Oireachtas Joint and Select Committees
Thursday, 6 April 2017
Joint Oireachtas Committee on the Implementation of the Good Friday Agreement
Issues Arising from Brexit: Retail NI and Retail Excellence Ireland
I welcome Mr. Glyn Roberts of Retail Northern Ireland and Ms Lorraine Higgins of Retail Excellence Ireland. The witnesses will discuss some of the issues facing small businesses, North and South, arising from Brexit. The format of the meeting will be opening statements followed by questions and answers.
I remind members, guests and those in the Public Gallery to ensure their mobile telephones, tablets and other electronic devices are switched off completely or set in aeroplane mode for the duration of the meeting as they cause interference with the recording equipment.
I wish to draw the attention of witnesses to the position on privilege. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of the evidence they are to give this committee. However, if they are directed by the Chairman to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to 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 are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person 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 they should not comment on, criticise or make charges against a person or body outside the Houses or an official, either by name or in such a way as to make him, her or it identifiable.
I welcome the witnesses and thank them for appearing before us. I invite Ms Lorraine Higgins to make her opening statement.
Ms Lorraine Higgins:
I thank the joint committee for the invitation to address it. For the purposes of the presentation and given the events of the past week, the focus of my submission will be confined to the impact Brexit is having on the retail industry in Ireland and what we consider to be possible solutions.
Like many members, I was disappointed with the outcome of the UK referendum on leaving the European Union, which is not to say the European Union is perfect. It is certainly not perfect and requires reform. It must do less and do it better. However, what Brexit has taught us is that elections and referendums have become polarising, have been driven by division and hate and are not in a country's best interests. We saw this in recent months in Austria, to a lesser extent in the referendum in Italy and to a greater extent in the United States with the election of Donald Trump. This is a regrettable feature of international politics. However, this broader issue is not the focus of the meeting, although the consequences of such political shifts are pertinent to our discussion.
We cannot underestimate the potential threat a hard Brexit poses to the economy, which is highly dependent on a close trading relationship with Britain. To put its significance in perspective, the UK is the second largest economy in the European Union behind Germany and the fifth largest economy in the world. More critically, it is Ireland's biggest trading partner, with more than €1 billion in goods and services exchanged between our countries on a weekly basis and 100,000 Irish households dependent on this relationship. These factors sum up the breadth of the challenge facing the retail industry, the largest private industry employer in the country. The retail sector provides 282,000 jobs spread across every village, town and city, accounts for 42,000 businesses which survived the recession, of which 83% are Irish owned and 75% are family businesses, and contributes €5.7 billion annually to the Exchequer.
Now that Article 50 has been invoked, the period until the full termination of the UK's membership of the European Union will be defined by uncertainty, unpredictability and destabilisation. This does not make it easier for us to strategise on ways to stave off the worst excesses of a post-Brexit hangover. Early indicators show the difficulty we face. Two negative retail industry reports were released in January, one from KBC Bank on consumer sentiment and a second known as the visa spending index. Both reports recorded a downward trend for the industry and concluded that in December 2016 - with Christmas approaching, December is always a good time for the retail industry - overall expenditure by householders was down; consumer confidence declined to a 22-month low; online spending increased by 15.4%, much of it focused on British retail operations; face-to-face spending in shops decreased for the third successive month; and, unusually, no increase was reported in clothing and footwear.
It is clear the leaking of significant expenditure to the UK is hurting Ireland and its businesses. This process is being aided and abetted by the virtual phenomenon of increased online sales and the return of cross-Border trade driven by the devaluation of sterling. The statistics are alarming for Irish retailers. Recent figures produced by the Department of Communications, Climate Action and Environment show that €850,000 is spent every hour online, of which 70% leaves the country. Given that 17% of small and medium enterprises are not online and that of those which have an online presence, 75% cannot process payments on their websites, the challenge facing retail is clearly enormous. We are trying to abate this challenge with continued engagement with State agencies, particularly Enterprise Ireland.
More broadly, the further depreciation of sterling will continue to push up Irish import prices and will make exports less competitive. Differing packaging requirements will become necessary for Irish goods and products and long delays and queues of trucks at points of entry will affect the cost of goods, impact on the freshness of produce and create new pressures on margins. Hard border controls cannot be tolerated given the country's unique geographical position. I urge the Government to ensure it uses the precedent set in the Munich agreement in this regard.
