Mr. Michael Burke:

I will comment to the two issues that were addressed to me in part. It was suggested that the private sector in the Northern Ireland economy is underdeveloped. I agree with Dr. Patterson that the public sector in the North is, with one very important exception, pretty efficient. I have already mentioned the important exception, which is the outsized level of the civil service and defence system there. It is twice the size of the equivalent system here as a proportion of GDP. I think that is a function of the political circumstances in which it operates. One would expect that would not be the case in a unified Ireland.

The private sector is underdeveloped. I would like to speak about one of the key problems in the history of the state. At the outset, the private sector there had a real role in the world. At that time, it was part of the British Empire, which was an enormous market, and it had a very specific industrial and shipping role within that. The British Empire has gone and there is no new role for the Northern economy. Successive Governments have attempted to overcome that by offering inducements to the private sector to invest. I suggest that the word "DeLorean" should be on the headstone of that policy. It really does not work. Public sector investment is required. Public sector investment does not work unless there is private sector investment as well. One cannot have public sector investment on its own. There is no reason on earth for the private sector to carry on investing in a tiny economy like that. The only way it would make sense would be if it were part of a larger unified economy with access to the European Union. It does not make sense to pursue the other policy I have mentioned. We have tried it and it has failed.

That relates to the issue of harmonisation of taxes and the devolution of fiscal powers in the North. There is an awful lot more heat than light generated by this discussion. It seems to me that the terms "harmonisation of taxes" and "devolution of fiscal powers" boils down to 12.5%, as if there are no taxes other than corporate taxes and that taxes have no purpose other than the tax rate, which is completely untrue.

I refer to corporation tax. Britain has a system whereby one can carry forward and carry back losses for, I understand, five years. That is unique in advanced industrialised economies. It is about what is taxed, rather than the rate at which it is taxed. The devolution of fiscal powers should be about what will be taxed, not simply the rate of tax. In all the jurisdictions we are discussing, the contribution of corporation tax is abysmally low across all fronts. Corporations do not pay much tax in any jurisdiction.

We should think about the whole gamut of taxes and their devolution, which I very much support in regard to the North, what we use them for, what we are taxing and what we are trying to achieve with taxation. I agree with Dr. Patterson. All of this makes sense only in a unified Irish economy because the required investment will not be achieved in a tiny economy like that in the North.