Empey sets out radical vision to prompt growth

Sir Reg Empey: "Ultimately the Republic will not be able to hold onto its tax advantages within the European context."

"We have to get people to focus on where the growth is likely to be, where we have to be and to re-examine how the state actually contributes towards economic growth. That requires a radical reorganisation of how we do things," says Sir Reg Empey, Northern Ireland's new Minister for Enterprise, Trade and Investment.

Radical is not a word that trips off the Ulster Unionist tongue easily or without thought, but it is one that Sir Reg uses frequently in his vision of Northern Ireland's economic future.

At first glance he has inherited an economy which seems in good shape. Unemployment is at around 7 per cent, its lowest level for decades, and economic growth is steady if not as spectacular as in the Republic.

But since taking office Sir Reg has shown an awareness that Northern Ireland's economic foundations need to be firmed up. The programme of government due in spring will give him his first opportunity to achieve this.

"Our economy has survived and managed to do well over the years despite political instability, but to some extent that is largely due to subventions from Westminster," said Sir Reg.

A bloated public sector and an unhealthy reliance on grants to attract inward investment has been flagged in economic circles for some time as promoting a culture of dependency. One of Sir Reg's most politically sensitive jobs will be choosing where to wield that knife.

"The budgets are still significant but the question is: do we have a substantial capital grant structure here and I'm going to review that?" he said.

Keen on promoting an entrepreneurial culture, Sir Reg wants to use or adapt ideas picked up from travels abroad as an Ulster Unionist senior negotiator. "If you look at how the small and medium-size enterprise sector operates in the USA, it's on a completely different system altogether. It operates on loan guarantees using commercial funds that are backed up by agency guarantees," he says.

"There is no radical change in the funds available - rather a choice to deploy the funding in a different way."

This lack of fiscal discretion has been criticised by some nationalist politicians but it is seen as a plus rather than a minus by Sir Reg. "It would result in tax raising powers rather than tax reduction powers," he argues.

Even the vexed question of the lower corporation tax which many commentators view as a significant factor in the Republic's economic success and a disincentive for investment to locate north of the Border, does not persuade him to change his position.

"I would like to see lower corporation tax and I know the UK government is moving in that direction, but ultimately the Republic will not be able to hold onto its tax advantages within the European context."

Referring to recent criticism of the Industrial Development Board's (IDB) ability to attract investment on an efficient basis, Sir Reg denied that a major upheaval of the organisation will be included in the programme of government.

"What I do not want to do is start some sort of organisational turmoil," he said.

Instead, in the next financial year there will be a significant shift towards the IDB becoming more focused on marketing, on the Internet and the whole area of promotion, according to Sir Reg.

The relationship between IDA Ireland and the IDB is unlikely to radically alter in the short term, according to Sir Reg. "We have to remember that if a piece of mobile investment is in the offing, to some extent it is every man for himself," he says.

However, he hinted at increased formal contacts and possible co-operation in the future: "At the end of the day there has to be a degree of co-operation insofar as if everyone is chasing the same investment in an uncontrolled way, either we will lose it or you get it on such terms that it isn't really viable."

The target industries for investment will be more narrowly focused than before and are unlikely to include the low margin textile, food processing and clothing industries.

"We are going to focus on the information age technologies and a report is due out next month on that. I believe there can be growth in the biomedical sector also."

The way to attract these high technology industries is not through grants or low corporation tax rates - rather, it is through education, he said.

"Dr Sean Farren [Minister for Further Education and Training] and myself are looking at bespoke training packages for inward investors because at the end of the day the most significant asset that attracts a company is the availability of trained and efficient labour."

This closely resembles the strategy employed by the Republic to promote the phenomenal economic growth of the 1990s. And there seem to be few unionist hang-ups on North-South initiatives which are of practical benefit and value.

Sir Reg has already met two of the Republic's three Ministers with responsibility for areas within his own portfolio; the Tanaiste, Ms Harney and the Minister for Public Enterprise, Ms O'Rourke. A meeting with the Minister for Tourism, Sport and Recreation, Dr McDaid, is expected to be arranged early in the new year.

"There is a significant potential for boosting trade and in the negotiations with Ms Harney we identified a number of areas for early activity," says Sir Reg.

Building supply chains within the island, initiating a capital fund to help investment in niche markets and establishing a common e-commerce trading area are all top of his agenda.

Sir Reg is also enthusiastic on the topic of promoting an all-island energy market in electricity and gas. "It will be good for competition and will lower electricity costs for major industrial consumers," he said. "There's a lot happening in the energy field and its quite exciting."

While negotiations on the programme for government and the future of Northern Ireland's political institutions will be decided early next year, Sir Reg believes economics can play a role in securing the peace.

"I would be reasonably confident that the economy would be a unifying force and not a dividing force," he said.