Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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We resume on a discussion on the all-island economy, with a view to generating recommendations on how to enhance economic co-operation and alignment across the island. I welcome, from the Nevin Economic Research Institute, Dr. Tom Healy, director, and Mr. Paul Mac Flynn, economist; from the Enterprise Research Centre at Warwick Business School, Professor Stephen Roper, director; and Dr. John Bradley, principal at the Economic Modelling and Development Strategies consultancy.

Before we commence, in accordance with procedure I am required to read the following. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.

I remind our guests that presentations should be no more than five minutes in duration. Members have already been supplied with the presentations submitted. I invite Dr. Tom Healy to make his presentation.

Dr. Tom Healy:

I thank the committee for the invitation. As the committee will be aware, the Nevin Economic Research Institute, NERI, is organised on an all-island basis and reflects the support we receive from trade unions across the island of Ireland and the Irish Congress of Trade Unions. It seems to us that the area of research on the cross-Border or all-island dimension of both economies is a vital area that has perhaps been neglected in the last ten or 20 years.

Paradoxically, it may also be connected to the peace process because aspects of cross-Border co-operation became more normal and the saliency of addressing particular issues on an all-island basis became less evident. At a professional level, it seems that cross-Border exchanges among economists and analysts is not what it could be. There was more professional engagement at various levels 20 years ago. I wished to make this point at the outset because it is also welcome that various bodies, including the Centre for Cross Border Studies, which has existed for many years and, more recently, the management school in Queen's University Belfast, have engaged more with this aspect of the all-island economy. However, much remains to be done. We are joined today by other research colleagues who have been working in this area for many years.

One of the benefits of focusing on the all-island economy is that it identifies how we fit into a global economy as a small, open, regional economy with significant exposure to international events and patterns of trade and investment. However, the extent of exchange trade between the Republic and Northern Ireland is still limited, for example, in manufacturing goods and exports. I am aware that the committee received a presentation from InterTradeIreland. We estimate that the value of merchandise goods exports from South to North does not exceed 2.1% of the total in recent years. This percentage has decreased a little since 1996. There has been a modest upward trend in cross-Border trade since 2009, but it is limited in terms of merchandise goods. Unfortunately, we have less insight into trade in services. Tourism has developed and grown, more so in the direction of North to South. There are still barriers of one sort or another, established paths of dependence and habits of exchange and trade that mean that there are untapped opportunities.

The energy market is more organised as an all-island reality, but there are still major opportunities. I wish to mention the importance of investment in natural resources and renewable energy and the opportunity to develop further critical investment in these areas. As an island and taking both economies together, we are exposed and vulnerable to international shocks in the price of energy and the supply of fossil fuel imports. We need to reduce our dependence over time. This calls for strategic investment in new forms of energy supply. As a country and island, we have considerable resources in our oceans and wind compared with other parts of Europe. These should be developed.

Regarding the possible value of oil and gas explorations off the coast, the collapse in crude oil prices represents a problem. None the less, a suggestion that is worth exploring further in the long term is that we should re-examine the terms and conditions applied to oil and gas exploration. It may be possible to channel some of the economic benefits and tax revenues, if there are commercial finds, into some kind of fund that could be organised on an all-island basis so as to invest in the areas that I mentioned. This would require long-term, courageous, strategic thinking that takes us beyond the limited scale, such as it is, of cross-Border co-operation.

Mr. Paul Mac Flynn:

I thank the Chairman and members for the opportunity to contribute to this discussion. I will begin by giving a brief overview of the two economies on the island and how they have each experienced the recession. Both jurisdictions underwent a substantial economic downturn following the financial crash in 2008. While the experience of property bubbles and bank failures is common to both, the scales of externally imposed austerity and outcomes in the labour market have been very different. For instance, house prices in Northern Ireland increased substantially in the two years prior to the crash before reaching a peak in 2007. By contrast, the increase in prices in this State followed more of a growth trend from the previous decade, which led to a situation in which we have proportionately more people in negative equity in the South, or in much deeper negative equity, compared with the situation in the North. Northern Ireland's property prices are still 50% below where they were before the crash.

In terms of the labour market, while unemployment reached a peak of 13% in this State, it peaked at just above 8% in the North in early 2013. In respect of the banking sector, financial institutions in Northern Ireland faced similar losses to those in the South, but the cost of this was borne either by the British or Irish Government, depending on where the institution was headquartered.

Northern Ireland has experienced a significant cut in Government expenditure since 2008 in line with the rest of the UK, but its experience has not been of the same scale as the rest of that country. Austerity measures are estimated to have totalled some 18% of GDP in the North, compared with a UK figure of 9%. The North saw the largest fall in incomes of any UK region over the course of the recession and is now the lowest-income region. Incomes in the Republic also fell significantly, but the downward trend began much earlier, in 2008 and 2009, compared with 2010 and 2011 in the North and the rest of the UK.

In terms of barriers to the all-island economy and increased trade, the currency issue has become much more current given recent fluctuations. As Dr. Healy mentioned, the trade in manufactured goods was roughly equal between both economies until 2001. Trade from the Republic to Northern Ireland dropped off significantly after that, however, aided by a sharp depreciation in sterling in 2002. Exchange rates then stabilised until a further significant devaluation of sterling arose in 2008 and 2009 following the financial crash. The advent of the euro has meant that the exchange rates between both jurisdictions on the island are less sensitive to changing economic conditions in each jurisdiction. While that has advantages, particularly for this State, in terms of increased trade to the rest of the European Union, it also has had an unintended consequence. The most recent depreciation of the euro following quantitative easing by the European Central Bank highlights the remoteness of such decisions.

Areas close to the Border, on either side, have maintained some of the highest levels of unemployment and lowest levels of productivity in Ireland and the UK. On the idea of introducing a development zone, I am concerned that the experience of such zones, referred to as enterprise zones, in the UK has not been convincing. There is scant evidence that favourable tax treatments or increased capital allowances have made any inroads into encouraging economic development. Perversely, where enterprise zones were considered to have been moderately successful in the UK, it was found that rather than creating increased economic development, they merely drew in economic development that would have transpired in surrounding regions.

Therefore there is a danger that focusing on supply side initiatives in one particular geographical region may ultimately create areas of economic underdevelopment in surrounding regions. However, there are opportunities to harness cross-Border co-operation to enhance the Border region, particularly with regard to public services and in the important areas of education and skills, in order to remove a possibly false limit on economic growth.

With regard to a job creation strategy, NERI has been producing research on the need for a significant rethink of industrial policy in both Northern Ireland and the Republic of Ireland. In particular, the current trajectory of policy would indicate that the Northern Ireland Executive intends to attempt to compete with the Republic of Ireland in terms of job creation and foreign direct investment. I refer in particular to the current plans to devolve and reduce corporation tax powers in Northern Ireland, which would signal a dangerous shift away from all-island co-operation and could lead to a dangerous race to the bottom in terms of policy. The Northern Ireland economy has suffered years of under-investment in both the public and private sectors and consequently, any claims that Northern Ireland could emulate the perceived success of the Republic of Ireland economy in the 1990s by simply reducing corporation tax is misleading.

Professor Stephen Roper:

I am pleased to be here and to be reunited with one or two old colleagues around the table whom I have worked with previously. I am professor of enterprise at Warwick Business School in the UK. At Warwick I lead the Enterprise Research Centre, or ERC, the UK’s national centre for research on small and medium enterprises. The ERC is a collaboration between five UK universities - Warwick, Aston, Imperial, Birmingham and Strathclyde - and is funded by the UK Government, the UK’s major banks and one or two of our targeted agencies, including Innovate UK. Therefore, we have a very strong strand around innovation and exporting.

My interest in the all-island economy is long-standing. Before moving back to England in 2003 to take up a chair in Aston, I worked for nearly 20 years in Northern Ireland in economic research centres. I worked with Dr. Tom Healy for a while and I have written extensively on the all-island economy and particularly on issues related to innovation and innovation promotion. I also had the chance to spend time at the ESRI in 2003 working on some issues around the broader Irish economy.