Above all, instead of presenting problems, we must offer solutions to the challenges we face. The actions necessary to lessen the impact of Brexit on the largest private industry employer in the country include the following. The next budget must be Brexit-proof and VAT must be reduced to allow us to compete with the UK rate. A 3% reduction rather than incremental reductions of 1% is required because many firms will not pass on smaller incremental reductions. Employment costs, specifically in the area of PRSI, must be reduced. We would like the current PRSI rate of more than 8% reduced to 4.25%. Upward-only rent reviews should be abolished retrospectively. While legislation prohibits upward-only rent reviews in all new contracts, many retailers negotiated leases during the Celtic tiger era and the problem persists. Furthermore, retailers need to be empowered to get online and have full access to State supports.
We would also like the Government to negotiate a special position deal for Ireland with the powers that be in Europe, similar to that which Spain is seeking to achieve in the case of Gibraltar, which is on the Spanish mainland. Moreover, the recommendations in the Retail Excellence Ireland and Retail Northern Ireland report, Building Retail: North and South, should be implemented. The recommendations include establishing a North-South retail forum; using State agencies to create cross-Border shopping breaks; ensuring retail forms part of the tourism strategy of both Fáilte Ireland and Tourism Northern Ireland; increasing investment in the Dublin-Belfast Enterprise network; and launching a campaign, North and South, on VAT back entitlements for people from outside the European Union who make purchases in retail outlets. My colleague, the chief executive officer of Retail Northern Ireland, Mr. Glyn Roberts, will discuss these recommendations in further detail.
Earlier today, I received a number of telephone calls from retailers who want the Bus Éireann debacle resolved as a matter of urgency. The dispute is damaging Ireland internationally and having a major impact on footfall and retail sales activity. When we are trying to benefit from Brexit and the invocation of Article 50 it is foolhardy in the extreme to fail to show leadership on this issue.
The opportunity must be used to support the largest employer in the domestic economy with favourable measures targeted at ensuring rising costs do not outstrip growth. These actions are critical at this juncture as the impact of Brexit is not a well-defined scenario for Ireland. This country is the collateral damage caused by the referendum outcome.
Disentangling Ireland from the UK involves the most brutal break-up of a long-standing relationship. We need to ensure we secure the best possible terms to safeguard Irish retailers and the 282,000 jobs and 100,000 businesses that are dependent on this relationship. For many local businesses, this is a difficult and uncertain time.
A post-Brexit Ireland needs to remain a self-confident, outward looking innovative country and we cannot let anything jeopardise that. I thank the committee members for listening and I appreciate the opportunity to present on behalf of my organisation. I look forward to further questions.
Mr. Glyn Roberts:
I thank the Chairman. Retail NI represents almost 1,700 members, covering retail, wholesale, suppliers to the sector and a number of affiliated chambers of commerce and traders' groups. We have a very strong partnership with our colleagues in Retail Excellence Ireland. As Ms Higgins indicated, we have conducted joint research which was funded and supported by the former Tánaiste, Eamon Gilmore. This identified the needs in building, as Ms Higgins said, the island of Ireland's largest sector, our retail sector, and identified solutions to many of the problems retailers face across the island. That research was the first of its kind and both organisations hope to revisit it in the next few months, particularly in the light of Brexit.
Before I go into detail on Brexit, I want to touch on some of the issues that have arisen from our North-South research. Ms Higgins made some very good points about integrating the retail offer of our town and city centres in terms of the tourism product, which both tourist boards as well as Tourism Ireland also need to be considering. Strong, vibrant town centres have a lot to offer tourists.
We need to see some new, bold thinking in terms of the next big North-South projects. The North-South interconnector is well advanced now; we are just waiting to hear the outcome of the inquiry. There is also the A5-A6 link road - all of those projects are ongoing. We want to focus on one particular area, namely, the future of the Enterprise train service between Belfast and Dublin. For some time, we have been discussing the need to get a one-hour service between Belfast and Dublin. We believe the time has come for the Governments North and South, as well as the UK Government and possibly the European Union, to put that project into action. It may take five or ten years. but imagine the potential of having a one-hour train service between Belfast and Dublin. Not only would it be good for shoppers and tourism North and South, but it would be the biggest game changer for the all-island economy that there has been so far. Our key message in terms of development is that we should start the ball rolling now on that project. Although it may take a long time and a significant amount of funding, all we need is the ambition. The current Enterprise service is not fit for purpose. It probably takes 15 to 20 minutes longer than it did ten years ago. In the modern environment of high-speed electric trains, that is simply not good enough for this island.
Moving on to Brexit, Retail NI took a very strong position during the referendum. We were one of the few business organisations that openly campaigned to remain. I was vice chair of the Northern Ireland Stronger In campaign and was very proud of that. The decision in the referendum might best be described as someone jumping out of a plane without a parachute, hoping he will find a parachute on the way down. The uncertainty that has been created in Northern Ireland is putting a huge dampener on economic growth. It is clear that the Conservative Government is going for the hardest possible Brexit, leaving both the Single Market and the customs union. That is not good news for Northern Ireland or the Border with the Republic.
