combine the organisations’ modelling expertise, existing research databases and proven methodologies to develop a deeper understanding of the economy of Northern Ireland and its link to Ireland and the wider UK economy, working in three interrelated strands.

The first strand aims to develop a macroeconomic model of Northern Ireland. As many members will be aware, no such model exists in the form we are used to working with here in the Irish economy or across the overall UK economy. It will look at links with the UK and the global economy and create a new analytical tool allowing for the analysis of economic linkages, policy measures and the transmission of economic shocks, both positive and negative.

In the second strand, parallel to developing the model, we are going to produce a series of papers on economic issues using the data gathered for model construction so as to present comparative analyses of the Northern Ireland and Irish economies along with all-island trade issues. Finally, workshops and conferences will be organised over the three years of the programme where the work will be presented and discussed. That engagement has already started and we have had very significant interaction on it to date, which has been very positive.

The programme is overseen by a steering committee drawn from the research area across the island and Great Britain and its outputs will enhance understanding of the prospects and choices mutually re-enforcing economic progress. At this point, the very detailed and technical work of building a macroeconomic model for Northern Ireland is well advanced and is due to be completed in 2024. Through the framework, we have also supported the ESRI's publication of a ground-breaking report on North-South trade and business post Brexit. That work was published before the summer.

On IBEC's work with the CBI in our joint business council, we are very focused on the future of energy and climate and continue to be concerned about the ongoing deficit in North-South connectivity that remains to be addressed. On energy, we note that there is an absence of joined-up North-South conversations on all-island energy futures. This is despite the very significant energy challenges we are all aware of and the fact that it is a single electricity market that keeps the island’s lights on. In addition, the climate action targets being set separately for both jurisdictions will struggle to be met without much more substantive and serious consideration of how our all-island energy future out to 2040 will help to ensure their delivery.

From its earliest work, infrastructure investment and improvement has been a major concern for the joint business council. Regrettably, the ambition we had for infrastructure improvement has not been delivered on. However, there is another opportunity now in the availability of resources from the shared island unit and, through the Irish Government, the creation of a national infrastructure fund which we believe should include ring-fenced capital funding devoted to delivering the national development plan and include projects that deliver the substantial North-South connectivity that is very much required.

In terms of the wider challenge of economic opportunities and enterprise, we note that, at our previous session with the committee, it was asked why Northern Ireland is not benefiting more from spillover effects from the current spectacular success of the Irish economy. As was stated then, this is certainly a valid question but it is equally valid to ask why more attention is not being paid to where this spillover is evidently happening in order to accelerate the momentum that has been established. For example, the Central Statistics Office and the Northern Ireland Statistics and Research Agency agree that annual goods trade alone in the all-island economy is valued at close to €10 billion. That has seen a particularly strong surge in recent years. This is not a small sum and it is benefiting both jurisdictions. We are seeing that surge in trade flows in both directions. The ESRI report highlights that the goods being moved are from both the indigenous and foreign direct investment sectors and that a significant component of local SME cross-Border business is also being done. This growth is occurring under the part of the Windsor Framework that is working and it is mutually beneficial. Looking to the future, we believe there is the opportunity to grow this all-island trade much further.

Developing the full potential of the wider all-island economy needs the support of more time and attention from policymakers. Areas such as energy and infrastructure have already been mentioned but further developing the all-island labour market, which is a particular interest of IBEC, is also a really important issue for the wider business community.

Finally, how and where the Belfast Good Friday Agreement, across all its strands, could and should support this ambitious goal of a more prosperous and dynamic all-island economy requires ongoing attention and debate.

An Cathaoirleach

I thank Mr. O'Brien. I understand that Mr. D'Arcy will make his contributions during the discussion. I will repeat the order of questions for the committee members: Fianna Fáil, Fine Gael, Sinn Féin, the Alliance Party, Independents, SDLP, Aontú and so on. Fianna Fáil is first on this list. Each group will ask questions and the witnesses can answer for ten minutes, and I will then call the next speaker. Senator Blaney can go ahead.

Senator Niall Blaney

I thank the Chair, Mr. O'Brien and Mr. D'Arcy for being here this morning. Their good counsel is always very welcome. At the outset I concur with their thoughts regarding IBEC's campaign in relation to the Good Friday Agreement. I attended one of the events and it was brilliant so I congratulate IBEC on that endeavour. Mr. O'Brien had quite a bit to say in his presentation. Could he give us a picture of the workshops he spoke about holding vis-á-vis the locations in Northern Ireland and in the Border counties? What does he envisage? Will it be through the counties or just a few appearances? How many locations has he looked at?

He spoke about the new model and that is really welcome. How are the different industries across Northern Ireland such as manufacturing responding to the new model? Have they taken part in the running and the make-up of this new model? What is their feeling about it?

Mr. O'Brien spoke about North-South energy connectivity and I agree with him on that. On the energy side, I do not think we have looked at the whole picture island-wide from the point of view of the ability to carry this talk about offshore wind farms. I do not think we are seeing the bigger picture. From my perspective in the north west, we do not have the network to carry the power. We cannot carry what is there on land, never mind on sea. What is Mr. O'Brien's view on what is needed on North-South connectivity? There is one connection at the moment. Will he give us a picture of what is needed? What will be needed to cater for our energy needs up to 2040?

I agree with Mr. O'Brien on the all-Ireland labour market. I spoke to him on the last occasion about the shift in power from Belfast to mid-Ulster and the manufacturing businesses there that now account for more than 40% of trade in Northern Ireland. That is a fantastic model and I think he is right that it can be grown. What needs to be done to create that extra labour force? There are areas in Belfast and Derry city, and parts of north and west Tyrone, that are planning blackspots. What can be done about that? That is it for now.

Mr. Fergal O'Brien

I thank the Chair and Senator Blaney. I will give an initial response and I know Mr. D'Arcy will join in as we progress. I will start with the questions about the macroeconomic model. It is technical modelling work and requires the specialist expertise that we have in the likes of the ESRI, and its counterpart in the UK, the National Institute of Economic and Social Research, NIESR. We are working with some very experienced people in the development of that modelling so it is quite advanced at this stage. We are struggling with some of the data gaps, particularly for the Northern Ireland economy. It is an ongoing challenge and the data gap and coverage of statistics for Northern Ireland is one of the issues that has come up. However, they have been able to address that quite effectively through a modelling exercise so we are very confident it will be a really important contribution to the understanding of the economy.

The Senator asked who was involved. As I said, we have a steering group which has a mainly economic speciality to date. We will talk about the work we need to do in terms of the dissemination. We have some economists and academics from Northern Ireland and there are some specialists from the UK. Both Mr. D'Arcy and myself are on that steering group as well. I chair the steering group and Mr. D'Arcy contributes to it along with other professionals from the ESRI. That is the input, and we are then engaging with stakeholders as we go.

I mentioned the trade report that is being developed as part of this research exercise with the ESRI. We published that trade report just before the summer and very actively reached out to stakeholders to join that conversation and to see the results of that trade report. This was very innovative because for the first time from a Northern Ireland data perspective, we now have trade data with EU countries. Northern Ireland is now reporting much more detailed trade data to the EU as a result of Brexit. There is a lot of additional data and statistics coming into it but the publication of that work is allowing us to engage with other stakeholders and obviously with organisations like the Confederation of British Industry, the chambers of commerce and Manufacturing Northern Ireland. At the moment, it remains quite a technical piece of work. We are progressing it through that steering group.

Senator Niall Blaney

I asked whether they are all engaging.

Mr. Fergal O'Brien

Everyone is very interested. We have met with various people in Northern Ireland. Everyone sees the benefit this model will bring because it seeks to address quite a significant gap in the understanding and analysis of the all-island economy, so we are getting a positive response to it.

The workshops I have mentioned will be somewhat technical in nature initially, for example explaining what a macroeconomic model of this type will do. We have not decided where exactly we will hold them, but we will have some in Northern Ireland and some in Dublin. It will be a discussion and engagement process with people. We will try to get their feedback on what the opportunities associated with this will be. Whoever will work with the ESRI in the future will have access to this model. It will not be owned by IBEC. This is something the ESRI will work on with other people who want to look at the impact of policy measures on the all-island economy. For that reason we think it will make a very significant contribution to public policy, to our understanding of the all-island economy and its interrelated nature with the wider UK, and to Northern Ireland itself.