I welcome the committee’s focus on trying to build stronger synergies across the all-island economy. This all-island perspective on policy-making is long overdue, in my view, and it is a welcome development. I also welcome the focus on trade, but I think that any focus on all-island trade - on cross-Border trade - is somewhat misplaced. Instead, I wish to see the committee focusing much more broadly on emphasising exports from the island of Ireland rather than on exports within the island and on exploring mechanisms that can be put in place to strengthen businesses and collaboration between businesses to enable them to innovate and export from the island. Therefore, I wish to make some remarks about the mechanisms that might be adopted for building co-operation between businesses to enable them to become more effective innovators and exporters. In some ways, this reflects closely the original objectives outlined in the Bradley Best report, which seem to me to have been rather lost in more recent discussions about the cross-Border enterprise zone, the objectives of which have become very much less clear.

Recent research has emphasised three findings. First, innovation and exporting are very closely related. Small businesses that export grow more than twice as fast as those that do not, while internationally active SMEs are three times more likely to engage in innovation of products and services. These two things go together. Second, innovation is very much enhanced where firms work in partnership with each other or in partnership with external organisations.

That innovation then provides the basis for exporting. Indeed, one study we recently published, based on data from the Republic and Northern Ireland, suggests that for small firms with fewer than 50 employees, approximately 40% of the value of their innovative activity derives from partnerships rather than from knowledge that is developed within the firm. Those external links are hugely important for small firms in driving innovation. For large firms it is approximately 25%, for smaller firms it is approximately 40%, so that is quite a big difference. Of course, the Border zone, particularly in the central Border, is dominated by those types of smaller companies.

The third big picture research finding over the last few years is that productivity gains arise when innovation and exports come together. In a sense what we want ideally is to encourage firms to be innovative and then to export the results of that innovation. We have taken some useful steps already in promoting innovation across the island wide economy through things such as the innovation vouchers programme, a cross-Border initiative between Enterprise Ireland and Invest NI. However, we can do more and there are three particular areas where we might consider more activity.

The first is brokerage. This is the idea that small firms often find it very difficult to identify the partners that they might use for joint innovation and, potentially, joint export initiatives. We could do more to broker partnerships between small businesses to generate those things. In the UK we have been playing with policy initiatives such as growth vouchers and creative credits to try to form these innovative partnerships.

The second theme, and it follows from the first, is that we could prioritise support for collaborative innovation. Typically, in the past we have supported, through Enterprise Ireland and Invest NI in the North, innovation by individual businesses, but increasingly we have learned that it is partnership or network based innovation which is really most important and provides perhaps a more successful basis for exports. Prioritising that type of collaborative innovative activity might be more important.

Third, I believe supply chains offer an opportunity. We have a number of supply chains which have a significant cross-Border dimension. They offer the opportunity for the upgrading of SMEs, innovation along the supply chain and the potential for building a stronger innovation and export base both in the Border region and in the wider Irish economy.

Dr. John Bradley:

I am very honoured by the committee's invitation to the meeting to discuss issues related to the all-Ireland economy. Starting in the late 1980s, I have worked on many aspects of North-South economic and business relations and the island economy. My mentor in this area was the late Sir George Quigley who, together with Dr. Liam Connellan of the then Irish Business and Employers Confederation, IBEC, first established the notion of all-Ireland as a legitimate area of research and policy action.

I guess the main reason I am before the committee is that in 2012, I co-authored with my American colleague, Professor Michael Best, a report for the Centre for Cross Border Studies entitled Cross Border Economic Renewal: Re-thinking Regional Policy in Ireland. During this work we spent time getting to know the cross-Border area, talking to stakeholders and visiting a series of entrepreneurial companies. The lessons that we learned highlighted the weaknesses of strategic thinking in the area of regional development in both jurisdictions and the urgent need to join up thinking on regional development policy with enterprise development policy in areas of the island characterised by peripherality, rural demographics and the complication of the policy fault line between North and South. I look forward to discussing these issues with the committee.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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I thank the contributors. I invite members to make their contributions and ask them to confine those contributions to questions to our guests. Also, they should indicate to whom they are addressing their questions.

Peadar Tóibín (Meath West, Sinn Fein)
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Cuirim fáilte roimh na finnéithe agus gabhaim buíochas leo as ucht na cuir i láthair. This is the second session we have had with different stakeholders and academics giving their perspective on North-South enterprise.

In general, most individuals have given a view that there has been a diminution of emphasis on cross-Border development or partnership over the last number of years for a number of different reasons. There has also been a lack of measurement of the engagement and of the relationship that exists, as mentioned with regard to services in the presentations by the witnesses. That sits beside the fact that there is obviously a shocking level of poverty, economic disadvantage, unemployment and emigration both North and South within the Border region. We also see that one of the major organisations, IntertradeIreland, has had a significant cut in funds, more so than any other enterprise organisation on the island of Ireland. If one speaks to anybody, they will say that cross-Border partnership and an all-island economy are good things, and one will hear an awful lot of lip service with regard to the issue. Before I move to questions to individuals, I want to ask a general question. Is it the perspective of the witnesses that there is such lip service? Is there institutional inertia on both sides of the Border with regard to actually taking those steps necessary to build on an all-Ireland economy which everybody says could bring enormous advantages to all citizens on the island?

Mr. Paul Mac Flynn talked about Border enterprise areas and, if one likes, simply taking enterprise from one area and putting it into another. There is a current view that the Dublin section of the island is nearly overheating with regard to development, and even the NERI report in 2014 suggested that very few jobs had been created outside the Dublin region. If that is the case, displacement of some level of that economic activity to the Border region could be a good thing, to a certain extent.

Professor Stephen Roper stated that synergies and partnerships were key to both innovation and exports. Are there any examples of what could be done? For example, IntertradeIreland plays a role in those types of synergy. Given the infrastructure of both the Northern state and the Southern in terms of enterprise, what are the practical steps that could be taken to achieve that? I like the idea of having a conversation about exports from the island rather than having a narrow focus on this.

Professor Roper said that supply chains have a cross-Border aspect. Can he put some meat on the bones of what he means by supply chains and what is the reality of them? With regard to brokerage in Ireland, how would Professor Roper suggest we develop more brokerage in the landscape of Ireland?

Dr. Bradley spoke about the dichotomy between the IDA and Enterprise Ireland that is referred to in the report. Is he suggesting that there is a necessity to unify Enterprise Ireland and the IDA in the delivery of their functions? All of the enterprise agencies on the island seem to be functioning in competition with each other, which seems incongruent, given the idea of partnership and innovation. The witnesses might address those questions.

Mr. Paul Mac Flynn:

In terms of the general point about all-island matters falling off the agenda, I think it would join a long list of longer-term solutions to economic growth that have fallen off the agenda in recent years. In both North and South, in policy terms, we have turned to short-term fire-fighting measures. I absolutely agree that the focus on an all-island economy is a more long-term strategy for growth.

In terms of the enterprise zones, I suppose the Deputy pointed to one way of seeing it, but I think it is a fairly harsh way of trying to achieve regional balance by seeing it as a zero-sum game.

My point was not to say that particular regions should not be singled out for greater attention but that there is a tendency with the model of enterprise zones to focus on supply side measures which tend to encourage the shifting of activity rather than demand side measures in parallel with infrastructure that tend to increase the total amount of economic activity.

Peadar Tóibín (Meath West, Sinn Fein)
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What kind of demand side activity?

Mr. Paul Mac Flynn:

In terms of the Border region, perhaps State investment taking a greater and more strategic role. I did not get a chance to mention it, but in terms of developing an enterprise strategy, which is something we have talked about for the entire economy, State research and grants, North and South, could be aligned towards a common goal for particular sectors across the island. Regional growth involves identifying where particular sectoral or industrial strengths lie within particular regions, and then deciding to make a long-term commitment in terms of focused capital spending or research grants towards a goal of growth in a particular sector. There is a danger that we fall into the trap of thinking that all that is needed is the cutting of red tape and of tax allowances and then such activity will magically appear in the Border region. We may end up with no increase in activity overall.

