Speech by Peter Robinson to the KPMG's Management Conference in the Europa Hotel, Belfast, (23 June 2006)

Speech by Peter Robinson, then Deputy Leader of the Democratic Unionist Party (DUP), to the KPMG's Management Conference in the Europa Hotel, Belfast, (23 June 2006).

"Thank you for the introduction and can I thank the organisers for the invitation to address you today. I am delighted that you have chosen to host your conference in Belfast today.

As one of the City’s MPs I would like to welcome all of you to Belfast. Can I also take the opportunity to welcome Minister Martin here today. My wife, Iris, who is my party’s Health Spokesperson, has instructed me to pass on our congratulations to the Minister on being in the vanguard of the campaign to ban smoking in enclosed public places in the Irish Republic.

I pass on the message not only as an obedient husband but because I believe his courageous decision as Health Minister a few years ago showed that if a ban could work in the Republic it could work anywhere - and it was a courageous decision and Michael took a lot of heat, he was labelled "busybody-in-chief" and "the Killjoy of the Emerald Isle". But he came through it and now many are now following his lead and most of those who opposed him have gone silent. I believe the decision will have a positive legacy long after all of us have left politics.

Mr Chairman, of all the speaking engagements I have had over the last thirty years - and that has been quite a lot - I think that I can safely say that this is the largest number of accountants I have ever spoken to at the one time.

Mr Chairman, I believe our visitors come to Belfast at a good time. It is a time of great potential for economic growth. For Northern Ireland the last few decades have been dominated by terrorism and the threat of terrorism. We have suffered from bitter political instability and community division. As a result the economy has been relegated to a secondary consideration while money which should have been used on investment and on improving the province’s infrastructure has been diverted to deal with the security situation and paying out compensation.

This has not been a recipe for economic success but I believe there is now greater hope for the future. If the shutdown of paramilitary and criminal activity can be completed - and progress is being made - and if we can complete our work in the political process then I hope that in the coming decades we can focus and work without distraction on the economic revival of Northern Ireland.

There is no doubt that the economy of the Republic of Ireland, in recent years, has made very significant progress. The Republic has moved from being one of the least vigorous of the European nations to what has become known as the Celtic Tiger. There were those who once mockingly joked that the only thing the Republic lacked in order to become a third world country was the climate, well, they’re not laughing now. It is the Republic which has had the last laugh.

Unfortunately Northern Ireland has not had such a favourable political environment in which to make progress. The legacy of violence and paramilitary activity has made the Province less attractive to potential investors than would otherwise have been the case.

The Republic has reaped the rewards of membership of the EU at one time gaining between 5 and 6 million pounds per day. But it used it skilfully and shrewdly on infrastructure and other initiatives which helped develop its economy. Northern Ireland, on the other hand, saw its portion of EU assistance diverted by the Treasury to other pressing concerns across the UK. We did not receive European Funds additionally and we did not benefit either in quantum or in laying down the groundwork for the stimulation and resurgence of our economy.

The Republic has been able to capitalise and exploit its economic stability and low corporation tax rate while we have had to fight to stand still. Even so our economy in the most difficult of circumstances has proved remarkably resilient.

We may not have been in a position to make the significant investment in infrastructure that the Republic of Ireland has in recent years but still we have lower unemployment figures than in a generation. If, in the worst of times, we can not only survive but improve I am convinced we can significantly prosper in better times.

The Northern Ireland economy survived the Troubles through a combination of the determination of our people and the economic support of the public sector. That support was necessary for us to survive but today the relative size of the public sector is an impediment to our future growth.

We are now entering a vital period. What we do in the next few years will be critical to the economic welfare of Northern Ireland in the next few decades. It is a big challenge, and the foundation for it is crucial.

There is much that needs to be done in terms of creating the environment where the Northern Ireland economy can compete and prosper but the greatest single boost we could receive is a stable political environment where the violence and conflict of the last forty years is seen as a thing of the past.

In practical terms this means a stable and functioning devolved Government in the Province. This requires a total end to criminal and paramilitary activity by the IRA. That point has not yet arrived, but I do believe that we are now closer to it than at any point in the last generation. It is vital that we reach the point of completion as quickly as possible.

In the last few years political progress has often seemed slow - frustratingly slow - but it is important that this time around we get things right so we do not have to face the crises, suspensions and collapses that have plagued the process so far.

Not just since the Belfast Agreement of 1998 but since the old Stormont Parliament was prorogued in 1972, devolution has been the exception in Northern Ireland, not the norm. For one reason or another each subsequent attempt at devolution has failed. People have not experienced a stable form of devolution now for over thirty years. That is why it is so important that when devolution is restored it is not for a week or a month or a year but for good.

In economic terms just think what a boost we would get from a recognisable end to all paramilitary activity. Just imagine the bounce that would come if paramilitary organised crime ended. Just try to visualise the surge that would attend political stability and a working assembly. Just contemplate the worldwide confidence that would accompany having a settled community in which tolerance and respect are evident and bigotry and sectarianism are absent.