I will say a few words on energy. We clearly have gone through a challenging period in terms of energy security issues across the island. We continue to believe the North-South interconnector is crucial to embedding greater energy security across the island. The last time we were at this committee, we said that we believe the single electricity market is one of the most significant concrete legacy effects of the peace process, apart from all of the wider benefits of peace. It is one of the very specific deliverables from peace and from the Belfast Good Friday Agreement. We are very committed to the single electricity market and want to see it strengthened. We want to see it embedded. The delivery of the further infrastructure in terms of the North-South interconnector is absolutely crucial to making sure that happens.

I know Mr. D'Arcy will probably add to what I have said, but I have a final comment on the labour market. We see an incredible opportunity in terms of how the world of work is changing because of hybrid and remote work. People no longer need to be within a commute time of 30, 60 or 90 minutes. Labour on the island is significant in terms of having a reasonable access to physical presence in an office once per week or whatever it is.

There is an opportunity for all of the regions of Northern Ireland. The Senator mentioned mid-Ulster. The opportunity across the island for future employment opportunities in Northern Ireland will be equally significant, but right now the labour market model is not functioning. The tax and social welfare systems are a significant challenge. There is a major lost opportunity in that regard. The world of work is moving at a pace, and the administrative systems, particularly on the island, are not keeping pace.

We are working with the shared island unit in the Department of the Taoiseach to do a particular piece of research on those all-island labour market challenges, but we would ask the support of the committee to advance the solutions. We have put forward solutions in the past, particularly in relation to taxation measures.

An Cathaoirleach

We are extending the slot to 15 minutes. Is that agreed? Agreed. There are five minutes and eight seconds left in this slot.

Mr. Michael D'Arcy

It is good to be back with the committee. Building on Mr. O'Brien's point, as a member of the group - they are all economists and I am the political scientist.

An Cathaoirleach

Mr. D'Arcy is the boss.

Mr. Michael D'Arcy

The prism through which I look at the work is perhaps a little different. NIESR involvement is important because it is the first economic institute in London - it is very respected - which is actually trying to break down the UK economy into regional and devolved models. When Senator Blaney referred to engaging. One of the key areas in respect of which those who do not normally engage on these issues should engage is the fact that this is providing knowledge about Northern Ireland's position within the wider UK economy and not just in the context of its connectivity to the Republic. We have to see it in that totality through the prism. There is a real political dimension to that.

Second, the main benefit is it enhances the understanding capacity of policymakers to make good decisions for their place. To date, there has been an awful lack of data and real understanding of how the Northern Ireland economy works, both in the context of the UK and the wider all-island economy. This modelling will help to inform policymakers and political decision-makers better in that regard.

Third - and Mr. O'Brien is being very delicate of course - there is a real knowledge gap in understanding right across the economic and policy community in the North as a consequence of this historic deficit. We have to be really careful in the positioning of this in order to ensure that there is not, dare I say, an instant dismissal because people feel threatened and that, instead, there is an understanding of its value. We are already having conversations with people. Obviously, over the years, I have built up many relationships with people in this arena. There is a real appetite for it behind the scene and a real hope that by talking and working with people we can bring it forward and when it hits in the public domain, there will be a lot of support locally behind it as a consequence. If one adds that to the research the ESRI is doing through the shared island unit, there has never been as much understanding about how the economic situation works. For those members of the committee who have to look at how they will make policy decisions going forward, the real gap is between this knowledge and implementation - how one actually is in a position to make decisions in that regard.

One of things Mr. O'Brien and I were talking about outside afterwards was that the campaign has been very successful. It was always meant to be about the next 25 years as much as about the past 25. We thought that this morning we could perhaps engage with the committee about what I call the forgotten child of the Good Friday Agreement, namely, strand two. We were in Belfast the other day, and many people are talking about so-called direct rule lite in the absence of the Executive, which, of course, we all hope will be put in place. They are talking about it exclusively, and thinking about it in Belfast, pretty much in the context of strand one alone. So where will it be thought about in the context of strand two? I thought that perhaps that is something this committee might explore during the course of the conversation because everything we have touched on already is all about strand two.

An Cathaoirleach

That is a very important point.

Senator Niall Blaney

The point Mr. D'Arcy makes is a good one. I suppose it is true to say the work he is doing is in line with and in the spirit of the Good Friday Agreement. I welcome that. I am delighted that there are two elements, namely, the UK element and the Irish context. That is really important.

I want to come back to the point that the labour market is not working in Northern Ireland. I suppose it all reflects back on where we are politically in Northern Ireland. Maybe it is wrong to ask our guests a question but I will bounce it off them anyway. What do they feel needs to happen to make it work?

Mr. Fergal O'Brien

Our particular area of focus is the all-island labour market and movement of labour across the island. The cross-Border worker issue is our particular area of focus. For our members - we have a number of member companies in Northern Ireland as well - this is proving a real challenge. There are things that we can do directly through the Irish Government that will alleviate the process. We had emergency measures in place during the Covid period when people could not travel to work. Those measures were really effective. The new world of work, when that relief has been taken away, it is causing a lot of problems. There are things we could do separately. Ultimately, we think there needs to be an agreement between Irish Revenue and UK revenue to support the particular circumstances of labour mobility across the all-island economy. That is our specific ask on that issue.

Senator Niall Blaney

Can I make one proposal to Mr. O'Brien and Mr. D'Arcy?

An Cathaoirleach

In fairness, Deputy Feighan is next.

Senator Niall Blaney

It might be useful-----

An Cathaoirleach

No doubt it would be.

Senator Niall Blaney

-----if we were to take a bit of time, maybe not today, and come back to this. Maybe they would send the Chair an email of their suggestions of what the Irish Government needs to do to help improve the situation. It would be useful.

An Cathaoirleach

Paddy Malone from the chamber of commence in Dundalk, with whom I was speaking at an event the other day, said he would be happy for the chamber to come to address some of those issues before the committee. That consensus between the revenue authorities is a major issue. It is frustrating. It is not good for either economy.

Deputy Frankie Feighan

I welcome Mr. O'Brien and Mr. D'Arcy. I congratulate IBEC on its Peace and Prosperity campaign. It was very successful. Along with other Deputies and Senators, I attended the IBEC north-west annual presentation. It was all very positive. It was helpful for politicians. I ask them to keep up the good work.

There are a few aspects I want to ask about. Regarding the transmissions of economic shocks, both positive and negative, first of all, can they elaborate are they global or are they local to the island of Ireland or the particular issues that they are concerned or positive about? Regarding the absence of joined-up conversations on all-island energy futures, we all watched during the crisis last year, and even this year, the EirGrid dasboard. It is interesting to see the amount of renewables and the amount of gas we import across the island. It is useful for us all. Is there more we can do there regarding the future of all-island energy?

I like their idea regarding the shared island unit and a national infrastructure fund that would have shared capital spending. We need to look at having a fund that is not yearly but that will be for four, five or maybe ten years, that will be there no matter what happens, in recession or boom, and that these projects will at least continue to move ahead.

Mr. O'Brien stated that there is good news as well. The annual goods trade in the all-island economy is close to €10 billion in value. I welcome that. How can we grow that trade much further? I live near the Border as well. At this committee, we have had issues regarding education and the recognition of various standards relating to health, etc. There are so many opportunities. We are talking about trade, but there are so many opportunities that we can work that bit further. I am looking for the witnesses' views on that.

The witnesses elaborated on the all-island labour market. What more can we do? Is it the fact that Stormont is not sitting or are there issues on the political side in respect of which we could do a little more?

I thank Mr. O'Brien and Mr. D'Arcy for their great work. I am looking forward to hearing their views.

Mr. Fergal O'Brien

I thank Deputy Feighan. I might give an initial reaction to a couple of these. Mr. D'Arcy might like to talk about energy and the trade issue and I might respond to some of the other questions.