We need to see more than just vague assurances around there being no return to the borders of the past. Many of our members have all-Ireland supply chains from Cork to Coleraine. There are questions about the disruption to those chains if there is any hardening of the border. We should not forget that 75% of Northern Ireland's tourists come via the Republic as well. If there is to be a hardening of the Border, our worry is that this will see a decrease in the numbers of tourists coming from South to North. Incidentally, one of the practical issues which came up in the research we did a few years ago is that Northern Ireland is missing out on a significant number of high-end retail tourists who go to Dublin but do not come North. I am sure the Northern Ireland MPs who are here very much want to see those tourists coming North, as we do. Having a good, reliable train service is part and parcel of that.
We also need to cover the issue of EU nationals. Many of our members employ EU nationals, who make a huge positive contribution to our retail sector as well our hospitality and agrifood sectors. In fact, 48% of all agrifood workers in Northern Ireland are EU nationals. We need to ensure that those people can continue to contribute to our economy, that they will be welcome to stay, and that we remain open to EU workers coming to Northern Ireland. Nor should we forget that there are some 326,557 journeys every week between the North and the South, which equates to 46,654 per day. Any delay at the Border is not going to be good news. In Pat Doherty's constituency in Strabane, we have members who regularly commute from Lifford and who practically walk across the Border every day. I have members for whom a quarter of their workforce cross the Border for work. I know there are a number of Border Deputies here as well. We need to ensure that those people can continue to make a positive contribution to the economy as a whole.
There has been a lot of discussion about special status or special circumstances. We need to give more definition to what we mean by that. I am aware that the SDLP and Sinn Féin have produced position papers on this matter. We certainly do need some degree of special status, as has been recognised in Brussels. Our concern is that we do not have a functioning Executive in place while the Border is front and centre of the Brexit discussions. Not having local Ministers or a Brexit plan in place in terms of the Executive is a major handicap. That should be one of the factors that will spur agreement in the current talks.
In conclusion, whatever new relationship is made with the EU, it has to reflect Northern Ireland's unique circumstances. We are very clear that a post-Brexit Northern Ireland needs to be a self-confident outward-looking region which is the very best place in the UK and Ireland to locate and start a business. It is concerning that an early casualty of the ongoing problems at Stormont is the fact that our April 2018 deadline for corporation tax devolution looks like it is going to be lost. If we could get an Executive back, that would be a major step forward. The fall of the Government at Stormont came at the worst possible time, given what we are going through with Brexit.
The programme for government that we published a few weeks ago has been circulated to committee members, along with our North-South research. Both of our organisations are working together very closely. We have a lot of mutual members. We will be examining the impact of Brexit on the retail sector North and South.
I welcome the witnesses. It is good to have Ms Higgins back in the Houses of the Oireachtas again. I know from meetings I have held with Mr. Roberts over the past years that he has been a very strong advocate for co-operation between the retail sectors North and South. I welcome the fact that the witnesses are here together making a joint presentation.
Where I come from we can all be parochial when the currency fluctuation suits us, with trade coming South or drifting North, but no sustainable economy can be built on currency fluctuations in a neighbouring jurisdiction. It is important to have co-operation on all of the island between Retail Excellence Ireland and the Retail Northern Ireland.
The presentation is very good, concise and comprehensive and paints a picture of the serious concerns in the retail sector throughout the country. Last July at the meeting of the British-Irish Parliamentary Assembly John Taylor was excited about Brexit and what it would do for the economies of Newry, Strabane and Enniskillen. I told him in fairly pungent terms that if he was hoping the economies of Fermanagh, Tyrone, Down and Armagh could be built on a fluctuating currency it would not be very sustainable. We want to see a sustainable economy throughout the island. There is great potential there for co-operation and having an all-Ireland retail policy.
Ms Higgins and Mr Roberts emphasise the Dublin-Belfast Enterprise network. Cities the size of Dublin and Belfast will look after themselves. I would be very concerned that there will be even more growth in the east of our country following Brexit than in the past and the imbalance between the west and the east will be exacerbated. I want to see both cities grow but there is a greater need for infrastructural development outside that corridor than in it. The A5 and the N2 are not going too far too fast, unfortunately. We have heard presentations at this committee by Donegal, Strabane, Fermanagh, Omagh and Monaghan councils about the delays which are a source of real concern for the north west all the way to my constituency in Monaghan. I would like to see greater interest devoted to areas outside the Dublin-Belfast corridor, not to take away from the fact that it would be good if the expressway service can be improved and invested in but that cannot be to the exclusion of the infrastructural needs of other parts of Ulster and south Ulster.
