Fergus O'Dowd (Louth, Fine Gael)
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Apologies have been received from Mr. Stephen Farry MP and Ms Claire Hanna MP. On behalf of our committee, I welcome Professor Alan Barrett, director, Dr. Adele Bergin and Professor Seamus McGuinness from the Economic and Social Research Institute, ESRI, to discuss the economics of Northern Ireland and the all-island economy.

Before we begin, I wish to explain some limitations to parliamentary privilege, and the practices of the Houses regarding references witnesses may make to other persons. The evidences of witnesses physically present or who give evidence from within the parliamentary precincts is protected pursuant to both the Constitution and statute by absolute privilege. However, witnesses and participants who are to give evidence from locations outside the parliamentary precincts are asked to note that they may not benefit from the same level of immunity from legal proceedings as witnesses giving evidence from within the parliamentary precincts, and may consider it appropriate to take legal advice on this matter. Witnesses are also asked to note that only evidence connected with the subject matter of the proceedings should be given, and they should respect directions given by the Chair and the parliamentary practice to the effect that, where possible, they should neither criticise nor make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to that person or entity's good name.

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

To explain to witnesses how we operate, we rotate speaking slots in the following order: Fine Gael, Sinn Féin, Fianna Fáil, SDLP, the Alliance Party, the Green Party, the Labour Party, Independents, Aontú and so on. Each slot after the opening submissions will last 15 minutes. We will call each group separately. The proceedings will be relaxed and, I hope, very rewarding. There are many people looking forward to this. I invite Dr. Barrett to make his opening statement.

Dr. Alan Barrett:

I thank the Chair for inviting the ESRI to appear before the committee to discuss recent ESRI work comparing the economies of Ireland and Northern Ireland. I am the director of the institute. I am joined by my colleagues Dr. Adele Bergin and Professor Seamus McGuinness. They have undertaken much of the work we will talk about today, so I want to give full credit to them. My main connection to the economics of Northern Ireland is through my membership of the Northern Ireland Fiscal Council but, as director of the ESRI, I am very proud of the work done by Dr. Bergin, Professor McGuinness and many other colleagues.

In 1999, 24 years ago, a former colleague of ours at the ESRI, Professor John Bradley, wrote: "Comparative discussion of the two economies of Ireland is a very recent phenomenon." He went on to note: "Limited communication over the years between Northern and Southern researcher ... led to a lack of shared knowledge about the different parts of the island." I am sharing these quotations for two reasons. First, they illustrate how the ESRI has been active in North-South research for quite some time. The quotations are from 1999, but we were thinking about this matter long before that. Second, and more importantly, as we have been doing the more recent work, we have been struck by the ongoing lack of North-South comparative research in economics. The work we will discuss today, much of which was funded by the shared island unit in the Department of the Taoiseach, aims to add to this comparative research because it is a good way of learning about economic issues on both sides of the Border.

We will present our summaries with reference to three research questions. The first is as follows: how do living standards and general levels of welfare in Northern Ireland compare to those in Ireland? In work published in the Cambridge Journal of Economics and in Irish Studies in International Affairs, Dr. Bergin and Professor McGuinness have comprehensively explored differences in living standards across a wide range of dimensions, including traditional economic measures but also other measures such as opportunities for life progression and general well-being, in an attempt to build a more complete picture.

There is an emerging body of research pointing to the existence of substantial gaps in income and living standards between Northern Ireland and Ireland. For example, GNI* per capitain Ireland was around 51% higher than GDP per capita in Northern Ireland in 2018. Members will see that I have used GNI* in the case of the Republic. Other metrics also point towards higher living standards in Ireland relative to Northern Ireland. OECD data show a gap in household disposable income of 12% in 2017 in favour of Ireland. In addition, the proportion of individuals at risk of poverty in Northern Ireland was 14.3%, compared with 8.9% in Ireland.

A broader, overarching measure that captures overall differences in general welfare and living standards is life expectancy. In 2018, life expectancy at birth in Ireland exceeded that of Northern Ireland by 1.4 years. We cannot be definitive about what is driving this gap. A broad range of factors, including income, education and access to healthcare services, determine life expectancy in a region. As such, differences in life expectancy across countries can be interpreted as a cumulative measure of differences in general welfare and living standards. The set of figures seemed to come as a surprise to very many people. We can dig further into this later in the discussion.

The second question we have addressed is the following: how do Northern Ireland's productivity levels compare with those of Ireland, and what are the explanations for any differences? The poorer performance of the Northern Ireland economy, relative to the economies of Ireland and British regions, was previously linked to its relatively low productivity levels. Productivity is measured as the value of goods and services produced per worker and is a key performance metric. While productivity levels were broadly similar in 2000 – it is important to keep that in our heads – over the period 2001 to 2020 productivity in Ireland increased by 0.2% per annum and fell by 1.1% per annum in Northern Ireland. By 2020, productivity levels were approximately 40% higher in Ireland compared with Northern Ireland.

Our statistical model of Irish productivity shows that sectoral productivity increases in respect of the share of educated workers employed and levels of investment. For example, with respect to education, the model suggests that a 1% increase in the share of graduates employed generates a 1% increase in sectoral productivity. The model also finds that export intensity is an important factor in driving Irish productivity. However, despite using comparable data sources and the same methodology, we do not find evidence of causal relationships between the usual factors that drive productivity – such as education, investment and exports – and Northern Ireland's productivity.

This apparent lack of evidence on the relationships between productivity and the usual drivers for Northern Ireland suggests that productivity in the region is likely to be relatively unresponsive to single policy levers such as changes in education and skills provision. Our analysis suggests that a comprehensive strategy is needed, aimed at improving competitiveness among Northern Ireland firms, reforming education and skills provision and increasing investment in an integrated way. "Integrated way" is the important phrase in this regard. More limited policies implemented in isolation are not guaranteed to enhance Northern Ireland's productivity.

The third research question is as follows: how do the education and training systems of Northern Ireland and Ireland compare with each other? In 2022 the ESRI published the first major comparative study of education and training systems in the North and South. Key findings from the study are that levels of educational attainment in the North are lower than those in the South, with a higher share of the population possessing lower levels of schooling. At the upper end of the qualifications spectrum, the proportion of people with third level qualifications is similar in both regions. However, Northern Ireland has only a very small proportion who attain a post-secondary, non-third-level qualification by comparison with Ireland, where post-leaving certificate courses have become more popular. Again, that is an important statistic. Ten per cent of the population in Northern Ireland has a qualification at the level in question compared with 30% in Ireland. At the other end of the spectrum, early school-leaving is two to three times higher in Northern Ireland by comparison with Ireland, and this gap has widened over time. The proportion of those between 16 and 24 who leave school with, at most, a lower secondary qualification is 14% in Northern Ireland by comparison with 6% in Ireland. This is concerning because early school-leavers are more likely to be non-employed or work in low-wage and potentially insecure jobs later in life. At all levels of qualification, wages are around 40% higher in Ireland than in Northern Ireland.

Social class is a much stronger predictor of educational failure in North Ireland, and the ongoing use of academic selection is likely to strengthen this adverse effect. During the course of extensive interviews and workshops with key stakeholders in both jurisdictions, there was a strong consensus that continued academic selection was generally damaging to social progression through education in Northern Ireland. In Ireland, the delivering equality of opportunity in schools, DEIS, programme was thought to have been very effective in lowering social inequalities and improving the outcomes of children from lower income groups.

As part of our research programme with the shared island unit, the ESRI has also undertaken research and published reports on topics such as primary healthcare, foreign direct investment, childcare and immigration, as well as a study on the evolution of cross-Border trade in services. Currently, work is being undertaken on topics such as housing supply and gender dimensions to the labour market. As members will understand, we do not have time to discuss all this work but we can certainly try to answer questions in the discussion. We thank the committee for the opportunity to discuss the comparative North–South research. We look forward to answering any questions members may have.

Fergus O'Dowd (Louth, Fine Gael)
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I thank Dr. Barrett for that. It was very interesting. Dealing with all these issues is very challenging. I will ask one question, after which I will hand over to the Fine Gael group. Professor John FitzGerald, who was here some time ago, stressed the issues relating to education and the fact that although a significant cohort of those who wish to attain a third level qualification go to Britain to do so, the big problem is that a significant number of them do not return to the North to work.

He made the point that if they could be attracted back to work, it could make a significant difference to what is happening up there. I do not know if our guests have any view on that.

Dr. Alan Barrett:

I will offer a quick response to the Cathaoirleach's question. My colleagues may wish to respond afterwards. Dr. McGuinness and Dr. Bergin might be in a position to share the precise numbers but a significant proportion of kids in Northern Ireland go to the UK for third level education and tend to stay there. One of the defining features of the Irish economy has been an interesting flow. We have had plenty of brain drains over time. It has been a defining feature of the country. However, a certain proportion of people, during the Celtic tiger period and at other times, have come back to the Republic in a way that has not happened in Northern Ireland.

There is another important point here. We have observed in data that the group of people who come back to Ireland tend to have higher earnings than the people who never went away. It seems that in the Irish labour market, having foreign skills is always valued. That is understandable in a highly globalised labour market. People have gone away and accumulated skills, competencies and all sorts of experiences. When they bring them back, they offer a new dynamic in the economy of the Republic of Ireland. We are now seeing that not only with regard to returning migrants. Immigrants in the Republic of Ireland are a very highly qualified group of people. They provide another injection of skill, talent and ingenuity that Northern Ireland does not seem to be enjoying. There are issues in respect of the movement of people, migration, return migration and inward migration. It is all part of the mix.

Emer Currie (Fine Gael)
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I will take seven and a half minutes before I pass over to my colleague. I hope this exchange can be conversational because I have many questions. This is a report about perspectives on constitutional change. It will come as no shock that I am in favour of constitutional change and am open-minded about how we do that and what it would look like. Dr. Barrett mentioned that the shared island unit facilitates research. In his opinion, how much of that kind of work needs to be done before we start putting together proposals for what a new Ireland could look like? How much work is needed in the gathering of data to allow us to start compiling visions of what things might look like?

Dr. Alan Barrett:

I am happy to start but perhaps one of my colleagues would like to come in.

Dr. Seamus McGuinness:

I am happy to have a go at that question. To address the question of constitutional change, we need to decide what voters need to know at the point of a referendum. They need to know how welfare and living standards differ across various dimensions on both sides of the Border. They need to know what is the situation now. They also need to know how those situations are likely to change in the event of a border poll ratifying reunification. All of the work that is being done for us on behalf of the shared island unit and other work that is being done across the spectrum is populating that information base by noting the differences between the jurisdictions in respect of living standards and general welfare. If there were to be activity to gather that information in advance of a border poll, we would be well down the road.

There are other areas where gaps remain in providing a good, fundamental picture of the differences in welfare and social welfare. That information gap is likely to be plugged, going forward. The big questions are around the planning operation and the fundamental delivery of things such as education, health, social welfare and industrial policy. How will those things change following any border poll ratifying reunification? What pathway will policy take? Over what timescale will those various policies be implemented? What will the outcomes be? That is a completely different scenario and no work has been done in that area. What is the world going to look like on both sides of the Border at the time of a border poll? That information is being populated. The second part around planning has yet to begin.

Emer Currie (Fine Gael)
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Is the first part essential to making the second part work?

Dr. Adele Bergin:

It absolutely is. Through the research done by Dr. McGuinness and me, and by colleagues of ours in the institute, with the shared island unit, we are giving an initial indication of the breadth and detail of analysis that is required for any debate to proceed in a meaningful manner. It is imperative that the evidence base is there for voters to make an informed decision and to allow politicians do their work. To make informed decisions, all the necessary data and evidence must be established in a timely manner before it is possible to move forward.

Emer Currie (Fine Gael)
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Our guests have suggested some of that work has been done. How much of that work remains to be done?