Professor Stephen Roper:

I would like to echo one of Mr. Mac Flynn's comments. There is potential for greater collaboration between Enterprise Ireland and Invest Northern Ireland in terms of the targeting of State support for innovation and exporting. That does not need to involve direct support in terms of grant support for businesses, but it could involve the provision of export market information and information about partner networks or partners which might enhance brokerage.

As part of the innovation strategy preparations in the Department of Enterprise, Trade and Investment in the North, the potential for an open innovation centre in Northern Ireland was defined. It involved a range of activities around trying to build the awareness of open innovation among businesses, that is, building demand and trying to build the capability within small companies to work together to deal with the innovation and exporting which might come from that. That built on a range of other examples of best practice across Europe, where universities and cities have established intermediary organisations, such as Fraunhofer in Germany, to develop that kind of connectivity between firms. Not all firms will play, but a significant number may do so.

On the supply chain point, I had a couple of things in mind. One is that there are quite a number of logistic networks which spread across the Border. I was also thinking in terms of agrifood, where I guess there is quite a lot of cross-Border trade as part of those kinds of supply chains. I am not an expert on that sector, but it strikes me that trading links are very often the basis for innovation collaboration. It provides a good starting point because some trust has already been established between the businesses involved.

Dr. John Bradley:

I do not understand where the idea of unifying the IDA and Enterprise Ireland might have come from in my writing. The problem with the cross-Border region is that it is a region of low population density with very few urban centres and foreign firms tend to locate around large cities, such as Limerick, Galway, Cork and Belfast. Enterprise Ireland has the more difficult task of creating indigenous businesses in regions with a low population density. When they were broken up some ten or 15 years ago, it was a very logical break-up.

I was asked about competition between the Southern and Northern agencies. This is very natural as they are competitors and it is like asking two runners in a race to co-operate as to who will win. One will always do one's best to win. This, however, is where the tragedy of InterTrade Ireland comes in. That could have been an embryonic cross-Border development synthesis. It could have been to cross-Border industrialisation what, say, the European Coal and Steel Community was to the European Union in that it could have evolved similarly. For political reasons, into which I will not go but with which I am sure members are only too familiar, this never happened and is not going to happen.

As policy-makers sitting in Dáil Éireann and Seanad Éireann, Members tend to look at the world from the perspective of a policy-maker. Senator Quinn, who looks at the world from the point of view of enterprises, knows that the world looks very different from that perspective. I am told that the recent initiatives by IBEC and the CBI in Northern Ireland are resulting in a massive increase in cross-Border interest on the part of firms. This is taking place entirely within the private sector and is not being hindered by the policy dysfunctionality between North and South, although it is not being helped by it either. What is needed is to encourage the private sectors, North and South, to take on the responsibility for evolving and co-operating and not to imagine that policy-makers are ignorant of what is going on, waiting for the private sector to push them in one direction or another. Our experience and our research show that businessmen are very clever and know more about the business environment in which they work than policy-makers. Policy-makers sometimes make policies that are inappropriate to the conditions of business and we found some glaring examples of this in our research.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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Would Dr. Healy like to comment on the first question that was asked about institutional inertia?

Dr. Tom Healy:

This comes from a keen sense of urgency and the priorities at regional and sub-national levels. In recent times, especially following the crisis of 2008 onwards, it seemed the priorities were to create employment, to maintain investment and to grow exports without paying as much attention to the regional aspect as was previously the case. There is evidence that some regions, particularly the north west area of the island, have lost out in respect of some of the welcome jobs recovery since 2012. It is still early days but the growth rates are less than impressive in some parts of the west.

The pattern of labour force participation has developed somewhat differently in some regional areas, including the Border areas where there is a high level of what some economists call "labour market inactivity". This is perhaps not the best term but it simply means that people are not in work or seeking paid work. It is a complex issue which reflects the structure of the population and many other factors but it is a concern because not only are there disparities in income per capita, as Mr. Paul Mac Flynn has pointed out, there is also a higher level of dependency on fiscal transfers within each jurisdiction, something which maybe gets lost in the bigger picture.

There is a need to focus on particular areas of vulnerability, which seem to be particularly acute as one moves westwards from Armagh, up around Fermanagh and into Donegal, where there are pockets of considerable deprivation and disadvantage.

Seán Kyne (Galway West, Fine Gael)
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I welcome the panellists. This is a very interesting discussion. I want to ask Dr. Healy about the importance of the single European market for energy. What positive consequences could it have for the all-Ireland economy? Mr. Mac Flynn mentioned the changes to corporation tax and said it would be misleading to think Northern Ireland would emulate the Republic by just cutting corporation tax. Surely if it was able to attract corporations that would otherwise come to the Republic, that would have a negative impact on the Republic. Can he comment on that?

One of the issues that will come to the fore in Northern Ireland in the next couple of years is the issue of a British exit from Europe.

Professor Roper might be able to comment on the benefits or otherwise to the Northern Ireland economy if it was to leave and whether they are more pronounced there than in other regions of the UK.

Dr. Bradley talked about the regional balance. Coming from Galway, we are obviously conscious of the growth and development of the Dublin region vis-à-vis other areas, notwithstanding a great deal of positivity in the west. In his summary, Dr. Bradley mentioned, in respect of the future of the Border region, a dependency through regional compensation for perceived threats and weaknesses. What exactly does that mean in terms of compensation? What type of compensation is he talking about?

Dr. Tom Healy:

The Single Market is probably the best area in which progress can be made in encouraging co-operation. It makes good sense and, as Deputy Kyne mentioned, the impact of European rules and regulations is a natural area in which co-operation and co-ordination can take place. One example of that, which is obviously a long-term issue, is harnessing wind and solar energy, particularly ocean-based sources of energy, and the possibilities of transferring and moving some of that energy source across the island, given the excess demand for electricity, particularly on the island of Great Britain. We should also be mindful, as we talk about an all-island perspective, that there is also an all-islands perspective, and all of this fits together naturally. What Northern Ireland and the Republic have in common in particular is a very problematic dependency on fossil fuel imports, so any initiative, either at European level or commercially here, to rise to that challenge and shift the dependency on traditional sources of energy, is very welcome. We are conscious of the role of the ESB in terms of Northern Ireland's electricity supply. Costs are an issue, which partly reflects the density and nature of the population in Ireland.

I will now give a graphic example of how public and private investment has, in some cases, not been keeping pace with economic development. We have had a huge surge forward in terms of road transport in the Republic. The M1 motorway, for example, has made a huge contribution to shortening the distance between Belfast and Dublin compared to 20 years ago. However, it is notable that the carriages on the Enterprise express train between Dublin and Belfast date from the early 1990s, so when I travel on the train, as I do regularly, I cannot charge my phone. There are no sockets as the train is from the pre-smartphone era. Wi-Fi is also pretty unreliable. Anyone who uses the transport between Belfast and Dublin, particularly in some areas which I will not name, can assume the coverage will go down. From a business point of view, Wi-Fi is important in every area of the country, including areas of the west and north, from the perspective of tourism, services, and activity in all sectors. That is an area where public and private strategic investment could play a crucial role.

Mr. Paul Mac Flynn:

In terms of corporation tax, from a Republic of Ireland point of view, at first glance it would seem the competition would be to the detriment of foreign direct investment here in the Republic. I do not think that would be the case. The greatest fear about the corporation tax move in Northern Ireland is that it will not work in that Northern Ireland will get control of the rate of corporation tax, but will not get control of the base of corporation tax, which is one of the key policy tools down here. More than that, Northern Ireland has significant ground to make up in terms of basic infrastructure and skills with regard to competition between the Republic of Ireland and Northern Ireland. To touch on what Professor Roper will probably talk about, if a foreign multinational corporation looking to create its European base had to choose between Northern Ireland and the Republic, it would look at the insecurity that would be created by an EU referendum and decide to put its money on the safe bet.

