Dr. Seamus McGuinness:

There is quite a lot to get through. Since Professor Doyle is the expert on the subvention, I will not talk much about it other than to say the consensus is that it is relatively trivial given the size of the overall public sector budget of the Irish State. On the more subtle matter of what subvention indicates, it is a number that can change. It is not static; it is dynamic. The subvention exists because there is low productivity. We have outlined some of the areas where productivity is lower.

That leads on to the Senator's question about the potential benefits of reunification. If reunification can address the productivity deficits in education, industrial policy, exportation and infrastructure, the benefits will be self-evident. The question is whether moving to a different constitutional framework will deliver that change. If there is to be reunification, it needs to be managed. It needs to be managed in a way that addresses the productivity problems. If these are addressed through a properly designed policy framework during a transition period, arguably subvention will become irrelevant at the end of that period, at the point of transition. That relates to Senator Black's question on the industrial policy that Northern Ireland should pursue. It is not necessarily something that is within its grasp at the moment. Ireland's industrial policy has been such a success because it has had such an educated workforce. Ideally, one would want to see foreign direct investment in services, pharmaceuticals and IT at the same level in the North as in the South proportionately. That will be difficult to achieve until the educational deficits we have identified are plugged. Education, and access to education, is a major driver of foreign direct investment.

To go back to the question on whether subvention in relation to the debt would remain an issue after reunification, Northern Ireland has its share of UK assets, both movable and immovable. Arguably, the liabilities and assets could be traded against each other in any negotiations on reunification.

On the minimum wage and productivity, we have a very successful minimum-wage policy in Ireland but we have regional differences in productivity. Having regional variations in productivity is not a barrier to the minimum wage. The minimum wage is to provide minimum earnings floor, particularly for marginalised workers. Therefore, it is not really driven by productivity considerations.