The Deputy asked about the modelling exercise and the shocks that we mentioned. This is the normal structure of a macroeconomic model. Be it an energy price shock, an interest rate shock or the impact of a global economic development such as a recession in China, one would be able to model it on various structures in one’s local economy, for example, the Northern Ireland economy or the all-island economy. The impact of those shocks and developments would be different in Northern Ireland than in the wider UK economy. Having a regional model and an all-island model for whatever shocks we face in future will make a significant contribution. We are not specifying what those shocks would be, but the economists are always expecting the next one. Inevitably, it will not be too far away.

I will say a few words about infrastructure and make a particular request of the committee. We feel strongly that there is an opportunity now for a national infrastructure fund. The surge of revenues in the State from corporate tax should not be put into day-to-day spending and should instead be put into a national infrastructure fund. Consideration could be given to how this could, in the medium term, support shared island funding in various ways. As was pointed out, the priority would be to ensure certainty of funding and that it not be subject to some of those future shocks. As we know from the past, infrastructure spending is always the first thing to be cut. Ensuring certainty is the real purpose of a ring-fenced fund.

Turning to our particular request, when the national development plan and the national planning framework were devised, insufficient consideration was given to the all-island economy. Given that a review of the national planning framework is now under way, we believe that the committee should take a particular interest in advocating for the all-island aspects. The Department of Housing, Local Government and Heritage is leading the review and work has started, with a consultation process to be held over the coming months. This is an important opportunity to redress the fact that insufficient consideration was given in the original framework to the North-South and all-island aspects.

Before I hand over to Mr. D’Arcy to discuss energy and trade issues, I will address the questions on the specific steps we can take as regards the all-island labour market. One step the Irish Government could take would be to reinstate the temporary measures that obtained during Covid. This would give significant relief to companies that are struggling with the complexities of cross-Border work. Ultimately, though, it will be for His Majesty’s Revenue & Customs, HMRC, with Ireland’s Revenue, to agree a bilateral agreement on supporting increased labour mobility on the island of Ireland. There may be wider international issues. For example, there may need to be engagement with the OECD, which is examining the new world of work, tech nomads and so forth. It is very much a changed world of work, but we believe that Revenue and HMRC could advance this issue if there were the political will to do so.

Mr. Michael D'Arcy

To frame this within the overall observations about strand two, two phrases always leap out at me in the strand’s preamble. The first is “the totality of relationships” and the second is “actions”. The preamble does not just speak about co-operation, but about action. A great deal of enthusiasm, energy and thought was put into actions in the immediate aftermath of the agreement and a great deal of time has been spent on deciding how to implement these actions. In many ways, it has been such a slow process and it seems to me that we have forgotten to decide what the next actions are. Surely now is an important time to consider this matter.

Energy is a primary issue, given that the single electricity market came out of the spirit and processes of the Good Friday Agreement as opposed to being a specific action included in it. It has taken the joint business council longer than expected because so much has been happening in the energy market with rising prices and security issues, but we have actually been filling a vacuum over the past year. No one is discussing all-island energy futures. People are discussing what they are doing themselves, comparing notes and so forth, but where are the joined-up actions? We brought key people in the sector together and quietly went through what they thought might be done here or there and what would make sense on a joined-up basis. One of the key initial insights was that it was not optimum for Northern Ireland to be wholly connected to the wider UK energy market. What is optimum for Northern Ireland is to continue to be connected to the all-island energy market and its evolution into a renewable, sustainable and more secure space. That is the fundamental point. Our request of the committee in this regard is that, once we have completed our paper – I hope that will be shortly – we can return and speak to the committee about the paper’s recommendations etc. In the first instance, we just want to start the conversation and help that with some concrete proposals and suggestions from the industry in areas that everyone is discussing separately, for example, wind, gas and hydrogen. How do we bring them together into a joined-up picture and push it out to the future? Energy is not something that you sort out today or tomorrow, as we know. It is something that you have to decide for 2040, never mind 2030, given the timescales in planning, investment and return. All of these projects involve investment. A key consideration for the Government is that most of that investment is from the private sector. As opposed to other forms of infrastructure, for example, railways, where the Government is primarily the one being looked to, most of the money for energy projects will come in the form of energy companies investing in generation and in companies adapting their internal systems to utilise renewable energy.

The challenge for the Government is in policy and governance. The latter is one of those points that gets neglected. There has been a great deal of talk in Belfast about governance and there has been some discussion about cross-Border bodies like the North-South Ministerial Council, NSMC. There are difficulties in terms of the appointment of directors and so forth, but the governance of North-South issues is broader now than just what happens within cross-Border bodies. Much of what will happen in the single electricity market is down to regulation, particularly now that the UK is out of the EU and the picture is not automatically joined up. The role of regulation in government policy, including that of the devolved Administration, will be critical in the two jurisdictions. Will the NSMC have a role in co-ordinating regulation? Will regulation be done jointly? These are important considerations for investors when looking to the future. Energy will raise these questions in a way that may be unexpected and it is important that people think about them in terms of strand two.

The Trade and Business Development Body – I always struggle with its original title – is usually called InterTradeIreland, ITI. The report by Dr. Martina Lawless that Mr. O’Brien mentioned is important because it segmented the two dimensions: the international or global dimension of trade, or what foreign directive investment, FDI, companies and so forth are doing; and what is happening domestically with SMEs and other indigenous companies. She identified the dynamism of cross-Border trade within the SME sector – SMEs simply selling to the person across the Border or companies coming together to provide a sub-supply to large FDI companies spread around the Border area – and that more attention needed to be given to it. Geography plays a role for FDI companies, but so do sectors and clusters. It is not about exactly where they are, particularly in this era of services, technology etc. It is about looking at this more through the prism of clusters. For example, where there are clusters North and South in pharma, life sciences and so forth, could they be joined up more effectively? Could other sectors be combined more effectively? Does the NSMC have any role in this? Should cross-Border bodies have more of a role? If we are going to discuss how the next 25 years of the agreement will continue the peace, stability and prosperity, then a more holistic approach needs to be taken to it. That is something that this committee might consider.

An Cathaoirleach

Mr. D’Arcy has made important points. I will put a question, although it is obviously for us to answer. If there is not a working Administration in the North from the political point of view and the parties are not working together, nothing will ever work properly. If the majority in the Assembly were to agree an Administration, should that not be something we consider? It would mean that the Administration could continue and it would prevent increasing dissonance, uncertainty, anger and hostility and people closing down communications.

All the points our guests have made are extremely valid. They address the spirit of the Good Friday Agreement in what they are saying. However, much of that is not happening. I agree, and they are right to point out, that there is a role for us in that regard. I and many others have spoken to many people in the unionist parties of Northern Ireland. Many of them have said to me that if it is not a political deal, they do not have an issue with economic progress. The fact is it is not happening. Behind every proposed consensus or agreement is the question as to whether it would represent a political change for the parties to engage on and in which to get involved.

Young people in the North must stand up for their futures and push back against the rhetoric to allow for future progress on the island. I see a former Minister, Deputy Brendan Smith, coming in. I attended meetings of the North-South Ministerial Council when I was a Minister of State. It was an important engagement but the approach was minimalistic. It was the smallest possible bit of the cake for everyone. There was not much openness, engagement or working together in full flow. Those are the issues I see.

Deputy Rose Conway-Walsh

I thank Mr. O'Brien and Mr. D'Arcy for being here. I also thank them for their opening statement and the discussion following. I can clearly see where they are going and building on the IBEC For Peace + Prosperity document. I will take the opportunity to say particular thanks to IBEC for the high quality of its leadership on the broad range of issues we have discussed this morning and on which it continues to work as an organisation. It focuses on the all-island economy, takes the two islands into consideration and all of that. It is important to discuss all of that in the context not only of the present challenges we face but also the challenges of the future and our preparation for them beyond the political cycles. That is where IBEC's leadership is valuable. The presentation this morning focuses that and give this committee an opportunity, in the context of our discussions about constitutional future, to consider how we can do those things.

IBEC's For Peace + Prosperity document states that its focus has been on the all-island economy and the strategic investment in growth, employment and prosperity across the island. The organisation has complimented the work of strand 2 of the Good Friday Agreement and, as it states in the document, the North-South co-operation required to develop trade, critical transport, infrastructure, skills, supply chains, the regulatory regimes and the markets in both jurisdictions and the benefits in scale that would be available to an all-island economy.