Dr. Alan Barrett:

Tons of it. Dr. McGuinness and Dr. Bergin are being quite modest in their responses. I will be slightly less modest on their behalf. Prior to the existence of the shared island unit, one of the reasons Dr. McGuinness and Dr. Bergin got involved in this area of work was because of the discussion around the subvention. To a great extent, that became a dominant issue and a mini-industry grew up of people asking was the subvention in the amount of £13 billion or zero. All those sorts of things were being discussed. In fairness to Dr. McGuinness and Dr. Bergin, one of the reasons they did the work in the way they did was to ask why Northern Ireland needs such an enormous subvention. The argument put to me by Dr. McGuinness was to suggest that part of planning for any reunification, or the potential of it, should be to ensure that the Northern Ireland economy is brought up to such a level that the subvention is almost removed from the discussion. Dr. McGuinness will remember making the argument to me a number of years ago that on the assumption that this is not going to happen within, for example, the next ten years, if we could make a concerted effort to improve the economic situation of Northern Ireland, we could make a substantial dent in the subvention. Much of the work on things such as productivity, education and everything else is not just about learning, it is about developing insights into the policies that are needed. No matter what happens, the potential for the Republic to cope in the event of reunification would be vastly enhanced by a successful economy in Northern Ireland.

Emer Currie (Fine Gael)
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People like me will vote for a united Ireland or a new Ireland. However, as we have seen in polls, some people, particularly in the South, want to know how much it would cost. There are concerns in the North about how reunification would affect people's standard of living. The figures are stark. Are our guests telling me that since the Good Friday Agreement, productivity in the Northern Ireland economy has fallen by 40%?

Dr. Adele Bergin:

It is not quite that productivity has fallen by 40%. The gap in productivity has fallen by 40%.

Emer Currie (Fine Gael)
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The gap is 40%.

Dr. Adele Bergin:

Around 2000, productivity levels in the North and South were pretty comparable. Over the past 20 years, productivity in the South has been trending upwards while productivity in Northern Ireland has been declining.

Emer Currie (Fine Gael)
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How much control does the Northern Ireland Executive have through its own policies over investment and changing educational attainment?

Dr. Alan Barrett:

We are probably going to start fighting to answer.

Emer Currie (Fine Gael)
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That is great.

Dr. Alan Barrett:

I will make a first key point so we all understand what is going on. When we talk about a decline in productivity in Northern Ireland, it does not mean that everybody working in Northern Ireland is getting less and less productive. What has really happened since the Good Friday Agreement, the late 1990s and 2000, is that Northern Ireland has done a good job in adding extra jobs to its economy. The problem has been that those have typically been lower productivity jobs. If a country has an average level of productivity and adds subsequent workers with lower and lower productivity levels, the average will come down. I will again give great credit to Dr. McGuinness in this regard. One of the discussions we have had in the institute over the years is around the question of a peace dividend. Dr. McGuinness argues there was no peace dividend, while other people say there must have been a peace dividend and that it does not make sense for there not to have been. The reconciliation of those two positions is as follows. Northern Ireland's economy did grow and added jobs and everything like that. However, the Northern Ireland economy did not converge on living standards in the Republic or Britain.

It maintained its relative position. A great success in the Republic over the years has been converging towards European norms. That was the policy objective for quite a while. Northern Ireland has certainly grown over this period, but the key problem is that they have been lower productivity jobs. I will hand over to Dr. McGuinness for the Senator's next question. The question becomes one of whether the Executive can do something. In theory, it can. Its budgetary situation is now becoming constrained and difficult.

Emer Currie (Fine Gael)
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Over the past 20 years.

Dr. Alan Barrett:

I will make one last point and then I will hand over. This is not a casual observation but an informed observation. Comparing policymaking North and South, some of the great advances in the South were achieved because the European Union, through various funding packages, created a culture of integrated policy formulation. If the Senator remembers the various national development plans over the years, there was a real effort to force people to think of how all these things knit together, including their housing, transport and energy investment. Much money was put into human capital. The legacy people think of now when thinking of European Union money is the road network, the port tunnel and so on, but the European Union put much money into regional technical colleges, further and higher education and so on. There was a degree of integration. My observation on policymaking in Northern Ireland is that a great difficulty is that their departments tend to be rather siloed. That is partly as a result of mandatory coalition. It actually relates to the structure of civil service departments too. When I say that in theory the Executive can invest and do all these things, there is a requirement to have a much more integrated sense of policymaking in Northern Ireland. That is a challenge. Sorry, Dr. McGuinness. I monopolised time for a moment.

Emer Currie (Fine Gael)
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Where has the energy been? Has it been going to that integrated approach to investment? Where has it been going? I want to try to understand that big gap.

Dr. Seamus McGuinness:

There are a couple of things to recognise. There is this notion that a peace dividend would have emerged automatically following the Good Friday Agreement. The fact is the North's economy was at the bottom when compared with the Great Britain regional economies. It was already at the bottom in 1968 and 1969, pre-dating the Troubles. The Troubles undoubtedly made the entire situation worse. At the time of the peace agreement, huge structural gaps undoubtedly already existed, particularly compared with British regions. There were especially significant gaps in education. Another aspect is health, when one looks at the rankings of the health services. There was no investment at the time of the Good Friday Agreement to address those structural gaps. There was no extra money to overcome those difficulties. The funding arrangements that have pertained since then have never and will never address those structural gaps. Irrespective of the quality of policymaking, it will be increasingly difficult if the basic infrastructural system is not in place to try to grow the economy. As Dr. Barrett said, the siloed nature of policymaking-----

Emer Currie (Fine Gael)
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Can the Executive change that itself?

Dr. Seamus McGuinness:

Of course it is possible but one needs to have policy integrated across education, industrial policy, infrastructure-----

Emer Currie (Fine Gael)
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Is it within the Executive's power to do that?

Dr. Seamus McGuinness:

It is within its power. The structural gaps we will talk about in education will show that the number of young people qualifying with further education qualifications is three times higher in the Republic than in the North. There is an issue with early school-leaving. Those are structural issues that need funding and need to be addressed through extra money. That includes the health service. Good policy needs to be put in place but there are structural issues that will need to be addressed through extra funding. If those are not addressed, then irrespective of how good the policy situation is, growth will still be constrained.

Frank Feighan (Sligo-Leitrim, Fine Gael)
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I thank the witnesses. Their information was very helpful. It was interesting that they referred to Professor John Bradley saying there was limited communication over the years between Northern Ireland and southern Ireland that led to that lack of shared knowledge. Knowledge is everything if we are going to have an agreed Ireland. I have always felt that Ireland, despite having so many hundreds of thousands of people working in the UK, had a siloed effect too until we joined the EU. I genuinely believe those relationships between officials like the witnesses and the British brought along the Anglo-Irish Agreement and Good Friday Agreement. The fact that the UK is now out of Europe leaves a huge void. We have to work twice as hard to build up those relationships.

The witnesses gave figures of GNIper capitain Ireland being 51% higher than GDP per capitain Northern Ireland, which is stark. The proportion of individuals at risk of poverty in Northern Ireland Is 40.3%, compared with 8.9% in Ireland. A figure of 8.9% is far too high but these figures are quite worrying. In Ireland, people live for 1.4 years longer. That is hard to fathom. There are obviously many different issues, such as education and health, that contribute to this.

Regarding the reform of education and skills provision, what would the witnesses do? One thing we have noticed over the years is that somebody from a loyalist or unionist background has huge challenges in attaining third level education. Do the witnesses have any views on that? Is integrated education the way forward? Some 70% of the public support integrated education in Northern Ireland. Integrated education is currently just a little over 7%. I understand there are challenges. Do the witnesses have any views in that regard? I am delighted they talked about the regional colleges. I have seen them myself in Sligo and Letterkenny. The Atlantic Technological University is the first time there has been a university north of the Dublin-Galway line. Much more cross-Border work can be done now with the Magee campus. Many things are happening here. It shows that our involvement in the EU for more than 50 years has changed our economy.

Snce Brexit and since Covid, certainly in areas that would not be huge wealth generators in the north west where I come from, many upwardly mobile couples have moved into small towns and villages, which have had emigration since the foundation of the State or even before that. One can see something is happening now. Those people are not in the bigger towns or in Dublin but in the small towns and villages. They are part of the Tidy Towns committees and part of the football clubs. They want to get involved. Has that happened in Northern Ireland to the same extent that it has happened here in the past three or four years?

I thank the witnesses for informative and interesting information. I wish them well in their deliberations.

Dr. Adele Bergin:

I thank the Deputy. He covered many topics. There are a couple of things to reflect on regarding education. As Dr. Barrett mentioned, early school leaving in Northern Ireland is twice the rate in the South. That is an important statistic. It is stark. We know early school leaving is associated with a whole range of negative outcomes for people later in life. When we did our study on education, we interviewed stakeholders North and South about some of these issues. Time and again, people highlighted the success of the DEIS programme in the South in reducing early school leaving and having a whole range of positive impacts. Could something similar be tried in Northern Ireland?

What we have seen in the South is that early school leaving has come down quite a bit over time.

Then there is always the elephant in the room when it comes to education in Northern Ireland and that is the impact of academic selection. It is very much contributing to the early school leaving in Northern Ireland.

The other stark difference, North and South, is in the further education and training sector. Dr. Barrett mentioned that only 10% of the population in Northern Ireland has that qualification whereas in the South, it is closer to 30%; post-leaving certificate, PLC, courses have become a lot more popular. What is happening in Ireland is that the status of further education has been improved. Younger people have a better sense, if they take the further education option, what their potential pathways are to further higher education, to the labour market, etc. They can see those paths much more clearly than they can in Northern Ireland. In the configuration of further education in terms of duplication of courses and what young people can see are their options, there seem to be quite strong differences, North and South.

Dr. Seamus McGuinness:

Not to dodge the question on integrated education, from a social perspective it has to be a good thing. From an economic perspective, there is duplication. There is an argument for it as well. Unfortunately, we had no data on religiosity within our data sets but we were able to measure social class. Social class is the biggest predictor of educational failure in the North. The impact of social class on people's likelihood of educational failure is three times higher in the North than it is in the Republic. It is a huge impact. If they come from a poor background, they are much more likely either to be an early school leaver or to have only primary-level education compared to those in the Republic. The issue of academic selection is definitely tied up with that effect.

Rose Conway-Walsh (Mayo, Sinn Fein)
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It is good to have the ESRI here today to discuss this as part of our constitutional future work that we are doing. We have divided it up into different themes and this is our economic section. Last week, we considered pensions and welfare and how that might look as well.

I will focus my contributions on the opportunities for the future but it is important to acknowledge all the work that the ESRI has done and to have it on record, such as its study on cross-Border trade in services, enhancing the attractiveness of the island of Ireland to high-value FDI, foreign direct investment, the analysis of the primary care systems, North and South, and the comparisons of education and training systems and the lessons for policy. These are only some of the studies that the ESRI has done. It is important to have this work done as it informs the debate.

My first question is on those reports. Has the ESRI the ability to choose to look, for example, at the challenges and opportunities of integrating and unifying the systems, such as the economic challenges, North and South, or could we play a role as a committee in recommending to Government what we need to do to move things forward to envisage how things might be in the future?