I put my money on the safe bet. As for worrying about corporation tax down here, I worry more that it would not succeed in Northern Ireland anyway.

Professor Stephen Roper:

I am grateful for an easy question. The UK economy as a whole will be facing a period of marked uncertainty over the next couple of years. As Paul Mac Flynn has suggested, that will affect the UK's ability to attract new investment and the willingness of UK business to invest in certain situations. However, it is also worth saying that Northern Ireland is the least connected of the UK regions to Europe in terms of trade. The southern regions of England are much more strongly connected. The implication, therefore, is that if the UK were to leave the EU, any potential downside which may arise is unlikely to have quite the impact on Northern Ireland that it would have perhaps on southern regions of England. This is to take a downside view. Of course one might argue that we could end up in a kind of Norwegian situation, in which case it is probable the benefits on the upside would also be less in the case of Northern Ireland. In a sense, the vulnerability of Northern Ireland to the UK's leaving the EU is probably slightly less than that which might occur and the potential upside effects are probably slightly smaller than in southern parts of England.

Dr. John Bradley:

The Deputy raises a very interesting and complex issue about regional imbalances. If one measures imbalances between the Irish counties in terms of output per head or GDP per head, these disparities are much bigger than if one measures it in terms of household disposable income per head. There is much more equality there because the social welfare transfer system transfers income from the rich regions to the poor regions. However, that creates dependency, so although it is socially very desirable in the short run, we have examples in Europe such as the Mezzogiorno region in southern Italy, where this kind of dependency can last forever. If I may say something that might be controversial in Northern Ireland, Northern Ireland is a very good example of this within the 13 regions of the UK, because it is the most dependent region and has been for decades, yet development has not been stimulated. The point I was making was not that there should be some horrifying austerity process to deprive the poor regions of their income support; rather, it was to draw attention to the fact that this does not drive enterprise, entrepreneurship and production because it has to go with other measures.

I will conclude by adding an anecdote. I can leave Westport at 5.15 a.m. on the red-eye, get into Heuston Station at 8.28 a.m. and be in the centre of Dublin at 9 a.m. The earliest I can leave Dublin for Belfast is 7.35 a.m., getting in at 9.45 a.m., which means I am in the centre of Belfast at 10.15 a.m. How idiotic is that for the island transport system?

Dara Calleary (Mayo, Fianna Fail)
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What is the earliest time one can leave Belfast for Dublin?

Mr. Paul Mac Flynn:

At 6.50 a.m.

Dara Calleary (Mayo, Fianna Fail)
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When does one arrive in Dublin?

Mr. Paul Mac Flynn:

It depends. After 9 a.m.

Dara Calleary (Mayo, Fianna Fail)
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That proves another argument - that everything is centred in Dublin.

Feargal Quinn (Independent)
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Dr. John Bradley referred to stimulation. Could we stimulate in a much broader way the opportunities in tourism between the two? One of the criticisms in recent times has been the fact that the wonderful Wild Atlantic Way stops short of the Border. There is also the new tourism initiative called Ireland's Ancient East, which starts short of the Border. If there was one opportunity for all-Ireland co-operation, it surely would be tourism. We have a tourism body to do that but we do not seem to be using it to nearly the extent to which we should. I ask the delegates if they have any comments in this regard.

Dr. John Bradley:

It is an interesting point, and we deal with it in our report. The cross-Border agency is not a cross-Border body like the six of which InterTradeIreland is one. When we approached this in our study, because we have a chapter on tourism, we thought this was great and that there was integrated tourism planning on the island but we found they are two separate strategies. We managed to create some type of extraordinary agency that has a Belfast focus centre and a Dublin focus centre, but there is no genuine strategic co-operation between the two. Other people will claim that there is, but when one talks to people on the ground there is not. That is extraordinary. If one cannot solve the tourism challenge on an all-island basis, what hope does one have of solving the enterprise development problems? I worry about this country sometimes and the ability of policy-makers North and South to genuinely co-operate.

Professor Stephen Roper:

I am not sure that I have much to add, other than to state that I believe there is potential. It is very rare to talk to somebody in England who is doing an all-island trip. They are either going to Kerry or to the north coast, but rarely would they do all of the island. In part, that might come back to the state of public transport between Belfast and Dublin.

Mr. Paul Mac Flynn:

To add briefly to that, there are certainly opportunities in the tourism sector but it is worth noting that, particularly in Northern Ireland, the tourism sector has some of the highest instances of low pay. If we are talking about increasing living standards in aggregate, we would have to tackle the existing situation in the tourism industry, North and South, in terms of pay before putting too many hopes in it.

Dr. Tom Healy:

There are practical initiatives that could be taken at local level, possibly involving different local authorities. Examples of that could include cycleways based on old railway tracks. There is potential in that regard, certainly in the Carlingford peninsula area. In promoting activities such as those it might be possible to direct tourists naturally from the Mournes to Carlingford and from Carlingford to the Mournes, and from Derry city to Gweedore and from Gweedore to Derry and Strabane. There are also the relatively under-discovered areas of Fermanagh, Roscommon and the like. However, it requires joined-up thinking and strategic approaches.

Certainly, the appreciation in sterling against the euro of approximately 10% in value since December has created a real additional difficulty for southern people coming to Northern Ireland as tourists, whether as day tourists or longer stay tourists. One suspects that it will really impact on Northern Ireland tourism, retail and other outlets this summer.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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As there are no further questions, I thank the witnesses for attending the meeting today to engage with the committee. All of the contributions and submissions will be considered in the context of the committee's report on the topic.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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I welcome the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, and his officials to the meeting to discuss the all-island economy and how economic co-operation and alignment across the island might be enhanced. I invite the Minister to make his presentation.

Richard Bruton (Dublin North Central, Fine Gael)
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I thank the committee. I would like to introduce Mr. Stephen Curran, an official in the Department who deals with this area and with international investment.

I welcome the opportunity to speak to the committee. As members may know, I meet twice yearly, in the North-South Ministerial Council, with the Northern Ireland Minister for Enterprise, Trade and Investment, who up to now was Ms Arlene Foster. Mr. Jonathan Bell is taking over that role. We jointly oversee the work of InterTradeIreland.

I know InterTradeIreland made a presentation to the committee. InterTradeIreland is a remarkable body in terms of what it is doing. I am sure it explained what it does and that its ratio of added value to expenditure is very strong. In its last three-year programme up to 2013, it set a target of a jobs impact of 500 but it reached 1,900. It has set a job impact target in its 2014 to 2016 programme of 3,500 and in the first year it hit 1,900, which is past the halfway mark. InterTradeIreland runs innovative and targeted programmes which fit well within the portfolios of the bigger bodies, both North and South. I am sure members know about Acumen, which is dealing with cross-Border business. It also has a Go-2-Tender programme, which encourages companies to combine and bid for procurement contracts. The programme Elevate seeks to support exporting. It has a very interesting technology transfer programme under which it places graduates North and South in one another's companies and has the support of access to third level colleges. It has been innovative in the operation of its programmes. Not only has it faced the general efficiency reduction in terms of budgets in the past number of years, but more recently it has faced a cut because of the difficulties in putting together the budget in Northern Ireland. We have been very keen to try to prevent this from impacting on the work that is being done. I think it will be able to maintain its programmes this year through reserves. It has gained great acceptance, North and South. The good work it does has been very fruitful in building mutual confidence among Ministers. We have very good exchanges and I hope we can build on that.

