Irish economic policy may look attractive but Alex Salmond must be aware of the differences
WHAT is the way forward for Scotland? What should be our inspiration? And what examples should we follow? First Minister Alex Salmond is in no doubt: Ireland. Though we have heard his endorsement of the "Celtic Tiger" many times before, what made his
speech this week in Dublin so singular and defining was its wholehearted embrace of Ireland's political culture, institutions and social partnership.
In his unqualified praise for all things Irish, here was the sharpest reminder that he is not some disinterested first minister holding together a minority administration in a non-Labour coalition, but a Nationalist whose world view is profoundly and fundamentally at odds with the partnership and the institutions we already have.
"I have come to Dublin", he declared, "to set our aspirations for Scotland's future… Our aspirations are no different from those that inspired generations of Irish people to independence and prosperity that you enjoy today."
Mr Salmond said the Scottish Government was "engaging a broad coalition of all the major institutions in Scottish society" which now "have a vital role to play in shaping the next steps of the national conversation actively contributing to the debate on the future of Scotland."
In heaping praise on Ireland's outstanding performance, Mr Salmond said the partnership that created it was not simply about economics. But the main achievements he hailed were economic. So how exportable is this Irish model to Scotland? And would it work in the way he believes it would?
Ireland's success over the past 20 years has certainly been outstanding, all the more so when you consider its traumatic post- independence history that the First Minister did not get around to mentioning: the civil war and the Troubles, and a long period of economic stagnation in the 1960s and 1970s.
Indeed, Ireland's "miracle" did not come about through independence per se, but in the wake of an extreme policy collapse. This led in 1987 to the adoption of a National Economic Plan whose first sentence made reference to "the grave state of our economic and social life".
Since then, Ireland's blistering growth has had the dynamics of catch-up, and it is not at all clear whether this would be applicable to a mature, more urbanised, post-industrial economy such as Scotland's.
Central to the process of catch-up was the slashing of corporation tax, now down to a little over 12 per cent, and low inheritance tax. These have been huge contributors in encouraging people to move to Ireland. But one of the results has been an economy even more heavily dependent on property than our own. This market has now turned down sharply. House prices have been falling for months. With some 13 per cent of the workforce dependent on the building and construction sectors against 7 per cent across the EU, some 100,000 jobs in Ireland could now be at risk.
And with the property bust, Ireland's economy is slowing from around 6 per cent growth in 2006 to a projected 2 per cent this year.
Loose planning rules have also been a notable feature of the Irish model, feeding the building boom. This is in marked contrast to attitudes in Scotland. The planning regime is much stricter. And there are prominent institutions which, together with community councils and environmental lobby groups, vigorously challenge many developments that would enhance growth.
Planning restrictions were a major concern of last week's meeting of the Council of Economic Advisers. It wants to see a more flexible system. But the imperative of higher growth is under challenge. Attitudes today have shifted from those of the 1980s. Many Irish infrastructure projects are also financed by private finance initiatives of the type Mr Salmond has rejected. So building an Irish-style low-tax, high-growth consensus may be more difficult than Mr Salmond admits.
However, in two key areas the Irish model does bear examination. One is the emphasis on education and training, which helped create the workforce servicing hi-tech sectors such as IT and pharmaceuticals. The other is demographics. Ireland has been astonishingly successful in reversing its population decline and attracting young people. In a new book on the Irish economy, The Best is Yet to Come, economist Marc Coleman cites the country's potential to draw in labour and capital for decades, providing confidence to see the economy through the present downturn. The population passed four million in 2006 and is forecast to hit five million by 2019. While this, he says, will not save the economy from a temporary correction of its overheated property market, "it promises fantastic potential" in later years.
So, the "Celtic Tiger" is not as replicable as it looks and the consensus for recreating it here not as strong. But it does have lessons, particularly on tax, that would be foolish to ignore. More challenging for the First Minister's opponents is the task of breathing aspiration and inspiration into the fading dynamic of "Britishness" that has become so porous and uncertain of its core values as to resemble an intensifying nervous breakdown. While Mr Salmond may have an uphill struggle with his choice of alternative model, his critics face a path no less steep.
The full article contains 891 words and appears in The Scotsman newspaper.