Dr. Alan Barrett:

The ESRI funding model in a sense drives the work that we do. To have a clear understanding, I will spend 15 seconds on it. Our annual turnover is €10 million, but 70% of that is essentially driven by project-related work that is directly commissioned. A total of 70% is a substantial proportion of our budget. We get a grant of €3 million every year from the Department of Public Expenditure, National Development Plan Delivery and Reform and that provides us with some scope to do work. Some of the work that we mentioned earlier, for example, the work that Dr. McGuinness and Dr. Bergin did on living standards, North and South, came out of our own resources. It is difficult to think in terms of programmes of work unless there is a funding stream behind it. That is the difficulty. As the Deputy can imagine, across the issues that ESRI is researching, such as healthcare and climate, it can be tricky. No doubt we are always very responsive to the work and the suggestions that are made to the extent that it is almost forward looking. There are measures such as the national risk register where one is trying to think ahead about what are the big challenges coming down the line and what are the sort of issues that we should be thinking about. No doubt this will be a very significant issue. Whether or not there is a border poll, this is vast. It is a sensible national thing to be doing to be planning. On some of the issues that the Deputy mentioned, which Dr. McGuinness touched on earlier, the practical questions that arise from the integrations of various systems are phenomenally complex issues. Without a shadow of a doubt, much preparatory work will have to happen. ESRI would be happy to play a role in doing that. However, as I said, we would probably need to have a direction and a funding line to make that happen.

Rose Conway-Walsh (Mayo, Sinn Fein)
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I completely understand that. There is agreement across the board on our need to prepare and it is only how we prepare and how we develop the different questions and the answers to the questions that people have in their minds. Maybe I could ask Dr. Barrett to have a think about that. For us as a committee, what areas should we ask Government to consider?

As the ESRI was doing its research in the different areas, I am sure other questions popped up that it did not have the remit to address. That would be useful in informing our work. I will not ask Dr. Barrett what they are today but it would be valuable if he could submit those to the Chair.

In the ESRI's paper, The Political Economy of a Northern Ireland Border Poll, Drs. McGuinness and Bergin state:

The disconnect between the UK governments' decision to leave the EU and majority opinion in Northern Ireland has undoubtedly increased the likelihood of a border poll taking place. It is also likely that the momentum towards a border poll will continue to build in the wake of subsequent political developments related to Brexit. ... [and] it is crucial that any border poll is accompanied by accurate information regarding the likely costs and benefits of Irish unification.

They will recognise them because they are their own words.

In addition, Professor John Doyle, in his paper, Why the 'Subvention' does not Matter, concludes that the subvention "will be approximately €3 b[illion]" in the event of reunification and that, "Existing economic models of an all-island economy predict a positive impact on economic growth, following a transition period, at a level sufficient to cover this deficit, although more work needs to be done on the public policy decisions necessary to support sustainable economic growth and to maximise the benefits of a larger and integrated all-island economy." It is important we hone in on that. Does Dr. McGuinness agree that the subvention figure is likely to be nearer to €3 billion than some of the figures that we see?

Dr. Seamus McGuinness:

The question of how close it is to €3 billion depends on the €3 billion of this that is related to pensions and what happens around that. There is a bit of a debate on that issue.

My view is that there are existing treaty arrangements between the UK and the EU relating to the mutual obligation of social security payments. That does not exist, for example, with respect to the Scottish debate. There is also existing practice where people have accumulated national insurance contributions in the UK and are subsequently claiming their pensions in another jurisdiction. My view is that the pension arrangement would be still a matter for negotiation because national insurance does not give someone a defined right to a pension but there are reasons to believe that would be the case.

However, I will go back to the point. Subvention is a bit of a red herring in this situation. The argument around subvention believes there will be a border poll that ratifies reunification, that this is the number for subvention and this is the number that will be consumed into the Irish Exchequer ad infinitum.

That could be the case, I suppose, if you want to have an unimaginative view of what reunification would look like that says we have low productivity in Northern Ireland that drives this need for subvention and we are just going to do nothing, we will just go along and we will keep it as it is and that subvention will run into the future. That is not the way policy should look at this. Policy should say the subvention is an issue driven by low productivity. Low productivity is not set in stone; it can be fixed. The planning for reunification should therefore let us have a managed move to reunification if the Border poll ratifies that option and let us decide what is the appropriate period over which that should take place. Is it two years? Is it five years? Is it ten years? What are the policy options we have in order to address Northern Ireland's low productivity during that transition period? How much would it cost, and in what order should those policy levers be addressed? At the end of that scenario, subvention is no longer an issue if Northern Ireland productivity has been raised sufficiently. Then the process should be designed in that way to benefit everyone rather than to take subvention as something set in stone in the sense that low productivity will always be the scenario for the North's economy and the Irish Exchequer will just take care of that into the future. Concentrating on the subvention figure misses the bigger picture and misses something that would be addressed by proper planning.

Rose Conway-Walsh (Mayo, Sinn Fein)
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Yes. I completely get that. That would speak to the fact that there would be a positive impact on economic growth following a transition period if the policies are gotten right, and we can start doing that from now.

Dr. Seamus McGuinness:

We talk about a 40% gap in productivity levels between the North and the South. They were equal 20 years ago. Even if the southern economy had not grown at all, that gap would be 30%. The gap is being driven by falling productivity in the North, and that is related to lots of different things, particularly the quality of jobs being produced. It is therefore not controversial to state that the Northern Ireland economy is underperforming and that there is substantial scope for productivity gains, given the right investment and the right policy framework.

Rose Conway-Walsh (Mayo, Sinn Fein)
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What do the witnesses think are the most likely opportunities for economic growth in the event of reunification or a transition period?

Dr. Alan Barrett:

Let me just pick up one point, and then I will come quickly to the second one. On the issue of the subvention, and the Deputy quoted Professor John Doyle's paper, reasonable people can differ as to what is the scale of the subvention. Ultimately, the critical variable, as Dr. McGuinness has pointed out, is who will take responsibility for pension liabilities, and that will be a matter for negotiation were this to happen. Very sane and sensible people can disagree. That is why you can get figures of €3 billion and €10 billion. In a sense, nobody can be definitive about that because it would ultimately be, I think, an issue for discussion.

Rose Conway-Walsh (Mayo, Sinn Fein)
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But we can look as to where expats are, whether we pay pensions and British people living in Spain, British people living in the South and so on.

Dr. Alan Barrett:

We can but, ultimately, people will differ even as to whether or not this is a grey area and whether there would be a legal obligation on the British Government to pay for pensions for a group of people for ever more. I will just make the point that sane and sensible people can disagree on this.

On the Deputy's question about areas of growth, I would take a very different approach to it. To a great extent, what one would like to see happen is that we get the sorts of issues around education organised appropriately - some of the work that was done in the institute on foreign direct investment, for example - and start thinking about the island of Ireland rather than just the South as a destination for foreign direct investment. There is the complication about the different corporate tax regimes, but even if there were a greater spread of economic activity across the island, in a sense we would not have to start wondering about what the specific sectors are. We just want the conditions to be put in place for economic activity to grow. Back to Deputy Feighan's point, maybe instead of people just moving to Carrick-on-Shannon or wherever, they would be moving north of the Border. It is really more about getting in place the conditions, which are a mix of appropriate education, infrastructural investment, R&D investment and a range of other things. There is no doubt but that greater political stability in Northern Ireland would help from an investment perspective. I think a range of things could click into gear, without necessarily identifying the narrow sectors in which we think this would happen.

Rose Conway-Walsh (Mayo, Sinn Fein)
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I agree in a sense because then there are opportunities presented by Atlantic Technological University and that reach up to the Magee campus and all that. We are waiting for the all-island rail review as well. Again, that presents opportunities for connectivity and transport across the island as well. I very much hear what Dr. Barrett says.

The ESRI states in one of the papers - it was probably Dr. McGuinness again - that "it would be reasonable to expect that Northern Ireland will be entitled to a share of UK assets" and that we would be "expected to take on a share of UK liabilities". Could Dr. McGuinness expand on that? I have not heard that mentioned before.

Dr. Seamus McGuinness:

This is another argument around the subvention scenario. What happens to the North's share of UK debt? Many people will say that is added on in that in the 1920s, I think, that is what happened on the foundation of the southern State. The argument I was making there is that people are looking at the North's share of UK debt but the North also has a share of UK assets and, again, in any negotiations around reunification, and there would be negotiations, it is reasonable to assume, and the argument could be made, that the debt would be set off against any claim to the assets.

Rose Conway-Walsh (Mayo, Sinn Fein)
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I never heard anybody mention assets before. That is why it caught my eye.

Dr. Seamus McGuinness:

In the same way they share the debt, they share the movable and immovable assets.

Rose Conway-Walsh (Mayo, Sinn Fein)
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As regards education, Mr. McGuinness identifies:

[L]arge gaps in educational attainment, and their implications for productivity, ... have been a major concern and should form a key part of any border poll discourse given that reforms to the education system aimed at improving NI productivity are likely to take time to design and implement.

Has the ESRI identified any all-island educational opportunities in the course of its work that would lead to a reduction in the brain drain, first? Second, do the witnesses think there is merit in including further and higher education in the remit of, say, the North-South Ministerial Council? Third, in that regard, what would the witnesses see as the advantages for having an all-island approach to apprenticeships to target that group that seems to be left behind as well in terms of skills?

Dr. Seamus McGuinness:

There are a lot of questions there.

Rose Conway-Walsh (Mayo, Sinn Fein)
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Yes. I am watching the clock.

Dr. Seamus McGuinness:

The major gap in educational attainment in two areas is that they are in the further education system but there just is not enough provision in the North, and in the early school leaving components two obvious things need to happen. There needs to be more provision within the FE sector. As regards an all-island approach, we have evaluated the post-leaving certificate programme, which is Ireland's major vehicle for post-secondary education. It has been found to have very positive outcomes for employment and in ultimate transitions to third level, particularly for children from lower income families. It is a very important vehicle in ensuring that people stay on in education. I think the problem with the Northern Ireland FE system is that there is a lack of provision, there are not the number of places and there is a scattergun as to what courses are available. Everyone here knows about the PLCs. The system also has lower status, I would say. There is an issue with FE having lower status to HE generally, but I think the gap is bigger in the North.

Rose Conway-Walsh (Mayo, Sinn Fein)
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Has the ESRI identified any all-island opportunities around all that, how as an island we can work together to-----

Dr. Seamus McGuinness:

We looked at that within our study, and the level of North-South co-operation within the education realm is very low to non-existent. Where it does exist, it is voluntary. There are two exceptions to that, that is, the SCoTENS project and the work that is done by the all-island inspectorate. There is some integration that happens within the higher education sector, but, again, it is limited and ad hoc. The obvious things from our research that would need to happen is that there needs to be a reform and much more investment within the further education system in the North. The issue of early school leaving needs to be addressed. The issue of social disadvantage in education needs to be addressed. As regards the starting point, where would you look to the Republic in that?

Not having academic selection is one area and having a programme such as delivering equality of opportunity in schools, DEIS, is a second.

Dr. Alan Barrett:

The issue comes up regularly enough, namely, the question around whether it would be possible to have shared approaches to various public services across the island and whether there would be a great benefit. Often what drives that thinking is the notion that there could be economies of scale. These things are much more likely to be available for exploitation in the health area. Specialisation is important is health. We know that from the centres of excellence providing cancer care and whatever else. I can imagine it across health systems. I can think of examples. When it comes to education, most kids are taught in the locality and that makes perfect system. We have to move up the system. I can imagine a situation for courses at university level. It can be argued that not all universities can offer all courses to the highest level possible. I can imagine specialisations across various areas. It is around specialisation and economies of scale rather than standard delivery. The delivery of standard public services are often done best at a more local level rather than nationally.

Rose Conway-Walsh (Mayo, Sinn Fein)
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Economies of scope as well. However, for example, there is no veterinary college in the North and we are now looking at opening another veterinary college here. What is important is that we have the accreditation for both sides of the Border. We cannot have a situation where we are designing courses that only fulfil the needs of half or part of the island. That also needs to be considered.

For the first time ever, in the Higher Education Authority Act 2022, we have explicitly tasked the higher education institutions, HEIs, with having a strategy for student mobility because we know the numbers are low. It is not only for the economic benefits but also for reconciliation and creating a better understanding. All those things can be created. We will continue to work in that area as one of the drivers to fulfil our potential North and South.

Fergus O'Dowd (Louth, Fine Gael)
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It is a useful and enlightening debate.

