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Developing a Change Culture Michael Smyth University of Ulster.

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1 Developing a Change Culture Michael Smyth University of Ulster

2 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.

3 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.

4 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!!!!

5 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.

6 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.

7 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.

8 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?

9 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? press for the devolution of Corporation tax and reduce its level At the macro level, there is a political commitment to "press for the devolution of Corporation tax and reduce its level" building a strong and shared community and balanced subregional growth.” At the strategic level, there is a commitment to “building a strong and shared community and balanced subregional growth.”

10 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.

11 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.

12 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.

13 (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?

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