The investment under the INTERREG programme is very significant. The INTERREG programme did not just cover enterprise, for which I have responsibility, but also transport, tourism and health. It resulted in 28 projects coming forward. Some of these innovative projects involved the local enterprise office structures and similar ones in Northern Ireland. Together they have focused on initiatives to support micro-enterprises but also on the flagship projects of the science parks in Derry and Letterkenny and the enterprise centres in Omagh and Carrick-on-Shannon. Those who visit these centres can only be impressed. The new programme will shortly have its first call. I know money for research and innovation has been set aside where people see an opportunity to build connections between the private sectors, North and South, through collaborative work. That has been an important theme of much of the work. InterTradeIreland is trying to develop collaboration in the research and innovation areas and this can go deeper and will foster collaboration at the level of enterprise. I hope it will stimulate work in this area. There are two streams of funding. The smaller of the two is for SMEs to get involved in cross-Border research and innovation activity, which is very sensible, and the large block of money, €52 million, will be aimed at the creation of centres of excellence, which would undertake research in two specific areas, health and life sciences and renewable energy.

It is very sensible that we move towards that. We are a small island and we cannot be expert at everything. Where we can have centres of excellence through combining resources, then that clearly is helpful.

The committee will know, from InterTradeIreland, about the success of the Horizon 2020 collaboration we have in place. It has proven itself in that the jointly sponsored programmes have been more successful. They have enjoyed a higher success rate in drawing down funds than stand-alone projects. We also have the US-Ireland Research and Development Partnership, which is in its ninth year.

Members have mentioned issues related to a possible British exit from the European Union. Clearly, such an exit would be a challenge in any consideration of the all-island economy, not least because of the contribution of European funding but also because, as two small trading economies that operate side by side, it is in both our interests to have barrier-free trade and investment. Naturally, there is concern, North and South, about an exit. We are keen to assist the process of negotiation that is emerging in order to try to get a satisfactory outcome that can be put to the British people in due course, as indicated by the new British Government.

In terms of North-South trade, there has been some significant improvement in recent times. This year to date, we have had 12% growth in Irish trade to the North, which is an increase on the previous year's rate of 8% and that of 3% in the year before that. We have seen some growth. Both economies are seeing some recovery in employment. In the North, there was 1.7% growth in employment last year and in the South, it was just over 2%. There are some signs of vibrancy in the two economies, which bodes well for the future.

The committee has considered wider development zones and so on. We are watching that debate. One of the things that we are doing, as the committee will know, is looking at weaker regions and analysing how to maximise the performance of our regions. We have committed to enhanced activity, with €150 million in the IDA property-based area. We also have committed to these calls within the regions. We are open to innovative calls coming forward from community-based groups, local enterprise offices and others which would be collaborative. We are consciously providing loadings in favour of innovative collaboration. There is a potential in these calls to see initiatives come forward that would tap into the potential of the cross-Border region.

I will leave my comments at that and will take questions or deal with issues members would like to put.

Peadar Tóibín (Meath West, Sinn Fein)
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Go raibh míle maith agat, a Chathaoirligh. Gabhaim buíochas freisin leis an Aire as ucht an cur i láthair atá tugtha aige.

I appreciate the opportunity to discuss this issue with the Minister. Views may differ but they are part of a constructive discussion to improve the project and feed into the committee's report. We have had a great opportunity to discuss this matter with a large number of academics and trade union activists, etc. They have fed information to the committee on all-island trade. The Minister might give his perspective on some of the issues they raised. One of the issues raised today was that the Border region has suffered from peripherality, rural demographics, location and from being a policy fault line. Peripherality and rural demographics are not for us to fix. However, the policy fault line and how it functions were identified as problems. It was stated that they have led in the direction of dependency, both North and South.

Another problem mentioned was that with the problem of the recent troubles having largely been resolved, there was not the same level of urgency around cross-Border affairs. That was a perspective expressed by an academic and I would like to hear the Minister's view on same.

The view was that there was more engagement with these issues 20 years ago than today.

The Minister mentioned the statistics for trade North and South. A statistic we received today was that, when compared with the total value of merchandise exports from the Republic of Ireland, manufactured goods exports dropped from 2.1% to 1.4% between 1996 and 2014, although there has been a modest trend upwards since 2009. Therefore there has been a fall overall in terms of trade from the South to the North. It was also mentioned that there was a lack of data on cross-Border service trade. In that significant sector of service, we did not have the measurement tools to work that out. The tragedy of industry in Ireland was discussed earlier by Dr. Tom Healy, as well as the policy dysfunction North and South. It was stated that recent initiatives by IBEC and CBI had resulted in a massive increase in interest on the part of cross-Border firms, almost despite policy development. We heard some very simple things. For example, we heard from one academic that the Dublin to Belfast train does not arrive in Belfast until 9.45 a.m. Although this is not specifically in the remit of the Minister, a tourism body was created that did not have a genuine strategic synergy. The reason for the report is that there was more engagement 20 years ago, as well as the reduction in focus currently and the shocking levels of unemployment, poverty and emigration.

InterTradeIreland, which the Minister mentioned, is a fantastic organisation. I worked on one of those projects discussed by the Minister, but it has suffered severe cuts. We had recommendations from the North-South Retail Forum, which was set up by Retail Excellence Ireland and its Northern counterpart. It considered that a North-South structure for retail was necessary. Its understanding, from the Minister's perspective, was that it was not necessary and that there could be a discussion about it. I would like to get an understanding of the Department's view, given that everybody believes that North-South co-operation is a good thing. Everybody speaks of the benefits of an all-Ireland economy as having positive outputs. A large number of those who have engaged in the process so far mentioned that we are retrenching rather than progressing on the issues of an all-Ireland economy, all-Ireland trade, developing those synergies and the practical elements of working together with our Northern counterparts. What is the Minister's view on their engagement and how can we solve this? Is it just inertia or, as one of the witnesses said, is it that governments are fire-fighting due to the crisis? Has it fallen down the list of priorities, or there is something worse involved?

In regard to the Border development zone, there is a serious problem. As we may have more time than expected due to the lack of participants, I will leave it at that, and perhaps I might be able to speak again.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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Before I invite the Minister to respond, it might be helpful if I read a quote from Dr. Tom Healy of the Nevin Economic Research Institute, to which the Deputy referred. He said:

In my professional experience I have noticed a diminution of interest over the last 20 years or so among economists in relation to all-island economic matters, as evidenced in the relative lack of exchange, thematic focus and appearances of various conferences and events.

It was economists to whom he was referring in that context.

Richard Bruton (Dublin North Central, Fine Gael)
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God protect us from those fellows.

I do not agree that there is a policy fault line. Looking at the hard numbers from our perspective, the IDA's performance in the Border region has resulted in an increase in employment of 21% in the past four years. That is a strong performance by any standard. There has been a 9% growth in terms of Enterprise Ireland's performance. More than 600 companies are supported by Enterprise Ireland and there are 77 IDA-supported companies. The region has its strengths and we are seeking to play to those strengths. As the Deputy will be aware, from the perspective of the IDA, we are copperfastening those strengths with an investment in advanced facilities in Letterkenny, Dundalk and Sligo. From our perspective, we are putting down a hard commitment to create a magnet for growth in the Border region. There is not a policy fault line.

Clearly, in terms of cross-Border collaboration, the presence of InterTradeIreland and its success, although it has faced financial difficulties in recent years, is a very tangible expression of the sort of practical collaboration we can build. We have had successes in research and development and in the placement of individuals in companies, with people of acumen facilitating cross-Border trade. We have good examples of companies that, for the first time ever, were able to go across the Border and build an export-oriented base from which they grew more strongly. Those are the most tangible areas. What we are trying to do in the next round is to ensure more of that occurs and that the collaboration between companies is deepened to get it more embedded.

Deputy Tóibín remarked on the proportion of our trade that goes North. He is right in that undoubtedly there is untapped potential there. That illustrates the value of these programmes. That is occurring in the overall context of a diversification of Irish trade away from the UK generally. We have consciously sought to diversify our trade base. The Deputy is right in saying there is more potential for trade with the North. It would be good if we could get more traction on the examples given. There have been some very good cases.