Erin McGreehan (Fianna Fail)
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I welcome the witnesses. It is great to hear from them and I congratulate them on all their work. It has been an investment well made and the results are very clear. We all know the ESRI's research is crucial to us in moving forward to whatever constitutional status, but simply in moving forward to a better island of Ireland, no matter what goes on. We are stuck together no matter what. It is a great foundation for advancing the economies North and South. It is great that the ESRI's research is free of ideology. Facts speak for themselves. They are plain and simple. To be honest they are stark.

I am from north Louth, near Newry. This is my reality. When I was growing up, and it is spoken about quite a lot, jokingly, when we went across the Border, it was like driving onto a carpet because of the roads. Now it is the opposite. It is a visual difference in how the two states are being funded or of the expectation of what we want. It is stark.

When I was leaving school and earlier, many people went to college in Newry. They went to learn their trades or do childcare and beautician courses in the Southern Regional College in Newry. It is no longer happening. They now go to Dundalk. Our educational focus has done a complete U-turn, as has much of our social focus. Strangely, the economic growth in the two states in the past 25 years has almost made partition in my area greater because we do not look to the North as much as we did, although we still go to The Quays for a good shop, but that is the reality.

The witnesses have highlighted many stark, depressing differences. If I think of a child growing up in the Cooley Peninsula versus a child growing up in Newcastle in south Down, they have different opportunities. That is absolutely wrong. I can see them when I look across Carlingford Lough. Their educational attainment and economic outlook can be different and that is absolutely wrong. The witnesses have outlined differences. Have any similar policies been pushed both North and South but had different outcomes because of the externalities? The witnesses spoke about the integrated approach we have and the different political systems.

We must plan in order to look forward. We have differences. A lot of work needs to be done. Are there any plans to write down a few ways in which we can converge in our policies? What are the most efficient ways for us as a committee or for other committees to push to start converging and getting the best of the North and the best of the South and making the best of both pots?

Are there any low-hanging fruit for co-operation? We know co-operation North and South needs to be nice and easy. It needs to be steady, to have simple, good outcomes and it needs to be clear that co-operation works. Are there any low-hanging fruit we can grasp and say, let us do that?

We co-operate through necessity at the moment. Donegal and Derry have their hospitals and healthcare. Newry provides dialysis for much of County Louth. We have co-operation through necessity. Is there any research into moving forward on that?

Has the ESRI done anything on or are there plans - I am not sure if this is for the ESRI but perhaps the witnesses can advise us - for a framework for co-operation, to counteract the differences, including the budgetary differences and the jurisdictional differences? When I was a councillor on Louth County Council a few years ago, we worked a lot with Newry, Mourne and Down District Council. Many of the barriers that came in front of us related to process, such as how the district council did budgets. It has control of waste and other things. Do the witnesses have any advice on how to work towards an adequate framework? If we can get the local authorities working efficiently and better, we will have a better policy on the ground. That always feeds up. Local authorities always show up. The Members of the Assembly in the North do not always show up. The local authorities are there. A framework could be a good way of moving forward.

Dr. Alan Barrett:

I will give a quick response before I hand over to colleagues on the more difficult questions. The Senator's introductory remarks were fascinating, and let me describe why. She started with the narrative of the old days of when the roads were terrific in Northern Ireland and terrible in the South. There was a sense of relative living standards. I touched on this notion earlier. The work Dr. McGuinness and Dr. Bergin did shows the living standards issue has completely flipped on its head. The numbers have moved in a different direction. It also comes as a surprise to many people. The Senator spoke about the work of the ESRI being good, fact-driven, non-ideological and all those things we appreciate. We are used to hearing that about our work in the Republic but when we ventured into some of these issues in Northern Ireland, in all truth, it was fascinating to see some of the kickback.

There was a sense that a group of people simply would not accept this was the case in a range of issues from living standards to educational failure. It was a bit of a new experience and a good character-building experience for the ESRI that we might have to be more proactive in saying this is what the data say.

That brief meander was an effort to give my colleagues some time to think of answers to Senator McGreehan's more difficult questions. We will see now how successful they have been.

Dr. Seamus McGuinness:

With regard to similar policies that have had different outcomes, in the past 20 years there have been educational expansion policies in both jurisdictions. They have had very different outcomes, as we have seen. There is early school leaving and there is a lack of post-secondary education. The expansion of education in the Republic has been done in a socially cohesive way where an eye has been kept on the fact there needs to be a policy to facilitate children from working-class backgrounds in particular to keep them in school and to encourage them into higher education. The DEIS programme at the lower end and the development of the post-leaving certificate programme at the other end have ensured educational attainment has expanded in a more socially just way.

In the North there has been educational expansion but there has been a much less progressive aspect to it. Children in the North are less likely exceed the educational levels of their parents despite them having much lower levels of education compared with the Republic. We have to ask the reasons for this. There is underfunding and the role of academic selection, which now explicitly excludes children who are not prepared in schools for the transfer test. The only way children can prepare is by going to private tuition, which costs £20 to £30 per hour. This is outside the realm of many families. It is active social exclusion in the educational system. These are two policies that have been implemented differently. They have a similar objective but they have had very different outcomes.

The question on low-lying fruit is very difficult. When we think about an island of this size having two health systems, it is not rocket science to say there is massive duplication and there would be economies of scale to be gained from having a more integrated approach in that sense. There is also the all-Ireland labour market, which has been affected by Brexit. There are potential barriers in terms of the quality of the infrastructure and the rail service. I wanted to get the train from Newry today but I had to get a lift because there was a 70-minute delay in the train service. It is unacceptably poor.

There are tax difficulties with cross-Border employment that need to be looked at, particularly from South to North. This aspect of the all-Ireland labour market is crucial. The Republic is growing at a much faster rate to the North and requires highly skilled labour. Having the North sitting there as a potential source should be a policy objective. Policy should address the issues and ask what are the barriers to the all-Ireland labour market and how we can address them.

Dr. Adele Bergin:

Dr. McGuinness touched on various education policies. The South has a stronger culture than the North of evaluation of policies. We did an evaluation of post-leaving certificate education. Our research was involved in establishing the evidence base needed when SOLAS was thinking about the future of the further education and training system. At various stages we have a better culture in Ireland of stopping, evaluating and trying to learn lessons on what has been successful, seeing whether there have been unintended consequences and asking whether we should change policy.

Senator McGreehan asked whether we could think of a policy that has worked in one place but not the other. I know of many policies that in the South we have said have worked, not worked or half worked. There is not the same perception of what has or has not worked in Northern Ireland. The culture of evaluation does not seem to be there. The danger with this is that a wrong policy could be followed or a policy could have unintended externalities for some time before it is stopped.

Erin McGreehan (Fianna Fail)
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People say they do not want the HSE and present the NHS as a golden goose. In reality we see terrible waiting lists. People are very attached to their disability cars and say they would not want a united Ireland because of their cars or benefits. How do we counteract this? We have big problems with the HSE and people accessing therapies and there are many other problems. How do we improve the message that there are a lot of structural problems in the HSE but there is a great value to what we provide in the South of Ireland? We can provide a valuable healthcare system for everyone in time if we work towards reunification. I would like to hear the analysis of the witnesses on the health aspects.

Dr. Alan Barrett:

This is fascinating for a variety of reasons. The first I will speak about is one on which I admit no expertise. Economists are not psychologists but something that is fascinating is the extent to which people in Northern Ireland have an attachment to the NHS even though the reality of the system they confront is so far removed from what we would typically think of as the NHS. It is an ongoing mystery as to why there is ongoing attachment to something that is patenting not working. It is beyond our competence to explain how this can be.

In Senator McGreehan's earlier questions she asked about the notion of a framework for co-operation. Rather than thinking about a framework, the key point is that normally in life where people can see there are mutual benefits in doing something, they will run with it. I have had conversations with unionist politicians in Northern Ireland, as I am sure has Senator McGreehan. While there are sensitivities and there can be difficulties, somebody once said to me that fundamentally the main drive of most politicians is to make life a little bit better for their constituents than it otherwise would be. If we can sell certain things on the basis there are mutual benefits, it does not have to be threatening in a constitutional sense. It is really just about making life on the island better for all citizens, North and South, under whatever political dispensation.

Erin McGreehan (Fianna Fail)
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Co-operation on children's healthcare is a classic example.

Dr. Alan Barrett:

This is the classic example. In the health system in Northern Ireland, there is greater recognition that it is not working and that the system is broken. Its difficulties will be compounded in the coming years. We are aware of the budgetary difficulties that exist in Northern Ireland at present. The Barnett formula, with which the committee is very familiar, has been held up for many years as guaranteeing positive public finance outcomes in Northern Ireland. It is now recognised that the need in Northern Ireland is 25% higher per capitathan in England. Once funding of public services falls below 125% per capita, although Northern Ireland gets more per capita, it does not make up for the needs gap that exists. Northern Ireland is transitioning to a phase whereby through the Barnett formula the amount it gets per head is falling below what it needs. This means further squeezes on health expenditure. It means that all of the difficulties that exist will be further compounded. Looking at some of the issues of expertise that we touched on earlier, I would have thought they are areas that can be solved.

Deputy Feighan is present and is aware of issues with Roscommon University Hospital.

It has been demonstrated previously that rationalising health services is not a simple thing to do.

Frank Feighan (Sligo-Leitrim, Fine Gael)
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Exactly, and many politicians have found that to be true.

Dr. Alan Barrett:

Exactly, I can well understand. These are not necessarily true but, again, it is around the idea of selling the idea. "Selling" is probably an unfortunate word but convincing people that a greater good can be achieved if we rationalise and, as Dr. McGuinness said, we are a small island if we do it on an all-island basis.

Erin McGreehan (Fianna Fail)
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The state of Northern Ireland was set up more than 100 years ago. In the expert opinion of the witnesses, was that state created to fail? I ask because Northern Ireland has not thrived in the way that it should have, particularly as it was the capital of industry and the best performing area on this island. I imagine that people thought that we would never cope down here by ourselves. We thought that the Boundary Commission would change the situation and that a place called Northern Ireland would never continue. However, it now 100 years later and at every passing decade, we see worse outcomes for people. Do the witnesses think that Northern Ireland was an economic state that was not meant to succeed?

Dr. Seamus McGuinness:

Those assertions are all true. The reason we got involved in this work is we saw the amount of lies, and misinformation, involved in the Brexit debate. We thought that a border poll is now more likely and inevitable because the Brexit debate has resulted in shifts in political beliefs and demographics. Our paper was published in the Cambridge Journal of Economics recommends that we need to set out what is required for an honest referendum that avoids the worst mistakes of Brexit. At the time of writing that document, if someone had asked anybody about North-South differences, they would have said that the North has higher living standards, a better education system and a better health service, all of which have been proven to be false assumptions so the argument about how North would have been characterised five years is very different. That is only different because the facts, which are verifiable and independent, have been produced that demonstrate that people's assumption about how things work on both sides of the Border were, in general, not correct. Irrespective of how we got there, the North has been a net contributor to the British Treasury but only up until 1935 so it has received some level of subsidy for a very long time. We could discuss all day how the North has reached the current situation. We must continue the work of equipping people with the real facts as they stand on the ground so that as a border poll approaches, people can be certain about how the relativities sit in terms of welfare, living standards, education, etc., on both sides of the Border. Then they need to know what is the plan, which is the bit that is missing.

Fergus O'Dowd (Louth, Fine Gael)
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I confirm that Ms Gildernew is online and she can hear me. I urge the witnesses to continue.

Dr. Adele Bergin:

On the health question, both jurisdictions are poor performers when compared with the OECD. Dr. Barrett mentioned the attachment to the NHS. It is very important to remember that there are four versions of the NHS. The performances of NI relative to the NHS in the other regions is quite different.