Dr. Alasdair McDonnell:
I thank the witnesses for their presentations. I agree with Mr. Roberts about the train. They have given us a lot of good information but what steps do they see themselves taking in the future? Is this a one-off or the first step in a process? What does Ms Higgins feel could be done quickly and effectively of the items on her list? What is practical and easy?
Mr. Glyn Roberts:
I fully agree with Deputy Smith this should not done to the exclusion of other infrastructural projects in Northern Ireland but we have members in rural towns in Northern Ireland who feel left behind. There is a sub-regional divide and an infrastructural deficit in the west. I have always been very keen to get a city deal for Derry, which would be good for it and for Strabane. We have to ensure that in the areas where we build infrastructure, such as the A5 and A6, that we also regenerate the town centres to make sure they are competitive for any foreign direct investment we get on the back of corporation tax. I know corporation tax might be on a longer finger now. We have to ensure those areas are competitive and that it does not all cluster around Belfast. Having a functioning Executive and government in Northern Ireland would make it much easier to put that case. There is some good work done by our new councils. It would be good post-Stormont that regeneration powers are given to those councils to make the change in their areas.
It would be good to improve the rail link between Belfast and Derry. One can get more quickly to Dublin than to Derry on the train. I am told someone was able to cycle more quickly than the train from Belfast to Derry. I am not entirely sure that is true. We work very closely with the town-based Chambers of Commerce, most of which are affiliated with us and support the good work they do to regenerate their towns and make them attractive for people to live and invest in.
I do not know if Dr. McDonnell was referring to the relationship between our two organisations but it has been in place for a few years. We are the only business organisations invited to present to the North-South Ministerial Council. We very much want to build on that working relationship because we work closely with retail bodies in the United Kingdom and it is important to cover the North-South dimension. Watch this space.
Ms Lorraine Higgins:
I thank Deputy Smith and Dr. McDonnell for their questions. Deputy Smith makes a plausible point. As somebody from the west of Ireland I know the importance of a proper functioning transport network in order to ensure connectivity on many levels. I would caution that despite CSO figures, many of our members are reporting a dip in sales, which is quite significant in some cases, particularly tourist-facing businesses in Dublin. One in particular has reported a 30% decline. That would not be the case in Cork and Limerick. It is important that we have a strong capital city. Part and parcel of what we do is to articulate these concerns to policy and decision makers. While we are involved in intensive talks with Enterprise Ireland to develop new markets for retailers we need to see what is on our doorstep and new ideas need to be welcomed.
What we want out of this report is to ensure that our proposals are acted on. We do not want it gathering dust on a shelf. We want a commitment. The upcoming budget is quite important. The reduction of value added tax, VAT, would be a critical factor in the survival and strengthening of the retail industry. It is hard enough for us to deal with sterling devaluation but when VAT is 3% higher here than in the UK that presents difficulties. I gave the figures for how much is spent online hourly. It is very important that retail is at the heart of the tourism strategy. Very often retail is forgotten despite our being the largest private industry employer on the island. We must be mindful also that tourists spend between 15% and 70% of their budget on retail in this country. Any way we can encourage them to spend at the upper end rather than the lower end is a good thing. I have been working with the Department of Foreign Affairs and Trade to increase awareness of the VAT back scheme.
I am in the process of devising a poster campaign for non-EU embassies in India, China and the United Arab Emirates to highlight the fact that tourists who spend money in retail outlets can get 23% back. We also need to look to the EU. Part of this strategy we have put in place regarding the future of an Enterprise service between Belfast and Dublin relates to Trans-European Transport Networks, TEN-T, funding. The last programme was negotiated in 2014 and approximately €20 billion is available for all member states. Ireland has benefitted from it. Shannon Foynes Port in Limerick is one such example. Generally, one criterion for availing of funding is that there be a critical mass of population. Why should the east of Ireland not benefit? I know the west has been discounted because that critical mass of population is not there. I imagine the next programme will be up for negotiation fairly soon because the next tranche of funding will be announced after 2020. Our proposal could fit in nicely with that, which is why we are focused on that.
Ms Lorraine Higgins:
Yes, that is something of which we are very aware. I commend Deputy Breathnach on the work he has done on this issue through the introduction of a Bill on Tuesday along with Deputy Troy. We have been working on it with Deputy Breathnach along with Retailers Against Smuggling. It is certainly something that has been growing. We will continue to intensify our efforts but in the absence of legislation, it is very hard. It is good to see that Deputy Breathnach has sought to remedy that by introducing a Bill, which is on Second Stage.
