Transcript Slide 1
Developing a Change Culture Michael Smyth University of Ulster 1. The Economic Situation. • Dominance of the Eurozone crisis. Why? • If unresolved it could precipitate a second global banking crisis, engulfing the US, the BRIC economies, the UK and Europe. • Coming on top of an already weakened banking system in Europe and the US and very weak developed economies. • Potential return to the 2008 credit crunch – only worse – SME insolvencies, households frozen out of credit markets, and the impact on consumer spending and the housing market. • The solution? • Massive financial firepower to support European banks and European sovereign debt markets PLUS a credible political change within the Eurozone and the move towards fiscal union. • Two-step approach: • 1. An amended Treaty quite quickly without electoral ratification – this is possible under an amended (tighter) Protocol 12 of the existing EU Treaty – the so-called “excessive deficit procedure.” • 2. A new Treaty to amend Protocol 14 – this gives a legal basis to regular Eurozone summits and a permanent Eurozone president. • Is a solution likely? • Time will tell. If not today, it will have too soon. • The implications for the UK, Northern Ireland, the Republic and for local government? • For the UK, all that really matters is that the Single Market is fully implemented – in particular the liberalisation of services. • UK financial services industry needs to be protected against invasive taxation and financial controls, but....... • Europe really has it in for the City of London!!!! • For Northern Ireland, what really matters: • a second banking crisis is averted; • the US economy continues to recover; • no further weakening of UK economic growth which would trigger yet more austerity (cuts); • RoI economy does not weaken further, hitting North-South trade. • For the Republic of Ireland, a real political dilemma looms. • Currently Ireland is effectively ruled by the TROIKA; • If a rapid move to fiscal union goes ahead can it succeed without being ratified a referendum in Dublin? • Will the Irish electorate sign up to a treaty revision that would permanently give away almost all Irish political sovereignty? • Its Corporation Tax regime would be doomed. • Implications for local government? • Depending upon the outcome, local government under current and future configurations should become more active partners in Europe. • From 2014 EU cohesion policy will be more based upon the principle of partnership in all its policies. • This means a willingness to put more time and energy into European initiatives, programs. • Local government should become champions of local SMEs, colleges, institutions who do not have the time and resources to exploit European opportunities – lots of research to show that small businesses are frozen out of European projects. • On behalf of civil society, NGOs and community organisations, local government is a much more effective coordinator on the ground and better at exploiting European opportunities. • Peace IV? 2. The Programme for Government. • Plenty of targets and commitments but short on detail about how they are to be achieved. • Departmental programmes may subsequently provide more details. • What is in it for local government? • At the macro level, there is a political commitment to "press for the devolution of Corporation tax and reduce its level" • At the strategic level, there is a commitment to “building a strong and shared community and balanced subregional growth.” • Specifically the implementation of the 11 Council model by 2015. • Given the austerity, the cuts and the lack of growth, lack of confidence are these proposals flexible enough? • Do they really address emerging serious societal challenges such as: Rapidly rising youth unemployment? Rising poverty levels? Societal problems such as social housing, rising levels of petty crime? • The first Programme for Government had Executive Programme Funds that were set aside to address just such problems. • Lack of attention and debate about "own resources" – that is our ability to be creative about finance and investment. • Need to explore the potential for District Councils to form local investment partnerships: to access cheap finance, to invest in local infrastructure in line with Local Government’s remit and/or to partner with Central Government to undertake such investment. • Examples..... (1) What borrowing powers has Local Government in Northern Ireland? • Clearly limited by the product of the district rates that could be used to serve as such borrowing. • In Scotland, municipalities and local authorities are regular users of European Investment Bank finance. • In Northern Ireland some Housing Associations have formed consortia to borrow cheaply from the EIB. (2) Could Councils become partners in a PFI or a PPP? • New European Project Bonds will soon be launched to finance investment in roads, transport, energy and environmental projects. • Could Local Government here help the strategic investment board to deliver more of the Investment Strategy for Northern Ireland at this time of cutbacks in Central Government spending?