Some of these gaps have gotten quite large in more recent years such as the more recent waiting list data. A colleague of ours, Dr. Sheelah Connolly, has talked about waiting times for various things. While we have an issue with waiting lists in the South, Northern Ireland has pulled away massively compared with the South or the rest of the UK. There is a huge job to be done to get basic information out there and to keep those facts and tables up to date and relevant. These perceptions just do not stand up when compared with data.

Fergus O'Dowd (Louth, Fine Gael)
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I have no issue with people continuing to talk but I wish to advise that the next slot belongs to Sinn Féin. Three members have indicated a wish to ask questions but there may be more and only an hour and half remains of this meeting.

Dr. Alan Barrett:

I will quickly respond to the very broad question, which was borderline about the sustainability of the Northern state. All nations and states have poorer regions and obviously in the Republic, we have poorer regions. It was not necessarily inevitable that Northern Ireland, as an entity, would have run into difficulties. It really was more a question of how policy, and especially policy from London, impacted. It is important to note that while a lot of money flowed into Northern Ireland over many years, it is not entirely clear that the money was used well. A former colleague of ours put it very succinctly that a lot of the money was used for current consumption purposes rather than real investment in Northern Ireland. Over the past number of years, Tory Governments have had different perspectives on regional-type policies than others. Failure was not inevitable but certain things were done over time that ensured that success was not inevitable either.

Fergus O'Dowd (Louth, Fine Gael)
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Does Ms Gildernew wish to contribute?

Ms Michelle Gildernew:

I would appreciate that; my camera is switched off. Senator Ó Donnghaile will speak after I ask a quick question. This has been excellent discussion with Dr. McGuinness and his colleagues busting some of the economic myths that we have been fed for a number of years. I thank the ESRI delegation for their measured and useful contributions. Comhghairdeas

I represent the constituency of Fermanagh and South Tyrone. We know that we cannot deliver every service in the constituency. Equally, we know that there are services that do need to be delivered in Belfast and Dublin. Thrombectomy care is available in Dublin on a 24-hour basis. However, the service is provided in Belfast from 9 a.m. to 5 p.m. on Monday to Friday but if weekend work is required, patients must be sent to Dublin. That is a great because the service is not needed full time in the North and we can work collectively on the island of Ireland. A thrombectomy is not like thrombolytics, which consists of stroke-busting drugs and there is a four-hour window to deliver the treatment. The delivery of a thrombectomy has a 20-hour to 24-hour window so it is possible to provide the service on an all-island basis. Let us consider paediatric services, and some other specialisms. Earlier Deputy Conway-Walsh mentioned veterinary colleges and all so on. We should be more efficient. Dr. McGuinness hit the nail on the head when he mentioned that we are "unimaginative." We need to be imaginative when it comes to finding ways to make savings and work collaboratively across the island of Ireland in this transition period and we certainly need more information to assist us in that. We also need to learn from both the Brexit and Scottish referenda in terms of how we go forward.

I have a question for Dr. McGuinness about people who have contributed to pensions. I contribute to the British exchequer and expect it to honour my pension. Another interesting point was made concerning assets versus liabilities. We need to further explore the subvention, bust any myths and analyse the situation in-depth. Do we contribute to things like the Ministry of Defence? Britain has ring-fenced 2% of its overall funding for the Ministry of Defence and I presume we contribute to that, which is not something we would choose to do. We do not want to pay for Trident and, at the minute, we are contributing to it whether we like it or not. My question relates to what we are paying for that we do not benefit from or want to contribute to.

Dr. Seamus McGuinness:

I think some parts of the subvention debate are really not that controversial. I do not think many people would argue that the North's share of the cost of running embassy services and of defence spending would be maintained after reunification. Pensions become more of an issue because the UK model for pensions and national insurance is to fund current pensions, as opposed to people's future pensions. It does not actually legally equip anybody with a guaranteed right to a pension in the future. No one paying national insurance now who is not in receipt of a pension is legally guaranteed a pension in the future. That is the key issue here. I think this issue will have to be negotiated. It could be an issue on which a future British Government could completely renege. The possibility exists that they might take no liability for these pensions. The difference here is that there are existing treaty arrangements between the EU and the UK that were re-ratified after Brexit. Professor Mike Tomlinson has talked about this in his paper "Social Security in a United Ireland" in the journalIrish Studies in International Affairs. Those reciprocal rights mean that people's national insurance-type contributions made in both states are mutually recognised. A person can earn contributions in the UK and claim a pension in the EU and vice versa. This is an important aspect that will inform any negotiations on the issue. Professor John Doyle talks about existing custom and practice extensively in his paper. He gives multiple examples of people who have accrued national insurance contributions in the UK labour market and are subsequently paid in other jurisdictions - Spain, Dublin and elsewhere.

Coming back to the subvention debate and the issue around the North's share of running embassy services and military defence spending, we can forget the argument that those would carry on after reunification. The pensions issue is potentially more of a grey area. The Scottish Government is putting this back on the table in terms of its argument for a second independence referendum even though it seemed to be resolved before 2014. The evidence of the treaty obligations and custom and practice would suggest that those pensions, or at least a large share of them, would not remain a liability for the Irish Exchequer following on from any poll opting for reunification.

Dr. Adele Bergin:

It is wrong to view the subvention through the lens of it being a static figure of €9.2 billion that bits can be taken from with varying degrees of certainty. Lower productivity in the North creates the need for a subvention in the first place. Another point here is that irrespective of constitutional change, would it not be desirable to have policies in place that would improve Northern Ireland's productivity, education and overall living standards to reduce the need for a subvention? One of the goals should be to put policies in place that would improve people's living standards, irrespective of the constitutional question. That is a really important point to bear in mind.

Dr. Seamus McGuinness:

We make this point in another of our papers that it is only really an estimate. Nobody knows exactly the true figure is for this because of smoke and mirrors around things like corporation tax. Professor Mike Tomlinson did a quick analysis of this. When the Irish tax code is applied to the North tax receipts would increase by 11% through higher taxation of higher income employees and employers of the low paid, so it is a movable figure. It is therefore a movable figure.

Regarding reunification, the subvention is not of a scale that could be considered a major barrier any more. It is more important as a signal for where policy needs to operate, if any transition to unity is to work in the interest of everybody, both economically and socially. We have an underperforming economy in the North and the focus really should be on fixing that situation for people there now and in the future so that the subvention is not an irrelevance. If we imagine there had not been a 30% fall in productivity over the last 20 years, where would the situation be in terms of that number? We really need to focus on stopping that decline in relative productivity and living standards. That is the way to address the issue. We do not want a subvention in any scenario of Irish unity. Subvention is a measure of economic failure and any process we implement should be focused on eradicating that failure and moving forward so it simply becomes a non-issue.

Dr. Alan Barrett:

I do not think any of us is a health expert so we may kick the Senator's question to touch. We can, however, put him in touch with one of our colleagues who knows a lot about it. I will make a couple of points here. When we produced a report on primary health care some of the data difficulties across the two jurisdictions came up very starkly. It turned out to be way more difficult than anticipated. Originally, the idea had been that we wanted to look at access to primary care North and South on the assumption that under an NHS system, there was greater and freer access to primary health care in Northern Ireland, and that might manifest itself in certain positive health outcomes. The project turned out to be much more difficult because the basic data and information were simply not available. In a way, this takes us back to some of the questions that were asked earlier. When one attempts to integrate two health systems the data requirements are enormous. If systems are not talking to one another, even at that stage, a huge amount of work needs to be done to start blending things.

We talk about the two systems as if they are remarkably different. However, one of the points that was brought home to me as we were doing things is that people talk about free at the point of access universal healthcare in Northern Ireland, and not in the South. We have to remember that something like 1.5 or 2 million people in the South have medical cards or GP cards so a huge proportion of people have access similar to that in the North. Sometimes we probably exaggerate some of the differences between the two systems.

The very last thing I will say relates to the premise of Senator Ó Donnghaile's question, which was that in a unified island we will have a single system. Maybe we will not. I am involved in the analysing and researching Ireland, North and South, ARINS, project between the Royal Irish Academy and the University of Notre Dame. This group is giving a lot of thought to a lot of issues. As the Deputy will understand, one of the starting points there relates to what precisely a unified Ireland would look like. They are talking about everything from having Stormont remain in place. I am sure there are countries in the world that are way more federal. There could be a system where there are two systems remaining on the island. There could be a transition period during which we would look to exploit some of the benefits. It goes again to some of the points made by Mr. McGuinness over time. If we think about reunification possibilities, it does not have to be a big bang in the sense that everything is this way one day and then everything is a different way. There can be transitions across economic development, the merging of systems and a whole range of other circumstances. For practical reasons it could take a very long time to blend the North and South health systems.

Dr. Seamus McGuinness:

Even looking at the issue of human resources and pay grades, it is a hugely complex area. All of these questions are hugely complex. I am saying that the work the ESRI is doing is populating the question of how things stand now. The planning bit is much more complex than anything that could be achieved. It would require something like an all-island Bengoa commission on health, and something similar in education. That requires investment, scale and time. There is a point beyond which we cannot answer any more questions because it is on that planning phase that has not been initiated. That will require a huge amount of resources and technical expertise across many areas. We can look at the Scotland's Future document as some sort of blueprint for that. In a sense, that was simpler because they had their own education system and health system so the scale of this planning process will be well beyond what was required for the independence referendum.

Dr. Alan Barrett:

We are thinking about this and having a discussion at the Good Friday Agreement committee. Over the next 20 years, regardless of Northern Ireland, we have to plan for population growth of approximately 1 million in the South. All of these discussions have to be layered over that. During a quick discussion I recently had with a colleague, they made the point that the big constraint in Irish healthcare at the moment in the Republic is not physical infrastructure but the workforce. To an extent, we think in terms of systems. Professor McGuinness touched on the point that if we do not have the bodies to populate the system, we have a real problem. The merging of two systems with two workforces, two civil services or whatever it is, and where people are on very different pay rates and in very different structures, is enormously complicated. We have not even touched on merging the welfare systems, for example.

Rose Conway-Walsh (Mayo, Sinn Fein)
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I just want to make a short point in the remaining minute and a half.

Fergus O'Dowd (Louth, Fine Gael)
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Two minutes.

Rose Conway-Walsh (Mayo, Sinn Fein)
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We are trying to assist the ESRI in what it is doing. In the submissions we made to the Central Statistics Office, CSO, on having congruence with the data North and South, we encouraged it through the Joint Committee on Finance and the Committee on Budgetary Oversight to talk to its counterpart in the North and have a formal arrangement there that will provide more data to assist the ESRI and others in the work they are doing. I hope that will be helpful.

In terms of health and workforce planning, we have to plan now for five, ten, 15 or 20 years' time. That has to be done on an all-island basis and regardless of the Constitution. We have a situation where people are being trained in the North, and their qualifications are not recognised here and vice versa in terms of CORU and others.

I want to ask about the west and northwest being in transition and attracting European funding. Perhaps it will be addressed when answering other questions. If there is a transitional situation where there is constitutional change, and if the island will be part of the EU, would the ESRI see the North then being regarded as a region in transition? If so, what might that attract? Projects and investments under the European Regional Development Fund, ERDF, attract 60% funding. That needs to be taken into account as we look at where we might be economically.

Jerry Buttimer (Fine Gael)
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We allocate the same amount of time to everybody. Parties choose their speakers. If somebody speaks twice, they are more than welcome. I want to make that point because there are people watching. I have a meeting with the Taoiseach shortly that I cannot avoid so I will have to leave but with permission I have two quick questions for the ESRI. It has said that the workforce in Northern Ireland has very low productivity compared to the workforce in the South. At the same time the unemployment rate, from what I read and if it is accurate, is less than 3%. I am trying to understand what it actually means for everybody to be in employment if the jobs are not adequate in terms of high skills requirements or whatever. What is at the core of all of that?