I will ask several questions. I agree entirely with the point that not enough attention is being paid to those areas of the all-island economy where progress is being made. Our guests correctly identified that the annual goods trade of the all-island economy is close to €10 billion in value. They also said that looking to the future, there are opportunities to grow as a whole island. IBEC's pre-budget submission outlined the business case for a national infrastructure fund. I was glad to hear the witnesses explicitly say that insufficient priority has been given to the all-island aspect of that because without it, we are limiting ourselves in many ways. They probably heard that the Committee on Budgetary Oversight discussed the issue yesterday and the possibility of an investment fund over the next few years. Both the Minister for Finance and the Minister for Public Expenditure, National Development Plan Delivery and Reform were before that committee. It is timely for IBEC to put the issue front and centre, not only for the shared island unit but overall in terms of the national development plan. We need better joined-up thinking.

It is a concern, as IBEC points out in its document, that the Irish Fiscal Advisory Council, IFAC, estimates that almost €20 billion in additional capital spending will be needed between 2024 and 2030 to protect the existing ambition within the national development plan. That has to be named and a grip of it must be taken. That reality must be dealt with. IBEC has identified the need for at least an additional €10 billion on top of that to reflect the growing demands for investment in areas such as net zero, which is an issue we will talk about further as the meeting goes on.

I am sharing my time with Mickey Brady MP. The last paragraph in IBEC's paper is of urgent interest given the DUP boycott of the North's Executive and Assembly has created a political and administrative void, which has the potential to further damage the North's economy and the all-island economy. Perhaps we could speak to that stalemate for a moment. In the wider context, what measures and which agencies should be involved in developing the opportunities that present to us? I know the witnesses have identified some of them this morning.

A section of IBEC's paper deals with developing the macroeconomic model, which I am very excited about and have been for some time. I ask for a better idea of the timeline in that respect and where it is at. As the witnesses have said and we have said at this committee in the past, that model is absolutely critical to taking the bias out of how things are presented. It would give us invaluable information. I commend what IBEC has said. Even though it is leading on this issue with the Economic and Social Research Institute, ESRI, it is not owned by IBEC. It would be enormously valuable to all political parties and higher educational institutes, nationally and internationally, for us to be able to dig deeper and make the right decisions. I thank IBEC for that. Perhaps our guests would speak to the couple of points I have mentioned. I think Mickey Brady MP is still in the meeting so he will be able to share my time.

An Cathaoirleach

He is offline at the moment. We are trying to get him.

Deputy Rose Conway-Walsh

Perhaps he had to leave. I ask the witnesses to speak to a couple of the issues I spoke about.

Mr. Fergal O'Brien

I thank the Deputy and other members of the committee for their ongoing support for the work we are doing on the all-island economy and all of the research we are conducting. On the model, we have not confirmed a publication date. We will be finishing it in 2024. Much of the detailed technical work has been done. At this stage, we are able to run simulations of actual developments in the economy and the model is matching up with that quite well. On the basis of the data, the components of the model are being built. We are doing it sector by sector. We are looking at the labour market and the impact of fiscal measures on all of this. It is telling us what we hoped it would tell us. It seems to be working, which is positive. There is a lot of testing and further development to be done. We hope to bring forward further research in 2024 and ultimately to roll out those workshops we spoke about to discuss the model with people.

Deputy Rose Conway-Walsh

How can we, as a committee, be in some way involved in that? We have a big interest because it is central to the work we do here. Is there any point along the way that we can be involved?

Mr. Fergal O'Brien

I am very happy to engage with members on some of the workshop sessions we will do. If the committee is interested in a more technical session, we will ask members of the project group who have specialist expertise to come before the committee. I am sure they would be happy to do so.

Deputy Rose Conway-Walsh

The committee could even have a private session on the technical side of things.

Mr. Fergal O'Brien

That is a good suggestion.

Deputy Rose Conway-Walsh

That would be useful so we are all on the same page.

Mr. Fergal O'Brien

That is something we can take to our steering group and on which I am happy to come back to the committee.

The other part of the model is that it is not something we are investing in for the sole purpose of business policy and the IBEC members who would benefit from it. We see it as a significant contribution to the wider analysis and understanding of policy and economic measures across the island for all stakeholders who will have access to it.

That is very much our intention.

Mr. D'Arcy might want to talk about the challenges for an all-island economy from a political perspective.

Mr. Michael D'Arcy

As the Deputy knows well, this is a challenge. If I may assert a limited level of knowledge, learned a long time ago when studying political science at University College Dublin, UCD, it is very hard to get away from economics in the North being political. With the UK outside the European Union and the nature of the UK constitution, every item of legislation is constitutional and a lot of legislation affects business and investment. Political unionism has engaged with that idea in a very narrow framework in terms of GB-NI trade. They are aware in private of the deeper background of the wider interests of the business community, of whom there are people from the unionist background. It is unfortunate it has taken so long to resolve the GB-NI dimension but it is all there now in the Windsor Framework and over the next while, we hope, space will be available to move into that broader discussion where real choices have to be made in policy terms if Northern Ireland is to have the best of both worlds, which is possible but requires engagement with politics and political issues in a way that perhaps did not always happen in discussions on the all-island economy in the past.

I often think, as Mr. O'Brien will know given he gets a bit of it, that we are too quick to put the spotlight onto the North rather than onto our ourselves, with a view to finding out what it is possible to do here. As he said, the NDP is a very good example of this. I recall a few years ago being invited into the Department of the Taoiseach, when a previous NDP was being developed, to explain what the all-island economy was before people understood it fully and how much potential was there, because we did not count it back then. Now people understand the scope and scale of it because it is counted. As for how we move it forward from here, I am trying to be rigorous in connecting this back. A number of the areas of co-operation, as set out in the second strand, are interwoven with the future of the all-island economy. In a broader context of policy, as distinct from what certain companies do from a production-floor level up, agriculture and agrifood are clearly the future of the all-island economy and a fundamental pillar of it. An awful lot of decisions taken in regard to policy, governance and regulation relate to it. We know about the aspects of veterinary science and climate change. Look at Lough Neagh at the moment. Suddenly the spotlight is coming onto farming and farming practices that had never been questioned.

I wonder about this myself. Was Waterways Ireland not meant to be somewhat in charge of waterways? Does it have a role here or not? Look at the question of education. The ESRI has carried out so much research highlighting the North-South differentials and so on but where is the action going to be to join them up to serve the all-island labour market, which is ultimately what that is about, in both the public and private sector sense? I look at transport. I think I recall Mr. Hazzard, when he was a Minister in the Executive, giving a presentation about a previous report we had produced on waterways and he was very enthusiastic about it. He engaged at the time on the whole question of financing, but the focus has now turned to transport and rail. Roads still matter, especially in the north west, but rail matters too, so that is double the money. At a time of the stringency of the Executive budget and the challenges there, where is that money going to come from? There needs to be a bit of creativity. How is that going to be done on a joined-up basis? Who is going to manage a truly joined-up North-South project? The environment is next and I touched on the issue of climate change. I am just illustrating the connectivity that is needed. We can bring the committee a lot of information and knowledge from the firm and factory-floor level and I will be happy to engage in that, but it is important for the committee to ask where this is connected to the implementation of the agreement in the context of the next 25 years of the second strand and its operation.

The final case study is the Northern and Western Regional Assembly's report, which I have just flicked through. Again, there is mention of the Border but no mention of cross Border. The agency feels so constrained by its legislative remit relating just to this jurisdiction that there does not seem to be any freedom of thinking. Committee members will know how important that cross-Border dimension is to the development of the region and the greater north west. I am going to Derry next week to talk about this at the John and Pat Hume Foundation conference. You cannot talk about development on either side of the Border, in an optimal way, unless it is joined up. It is about trying to push the conversation into that more dynamic phase, just thinking about the future. That is somewhere this committee could play an important role.