I thank Ms Higgins and Mr. Roberts for their presentations. I will try not to be too long-winded but I will touch on a number of issues. It is great to hear the witnesses say that Retail Northern Ireland and Retail Excellence Ireland will work together on an all-island retail sector basis. However, when and if a hard Brexit happens, I hope they are as co-operative because when it comes down to product and price, everybody will start fighting for their own. Leaving aside currency fluctuations, could the witnesses comment on what sectors other than the ones we referred to that are constantly being referred to in respect of smuggling may be affected? I know the witnesses cannot second-guess that. I do not want to dwell on smuggling today because other committees are dealing with it but anecdotally, we are told that the issue of oil has not gone away. While the marker, North and South, is an excellent product that upsets it, the smuggling problem has already moved to home heating oil involving the same amount of product and the same amount of money is being lost to the Exchequer. Could the witnesses comment on the volatility of other products in a post-Brexit situation?
Deputy Smith would like to see the Enterprise service move into the west. What a pity that the Dundalk-Bundoran line was ever lifted. I am old enough to remember it. It runs through the parish I live in. One wonders whether it needs to be brought back in terms of the regions because it certainly linked people through to where the Enterprise runs at present. Recently, there were calls for submissions to Transport Infrastructure Ireland, TII, about the future of train services. Did Retail Northern Ireland and Retail Excellence Ireland make submissions because it is very easy to miss the boat? I am glad the witnesses raised the availability of funding and the window for that because I anticipate this is what TII is looking at relative to the Enterprise service. A lot of it runs through my constituency. We were always told at local authority level that the capacity of the line is such that it cannot take any more traffic because of safety issues relating to the number of trains that can travel between destinations. There are many calls along the line for additional train stations, which will slow down the service rather than speed it up. I have often thought it was a pity that in terms of the development of the M1, nobody had the foresight to use a portion of the space along the motorway to create a new line. I do not think this is beyond the bounds of possibility. It is a question of how we can improve capacity on the line.
I agree regarding the retail opportunities in tourism. Many years ago, the North-South Ministerial Council asked us what issue was non-contentious and could be dealt with in a North-South sense. Tourism was clearly the one that was identified. I do not mean to be critical but in respect of the selling of a North-South tourism product, again, I am going to be parochial and refer to the Mourne mountains and the Cooley mountains as a joint marketing area that sticks out a mile, not to mention along the rest of the Border. It has not happened. Indeed, very little effort is made when one considers the small number of airports along the east corridor - Derry, the two in Belfast and Dublin. There is no marketing of the aforementioned two region either at airports or to our diaspora in the UK. I have requested on several occasions that toll booths take sterling. It is a "no-brainer". They do not want to know about it. How are we welcoming people who are coming with sterling? Unless they have a credit card to pay with, they will not entertain it. The issue needs to be raised in respect of transport.
The issue of special status was referred to. Ms Higgins referred to it as a special position. We have heard words like "bespoke". I could go through the dictionary in this regard but I wish to make clear that Fianna Fáil's belief is that special status is needed not just for Northern Ireland but the Border region. I firmly believe that this is the approach that needs to be taken regarding getting a full buy-in to the Good Friday Agreement and the peace process in a European context. Spatial planning relative to the development of any of our towns is another issue. I have always said that if Newry benefits, Dundalk benefits and vice versa- be it in employment or trade. I have already described the triggering of Article 50 as a mayday in history because I do not think it is going to help any of us but I hope that through co-operation between the two retail sectors and working together, we can minimise negative elements and, hopefully, explore opportunities. I thank the witnesses for their presentations.
Mr. Pat Doherty:
I welcome Ms Higgins and Mr. Roberts and I particularly welcome their presentations. I was very struck by the all-Ireland nature of Mr. Roberts's presentation. With all these conversations, we are moving in the right direction. Watching the debate in Europe, I can see how they have taken on board the Good Friday Agreement, the peace process and no borders in Ireland. All of that is to be welcomed because Brexit will affect not just the North but all of Ireland. It will affect them in different ways but it will be very negative. My party and other parties have brought forward documents calling for special status within the EU. I am not hung up on names. It is the detail that counts. By and large, we are on the one page on all of that. However, one then faces the history and nature of relationships within these islands, which go back hundreds of years, and the question of how they can be maintained. There needs to be a huge focus on all of that.
We have often rehearsed arguments here over the A5, the A6 and the Derry to Belfast train.
When I first went into west Tyrone, I used wonder why so many Tyrone people went on holiday to Bundoran. Then I looked at the old railway maps and all the rails ended up in Bundoran. It was a holiday destination. There is the history of that.