Our move to establish local enterprises offices within the local authorities will hopefully mobilise the capacity of the local authorities. There is a good deal of cross-Border interaction between local authorities. I hope that putting resources into making those offices a first-stop shop, promoting innovation within them and now having competitive calls in which they can participate, will result in new thinking in this area. In any of our regional strategies we are trying to promote new thinking and new collaborations out of what has been done in this period. The Border region has done pretty well. It is one of the stronger regions in performance terms in the recovery period. We need to continue to build on that but to look to our strengths. We have some fantastic companies there and we can build on their strengths.

On the issue of setting up new structures such as a retail structure, I do not think new structures are what we want. InterTradeIreland is a good structure, it is delivering North and South and it has real programmes. If there are initiatives that need to be developed, let us spin them out there. Clearly, if retailers want to form a structure of their own in the way CBI or IBEC has formed one, that is to be encouraged, but whether we want to set up structures additional to InterTradeIreland at this point would be open to question. It is better to manage-----

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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I want to bring Deputy Tóibín back in.

Peadar Tóibín (Meath West, Sinn Fein)
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I have a supplementary question for the Minister. The general view that a policy fault line exists there is on the basis that there is no synergy with regard to North-South policy developments, policy implementation or capital infrastructure development.

InterTradeIreland is always held up as the solution in this sphere. However, the organisation is almost 20 years old and, as the Minister indicated, the INTERREG programme dates back to 1990. This is not a dynamic space in terms of the development of synergies. What is required is back-to-back policy development, of which Tourism Ireland is a perfect example. The Wild Atlantic Way and the Ireland's Ancient East route both stop at the Border.

The joint committee heard interesting evidence that innovation, exports and key pathways to trade arise from partnerships and the brokerage of partnerships. The Minister stated that if organisations would like to get together they should do so. The committee, on the other hand, is trying to understand what can be done to institutionalise and enforce synergies from a policy perspective, as opposed to allowing them to develop almost despite the existence of the committee. We want to be the engine for the development of synergies, rather than a neutral observer. There is adequate and detailed evidence to support the view that innovation and exports are developed from partnerships. What practical actions are taking place in policy development synergy, North and South, between the two Departments?

Richard Bruton (Dublin North Central, Fine Gael)
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I disagree with the Deputy's suggestion that InterTradeIreland is not a dynamic body.

Peadar Tóibín (Meath West, Sinn Fein)
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That is not what I said.

Richard Bruton (Dublin North Central, Fine Gael)
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The Deputy stated that we were not in a dynamic space, but I believe we are in a dynamic space. InterTradeIreland exceeded its employment target by 50% in 2014.

Peadar Tóibín (Meath West, Sinn Fein)
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The organisation is 20 years old.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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Please allow the Minister to continue without interruption.

Richard Bruton (Dublin North Central, Fine Gael)
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We are trying, through the activity of this body, to have an economic impact. As I stated, it exceeded its employment target by 50% last year and is well past the halfway mark for its three-year target. As such, it is having an impact.

The areas of activity to which the Deputy referred could not be more relevant. For example, InterTradeIreland is helping small companies to start their export journey by trading North and South, developing collaboration in research and development and assisting companies in bidding for research funding. Under the regional strategy, we are encouraging collaboration across regions and asking for proposals in this regard. These types of competitive call provide opportunities for creative developments to emerge. We have established North-South links between local authorities and we are investing resources in developing stronger economic performance in the Border regions. Good activity is taking place in this area.

Deputy Tóibín indicated that there is an element of institutional staleness. We did not have cross-Border institutions for many years, and building confidence in them has been a task. Now that confidence has been built, good work is being done, and Ministers review practical programmes in this area all the time. We also share information about issues such as access to finance and how initiatives we are introducing are working. Shared learning is taking place in a dynamic space.

Peadar Tóibín (Meath West, Sinn Fein)
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The Minister and I are both from County Meath, and while I appreciate his argument, it is akin to my arguing that Meath football is dynamic because we beat Cork in 1987. The establishment 20 years ago of InterTradeIreland should have been followed by the creation of ten or 15 organisations, bodies or institutions. InterTradeIreland is still being held up as the greatest achievement in the development of cross-Border trade.

The Government is talking about 20-year blocks in terms of the development of an all-Ireland economy, rather than saying, "Well, this is our plan." What institutional connections in terms of policy development do the local enterprise offices have with their counterparts in the North? How often do they meet? Is it regularly? There are particular groups within County Down and County Louth, including the east Border innovation group, but there is no momentum in terms of the development of policy either in these small institutions or at ministerial level.

Richard Bruton (Dublin North Central, Fine Gael)
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First, I cannot remember in recent years Meath beating its target by 50% in any given year.

Dara Calleary (Mayo, Fianna Fail)
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Unless they had the referee with them.

Richard Bruton (Dublin North Central, Fine Gael)
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The Deputy is turning a blind eye to what is happening. There is genuine good performance and people are making solid impacts. I do not have access to the collaboration of local enterprise bodies but the existing INTERREG bid had joint applications and that is the sort of process we encourage. In our latest regional call I will encourage collaboration because anything that can tap into a wider range of expertise or get collaboration going is to be encouraged.

One must be practical in terms of the limits of institutional growth. There are two legislative systems in place and people must agree to any evolution. That would have to be negotiated at an institutional level.

Peadar Tóibín (Meath West, Sinn Fein)
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Is there disagreement?

Richard Bruton (Dublin North Central, Fine Gael)
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I do not say there is any disagreement but clearly this is something that would have to evolve on both sides if there is to be additional institutional collaboration. I am not up to speed on the collaboration in the tourism area but I am aware that Ministers meet regularly in respect of tourism North and South and there has been progress in the area. The Deputy would have to talk to the individual Ministers concerned. Enterprise Ireland has practical supports and there is access to Enterprise Ireland programmes for companies which want to participate. Provision has been made in that regard. There is an openness to collaboration.

Peadar Tóibín (Meath West, Sinn Fein)
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How many-----

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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Deputy Tóibín should stop interrupting. I want to bring in Deputy Calleary now.

Peadar Tóibín (Meath West, Sinn Fein)
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I understand. I am not interrupting, but to be honest, I do understand-----

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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It is quite difficult for the Minister to make his contribution.

Peadar Tóibín (Meath West, Sinn Fein)
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I do understand that.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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The Minister should be allowed to make his remarks and then Deputy Tóibín can respond. I will not prevent the Deputy from responding.

Peadar Tóibín (Meath West, Sinn Fein)
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No, I understand that.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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I urge the Deputy to exercise a little self-control.

Peadar Tóibín (Meath West, Sinn Fein)
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Sure. A Chathaoirligh, this is not an effort to have a divisive, belligerent conversation; it is simply and genuinely to have a flowing conversation on the issue.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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This is an Oireachtas committee and there are rules. Does the Minister wish to proceed with his response?

Richard Bruton (Dublin North Central, Fine Gael)
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I think there is always room for additional initiative in this area. What we are doing ourselves is trying to evolve our regional policy with a number of new tools we have put out into the field. This is an experimental period and I am definitely interested in seeing if they can evolve and if we can get involvement collaboratively across the Border. That would be very good for those initiatives and would add to them. I am open to new ideas but institutional development is very much high politics, whereas what we are trying to do is to get practical collaboration at an economic level to build the connections to exploit the potential that clearly exists, build our export base, get people thinking in terms of trading and using that as an opportunity to build employment North and South. That is what we are trying to do in practical ways.

Dara Calleary (Mayo, Fianna Fail)
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I apologise to the Minister. I missed his opening remarks as I was welcoming the new Member. I would probably go in the same direction as Deputy Tóibín. Perhaps it is a political issue. I get a sense, not just in enterprise, that the Government’s mindset stops at the Border. Perhaps I am building on Deputy Tóibín’s contribution in saying that while InterTradeIreland is very successful, its executives are frustrated, as are experts in the field, about the level of budget cuts being inflicted on the agency. Its ability to deliver on its mandate is being choked.