Deputy Rose Conway-Walsh

That is why the work IBEC is doing is so valuable. It could have looked at just this jurisdiction and not had the vision to look at the all-island situation, but IBEC has shown the lead in that regard. The restrictions Mr. D’Arcy pointed out exist, but they do not prevent each of the organisations, firms and public bodies, no matter what they are tasked with, from having a vision for the future and, without taking a constitutional position, that has to look at all aspects of the all-island economy and the challenges we face as an island. It is remiss of organisations not to stretch that far and have that vision. In fairness, most people do and IBEC's work is so valuable here. Mr. D'Arcy is correct in what he said about the institutions being back up and running in the North and getting all the benefits of the PEACEPLUS project and the new opportunities that opens where it is not confined to the Border areas but is also for the local authorities throughout the country.

Dr. Stephen Farry

We in the Alliance Party recognise that the all-island economy is significantly underdeveloped and we see significant scope for improvement in that regard over the coming years. That can happen irrespective of where things go on the political and constitutional discussions that are also happening.

The Chair mentioned the NSMC from a governance point of view. In my experience as a Minister in Northern Ireland in the distant past, I always found the NSMC to be very formulaic. Like any intergovernmental body, it involved a very short meeting with the UK, more or less worked out in advance, but the areas under discussion were very piecemeal and project based as opposed to looking at a broader thematic analysis of where things could go. There is significant room for improvement in that regard. The NSMC was often the first casualty whenever political instability happened in Northern Ireland, more frequently than some of the other institutions that were later to fall.

One of the potential barriers to the development of the all-island economy relates to investment. I appreciate that Mr. O'Brien and Mr. D'Arcy have discussed the potential for investment to be more evenly distributed throughout the island and how we can go about doing that, but to what extent do the different models of incentive for investment become a problem? In the South, there is a combination of a heavy emphasis on skills and education alongside corporation tax. I would always say skills and education are the most important aspect and that the corporation tax is a further incentive beyond that. In Northern Ireland, by contrast, we have growing deficits in our education and skills investment. In the context of the current budget, we are probably not in a position to focus on corporation tax for some time and I imagine there will be a wider discussion on that down the line in Northern Ireland.

We also look more widely, with envy, at the different financial circumstances in the South, which has a very significant budget surplus at present. In Northern Ireland, we are running through a huge financial crisis.

On some of the barriers that have emerged from Brexit, the Windsor Framework provides a particular advantage in terms of the dual-market access for goods, but Brexit interferes with the service economy and things like labour mobility on the island for those who are not Irish. To what extent is a dealignment in services and labour mobility a potential barrier in determining how far things can go with the all-island economy? To what extent will problems with the mutual recognition of professional qualifications be an issue?

With regard to mindsets, how do we get both jurisdictions thinking about infrastructure investment, having regard to bigger economies of scale? I do not think it is fully happening yet in the South, and it is certainly not in Northern Ireland. Regardless of whether we are talking about the physical infrastructure or health infrastructure, we are still seeing it solely from a Northern Ireland perspective at times. I would welcome comments on those points.

Mr. Fergal O'Brien

I thank Dr. Farry. It is great to see him and I thank him for his contributions. I will comment on the point he raised on investment, and I will make a brief comment on infrastructure. Mr D'Arcy might contribute on the barriers.

On the investment issue and the various developments around investment –I am talking specifically about foreign direct investment in answering the first part of the question – there are quite a few moving pieces. Dr. Farry will be aware that, from 1 January, we are to move to a 15% headline corporate tax rate. It does level the pitch to a degree. Essentially, for most businesses it will probably mean a 50% increase in their effective tax rate, or close to it, because the effective tax rate was probably around 10% rather than the headline figure of 12.5%. However, it signifies a shift away from the importance of corporate tax generally in investment decisions and the matrix of factors driving investment decisions. Over time, it will be quite a significant development for the all-island economy and investment-location decisions across the island.

As Dr. Farry rightly mentioned, the labour opportunity for the all-island economy is by far the most significant issue. There is a genuine opportunity for us now to present an all-island offering of skills and professional opportunities for investment. Increasingly, we are getting quite close to an all-island labour market of nearly 4 million people. There is significant strength in the critical mass of that. The Irish economy has been fortunate in recent years in that operations established in it through foreign direct investment have been able to attract specialist skills from the wider European labour market. With regard to advanced and specialist operations, which reflect the nature of investment in the Irish economy now, we must realise we are not going to have all the skills in the domestic market. However, we have had the safety valve of a European labour market. Clearly, the housing situation is now affecting that significantly, and it is becoming much more difficult for companies establishing a specialist technical operation in the Irish economy to avail of the wider European labour market and have the mobility of skills. Therefore, the all-island offering of 4 million people, new ways of working with that labour force of 4 million, new ways of working and the demographic growth across both jurisdictions on the island represent something much stronger than what we see elsewhere in Europe. We have a really strong opportunity but need to co-ordinate how we pitch the skills offering. Moreover, we need to invest where we have shortcomings. Some of the practical things we are considering regarding shortcomings include all-island apprenticeship models and all-island in-work company training programmes. It is a question of how to get some of the investments happening on an all-island basis. The mindset of being able to present the offering of an investment anywhere on the island so as to be able to tap into what needs to be an improving and more advanced labour force represents a great opportunity.

I would like to make a quick comment on the economies of scale and infrastructure. In this regard, the really sharp end relates to renewables and energy. There are very specialist international players, whether in the sphere of offshore wind energy or other parts of the decarbonisation investment. Markets much bigger than the island of Ireland are attracting the capacity but the economy-of-scale opportunity associated with aligning investments on the island could be really significant in getting some of the players into the Irish market. The energy issue, particularly concerning offshore wind, is one in respect of which several players have said to us that there is a significant economy-of-scale opportunity.

Mr. Michael D'Arcy

It is good to speak again to Dr. Farry. I was wearing my political scientist hat but now I am going to wear my historian's hat. Mr. Farry's observation about the meetings of the NSMC that he went to is very pertinent. It goes back to my point that the first line of strand two refers to the totality of relationships. There was a sense that while a lot of thought and effort were put in, during the build-up to the agreement, around encompassing the totality of the economic relationship and the potential for economies of scale regarding proximity and mutually beneficial conditions, it got narrowed down too quickly in the operation of the NSMC to particular projects that we could agree on doing and for which there was money to proceed. Then there was a sense of just sticking to those ones that had been left in the text following the negotiations and not all those that had been agreed, as certain people have reminded us, in the original UK–Ireland Government framework document, which I know was based on solid research done by a whole range of legitimate entities, including the University of Ulster and the ESRI, and myself and others at the time. They were not just plucked out of thin air; they were really solid, beneficial things that would have made a real difference over the past 20 years.

Speaking to Dr. Farry in his MLA hat, I believe one of the things missing for me has been awareness in the Northern Ireland Assembly generally of the all-island dimension of devolved responsibilities and the question of where we take a decision in a devolved area that actually has an impact on the all-island economy that is detrimental to the well-being of Northern Ireland. There is very little thinking in that frame when it comes to looking at the broader picture. The response to the question should be used as a criterion to make a judgment call about individual obstacles and projects and opportunities.

If I look at the programmes for Government, I note it always seems to have been the Irish Government that had to bring the North–South dimension into play. There did not necessarily seem to be a sense in the Assembly itself, in committees and across the board, of how the all-island-economy dimension mattered to the areas of direct responsibility for Northern Ireland itself. Now we have the scale of the all-island economy quantified and research telling us a lot more about our interconnectivity. Again, I come back to energy as being the area regarding which most ordinary consumers will have the most immediate connectivity. The most important neglected area is the role of the EU dimension. To come back to the Windsor Framework and its focus on Great Britain and Northern Ireland over the past few years, everyone is neglecting the connectivity of Belfast to Brussels via Dublin, which is essentially through the NSMC. This was an area never considered when the NSMC was agreed, as we know. Does the NSMC still have a joint secretariat? What is the position on the cross-Border bodies, which are both mentioned as entities that can bring the specific issues Dr. Farry referred to as obstacles to the attention of the joint committee? Is it automatically the case that, in the absence of the Executive, the joint secretariat could not be a facilitator in this regard and involve business and other interests in engaging the democratic route of consultation to inject Northern Ireland's views, interests and concerns into the decision-making process around the framework in Brussels?