My specific question relates to the witnesses' view on decentralisation - in the North, west of the Bann and, in the South, west of the Shannon. That covers a significant area. Whatever growth exists in Ireland is on the eastern seaboard. That will lead to all types of imbalances and knock-on problems unless we adopt a more specific and focused spatial policy.
We have had debates about the lack of rail services in the North and we came up with a concept. I am trying to answer the question as to whether rail lines could be put in place alongside the A5-N2 when it is being built. We are informed that the trajectory and the gradients do not suit trains and that there are different criteria for roads. My colleague, Deputy Pearse Doherty, is an engineer and he seems to think that this is true and that we have do different things about it.
The key point is that I would like the witnesses' views on the decentralisation programmes, from the Assembly and from the Dáil, to push industry and commerce west of the Shannon and west of the Bann.
Mr. Glyn Roberts:
In broad terms, in the context of the sensible things that we are putting forward, it is not about politics. Rather, it is about what is good for the economy and the retail sector, North and South. It is about practical sustainable economic development. While we have got to be careful of special circumstances, special positions or special status, what we cannot do is open up an internal border within the UK. This is obviously a difficult circle to square. We have got to ensure that there is no hard border in terms of the Border on this island but, equally, there is no hard border or barriers in terms of an internal border within the UK. That will obviously be a significant challenge.
In terms of the points made by Mr. Doherty in respect of decentralisation, we have always taken the view - we put a detailed manifesto out ahead of the council elections to the new 11 councils in Northern Ireland and covered this in our programme for government - that we need to be looking at giving those 11 councils more power. Regeneration powers need to come from Stormont to the councils. What is the point of giving the councils in Northern Ireland power over planning but not power over regeneration? We would be looking at what can they do in terms of having a greater say in how they spend their rates and how they collect them. We have suggested, for example, that they could ensure that they keep a greater proportion of the rates they raise in their town or city centres to put back into regeneration projects. When we talk about devolution, it should not only be about giving Stormont more powers, it should also relate to how we empower communities and how we empower businesses. For example, in Mr. Doherty's constituency, Strabane has taken a step forward with its own business improvement district. That, in many respects, is decentralising many of the decisions about Strabane town centre to the local traders. They lift the money and they decide how it is spent in their town centre. That is a small example of how one can decentralise, not only to the hallowed corridors of Stormont but down to local communities, towns, villages and, indeed, business.
There are practical aspects to some of the proposals we have put forward. For example, a weekend shopping break is not rocket science. Either of the hotel sectors could work out that if someone is spending a Friday and a Saturday in Dublin, he or she could hop on a train and go to a hotel and spend the day in Belfast or any other town in Northern Ireland. That is not hard to work out. From a Northern Ireland point of view, we are missing out in a significant amount of high-end retail tourists who go to Dublin but who do not come North. Obviously I do not have the statistics on this but a growing number of middle-class Chinese people regularly come to Dublin and shop in Brown Thomas. I want those retail tourists to come North, and not only to Belfast. There is a bigger marketing role. We have been clear in talking to Tourism NI that it should be integrating the fantastic retail the town and city centres in Northern Ireland have to offer such tourists. A lot of that would not require legislation or big strategies. It is a matter of practical changes in how one markets this. Also, we do not conduct enough marketing at Dublin Airport to the tourists who go there in terms of visiting Northern Ireland. Colleagues in the hospitality and tourism sector in Northern Ireland would equally agree with many of the points.
In terms of the comments about our proposals for the one-hour service, what I would say is I am not an expert in high-speed trains but one can always find 100 reasons why not to. Instead, I am the type of person who finds 100 reasons why we should do it. There are many good examples right across Europe and the world. I refer, in particular, to China, where they have perfected the idea of the high-speed train. If they can do it, I do not understand why we cannot do it here.
Mr. Glyn Roberts:
There is a new transport hub in Belfast, which, I think, is in Dr. Alasdair McDonnell's constituency. That will be a big investment which will ensure that we get a better transport network for the whole of Northern Ireland. Likewise, there is a new transport hub in Derry. One could easily see how this idea of a one hour high-speed train between Belfast and Dublin would help all parts of the island. It is not difficult to work out how we do that.
On the point about the toll booths, I have enough difficulty in getting our car park machines in Northern Ireland to take the new £1 coin. We have our work cut out in respect of these issues. It shows the diverse number of issues we must deal with in the retail sector.