Before the Minister came to the meeting we heard examples from the transport area, which is not the Minister’s remit, but it is enterprise-related. The earliest train from Dublin to Belfast leaves at 7.30 a.m. The Wi-Fi is tricky on it and there are no charging points on the train because the carriages are so old.

Were it the Dublin to Cork route, there would be a hullabaloo about it. That does not speak of an all-island approach. The Government has dropped the ball on the Dublin-Derry road and on the Narrow Water bridge. The Wild Atlantic Way has been phenomenally successful and has been particularly successful in getting economies going such as those along the Border, that is, small rural economies, by giving them a chance to get a share of the tourism market. While we now have the latest version of that, the name of which I keep forgetting-----

Peadar Tóibín (Meath West, Sinn Fein)
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Ireland's Ancient East.

Dara Calleary (Mayo, Fianna Fail)
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Ireland's Ancient East. The point is that everything is wild until one reaches the Border or everything is ancient until one reaches the Border. While I acknowledge that the Minister will state it is political and there are cross-Border institutions, where is the push? Where is the impetus and where is the sense of the Irish Government, which is the Government on which one depends, pushing beyond that Border and pushing everything possible from beyond that Border? Where is the push coming in respect of enterprise? While the Minister has commented on the potential of a BrExit, will he reflect on this again, if he does not mind? What work is under way in his Department both in respect of the consequences of that and from an all-island enterprise point of view?

As for the LEOs, are there milestones in their service contracts with the Department about cross-Border co-operation or does the Minister leave it to them to try to do it as it may fit? In general, I refer to enterprise infrastructure. For instance, there is the ongoing issue about the credit guarantee scheme and its extension to cover banks that are exiting the market. This is a cross-Border issue because one of the banks causing the trouble has its headquarters across the Border. What kind of work is under way there? I get a sense that the Border is limiting the Government in a way that no Irish Government should be limited.

Richard Bruton (Dublin North Central, Fine Gael)
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Obviously, there is the Border, so North and South operate in two different jurisdictions with different Parliaments to which they are answerable. This clearly is a reality and what the Government has built is cross-Border institutional collaboration which it has turned into the channels it considers are best for driving real change. Consequently, there is significant collaboration on the research area, innovation, exporting and cross-Border placement of people from colleges to build those connections. This is highly practical. Yes, in recent years there have been efficiency economies expected of InterTradeIreland, and that has been true of most State agencies. This year, as members are aware, there is a particular problem with budgeting in the North. While a number of parties are involved, the consequence has been a deeper cut than the one that was agreed originally between the Departments of Finance of the two jurisdictions. A deeper cut is being made there, and while we are managing to live within it thus far, that is a particular budgetary fallout that has occurred as a result of the discussions going on in the North on their budgets at present.

However, there is a tangible record of success in this regard. One might state this is something on which one can build more quickly, and one hopes this will be the case. The Government is trying to build a stronger regional strategy and to put in place institutions that can be more collaborative. The local enterprise offices are in a position with their partnership or, if one likes, their parentage within the local authority, albeit under a service level agreement with the Department, whereby it is possible to promote collaboration as it delivers success. However, I would not be doing my job unless I set targets of delivery, and in any competition for resources the Department will be running, it will wish to see an impact. Consequently, just because there is collaboration between individuals does not mean it will get them an automatic buy. The Government will wish to ascertain that such collaboration is producing something genuine in terms of output. As this is the approach the Department takes, when people are competing for funds, it must be about the impact on the things that matter to people, such as whether they can promote more trade, more innovation, more start-up hubs and, ultimately, more jobs. I have been very impressed with some of the legacy. I visited The Hive in County Leitrim, as I am sure has the Deputy, and it is a very exciting and good operation. The investment in science parks in Letterkenny and Derry has significant potential.

We are funding a great deal of research collaboration, particularly through SFI, in the context of Horizon 2020, which has €80 billion in funding resources. We are attempting to corral such collaboration, North and South, to try to win more of the resources available under Horizon 2020. We are working in a very practical way to try to maximise what we can achieve, both through the institutions and by means of the opportunities that exist.

Institutional development is a bigger political issue and the Deputy must recognise that negotiations relating to it need to be carried out in a particular way. We are promoting the tools that can be used to generate more practical collaboration. If there are new ideas that we might test, we would be very keen to do so. To be fair, some of the collaboration that has already taken place here has gained recognition internationally as constituting best practice in the context of cross-Border collaboration between two jurisdictions. What we are doing is recognised internationally as being very innovative. I accept that more can be done and it is hoped we will develop our activities further. However, the Deputy should not pretend this is not a successful model. It is recognised internationally as being such a model, but I accept we can do more. We will be very keen to try to protect the resources available to InterTradeIreland, and obviously that is a-----

Dara Calleary (Mayo, Fianna Fail)
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I genuinely do not doubt that it is successful. However, I get the sense that the Government is resting on its laurels and is not willing to recast that success. InterTradeIreland is a child of the Good Friday Agreement, which came into force in 1998. It is now 2015 and the world is a very different place. I am of the view that when it comes to cross-Border policy, there is a sense of lethargy across all Departments, not just that of the Minister.

Richard Bruton (Dublin North Central, Fine Gael)
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The Deputy should attend some of the events held by InterTradeIreland. That agency is anything but lethargic.

Dara Calleary (Mayo, Fianna Fail)
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Absolutely. I want to make it very clear that the various agencies are not lethargic. InterTradeIreland's representatives have come before the committee and made presentations to us. Their passion for the job they do is fantastic. The lethargy is at political level in terms of imagining life beyond the Border and in the context of pushing the Border aside. The lethargy to which I refer has been evident across all Departments in recent years. We will not agree on that matter, of course.

Peadar Tóibín (Meath West, Sinn Fein)
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I wish to ask a number of very short questions and I will pose them individually if that is acceptable. How many Northern and Southern firms have participated on trade missions abroad in each of the past five years?

Richard Bruton (Dublin North Central, Fine Gael)
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I do not have those sort of data with me.

Peadar Tóibín (Meath West, Sinn Fein)
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Can the Minister provide a rough estimate?

Richard Bruton (Dublin North Central, Fine Gael)
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No. I would need advance notice of such a question to provide the information being sought.

Peadar Tóibín (Meath West, Sinn Fein)
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Perhaps the Minister might forward the information to the committee.

Richard Bruton (Dublin North Central, Fine Gael)
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Approximately 18 trade missions take place each year - not all of them are organised by Enterprise Ireland - and approximately 60 firms participate on them, which means the total per year would be somewhere between 600 and 700.

Peadar Tóibín (Meath West, Sinn Fein)
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Is that Northern firms involved in Southern trade missions?

Richard Bruton (Dublin North Central, Fine Gael)
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No. I do not know what the number is in that regard. The figure I provided represents the total involved.

Peadar Tóibín (Meath West, Sinn Fein)
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I am seeking information on the firms from the two jurisdictions which take part in the other jurisdiction's trade missions.

Richard Bruton (Dublin North Central, Fine Gael)
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As the Deputy is aware, I was involved in a joint trade mission with Arlene Foster. That was the first such trade mission of its kind ever but it proved to be extremely successful. The mission in question was centred around aviation, and we travelled to Singapore, where there is an aviation cluster. A number of the precision engineering companies which operate in the South are sub-suppliers into that marketplace. As a result, the mission proved a good fit. Perhaps that is an area in which we might be involved in similar initiatives. Our own trade missions are increasingly being geared towards aviation, ICT, water technologies and clean technologies. Potential may exist in this regard.

Peadar Tóibín (Meath West, Sinn Fein)
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Work is being done in the South in respect of spatial planning. Is that correct?

Richard Bruton (Dublin North Central, Fine Gael)
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Yes.