Dr. Seamus McGuinness:

As Dr. Barrett explained, it is fundamentally the case that when we look at Northern Ireland in the context of the regions of Great Britain, it was historically a region of high unemployment. When I worked in Belfast, industrial policy was always aimed at expanding employment and cutting unemployment. At the same time, educational attainment has been rising. It is not that the workers are less productive, but that the workers should become more productive because they have more education and skills than they had in the past. If the objective of industrial policy is simply to expand employment, and if we do not really check the quality of the jobs coming in, the average quality of the jobs will fall over time.

Jerry Buttimer (Fine Gael)
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If I want to improve myself because I am not getting the same income from a lower productivity job that I would from a higher productivity job, would that not be-----

Dr. Seamus McGuinness:

I will explain what we mean by productivity in this context. If there is a graduate in a non-graduate job that requires the leaving certificate, and the guy beside him is doing the same job and he has the leaving certificate, we would expect that the graduate would earn slightly more than the guy beside him who is doing the same job and has the leaving certificate. He will never earn as much as a graduate in a graduate job because the job itself puts a ceiling on how productive that worker can be and therefore the wages he can earn.

Jerry Buttimer (Fine Gael)
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A question was asked about the unemployment rate. It is very low. It is amazing, actually.

Dr. Seamus McGuinness:

The unemployment rate can fall. They are getting more people into jobs and that has been a success. They are not necessarily getting more people into good jobs - the data suggest that the opposite is the case.

This is the only way we could see productivity falling, which is very unusual in international terms. Stagnant productivity could be expected, but falling productivity is very worrying and to the extent we have seen it, this is especially worrying for the North. The only way this can happen is if there has been an expansion of employment but the average quality of that employment has been falling over time. This then raises important questions in respect of how economic policy has been run, how successful the agencies involved in industrial policy have been and foreign direct investment and what they have been doing.

Fergus O'Dowd (Louth, Fine Gael)
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The other part of this is that, as stated in the paper, the number of people at risk of poverty is very high in the North, compared with the South.

Dr. Seamus McGuinness:

Yes.

Fergus O'Dowd (Louth, Fine Gael)
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How does it compare with the UK generally?

Dr. Seamus McGuinness:

The important point that is missing is that if we compare the poverty rates before the tax and welfare systems kick in, then the proportion of people at risk of poverty in the Republic is higher than in the North. The rate in the South then falls well below the North following the impact of the tax and welfare system.

Fergus O'Dowd (Louth, Fine Gael)
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This is the redistribution.

Dr. Seamus McGuinness:

This shows that the system in the Republic is much more redistributive relative to the North and it has this big impact. I am not sure if we have a figure for it, but we would expect it to be higher, based on incomes generally being lower compared to British rates.

Fergus O'Dowd (Louth, Fine Gael)
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I thank Dr. McGuinness. To make one last point, what is missing in this debate is a contribution from the equivalent of the ESRI in the North, whatever organisation that may be. In the context of debates being attended in the North, academic debates or whatever, I presume, it was said there is a different perspective on what the witnesses here might say. It is our job to try to understand that other perspective as well. I think we need to hear such responses as well to understand what other people might think and feel regarding what the witnesses are saying.

Dr. Alan Barrett:

On that point, we had a very productive joint conference with Queen's University in Belfast just some weeks ago.

Fergus O'Dowd (Louth, Fine Gael)
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Sure.

Dr. Alan Barrett:

In that setting, among the economics community there is a broad agreement----

Fergus O'Dowd (Louth, Fine Gael)
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Fair enough, I was just referring to the comments that were made-----

Dr. Alan Barrett:

It was a broader range of commentators, if I can delicately put it like that.

Fergus O'Dowd (Louth, Fine Gael)
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Okay. I hear that and it is good stuff. I apologise now for leaving but I have a meeting I must attend.

Erin McGreehan (Fianna Fail)
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I call Senator Black.

Frances Black (Independent)
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I thank the witnesses for their presentation. It is powerful listening to all of them. Their expertise and experience are valuable and vital to this committee, especially on this subject. We hope to bring out a report and it is important we hear the recommendations of the ESRI. I am glad we are having this conversation in the Oireachtas. I say this because I believe these conversations are being had in communities and around kitchen tables all over this country. This is hopeful and exciting. I found all the contributions the witnesses made to the Seanad Public Consultation Committee, of which Senator Mark Daly was the driver, fantastic. It is great we can expand on that today.

I have several questions, and I will start with the education aspect. I would love it if the witnesses could give us a few recommendations in their answers as well. Dr. Bergin and Dr. McGuinness mentioned earlier the differences in academic attainment between the North and South. I found that information fascinating, to be honest. It was mentioned that academic selection exacerbates socioeconomic disparities. Will the witnesses elaborate some more on this point and take some time to really expand on it?

While I have the witnesses here, I also wish to ask them about the Windsor Framework. Much has been made of the potential economic benefits this could provide for Northern Ireland. I cannot ask the witnesses to predict the future, but has their work in the area provided them with any sense of how the North's economy could be impacted by these developments?

Dr. Seamus McGuinness:

Effectively, how academic selection works is that at the age of 11, some 30% of young people are segmented into the grammar school system and 70% into the non-grammar school system. The educational system works very well for that 30% of students, but perhaps not so well for a significant proportion of the other 70%. More filtering out happens at the age of 16. This occurs even in good schools because school rankings are also important and schools tend to retain those students who are most likely to perform at A-level. This means young people are filtered out at this point as well.

The process of academic selection then consists of this filtering process. It is the context of this filtering process, especially at a very young age, where the problems begin. Our international research has shown there are much better outcomes for everyone if students are taught in mixed-ability classes. This is pretty much the effect evident from the international literature on this issue. Obviously, a stigmatisation process also goes on for those children who do not pass the transfer test and there is also an issue with self-esteem. Equally, there is an issue with social equality, where children from working-class backgrounds are less able even to participate in that system. They are being excluded from the outset because of the initial upfront cost associated with private tuition. It is important to say that in our study looking at North-South educational differences, we spoke to educationalists, policymakers and people involved in both sections, in respect of the Catholic and non-maintained sectors. We found no one who was supportive of academic selection as a process.

We were told the parents themselves object. Those who can afford to participate in the system feel they have to do so in the best interests of their children. When we see significant rates of early school leaving, up to three times higher, in the North and when you break that statistic down, you will find it will encompass those in the social classes who have been excluded from the academic selection system in the first place. The drag of coming from a lower-income family is much higher in terms of subsequent educational attainment and therefore subsequent future income, and in the North this rate is again a multiple of that in the South.

Other factors are also in play in terms of policies to combat social inequalities in school, but it is hard to conclude that the maintenance of academic selection is anything but damaging, and particularly for children from lower socioeconomic groups. It is very difficult to find any argument in favour of maintaining this system. It has gone from the British system. It is quite an archaic approach and the North is one of the last areas that has this type of system in operation.

Frances Black (Independent)
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Okay.

Dr. Alan Barrett:

I will do the best I can on the Windsor Framework question. I am drawing on the work of colleagues, rather than my own. What ESRI work has shown is that access to and being in the EU really matters for FDI. Colleagues have done work where they have tried to look at the inflow of foreign direct investment in countries and regions and subsequently tried to link this to taxation, language spoken, legal frameworks and all these sorts of things. In that context, being in the EU really matters in terms of FDI. To the extent then, under the Windsor Framework, that Northern Ireland, at least for the purposes of trade in goods, is still, essentially, in the EU, this situation should be very positive for investment coming into Northern Ireland.

Strangely too, there could be an additional benefit for Northern Ireland due to the fact that Great Britain is outside the EU. One can imagine when all of the United Kingdom was in the European Union, a foreign direct investment entity would have looked at the entirety of the UK to decide, if it wanted to locate in the European Union, where in the UK it would locate. One could potentially have a diversion effect now with the firms that had heretofore considered locating in the UK maybe deciding to go to the bit of the UK that is still in the European Union. There are positives there and, over time, subject to some of the points we made earlier on having a more rational economic policy and framework, that potential is quite significant and could make a difference. One of the points we always try to emphasise is that in and of itself Brexit is not going to make a difference and that all these other sorts of investments are needed to make the whole thing happen.

The only question mark I will put at the end of all that, and I am again on the edges of my expertise here, is the extent to which the Stormont brake and arrangements within the framework throw up any doubt around the possible ongoing operation of this. That is the sort of thing which works against foreign direct investment because nobody wants to invest and then discover subsequently that if there is a divergence between the EU and UK legislation and Stormont is operating in particular ways to align in various ways, that could be a problem. Generally, it should be positive, however.

Dr. Adele Bergin:

I will add to that briefly. One thing we have seen since Brexit is an increase in the cross-Border goods trade, North and South, which we can see from work done by a colleague of ours, Martina Lawless. This is put down to the unique status of Northern Ireland in having full access on the goods side of the UK and the wider EU. The important point to make here is that it does not apply to services trade and is only on the goods side. This is often forgotten in the debate.

Services make up a growing but small enough amount of the trade going over the Border but there remains the potential for the services trade to be negatively impacted, especially if there is any divergence with the UK with regard to services regulations over the longer term. That is something else to bear in mind.

Frances Black (Independent)
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Given the current debates about the future of Ireland, the shared island and the all-island economy, what are the priorities for future research?

Dr. Seamus McGuinness:

Going back to our Cambridge Journal of Economics paper with respect to the all-island economy, the point we made there is that if we believe a border poll is probable in the future, it is not rational not to plan properly for it. One does not have to believe it is going to happen, or even want it to happen, but one has to accept that it is a possibility that it will happen. We need to look at Brexit for the lessons of how to run constitutional referendums badly. My opinion, and I am not speaking for the ESRI here, is that the planning needs to be put in place and it needs to be properly funded, structured, independent and verifiable planning that can be trusted by the people when they vote on these issues. That is where the priorities lie.

Frances Black (Independent)
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I definitely agree with Dr. McGuinness there. There is no doubt but that it is coming down the road. There is no point in kicking the can down the road as there will be a border poll. Planning and preparing are vital. I have one more question-----

Dr. Alan Barrett:

If I can just add to that, Senator Black posed a question with regard to research priorities. I believe much of this discussion is around the mechanisms as to how this will happen. A certain amount of work and knowledge of the economy and the societies North and South is in place but the very tough stuff here is the granular public administration type work on how to merge the health and education systems, and all those sorts of things. There are also cost implications here. This is not so much about the subvention but simply looking at welfare rates in Ireland versus the North - the committee is made up of politicians who know more about this - I would imagine that most people would understand that if one is going to do this, the expectation is that one will converge to the higher rate and not the lower one. What then are the implications of this?

Dr. McGuinness has already mentioned that the tax systems North and South are very different. We exempt a large number of lower income people from taxation. Again, what will be done about that? There are costs associated with that which we can project and think about with regard to the implications of that. This is granular and it will be tricky work with costs attached to it. I believe that when putting the roadmap in place, it will be around those sorts of issues. I would see those as the research priorities from here on out.

Dr. Seamus McGuinness:

Those questions are very complex. They take a great deal of expertise and planning.

Frances Black (Independent)
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What might be the main economic benefits for a new and united Ireland within the EU? Do the witnesses believe there could be such benefits? What are their thoughts on any new economic benefits that might arise within the EU in an all-Ireland scenario?