I heard Mark Durkan and others in a previous session, when they were giving lessons, talking about innovation around the agreement. There is real potential there but it needs someone to start talking about it within that schematic, as was said, where individual issues can then be placed, rather than just being plucked out one by one and we almost have to reinvent the wheel for every one of them. Certainly, for business, investment and an organisation such as IBEC across 35 sectors, it would be very useful to have a schematic by which each of the sectors here and their engagement in the all-island economy could, in a way, be a starting point as a route into policymaking and decision-making in both jurisdictions. It is about whether strand two and the North-South Ministerial Council, NSMC, provide a co-ordinating framework within that and a support to that process.

An Cathaoirleach

Mr. D'Arcy has just set our agenda.

Mr. Michael D'Arcy

Sorry. I apologise.

An Cathaoirleach

No, it is very good. I am very impressed by what he said and the energy with which he said it in pointing out where we should be. We have a lot more thinking to do. We will take up some of his ideas.

Sinn Féin MPs are next on the list. One is returning to the House-----

Ms Claire Hanna

Am I on the rotation?

An Cathaoirleach

No. I will blame my clerk. I read out the rotation but I do not have a problem taking Ms Hanna next at all.

Ms Claire Hanna

No, that is fine. I missed what the Cathaoirleach read out. I was just going by the normal-----

An Cathaoirleach

I am going by what I read earlier. There is no issue. I do not have a problem taking either. We are anxious to continue with the order we agreed but there is no issue.

(Interruptions).

An Cathaoirleach

That is fine. I just wanted to make sure the opposite argument can be made. We will take Ms Hanna now.

Ms Claire Hanna

Grand. I thank the witnesses. As the Chair said, these are very interesting ideas. We obviously have a stalemate on devolution and the UK Government being away, but very little in the way of dynamism or ideas on innovation is coming from the political parties either. These contributions are therefore very welcome, particularly macroeconomic modelling, to help us think through what is and is not possible and achievable towards potential constitutional change. However, it is a case of unless and until.

I will pick up on three matters IBEC touched on. The first is around energy and, as was said, the urgency of keeping the lights on and being in the right place and ready for climate transition as well. The flux in the market explains some of it, but what are the governance gaps in getting us in the right place to properly take advantage and be ready for that? The North-South Ministerial Council was mentioned. Strand two is paralysed so in the short term that is not a useful place to do that. Is there a way to get through that governance gap in the short term?

On higher education, in particular higher education mobility and the ease of students moving North to South and South to North, IBEC's post-GFA report earlier this year referenced the agreement stemming emigration. That is still an issue, however. In the North especially, there is a dynamic of young people leaving the island for university. Some very much want to do that but some are doing it because they cannot get a place closer to home. Do the representatives have specific thoughts on that?

On the spillover economic benefits, is there anything else IBEC thinks needs to be addressed in terms of the post-Brexit borderism, which Dr. Farry touched on, and some of the not-as-foreseen barriers that are coming up post Brexit? Related to that, how do the witnesses feel we are ready for the Windsor Framework implementation, a lot of which is coming in the next few weeks? There are bound to be inevitable teething difficulties as some of the grace periods end and some of the new mechanisms take place. Is IBEC involved in conversations about the readiness for that?

Mr. Michael D'Arcy

I thank Ms Hanna. It is good to see her again. To drill down into the energy issue, I emphasise that we are hoping that perhaps the most important contribution we can make is to prompt discussion of the joined-up picture in the first instance. It is not just about what we and the committee are doing but rather that people will actually come together, sit down and have a plan. As I said, most of this investment is coming from the private sector. The Government will be looking to the private sector to implement the changes and transformation that will deliver the targets that have been put in place, and will keep the flow of energy that is needed to keep the country's houses and households running. That is not there. That is the first thing. Fundamentally, the immediacy is that when we publish our paper and put it out there soon, there should be real, joined-up engagement by officials, in the first instance, in the absence of an Executive. Subsequently, it is to be hoped, when there is a restoration, a lot of the groundwork may already have been done. That should not just be short term but should have that longer term vision, not just to 2030 but right out to 2040. It gives space for new thinking, when people do not just presume the absence of immediate governance holds back thinking about what we will do into the future.

The second issue is to broaden the picture a little. I appreciate this is not just an island of Ireland issue. It is a these-islands and EU issue and whether there is connectivity between GB and the island of Ireland and connectivity between GB and the Continent, because we now know our gas originally comes from Norway. That brings us into the Windsor Framework context and the EU-UK Trade and Cooperation Agreement, TCA, context because energy is under the TCA. All these discussions on energy are happening under the TCA, but discussion on energy is not allowed for under the Windsor Framework. Energy is one of the areas of North-South co-operation mentioned in Article 11. Who will initiate that conversation? It is there to be done but is not happening. How will it be initiated? That is something that is very important on the energy bit.

What was the second part of Ms Hanna's question?

Ms Claire Hanna

The second part was about higher education mobility, particularly North to South.

Mr. Michael D'Arcy

This is a very difficult issue. The Economic and Social Research Institute, ESRI, reported on the low level of cross-Border movement. I did some research nearly a decade ago for the Institute of Technology, Sligo. We thought the change in fees would prompt more cross-Border movement but it did not happen. Perhaps too much of the discussion is buried in the second level piece and not enough is focused on the third level piece and the piece beyond that. In other words, where are people going when they come out of third level? Then you start looking at the all-island labour market. The gap here is the fact we are not sufficiently connecting up the skills conversation and the all-island labour market conversation. The place I look to most is the north west, in fairness, and what has been happening between Letterkenny and the University of Ulster and what has been driven there in the past to underpin the needs of the development of local firms and companies and, indeed, in the public sector, not just in the private sector, by more interactivity between the institutions there. More particularly, courses in Letterkenny help people in Derry and vice versa. There has not been enough of that.

The Royal Irish Academy has some very high-level ideas about the whole of the greater north west that would potentially incorporate about 12 or 13 different institutions on both sides of the Border. How will that be connected with what the committee is asking us about how business will develop and how the economy will be developed in the region? Then we can get down to the skills, such as the obvious ones to do with climate action, climate change, etc. To address the matter of apprenticeships, however, there are almost no real conversations about how we offer someone on either side of the Border a joined-up pathway that firms can link into on the output side and schools and institutions can link into on the input side. I am sorry to keep going back to this during this discussion, but education was one of the areas under strand two of North-South co-operation.

Will that conversation take place in that context or will business have to push it forward?

Mr. O'Brien has often made the point about the potential for Skillnet to be rolled out on an all-island basis. He has made the point about the fund that is available here that business has paid into. Is it €1 billion or €1.5 billion that is sitting there waiting for something to do and a use to be found? Could we use that as a model to fund a roll-out of Skillnet, in co-operation with the agencies in the North to do so effectively? There is much opportunity here but it takes work. It does not happen organically but has to be made to happen and it takes work to make it happen.

Sorry, I have used up everyone else's time by speaking too much and do not want to use up Ms Hanna's time.

Ms Claire Hanna

That is okay. As the Chair said, Mr. D'Arcy has helped us set our agenda in terms of innovation. I thank the Chair and Sinn Féin colleagues for letting me come in. I was planning around the usual rotation.

An Cathaoirleach

Apologies about the confusion earlier. I call Mr. Hazzard.

Mr. Chris Hazzard

I thank the Chair and Mr. D’Arcy. I could sit here all day listening to the talk about the priorities going forward. I agree entirely about energy and the need for a national infrastructure fund. There is no doubt about it. When in comes to energy, there has been a poverty of decision-making among decision-makers across the island about what we need to do. That aspiration exists within the policy framework and the industry but getting down and delivering it is another matter. I eagerly await the report and the further work on energy.

We have mentioned today and in previous sessions with other witnesses how the world of work is changing dramatically. Often what is missing in that is the voice of the workers. Increasingly in this State, across the island, across Europe and further afield, there is dislocation and alienation of workers once again. They do not feel they have a stake in how economies are changing all around them. How does this play a part in the work that needs to be done?

Today there has been more conversation about climate change as we progressed but there is no getting away from the fact the Irish economy, both this State and all-Ireland, is among the most extractive, resource-intensive economies in Europe and has one of the worst problems with the concentration of wealth. It is not sustainable or democratic enough. We have talked of economic shocks coming down the line and climate change will be one of the big shocks inevitably coming down the line. We talk of building a more dynamic all-Ireland economy but surely we need to build a much more sustainable economy, increasing resilience to and mitigation of climate change.