Peadar Tóibín (Meath West, Sinn Fein)
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Is the Minister in a position to highlight practical examples of engagement with the Northern authorities in respect of such planning?

Richard Bruton (Dublin North Central, Fine Gael)
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The Department of the Environment, Community and Local Government is leading the spatial planning exercise and, therefore, the Deputy would be better to direct his question in this regard to the relevant Minister.

Peadar Tóibín (Meath West, Sinn Fein)
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Okay, but am I correct in stating that the Department of Jobs, Enterprise and Innovation has an input into that exercise?

Richard Bruton (Dublin North Central, Fine Gael)
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Yes.

Peadar Tóibín (Meath West, Sinn Fein)
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Has there been-----

Richard Bruton (Dublin North Central, Fine Gael)
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There is a process involving local authorities and their regional assemblies. In the context of NUTS 3 regions, we are working with local authorities and our own agencies in the context of seeking to develop regional enterprise strategies.

We were deliberately timing those ahead of the emergence of the wider regional infrastructure plan in order to get the enterprise thinking, needs, expectations and opportunities into that process ahead of the wider infrastructure. We are therefore consciously developing our regional enterprise strategy in the NUTS 3 region ahead of that cycle to try to influence the cycle.

Peadar Tóibín (Meath West, Sinn Fein)
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It might benefit our report if the Minister sent us examples of the Department's engagement with its sister Department in the North on spatial planning. Has anything been done on the development of a Border development zone?

Richard Bruton (Dublin North Central, Fine Gael)
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Priority is being given to encouraging FDI to set up in the Border region. That is a distinct feature of the IDA's latest plan, in which we have committed to strategic investment in advance facilities in Sligo, Letterkenny and Dundalk and we have committed to increase the number of projects won by 40%. InterTradeIreland and INTERREG are focused on the needs of SMEs with export potential. The food economy offers opportunities because there is capacity planning both North and South. There is a good deal of cross-Border trade in this area and much of the company thinking we support is not confined to particular counties. The green economy and renewables are specifically included in the research call to go after that particular sector. The call under INTERREG will specifically go after that corridor. The agenda being set by that Border development corridor concept involves several areas in which we are working.

Peadar Tóibín (Meath West, Sinn Fein)
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But the idea is that the Border development zone will straddle both sides of the Border. It will be a practical, geographically limited zone which incorporates particular partnerships, taxation policies, policy development synergies, etc. Are there practical steps? Will this be in place before the Government's term ends, for example?

Richard Bruton (Dublin North Central, Fine Gael)
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I outlined the practical steps, but whether a Border development zone is an idea that should form a centrepiece of policy is an issue around which there is room for genuine, open debate on its merits.

Peadar Tóibín (Meath West, Sinn Fein)
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What actions are planned?

Richard Bruton (Dublin North Central, Fine Gael)
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Plenty of actions underpin the development in practical ways. I am not trying to be smart, but there is genuine debate about what is the best way to develop. Is it around a Border corridor or the all-island economy concept, through which we play to the overall strengths of the two economies and can take a greater look at regional strengths and opportunities? There is a genuine debate to be had as to whether this is a concept that offers a great deal of potential. We are taking practical actions in areas that have potential, particularly around the SME and food agendas, the green and renewables agenda and centres of excellence in terms of research capacity. They fit into an all-island concept. The UK has had mixed success with development zones and, therefore, there is a debate to be had as to what is a zone, whether it works, whether a zone can be created in an area of disadvantage and whether it will self-combust, or whether we need to look at poles of strength and have layering development that integrates into poles of strengths within the bigger picture.

Peadar Tóibín (Meath West, Sinn Fein)
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Retail Excellence Ireland came together with the Northern Ireland Independent Retail Trade Association, NIIRTA, and created a detailed report based on surveys they carried out of retailers on both sides of the Border and tourists who had visited both jurisdictions.

They found there was the potential to generate €750 million if the tourism and shopping sectors were developed. It was not tourism or shopping particularly, but the area in which both sectors intersected. The report makes for interesting reading and one of its key findings was that a retail forum should be set up. What is the Minister's specific issue with regard to the development of an institutionalised retail forum? Can he outline his reasons for opposing such a forum?

Richard Bruton (Dublin North Central, Fine Gael)
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We have a retail forum that is chaired by the Minister of State at my Department, Deputy Gerald Nash, where we listen to the retail sector.

Peadar Tóibín (Meath West, Sinn Fein)
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It is in the South.

Richard Bruton (Dublin North Central, Fine Gael)
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Exactly.

Peadar Tóibín (Meath West, Sinn Fein)
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Yes.

Richard Bruton (Dublin North Central, Fine Gael)
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We do listen to the sector. I have not seen the report. My general opinion on institutional innovation is that I start with policy actions. It is only if the policy action cannot be delivered by existing institutional arrangements that I start to look at new institutions. I have been around a long time and have seen a lot of energy put into setting up institutions. What we should put our energy into is using existing institutions to drive practical policy initiatives. If there are practical policy initiatives that we can bring forward then let us have a look at them and see if existing institutional arrangements can deliver them. If that cannot be done, then let us consider what institutional innovations are needed. That is my general approach. I have tried to take out structures and simplify matters. I have merged the LEOs back into local authorities. I have also put a centre of excellence within an existing body, in Enterprise Ireland, to oversee them. That dynamic is working. We have robbed counties of institutions, boards and so on, but the innovation has worked.

Let us look at the policy initiatives that we are trying to drive. What we have been able to do through such an approach is to get the young entrepreneurs thing going. We also use local authorities. LEOs are now big players and have more than doubled the output generated by microfinance. We also gave them new mandates. That would be my approach generally. If there is material in this study then perhaps we should look at whether local enterprise offices can be partners or if an initiative can be taken. That is my preference for approaching this matter, but my view is based on what I know. I will take a look at the report published by Retail Excellence Ireland but I have outlined my policy presumption. I do not want to invest in institutions; I want to invest in actions that deliver on the ground.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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I want to ask the Minister to give his view on a comment made by Mr. Paul Mac Flynn from the Nevin Economic Research Institute during the previous session of today's meeting. He expressed his concern about the goal of the Northern Ireland Executive to compete with us when it came to attracting foreign direct investment. He referred in particular to the current plans to devolve and reduce corporation tax powers in Northern Ireland, which he views as a move away from all-island co-operation. He made the point that he would prefer to see us jointly develop innovation and industrial policies.

Richard Bruton (Dublin North Central, Fine Gael)
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One must always compete for FDI. Investors will look, for example, at Manchester and different locations. An agency that is trying to win foreign direct investment, whatever its geographic mandate, will compete, and that has always been the case. I do not see competition as a bad thing. The more Ireland is promoted as a good place to invest, and the more vibrant the competition is, then the better it is for both sides. We will win some and we will lose some, but promotion has a good impact. I can see where we can increase collaboration. We can look at whether there are sub-supply opportunities within an FDI base, which is a concept that we have tried to promote. Last year, we had a trade mission to Ireland in which a number of companies visited what were effectively multinationals and Irish companies in terms of building a sub-supply chain.

We need to look at the sub-supply chain. InterTradeIreland is well placed to do that and it has already provided programmes on public procurement, the Go-2-Tender programme, which is very successful and gets companies familiar with what it takes to win tenders. That is the sort of collaboration we can build. We can allow companies to participate in Enterprise Ireland programmes for capability building, but when we are competing head-to-head for an individual investment, we are competing with many locations, although that does not mean we are not building a stronger economy and promoting trade and collaboration in many other areas.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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I thank the Minister for Enterprise, Trade and Employment, Deputy Bruton, and his official, Mr. Curran, for attending today's meeting to discuss this important topic.

It is proposed to suspend the sitting until 5.45 p.m., when we will resume in public session to consider the Companies Act 2014 (section 1313) regulations 2015 in draft. Is this agreed? Agreed.