Dr. Alan Barrett:

On economic benefits, our discussion today has very much not been about the constitutionality but about improving the economy of Northern Ireland and outcomes there. If we look at the South, we have an economy that is doing very well at the moment. Of course, there are pockets which are not doing as well. We want to be bringing people up to higher levels but for me it is very much around the difficulties in Northern Ireland and bringing that group up higher. Is the entire constitutional discussion about some extraordinary economic leap forward? Looking at Irish output, productivity levels and all of that, we are not going to be able to jump way ahead of everybody else in the world or anything like that. I would not overstate the potential economic benefits of an all-island situation but there are very good reasons one would want it to happen, other than that it would deliver significant economic growth. I would compartmentalise there. Again, we are not talking from ESRI positions here and colleagues are open to-----

Dr. Seamus McGuinness:

Ultimately, with regard to the benefits, we would have to look at a model that stops the decline of productivity in the North. Falling productivity that impacts on wages, the sustainability of services and the ability of a region to invest. Any move to any constitutional framework has to stop that. The biggest gains from any changes in constitutional arrangements would be to have a policy and investment framework that could stop the drop in productivity and improve those levels in the North. Bringing up productivity levels lowers or eradicates subvention, raises incomes and tax receipts and improves the ability of the region to enjoy and benefit from investment. That should be the focus. The work we have done and some of the statistics and trends have been truly disturbing, even for us. We were not expecting to see that. We are seeing a region that is substantially underperforming and therefore has substantial possibilities with respect to higher future growth, higher income levels and higher welfare and living standards under the right policy framework.

Violet-Anne Wynne (Clare, Independent)
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I was fascinated by the information provided. I thank the speakers from the ESRI for attending. I commend the fantastic work it has conducted. I am aware that the ESRI was struck by the lack of North-South comparative research. I wanted to say well done to the institute right now because without it and the research it has done, this particular conversation most likely would not be taking place today. It is very important that we are getting into the nitty-gritty, especially in respect of the social welfare systems and the differences on either side.

I also want to look at the stark statistics contained in the opening statement.

It is mentioned that life expectancy at birth in Ireland exceeds that in the North of Ireland by 1.4 years and that differences in life expectancy across countries can be a useful measure of general welfare and living conditions. Dr. Bergin mentioned that she would like to elaborate further on that point. I hope she might do so now.

Dr. Adele Bergin:

I thank the Deputy for her question. One of the reasons we homed in on the life expectancy measure in our work comparing living standards is that it takes you away from the economic measures that are typically used, such as GDP per capitaand so on. A whole range of things go into determining life expectancy in a region. Factors including economic growth, people's incomes, access to healthcare and educational attainment combine to give life expectancy in a region. One of the things we were particularly struck by is that, going back 20 years, life expectancy in Northern Ireland was close to or above that in the Republic. We have seen life expectancy continue to increase in the South and a gap has emerged. We cannot say for sure what is driving it. All of the factors we have mentioned, from healthcare to income and everything else, combine to give us that. We do not have data for Northern Ireland for more recent years. The data the Deputy has referred to are for 2017.

The other day, I was looking at some of the statistics on life expectancy for Ireland and the UK contained in OECD data covering the first part of the pandemic and one of the things we have seen between 2019 and 2020 is that life expectancy in Ireland fell by 0.2 years. That is a fall, which is not a great thing to see, but life expectancy in the UK fell by a year between 2019 and 2020. That is what the most recent data show, which illustrates the stark impact of the pandemic. However, I digress.

We do not have the same data for Northern Ireland for recent years. They are just not available. One of the reasons we really like this life expectancy measure is that it tells us something about everything and the cumulative difference in living standards and welfare between the two jurisdictions. When we see that gap, we know it reflects an overall gap in living standards, opportunity and all of that kind of thing.

Dr. Alan Barrett:

The other great advantage of that particular measure is that people cannot dispute it. If you start talking about GDP, people say it is based on all of the funny money coming in and out of Ireland. People will also question talk about incomes. However, life expectancy is a pretty definitive figure so there is less scope to discuss its authenticity.

Violet-Anne Wynne (Clare, Independent)
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To move on to productivity, it was mentioned that there were major differences. I note that the ESRI did not find evidence of causality between the usual factors and suggested that a comprehensive strategy was needed. I ask the witnesses to come back with recommendations in respect of this comprehensive strategy and what it would look like. This was already covered to some degree in previous responses to other Deputies and Senators but what would the ideal comprehensive strategy look like? That is really it on that point.

Dr. Alan Barrett:

We touched on this a little bit earlier. We think about this as a plan in the style of the national development plans that have been rolled out in the Republic over the years since the mid-1990s and probably even before. This was very often in the context of European money being made available. Expenditures needed to be set out across a whole range of areas. Everybody thinks of roads, wastewater treatment plants and all of those sorts of major infrastructure, which are all really important for an economy to function well, but a lot of European money went into things like higher and further education. It is about the notion of a very integrated strategy. For a variety of reasons, there has not been that sort of integrated strategy in Northern Ireland for quite a while. Even at a much more basic level, you always want a government to have a programme for government so that it has a roadmap and an agreed set of principles to pursue. However, because of the on-off nature of the Executive over quite a long period, there has not even been a programme for government in place. That causes real complications because, apart from the difficulties from a policy formulation point of view, to return to the point Dr. Bergin made earlier when we were talking about a culture of evaluation, it is very hard to evaluate how a government is doing when, for example, trying to assess the annual budget if there is no benchmark against which to decide whether it is doing a good job. It all goes back to the issue of integrated policy. To a certain extent, precisely what is done is almost a second order issue compared to the first notion of a high-level integrated approach to all these things in which you think of all the levers of policy that should be working together to achieve the sorts of outcomes you want.

Violet-Anne Wynne (Clare, Independent)
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To move on, Dr. Barrett mentioned education, which was the next thing I was coming to. With regard to the number of early school leavers, the situation in the North of Ireland is obviously disappointing and concerning to everyone here. Dr. Barrett mentioned that children are now not exceeding their parents in respect of their level of educational attainment. He also mentioned academic selection, the damage that is causing and the fact that the UK has got rid of that but that it is still in effect in the North of Ireland. He mentioned the post-leaving certificate, PLC, and third level education we have in the South of Ireland. I personally availed of the Trinity access programme and am also aware that there is a direct entry route into education. There are no alternatives and no equivalent to these programmes to help people access education in different forms or through different methods in the North of Ireland. Do the witnesses have any information on apprenticeships?

Dr. Seamus McGuinness:

The benefit of the post-compulsory education system in the Republic is its clarity, its simplicity and the fact that, if you undertake a PLC course or apprenticeship, you can see your current level of education and how to map a path through higher education and lifelong learning. On the issue in the North, I live in Newry and know Southern Regional College. What it does is excellent but the system is very difficult to navigate. Our study has shown that, in the further education system in the North, the colleges are competing against each other and against schools, because the further education colleges provide A levels, which are traditionally provided in schools. The schools are now providing vocational courses such as those traditionally provided in the further education colleges. It is an issue of higher levels of complexity within the further education system in the North than within the system in the South, where the PLC system is very clear, everybody knows about it and it is highly accessible.

Then there is the issue of the types of courses that are available, the extent to which they are accessible in every college and the question of geographic spread. The fact that further education attainment levels are three levels higher in the Republic than they are in the North tells us that there is a problem with capacity within the further education system in the North and that there is a gap with regard to the number of places. It looks as if substantial investment is needed in that space. Again, there is a job to be done. There has also been a perception that further education is a Cinderella. Everybody wants their sons and daughters to go to university and it is seen as some sort of failure to do further education. SOLAS has done a lot of work over recent years to raise the profile of further education and PLC courses in the South. The work we have been doing in evaluating these programmes has given evidence to young people and their parents showing that they are worthwhile programmes that will enhance their employability and which offer a route into higher education if they choose to follow it.

There is a difference between the systems with regard to simplicity, clarity, the availability of places and the reputational aspects. There is a gap there as well.

Violet-Anne Wynne (Clare, Independent)
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Is it possible to measure the human impact? I attended a briefing given by the Irish Hospice Foundation yesterday at which it explained the need for the reintroduction of bereavement grants here in the South. We lost that scheme in 2014. What we are hearing from our constituents and those impacted is that they are ending up in considerable debt just to be able to afford funerals for family members. We need that scheme back in place in the South.

That brings me to the community welfare system we have and the supports that can be offered to constituents facing hardship, particularly in the form of the exceptional needs payment. Is there any equivalent in the North? I am not sure. What do people in those situations do when they experience difficulties? We are talking about the eradication of the subvention and the possibility of something like that being a reality in the future. What can the Government do to bridge the gap or bring us to a place in the future where talking about the eradication of the subvention would not be such a big deal? What are the stepping stones to bring about the reform that might be needed? The witnesses are talking about the social welfare system in the North being much different from that in the South. How can we bring them closer together? What would be the cost of doing so? Is there are need for further research in this regard?

Dr. Seamus McGuinness:

I can answer the question on funeral grants. Such a grant exists in the North. It is means tested and highly restricted. The value is capped at approximately £1,100. Funeral costs average way above that. It is a heavy burden for low-income families in the North, as it is for their counterparts in the South. It is a major issue. The real-term value of the grant has been cut substantially over time.

With regard to what can be done, we touched on aspects of mutual co-operation that are likely to benefit everyone. Obviously, health is one area. One needs a good health system to have healthy and productive workers. There is clear scope for more work in that regard. There is an argument in the space of industrial policy as well. Ireland has been extremely successful with regard to how it attracts FDI, and with its assistance to the agencies that assist SMEs. There is a possibility of a more joined-up approach to that, although FDI is very complex and political stability is needed. If one asks multinationals what is the most important factor, it is not necessarily the corporation tax rate, it is the political environment, stability and the education system. Those are two possible areas with regard to industrial policy.

Dr. Alan Barrett:

One of the frustrations is that many politicians in Northern Ireland have a sense of what the roadmap is in the context of improvements in a range of areas. The funding difficulties they have in Northern Ireland, especially because they do not have the capacity to raise their own revenues, is one issue. They are reliant on the block grant. That really is just consumed, with health taking more than 50% of it. The scope they have to make investments is currently very limited. The other difficulty is the siloed nature of the various Departments and the mandatory coalition that just makes collaboration a little bit more difficult. However, if the committee talks to civil servants in Northern Ireland, which I am sure it has, in some ways they look at the South - I am going back 20 years - when there was considerable knowledge transfer at the time between Ireland and the accession states of the European Union. There was considerable interest in coming here and learning what we were doing and how we were using EU money. The folks in Northern Ireland know all of this. The blockages to advancement are probably more internal. To the extent that the big issue around the subvention is, as we have been discussing, poor economic outcomes in Northern Ireland, it is very difficult for the Government in the South to have an impact on that. By far, the greatest impact is in Northern Ireland and, possibly, London.

Frank Feighan (Sligo-Leitrim, Fine Gael)
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I thank the witnesses for taking the time to be here. It is great to see. Sometimes one thinks that the shared island unit is for capital projects, but this research is funded by that unit and is free. The information is wonderful and very helpful.

Dr. Barrett mentioned Roscommon hospital. The latter because an issue ten years ago because many people, such as GPs, consultants and the HSE, just did not get involved. They left politicians try to explain something they might not have known about. Just ten years later, Roscommon hospital is twice as big and twice as busy. The hospital is much safer now, and hundreds of people are alive. Everyone knows that.

This is where the ESRI comes in. The ESRI is great at getting involved in politics. It can be very difficult and may not be a nice place to go, but if we are talking about an agreed Ireland, we need all the stakeholders such as the witnesses. When Paul Reid, Tony Holohan and many others were obliged to come out and speak publicly, they garnered people's respect. Those to whom I refer understood the health issues involved and were able to get the message across to communities. The vacuum was not filled by - I will not say nonsense - by statements that were not true. What I am trying to say is that there is a role for the witnesses - sorry to say - in the coming decades and for many other stakeholders, such as the HSE, the NHS, church leaders and others.

I thank the witnesses for coming here today. I wish them every success in their deliberations. The information they have provided is very helpful. It is real information the witnesses have sourced, and I thank them for it.