We talked about Lough Neagh today and there is not a single watercourse on this island with a good rating. It is the same in Britain and is a problem across the board. Any economy going forward will have to deal with these issues. I would welcome reflection on some of those remarks.

Mr. Fergal O'Brien

On the point about social dialogue, in IBEC we have been strong advocates for two elements of this. One is an effective social dialogue model in the Irish economy. Right now, we do not have that.

We have had some advancements through the Labour Employer Economic Forum in which we work with the trade unions and Government to address labour market issues. There have been some successes from that. We made particular contributions through that process during Covid. We were able to agree protocols to allow people to continue to work safely in essential operations and facilitate people's return to work through the various phases of Covid. That forum is significant. We are looking at things like pensions. We are looking at the all-island labour market through a subgroup of the forum with the trade unions, including trade unions from Northern Ireland.

That has been quite positive but in many ways it signals the missed opportunity. We have been strong advocates for some time for a genuine all-island social dialogue model to address these issues through the social partnership structure. Much is happening at a European level in terms of the minimum wage directive, which will impact on consultation of employees and so on. Significant and fast-moving developments are happening there. We see significant opportunity in the all-island social dialogue model. We are proponents of it because we see the benefits from the limited structure of the Labour Employer Economic Forum and the all-island dimensions within that. We would like to see that broadened out.

Mr. Hazzard raised an important point on sustainability. Ms Hanna asked about the spillover benefits we are not seeing come through in the all-island economy. One where we will continue to see traction for a number of reasons is the sustainability agenda. IBEC members and other businesses in Europe are entering a new phase of sustainability reporting. We have a lot of new legislation coming from Europe such as the corporate sustainability reporting directive and the corporate due diligence reporting directive. These will accelerate how companies think about and report on sustainability. One of the things companies find most challenging is the scope tree of the wider ecosystem and their supply chains. Many companies are looking at making their supply chains more sustainable in the broadest sense. People tend to think of the environmental element of that, but the social, human rights and worker rights dimensions are becoming incredibly important for business. We already see our members looking at restructuring their supply chains to drive for a stronger sustainability agenda in their operations. That will bring opportunities for the all-island economy. We will see positive spillovers emerge and sustainability will be a catalyst for much of that.

Mr. Michael D'Arcy

The call for more social dialogue on all all-island basis was made most recently by Danny McCoy at the Centre for Cross Border Studies' George Quigley memorial lecture in Belfast earlier this year. He specifically referenced section 19 of the agreement in strand two which calls for the setting up of a civic forum.

History hat back on, I attended the sessions organised by the Government here to kick-start that in the absence of co-operation from certain parties in Northern Ireland. There was a little too much of aspiration about it and a little confusion about why it was there. It should not be difficult to figure out why there should be a social dialogue now. We have serious social problems to be dialogued about.

One we have not mentioned this morning is integration. If we were innovative about the application of the spirit of the Good Friday Agreement and the time and effort put into reconciliation, that is a short step from integration. It is pretty much the same principles being applied in a different context. If we had an all-island social dialogue, perhaps we could broaden our understanding of the scope of the application of the agreement to the peacefulness and coexistence of different ethnic groups and people in society. This is important here but is also important in Northern Ireland because that plays right into the development of economic activity in the North in the absence of population growth. You need people to fill in the jobs that will be brought by new investment. We know here, having been that story, that it is about bringing new people in. It is not always as welcoming because of traditionally embedded problems in the North, but there are also issues around welcoming in the South. That is a concrete shared issue that politics and civil society have to grapple with. Should they be grappling with it separately? Should they not talk about it in a joined-up social dialogue? Should that joined-up social dialogue be on an all-island basis? That was one of the important things Danny McCoy was pointing to. Do we need a formal calling of a civic forum to do that under strand two or can we apply the principle and processes to convene such a conversation at some place in some way?

That is worth considering.

To return to sustainability and bring it back to something I have mentioned a few times on underpinning governance, many of the climate organisations rightly call for sustainability but optimum climate action on the island is all-island action. How is that going to be delivered, other than by effectively joined-up governance? We need to look at enforcement, investment and all the other issues that follow from that when it comes to operational facts on the ground, and how we actually make it work.

Coming back to Mr. Farry's point about the schematic, we need that broader schematic in some way, even for business to plug into and to help deliver a better outcome of that wider dimension and picture. Mr. Hazzard has raised an important point, but I think that perhaps we can push the conversation into a more dynamic phase and get it going.

Mr. Chris Hazzard

Mr. D'Arcy spoke about social dialogue. Is there a model on the shelf that we need to look at? Is it done elsewhere?

I forgot to ask about the national infrastructure fund. Everybody automatically thinks of rail. Obviously, the all-Ireland rail review is in our heads, but are there priorities that business would like to see that are perhaps not being talked about as much? We have had great advancement in the North on broadband coverage, for example, and the roll-out of all different types of broadband. That has been fantastic for rural businesses. Is there something within that type of digital sphere that we need to look at, and not just the hardware of rail, road or whatever it might be?

Mr. Fergal O'Brien

On the question of social dialogue and whether there is a model elsewhere that we should look at, I think we had a pretty good model here with the original advancement of social partnership. I do see it, predominantly in our conversations, with the focus on the labour market. There is lots of other engagement in consultation that tends to happen, but there is a significant risk that if it becomes too broad, it will lose purpose. I think the trade unions would share our view that for a labour market engagement and the social issues that flow from those labour market issues, the model that we started in 1987 was a pretty good one. It lost its way, but it was a pretty good model. We are quite an outlier in a European context. Most of the IBECs of Europe that we work with are almost all engaged in some type of social dialogue in quite a substantive way. We see that as being beneficial.

We spoke a lot about sustainability and the just transition elements to that. Mr. Hazzard touched on the digital transformation in his second question. Just transformation is what we are talking about in terms of the disruption that is now going to come into the world of work with AI and advanced digitisation. That is going to need a sophisticated dialogue model to hold it together. That is something that is not going to respect the lines of jurisdictions.

Mr. Chris Hazzard

Absolutely.

Mr. Fergal O'Brien

I see a big opportunity for that in terms of an all-island engagement and a real purpose for social dialogue on an all-island basis. We think the world of work has changed since Covid. It is nothing compared to what we are about to embark on and the scale of disruption we will face.

On the investment priorities, we are big supporters of rail, as Mr. D'Arcy has said. We have not finished an all-island road structure that is in any way effective in terms of the movement of people, workers or goods across the island. Decarbonisation is the one area in which we see very significant shortfall in terms of what is already in the investment plans.

An Cathaoirleach

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Deputy Brendan Smith

I apologise for missing the earlier part of the meeting. I had another committee meeting to attend and I was asking questions in the Dáil Chamber.

I welcome the work IBEC has done on the all-Ireland economy. We had the opportunity to attend a number of events earlier in the year as part of the peace and prosperity campaign. They were very impressive. The organisation got out a message about what has been achieved over the past 25 years, and what more we can do. I welcome the fact that IBEC's research programme is North-South and east-west and focuses on Ireland's international relations as well. It is very important that it encompasses all of that.

Mr. D'Arcy made a comment in regard to Lough Neagh. He said there would be a spotlight on agriculture. I have concerns about the unfair spotlight that is placed on agriculture in this jurisdiction in regard to climate change, emissions and all of that. A lot of the narrative here is a lazy and ill informed. I do not have enough detailed knowledge of the Lough Neagh situation, but it is deplorable to learn how much the lough's water quality has deteriorated. To my knowledge, and I read it in The Irish News or another Northern publication, raw sewage is a big contributor to the deterioration in the water quality of Lough Neagh. I read that in some publication. I do not have enough knowledge to know what all the contributing factors are, but I must say that agriculture in this State is a huge and important player on an all-Ireland basis. There have been huge advances in this State over the past 20 years and more in farm facilities and in ensuring agriculture has a productive and sustainable system. We must always bear that in mind. So many people, and I am not talking about IBEC, are negative and throw out ill-informed commentary about agriculture and food production. At the same time, they talk about the need for food security. Food security means food production as well. We have to ensure we protect the food production base.