It would be hard to overstate the level of international good will which would exist towards Northern Ireland in those circumstances. I would have absolutely no doubt that in those circumstances we could compete with any other European region. It’s not an idle dream it is a realisable goal. The potential that exists in this Province could be released and Northern Ireland could once again be a significant international player in its markets of choice.

The Republic talks about the Celtic Tiger. If we can get those features into place you will see the stripes and hear a mighty roar from Ulster.

I do not underestimate how far we have yet to travel but equally I do not close my eyes to how far we have come. Seeking certainty that paramilitary activity and organised crime have ended may cause impatience but it will provide the stable foundation for long-term success.

Sadly the Troubles have brought a dependency culture which is neither sustainable nor desirable. You cannot build a successful and sustainable economy if you are reliant on grants and hand-outs and relying on others to tackle our problems for us. It is time that we created an environment in which the natural entrepreneurship of the local population can be harnessed. We must move towards a place where the career role models are people like Alan Sugar and Richard Branson rather than the holders of the safe careers offered by the public sector. Innovation is the key to making this shift in our economic approach.

The Northern Ireland economy also suffers from a number of structural difficulties. As I have said there is no doubt that the Northern Ireland economy is over reliant on the public sector but the real challenge is to try to manage the transition from a public sector dominated economy to a private sector dominated economy in a way which will not crash the economy in the process. This is not an easy task.

The culture that is created by the public sector dominated economy will not be changed overnight. The challenge of changing the nature of the economy is a formidable one when one considers the number of people in Northern Ireland directly and indirectly employed by the public sector.

An overlarge public sector also acts as a disincentive to the private enterprise which is needed to boost the local economy. At times Government is not the solution but is the problem. The role of Government is not to create jobs but to create the environment in which the private sector can create them. Too often Government activity can hurt rather than help the private sector through regulation and taxation.

The back bone of the Northern Ireland economy has not been the large companies but the small and medium size businesses. While international investors have come and gone it has been the small businesses that have stayed the course.

Government has not always made it easy for them. Too often the Government has required the same level of regulation and control of small businesses as are required for big business. This does not make sense. We must tailor our requirements on small business to what is appropriate for small business. This is the basis of our economy and it is this portion of the economy that will determine our long term success.

Just as an absence of Government interference can help the economy locally I also believe that the economic relationship between Northern Ireland and the Republic of Ireland is best left to the market to determine. Government can seek to remove obstacles to co-operation but political interference in the process can be counter productive.

When I was Minister for the Department for Regional Development I had no difficulty working with the authorities in the Republic on roads and transport issues. It made common sense for us all and I believe it worked well.

I have no doubt that in the context of stable political institutions at Stormont where co-operation with the Republic is based on practical not political considerations our relationship with our nearest neighbour will continue to grow.

There are many areas where working together with the Irish Republic would be enormously to our mutual advantage and we should not allow politics to be an obstacle to such an advance.

Equally it would be a real threat to north-south relations if there were politically motivated attempts to enhance links where the merits of the individual proposals are lost in the politics of it all.

Just as in some areas, co-operation with the Republic is to our advantage, in others we may be in competition to attract investment. At the moment this is not a very level playing field.

Undoubtedly one of the problems Northern Ireland has had in competing with the Republic is our level of Corporation Tax. It is very difficult for Northern Ireland to compete when we have a Corporation Tax level of 30% compared to 12.5% in the South.

Reducing our level of Corporation Tax is an issue that we have pressed the Government on for some considerable time but we always come up against the Treasury’s aversion to having differential Tax rates within the United Kingdom. That is an important consideration but I do not believe that it needs to be an insuperable obstacle.

I believe that Northern Ireland does warrant special treatment because of the fact that it is the only part of the United Kingdom with a land border with a country which has a much lower rate of Corporation Tax and because of the economic problems we have endured over the last forty years of the conflict.

In these circumstances I believe that for a limited period a special case can be made for Northern Ireland. We have suggested that a 10% rate would be appropriate. This would give us a short term competitive edge.

When we met the Chancellor earlier this week we raised this matter with him. He was well aware of the issue but also made the point that there are very few businesses that pay the full 30% Corporation Tax in Northern Ireland. He confirmed that he would do some work on the issue and provide us with a paper.

However, I still believe that in terms of attracting international investment the headline Corporation Tax level is important and sends out an important signal.

There has been much talk recently about an all island economy. Our relationship with the Republic is very important but in terms of the size of the market even more important is our relationship with Great Britain.

However, I believe that there is no reason why we cannot have the best of both worlds. We are part of the fourth largest economy in the world and have a successful economy to our south which we can also exploit to our benefit.

Our first challenge however must be to get our own house in order. With a realistic pump priming economic package from the Government and with the correct policies in place, the chance to transform our economy in the next few years exists. Firms like KPMG can help play a part in that process.

The presence of a firm like KPMG in Belfast with over 100 employees is also a vote of confidence in the local economy and brings with it the kind of jobs that will help build our economy.

I welcome the positive role that organisations like yours play in our society and I feel sure that as the economy here takes off there will be great potential for further expansion of your business. I am once again delighted that you have chosen to host your conference in Belfast and hope that the next time that you are here we will have in place a functioning and successful devolved Government and have taken the first steps towards economic revival."