Dr. Alan Barrett:

I am not sure if a long reply is needed. On hospitals - this is something I have given a bit of thought to in the Northern Ireland situation - we are back to that issue of rationalisation and whether it come be done on an all-island basis. Of course, it is continually raised with us that there are additional difficulties in Northern Ireland with rationalising the health service because healthcare facilities often service different communities. I am sorry to bring up bad memories, but if one talks about Roscommon hospital, just the group in the county were upset by it. However, if one tries to remove and rationalise a healthcare facility in Northern Ireland, it can be perceived as an attack on one community or another. There is an additional layer of difficulty. Achieving rationalisation in the Northern Ireland healthcare system, in and of itself, will be tremendously difficult. Doing it in an all-Ireland context will be phenomenally difficult. I know the Deputy referred to us about being important players, but - all joking aside - there are many lessons to be learned from the experience of people who have been through these battles and how they interact with and convince the public.

Rose Conway-Walsh (Mayo, Sinn Fein)
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I will come back to the region in transition, the EU and the impact that would have in the event of reunification. The FDI paper by the ESRI states:

Our estimates indicate that moving to a corporate tax rate of 15% – in line with ... OECD-led global reform ... would increase the expected number of high-value FDI going to Northern Ireland by 7.5% ... with a corresponding decrease of 4.4% per annum in Ireland.

Will the witnesses comment on the EU and corporation tax?

Dr. Alan Barrett:

The FDI paper was written by a colleague. The corporation tax rate in the UK has gone up to about 25%. There is quite a difference.

As the Deputy will know, there has been a long discussion in Northern Ireland on the possibility of a reduced corporate tax rate. Previously, there were moves to bring it down to what was then the Irish rate of 12.5%. It is not overly controversial to say that if the tax rate was to go from 25% down to 15%, it would increase the amount of FDI. We are back to the possibility of the diversion of FDI from Great Britain to Northern Ireland. That was based on the idea that Britain would hold its corporation tax rate but Northern Ireland would get an exemption. That is perfectly possible and even plausible.

Rose Conway-Walsh (Mayo, Sinn Fein)
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Is there any change at all because of the 15% OECD rate? Is that going to impact on the North, as is, in any way?

Dr. Alan Barrett:

The corporate tax rate in Northern Ireland is determined by London and the UK corporation tax and it is somewhat unusually high now. It is fair to say that corporation tax is always very complicated because there is the headline rate but if there are lots of exemptions and allowances and everything like that, the effective rate can differ quite substantially. Nevertheless, people in Northern Ireland have for a long time argued for a lower corporation tax and I think there were moves on that a while ago.

To pick up on the second question, the Deputy asked about this notion of an area in transition and the EU funding possibilities. I have to confess that, given that we do not get an awful lot of money from it, I am sort of out of touch with what the rules and regulations are. In the context of Ireland having reached the level of economic development that it has, and in the context of projected budget surpluses of €65 billion, a lot of which is tax that other jurisdictions would see as being – I am not going to say stolen from them or anything like that-----

Rose Conway-Walsh (Mayo, Sinn Fein)
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Go on.

Dr. Alan Barrett:

The notion that Ireland would go to Brussels and say we need some help financially in this area, I am not convinced it would be-----

Rose Conway-Walsh (Mayo, Sinn Fein)
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I am talking specifically about the North. There would be a good case there in terms of where it would be. It would be a region in transition in the interim.

Dr. Alan Barrett:

It is possible. Again, there may be rules or negotiations around it. All I am saying is that Ireland is now viewed as a wealthy country. Let us imagine, for example, that this was happening around the time Ukraine was being admitted to the European Union and there was a redevelopment effort. Where would the funding go - to rebuilding Ukraine or into the north west?

Rose Conway-Walsh (Mayo, Sinn Fein)
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Is it possible to simulate the situation around the changes in the variables that are driving productivity and growth? How might that be done?

Dr. Seamus McGuinness:

We have done that on productivity. The productivity gap is approximately 40%. If we take the Northern Ireland education system and the Northern Ireland level of investment and plug it into the Irish model, predicted productivity in Ireland falls by 40%. We can explain all the gaps in productivity between the North and the South because of differences in education and skills and the level of investment. The problem is that if we took the Irish system's educational level and investment and plugged it into the Northern Ireland model, we would get something but that model does not work. While we can say what would happen to the Republic's productivity if education and investment levels fell to the North's level, our model is telling us that if education and skills levels increased in the North to the Republic's level, there is no guarantee that productivity would increase because that causal relationship is not there in the models for the North that we see in the South. That is the problem. There has to be a fundamentally different approach to competitiveness, industrial policy and economic policy. It needs to be more integrated because if the levers of investment or education are just hit on their own, there is no guarantee that anything will improve. There needs to be a different approach to policymaking because of that lack of the causal relationships that we take for granted for any other country. The fact we do not see them for the North is telling us that is very-----

Rose Conway-Walsh (Mayo, Sinn Fein)
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Why are the causal relationships not there?

Erin McGreehan (Fianna Fail)
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I have to be fair to other speakers. I would love to know that as well but I have to let Senator Daly in.

Mark Daly (Fianna Fail)
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I thank the witnesses for the presentation and for all their work in this area. I came across a number of quotes many years ago by a colleague of theirs, Dr. John Bradley, and I thought they were very appropriate to the discussion we are having. One related to the lack of facts. He said that in Northern Ireland, along with everything else being disputed, even the economic facts are disputed. The witnesses have touched on the difficulty of not having good data and facts. They are trying to manoeuvre those and see how to get those together, from which we make policy. Without the facts and the data, policy cannot be made.

I will also quote John Bradley on this next point, which is related to the last point. He said that policy neglect seldom goes unpunished. The witnesses referred to that in respect of the national risk assessment and the plan and the fact there was no mention of the issue of a united Ireland, in any real sense, in the assessment. Do they have a view on that? Scottish independence having an impact on Northern Ireland was mentioned in the national risk assessment. Now the assessment structure is being changed; I think they are trying to do it every second year. Do the witnesses have any views around having it mentioned in the national risk assessment? That may be of no real value unless there is a plan around what to do with it. A global pandemic has been mentioned in the assessment every year since it started, I think a decade ago, yet when it came, no one was ready. Policy neglect seldom goes unpunished.

I will ask the even tougher question. If we were to create a plan, how long would it take? Depending on what in the plan could be implemented, how long would it take to implement all those plans? We must bear in mind that we have no control over the calling of a referendum. That is the first part. We do not set the date. It is set by the British Government. One would imagine that it would be done in consultation with the Irish Government but we literally do not have any control over that. We have seen the consequences of an unplanned referendum with Brexit but this is an entirely different situation.

Was it a surprise to the witnesses, bearing in mind that it was not in the national risk assessment, that there was no mention of there ever being a possibility of this in the national development plan? Project Ireland 2040 had no planning for it at all. The year 2040 is a long way away even by my standards. There was no mention in the NDP of the scale of the one that was launched by the Government, of the possibility that there would ever be a referendum that would have such an impact. Is it of concern to the witnesses, given what they would be aware of within the Departments, that there is no plan for an event which we have no control over when it is called?

Some people have commented on this. Bertie Ahern and others have said that there will be a referendum within ten years. If there was a referendum within ten years from where we are now, how well prepared are we? I know a lot of this would be down to funding. Have lessons been learned from the only similar case in our lifetime, namely, that of Germany? That is entirely different in so many ways but then there are never going to be two that are the same. Cyprus is another example but again it is entirely different. The only relationship regarding Cyprus is that we are both in the European Union. There are similar issues with regard to how we got divided-----

Erin McGreehan (Fianna Fail)
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The Senator is really not leaving any time for the answers.

Mark Daly (Fianna Fail)
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Are there lessons there for us in relation to Germany and the national development plan?

Erin McGreehan (Fianna Fail)
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I can give the witnesses a little bit of indulgence but not much.

Dr. Alan Barrett:

Do not worry. It is easy to say, and it is sort of sensible, that there should be planning. There should be recognition that this is a possibility in any sort of national plan, be it a risk-type exercise or organisations working through the creation of risk registers. It is never about saying these things are absolutely going to happen. You are setting out the things that might happen and there is an onus to try to set out plans as to how the risk would be mitigated or dealt with.

The Senator is absolutely right. There is a general sort of acceptance that a border poll could happen at some point and probably will happen at some point.

The idea that we would be planning for it is sensible.

Questions on how long it would take are impossible to answer. As we touched on in some of the earlier discussions, planning would require roadmaps around the integration of various systems. Without going through all of them, we touched on the issue of social welfare pensions. Apart from that, one gets into issues on the tax treatment of pensions, North and South. People have pension pots built up. How would they be treated? That is just one issue. If one starts thinking about it one can see layers of complexity. How long it would take I do not know. That probably reinforces the notion that we should be thinking about it sooner rather than later. In the national context, that is a sensible place for it to be.

In terms of whether Departments are thinking of this, the national development plan has been mentioned. Nobody talks about a border poll, but there are references to North-South linkages in the national development plan. That is the sort of language the Government is inclined to use. It is the notion that we can benefit from North-South co-operation without mentioning things that might be threatening in any shape or form. It could in some sense be argued that the activity is embedded without being signalled to a greater extent. When Deputy Conway-Walsh asked about health, I was conscious that the ESRI was involved in projection organisations. That was very much from the perspective of the Republic.

Erin McGreehan (Fianna Fail)
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Senator Black wishes to get in.

Frances Black (Independent)
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I will keep it short. I have one question, and I also want to get the opinion of the witnesses on something else. We know the shared island unit is doing phenomenal work. There is no doubt about that. The unit has been involved with work the ESRI has been doing. If the witnesses were to advise the shared island unit on priorities, what would their advice be? My second question is on the high-speed train. I recently saw a presentation by David Gavaghan. To be honest, I was blown away by it. They were talking about having a high-speed train from Belfast. It would take half an hour to get from Belfast to Dublin. How brilliant would that be? Housing problems could be solved if people could move to Belfast and work in Dublin, or vice versa. I would like the witnesses opinion on that.

Dr. Seamus McGuinness:

We have to recognise that there are limitations in terms of the mandate by means of which the shared island unit can implement policies on an all-Ireland level. Work done on infrastructure, including, for example, in the context of the Warrenpoint to Omeath bridge and the motorway. Recognising that there is a limited mandate, the train service is the first thing I would put on the list. I know there is co-funding on the basis of upgrading the current Enterprise stock. That would be useful in practical terms and would have benefits for the all-island labour market. It would also potentially help to ease bottlenecks around housing and skills shortages in both regions. I would advise that the money be invested there.

Dr. Alan Barrett:

I do not know about the relative merits of David Gavaghan's suggestion regarding trains because I am not qualified to talk about it. It is interesting, however, particularly if you project forward and start thinking about a possible united Ireland. If you start thinking about it in that longer term way, it brings up a whole set of environmental and other considerations. Let us not just think about how we currently organise ourselves and how we are going to shove the two bits together. We need to reimagine how we treat a whole load of things. We have touched on health, transport and rural development. We are reimagining a new island of Ireland, which has a constitutional change. It maybe also has a broader change about our relationship with the environment, well-being as a policy indicator and those sorts of things. Deputy Conway-Walsh spoke about frameworks around these. We can be tremendously imaginative. I do not know about the hourly train service, but I love hearing about those creative and imaginative initiatives. It would be lovely to see more of them.

Frances Black (Independent)
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I thank the witnesses.

Erin McGreehan (Fianna Fail)
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As can be seen, there are lots of questions. It has been a fascinating few hours. I have one question, and I would love if the witnesses could furnish an answer on it. The countries that comprise the EUREGIO area, namely, the Netherlands, Germany and Luxembourg, co-operate in Europe. They have cross-border workers and integrated healthcare. They do a lot of stuff that we want to do on this island but that we are restrained from doing as a result of politics or policy. Has any analysis been done about how they work in the EUREGIO area and how we can work, going back to my question on a possible framework for cross-Border, low-level co-operation? This is one of our favourite topics - economic integration and advancement of the island of Ireland. I thank the witnesses. It has been fascinating. We could have kept them here until tomorrow and we still would not have all of our questions answered.