Mr. D'Arcy mentioned the recent report of the Northern and Western Regional Assembly. I did not get a chance to read it, but I am very disappointed to learn, as Mr. D'Arcy has said, that there is no cross-Border development. That assembly represents quite a number of Border counties, where our everyday existence is dependent on us communicating, travelling and working with one another. We should be cognisant of the work done by regional groups in the worst of days. There are groups such as the Irish Central Border Area Network that encompasses some of Cavan and Fermanagh and that central Border area, with the east Border region of Newry, Mourne and Louth, in the Cathaoirleach's home area, as well. In the north west, there is the North West Region Border Group that encompasses Donegal, Derry and Strabane. Those groups have done a lot of very good work over the years. I recall, in my early days in politics, the work of my colleague Senator Niall Blaney's late father, Deputy Harry Blaney, who was a great proponent of cross-Border co-operation, and that of the late Senator Paddy McGowan of Donegal. They were talking about cross-Border development in the darkest of days on this island. On every occasion that we have the chance to talk about the opportunities for more all-Ireland development, we should recall the efforts of those people in very difficult times.

I want to raise a concern that I have mentioned previously. We all want to see the all-Ireland economy grow. There are natural strengths to the Dublin-Belfast line. It will grow, regardless of the economic climate, and that is their good fortune. Thankfully, today in the north west we have the Letterkenny Institute of Technology and the University of Ulster Magee Campus in Derry, which are powerful drivers for economic development in that region. It is good that the north west has those advantages. However in the central Border area, the counties of Cavan, Monaghan and Fermanagh will face particular challenges. I am putting a question. I am sure IBEC has a lot of interaction with some of the major players in economics and business. We have to be mindful of the requirement that we grow all of the Border region as equally as possible. Thankfully, there are huge strengths in my own area in the construction product sector, engineering and agrifood, and we want that to continue. However, we have to be extra conscious that we do not have the advantage of big population bases or of having third level education institutions in the area. There are good colleges of further education that are collaborating with institutes of technology and some of the universities, but we are at a certain disadvantage in that we do not have that scale of population to help development thrive. In the discussions of IBEC's own work or in the research that it is doing, I would like there to be some focus on the need to be mindful of that and to put forward some suggestions as to how the potential of the central Border area could be grown, structured and assisted.

The last thing we want is a complete imbalance on the island. We do not want the central Border area lagging way behind the other areas, and the best of luck to the east coast, north east and north west if they can grow rapidly and deliver more jobs, employment and prosperity to people. We all want to see that going on but we do not want to be left totally behind either. Maybe there has to be some positive discrimination, because at the same time, we are not far from Dublin or Belfast but we do not have our own big population to drive economic development or to attract the third-level institutions. Those are just some random thoughts.

We have discussed the opportunities and challenges many times. The work IBEC does is extremely important at a time when there is much negativity about the Good Friday Agreement. We had the trade unions here last week and they were outlining the deficiencies in the provision of education, health services and social services because we do not have functioning institutions. One of the areas Mr. D'Arcy talked about was the North-South Ministerial Council, which is a huge miss as well across all sectors. Again, so much work could come from those institutions if they were up and running. I compliment the witnesses on their work. It is very important to get that positive message out about the potential to grow the Northern Ireland economy further.

Mr. Michael D'Arcy

Absolutely. One of the risks I always face is that I try to give it the big overview and miss out something really important and be misunderstood. The Deputy is absolutely right. Agriculture was in my head. Dare I go back to the sacred text that speaks about animal and plant health? That is the only specific area for co-operation. Of course, that underpinned the single epidemiological area, which was agreed and which helped us deal with the threats from off island that would have undermined the agrifood industry to which the Deputy referred.

Of course, as we found out during the debate around Brexit, it is very much joined up on a basis of supply chains and productive capacity. The whole thing is now a single all-island entity. That is what I was referring to, but I suppose I jumped ahead a little bit too quickly in terms of the challenges now faced from the broader issues of climate change and demands of transformation. There are risks involved. I think it was Mr. John FitzGerald who used to write about how if there is culling of animals in one jurisdiction and there is not in another, that is going to play havoc. We spent decades trying to do a deal with pigs and sheep that crossed the Border countless times under the old Common Agricultural Policy, CAP, regime so, again, the absence of co-ordination and coherence to underpin the existing supply chains that are bringing so many jobs and employment and well-being across the board is a challenge. However, there is no gain in saying there are challenges to that without asking what role the agreement has or looking at structures and principles in processes in the agreement to ensure that is done coherently and effectively, balancing the interests of all concerns both sectorally and on both sides of the Border.

In terms of the Border region itself, Ms Pamela Arthurs and I were on the same panel for the Centre For Cross Border Studies annual conference last week. As the Deputy knows, I am very acquainted with the issues. I am also involved with PEACEPLUS. That has another €1.1 billion that is going to the six Northern Ireland Border counties but also to the functional area because, frankly, sometimes I think the development of the Border area has to also take place in the wider context. How can it be done in a way that plugs into the energy and effort and brings it into the Border region in a way that is needed to lift the Border region? The Deputy's colleague mentioned the mid-Ulster region recently and the fact so much economic activity takes place there. How is that going to be spread out? Where is it going to be spread? Is it Cavan or Monaghan? Is Monaghan a part of that already? If it is a part of that region, where do Sligo, Leitrim and Mayo fit in?

To me, there is always a challenge in how we do this, which is why I will bring the Deputy back to clusters in sectors rather than just geographic spaces, particularly today when transport in the regions is so important. What are our strengths in our particular central Border region? What are the sectors that are going ahead and are the most progressive? How can we develop local supply lines and supply companies with SMEs supplying those? Are they there already? Could their activities be expanded outward into the wider all-island economy? That area perhaps is local services or, as the Deputy said, the co-operation between the local authorities in the region in the absence of there being a North-South Ministerial Council. I suppose that is what I was referring to more with the north west in that this report was composed because it was a pitch entirely to central government here. Therefore, the highlights were always related to what the priorities were here. If, for example, we had a more dynamic North-South dimension, perhaps a big feature of the report would have been a pitch into the North-South Ministerial Council context as well as the central government context.

Maybe the bit I am missing is that we have all very good political relationships between regional authorities in the area, so in the absence of the North-South Ministerial Council, should there be more bottom-up co-operation at local level which drives more interaction with Government, economy, business, civic partners, etc.? Should it always be driven by just the availability of money? Can it be done because it is a good thing to do it for policy reasons and not just because there is a pot of money available? I refer to local services, provision of health, education services, etc. There is much disconnect between responsibilities. Another issue mentioned in the agreement is waste, coming back to environmental issues. Again, it is in the absence of that joined-up conversation and thinking on multiple levels that I am just using the report, maybe unfairly. I very quickly scanned the report but I understand it was pitched more at a national policy level and the national development plan, NDP, here rather than that cross-Border dimension. As I said, there were perhaps references in the detail but I was unfairly highlighting it. It is more to get at my point that when we get into the next phase of our North-South discussion, the next phase is the development of the all-island economy. That is why I highlighted those points.

An Cathaoirleach

Okay. I think everybody has made their-----

Deputy Brendan Smith

I will make one comment. The witnesses might be conscious of the work, research and collaboration they would have with business and enterprise. The needs of the less populated areas could be given due consideration because there would be sufficient people and skills to service any industries or businesses.

An Cathaoirleach

I thank the witnesses for their contributions today. Their knowledge and enthusiasm is catching because we tend to get stuck in the grind of the problems in the North and the political impasse and we cannot see around it. The witnesses are suggesting we think outside the box and the rigid structures that are not working to find a new way of getting to the same outcome, which is better for everybody on the island. The points they made have been very important. We will reflect on them as a committee and get back to them about the most important of the issues they raised that we should or could tackle and what is practical, realistic and what we can actually do. They certainly opened our eyes to look again at the Good Friday Agreement and see what more we can do and, as was said, be an agent for change or action in the current difficult situation.

If it is in order, we will adjourn and go into private session as we have a small bit of business to do. I thank the witnesses again for their contributions.

The joint committee went into private session at 11.28 a.m. and adjourned at 11.38 a.m. until 9.30 a.m. on Thursday, 12 October 2023.