Ms Lorraine Higgins:
Deputy Breathnach asked about smuggling. As he will be aware, smuggling is costing the Exchequer over €2 billion on an annual basis. That is a significant amount of money. It is not something we can sustain. We had a number of complaints from members of Retail Excellence for whom solid fuel represents half of their turnover and who found, particularly in the past six months, that they had a unusually quiet period. They normally subsidise their incomes with garden centres and sell fuel during the winter months. Then we heard individual reports of persons and groups, as far south as Kerry, who were having illicit fuel delivered and those who were bringing it to them were making €5,000 a drop, which is obviously of concern. The Deputy's Bill might go some way towards sorting that out. If there is more enforcement and collaboration on the part of the authorities, North and South, if more resources are provided and if stronger legislation is put in place, it would have an impact in the context of tackling the scourge of smuggling.
The Deputy also mentioned funding for transport. As I pointed out earlier, there is a €20 billion pot available in Europe under the TEN-T funding scheme. We satisfy the criteria in terms of need, requirement and critical population mass and, therefore, accessing such funding could lead to an enterprise service between Belfast and Dublin becoming a reality.
Deputy Breathnach referred to tourism. Certainly, increased collaboration is required between the state agencies, North and South, for example, Fáilte Ireland and Tourism NI. With the establishment of a North-South retail forum, that would certainly put flesh on the bones of the commitment to deal with this issue. We would have a strong role to play. There are all sorts of opportunities in this area. I refer, for example, to Ireland's Ancient East. There is the potential of developing loops off Ireland's Ancient East and this must be considered. Mr. Roberts has already referred to weekend shopping breaks. When people come to Ireland, they want experience. That is why they come here in the first instance. What would be better than visiting two cities on one break? If we can sort out the transport issues and properly market Belfast and Dublin as viable shopping destinations, many women will make their way here in droves.
Mr. Doherty mentioned a number of issues. To return to the significance of retail, I suppose it is shown by the fact that retail sales are often used as a barometer for how the economy is performing.
We already know, based on the information I have given in my submission, that retail in the South in particular is being affected as a consequence of Brexit. The future of decentralisation is obviously quite important. I am not so sure of the position regarding the spatial strategy. I think the Minister for Housing, Planning, Community and Local Government or some of the Deputies present may be better informed in that regard and may be able to shed some light on it. There is no doubt that development needs to be clustered around proper infrastructure. As a person from the west, I know that the airports at Shannon and Knock need to be developed further. Infrastructure is essential for foreign direct investment because prospective investors look for proper road networks, airports, train connectivity and so on.
A proper functioning fibre-optic broadband system is absolutely critical to decentralisation and further development in rural Ireland. There are many cottage industries, particularly in the food sector, which are heavily dependent on exporting goods to the UK market. It is important to get these cottage industries into new markets. Enterprise Ireland has a role to play in that, where it could leverage and use linguistic supports and networks that have been built up over the years. If we bring jobs to rural Ireland through decentralisation programmes and the improvement of infrastructure, people will spend money and that obviously helps our members handsomely.
My colleague has pointed out the special position, the special status and the special case. Everybody is using different phrases to describe the relationship between North and South. Have the witnesses done much research on the issue of trade between East and West Germany prior to the Berlin Wall coming down and the special status that East Germany had in the EEC and the EC, even though it was outside the then Common Market and at times was effectively a 13th member thereof? Given that Northern Ireland is about to leave the European Union, could this special case, special status and special position be used as a precedent by Retail Ireland - and all the other organisations operating in the areas of agriculture and trade - in the context of stating that we need a similar special status to that which applied in East Germany and West Germany prior to the Berlin Wall coming down? We are being told that the European Union would like to help Ireland but we have to tell the other member states what we want.
Ms Higgins has pointed out the domestic factors such as employment costs and the VAT rate. Whether these are addressed in the budget is a matter for another committee. The framing of the final agreement between the UK and the EU must take place between now and September. According to the former Taoiseach, Mr. Bertie Ahern, who is participating at today's meeting of the Seanad Special Committee on the Withdrawal of the United Kingdom from the European Union gas said that is where the cases must be made. Those in charge of the negotiations between the UK and European Union are asking Ireland to set out what it wants, but it must be within the parameters of the European treaties. Europe is very good at finding exceptions. We already have those exceptions. Have Retail Northern Ireland and Retail Excellence Ireland worked on that? Ms Higgins mentioned the Munich agreement, with which I am not entirely familiar. Will she outline those precedents?
We are glad the witnesses have come before us because we are trying to come up with solutions. Prior to today's meeting, witnesses identified the problems. One of the problems which only affects a small number of retailers is that which relates to roaming charges. This matter was supposed to have been sorted out - after much effort - under an EU agreement. The idea was to prevent people who are on one side of the Border being charged the rate on the other side of the Border just because of the proximity to telephone masts. Where will this matter stand post-Brexit? An agreement in respect of this matter is due to come into place in the summer but it will be in effect for less than two years. What will happen after that? This is another example of a special case that, as we are saying to our guests and those involved in the telecommunications sector and other sectors, must be added to the very long list of things we need from the EU in respect of Northern Ireland. We need to make the case in respect of these various matters and if we do not do so by September, the framing of the entire agreement will be set and it will be extremely difficult to add things in thereafter.
Mr. Glyn Roberts:
I think there is a plethora of models. I know that some good work has been done by Dr. Lee McGowan at Queen's University. He has done some work with the Northern Ireland Independent Council on Europe, of which I am a member and of which Dr. McDonnell is vice chairman. There are many different models ranging from the Isle of Man to Norway, Sweden and so on. There is so much information and so many reports, a lot of them analyse the problem but they do not give us solutions. We are making the point that we need to focus on solutions. What do special circumstances look like? For Northern Ireland, it to ensure that there is no hard Border, that we have full access to the Single Market, that the EU nationals who are employed in Northern Ireland will be able to remain and that we still will be able to have freedom of movement across the EU. These are the end destinations but we need to focus on the solutions to get us there, while achieving a balance with the United Kingdom at the same time.
Let me repeat that we cannot have a hard border to the rest of the United Kingdom. Unfortunately, in Northern Ireland this has become skewed in the sense that if one speaks of special status, one is considered to be against the Union. I think we must have a bit more maturity in the context that business has a key role to play in the debate on Brexit and must be part of the solution. We have had a number of meetings this week with the Secretary of State of the Department of Business, Innovation and Skills in the United Kingdom. We are hoping to have more engagement with the Department for Exiting the European Union as well. For us, it is not about constitutions or politics, it is about how we can get our economy moving forward. There will be disadvantages. Whatever way we dress this up, we will be at a significant disadvantage as a result of Brexit. I hope I will be proved wrong about that but I struggle to see anything positive coming out of Brexit in the short term. I accept the result. I think we would have been in a much stronger position had Wales voted to remain. There would have been a strong access between Scotland, Wales and Northern Ireland in terms of the UK Government, but that was not the case. The issues of Scotland are very different from those relating to Northern Ireland. Let us not forget about the EU Single Market. In the Single Market, there are 500 million consumers and 26 million businesses. The fact that in a very short period we will be outside what is, from any objective standpoint, the largest such market in the world is not good. To be outside the customs union is not good.
I have not mentioned the significant challenge that the Great Repeal Bill, which was introduced last week. I do not see much great about it to be honest.
Mr. Glyn Roberts:
Our MPs are present. I do not envy them the role they have in processing that Bill, which is a big cut-and-paste mechanism to transpose EU directives into UK domestic law. There are significant challenges with that. I think this is a major waste of time and effort. There is also an issue about how we will scrutinise this in Stormont. In the context of the current negotiations, we have suggested that Stormont establish a Brexit committee because there are going to be major issues in respect of Brexit. Those issues will have an impact on the Executive in the context of how it does its job the responsibilities it will have. There are indications that Stormont may get additional powers on the back of Brexit, particularly in respect of agriculture.
Ms Lorraine Higgins:
I thank Senator Daly for his question. The EU has been very steadfast in declaring that we cannot enter into a bilateral agreement with another country that is outside the Union.
It must be negotiated as part of the EU position. All we ask is that the EU follows precedent. Earlier the good example of East Germany and West Germany was given. The Munich agreement concerns Germany and the Czech Republic or Czechoslovakia as the country was known before it entered the Union. We need to ramp up activities. We need to get as much information from our MEPs and get them and our Commissioner to push for this measure on the floor of the European Parliament. They must find out what is tolerable within the EU. The information will strengthen our negotiating position as we will know what we can push for. We also need to liaise a bit more with Spain, which is playing hardball with Europe. We have many fora but we need an informed plan. We must ensure that we minimise the impact and maximise the opportunity for all industries in the island of Ireland.
I thank both witnesses for their attendance. I also thank them for the additional documents supplied. All of the information will prove helpful. Brexit is the main focus of the committee at the moment and we will publish a report on it shortly.
I wish to advise the committee that today is last day that Ms Moore-Durajczyk will act as our clerk because she has decided to return to the Department of Foreign Affairs and Trade. I wish to express our sincere thanks to Ms Moore-Durajczyk on behalf of myself and the committee. I am a new Deputy and the position of Chair is new to me. I sincerely thank her for being very helpful and patient with me. We will definitely miss her.