Presentation on the privatization of Northern Ireland's infrastructure and social economy in the aftermath of the Good Friday Agreement

1. Northern Ireland and the Double Transition
Dr. Conor McCabe, UCD School of Social Justice

2. Northern Ireland and the Double Transition
▪ Double Transition
▪ Financialization and the Nature of Neo-Liberalism
▪ Public-Private Partnerships
▪ Corporation Tax
▪ Monetary & Economic Policy – UK Framework

3. Double Transition –
Northern Ireland is undergoing a double transition. In terms of its political
dynamics it is moving from a situation of conflicted democracy and violence to
one where democracy is supported and broadly participative.
However, it is also moving from an economic framework that is formulated
upon social democratic ideals to one that is dominated by market agendas and
neo-liberal principles.

4. Some characteristics of Neo-liberalism -
Attacks the post-war compromise between producer capital and labour –
compromise that put severe checks on free movement of capital
- Great Britain and Northern Ireland = Welfare State
- Irish Republic = Corporatist State / Rerum Novarum (Vocationalism)
•Pushes a monetary policy designed to benefit financial rentiers
•Privileges asset-price speculation over producer-led employment
•Needs to kill inflation in order for asset price profit-seeking to work

6. PPP and Northern Ireland
Most public expenditure in NI funded under the
assigned budget – adjusted to reflect changes in
per capita expenditure in England
Capital spending funded through the use of NI
resources or through direct borrowing is tightly
constrained. The capital used with count against
NI’s capital budget.
“In contrast, under current Treasury rules as long
as a PPP is off-balance sheet (i.e. the project is
recorded as a contract for services rather than a
financial lease in the public sector’s accounts),
there will be no direct impact on the NI capital
budget, while annual charges count against the
revenue budget as they are incurred.” (NIPSA,
p.9)

33. 11 May 2010
Dear Chief Secretary,
I'm afraid to tell you there's no money left.
Sincerely,
Liam Byrne.
chief secretary to the Treasury.

34. “The British Government has run out of
money because all the money was spent in
the good years.”
George Osborne, 25 February 2012

35. “So we cannot just carry on as we are. Unless we reform our economy - rebalance demand,
restructure banking, and restore the sustainability of our public finances - we shall not only
jeopardise recovery, but also fail the next generation.”
Mervyn King, TUC Conference, 15 September 2010.

36. 5 March 2009. QE : £75 billion
10 October 2011. QE : £75 billion
2009 – 2011. corporate bond purchase
via asset purchase facility : £375 billion
2012: Monetary Policy Committee
approve a further £50 billion.
“So we cannot just carry on as we are. Unless we reform our economy - rebalance demand,
restructure banking, and restore the sustainability of our public finances - we shall not only
jeopardise recovery, but also fail the next generation.”
Mervyn King, TUC Conference, 15 September 2010.

37. “In the European context tax rates are high and
government expenditure is focused on current
expenditure. A “good” consolidation is one where
taxes are lower and the lower government
expenditure is on infrastructures and other
investments.”
Mario Draghi. 24 February 2012.
“The ideal fiscal consolidation ... must be focused
on spending cuts and not tax hikes.
It is essential that [this consolidation effort] is
perceived as credible, irreversible and structural to
have impact on sovereign debt spreads.”
Mario Draghi. 15 November 2012

38. Long Term Refinancing Operations (LTRO)
21 December 2011: €489.2 billion to 523 banks –
3yrs @ 1 per cent
29 February 2012: €529.5 billion to 800 banks –
3yrs @ 1 per cent

39. Long Term Refinancing Operations (LTRO)
21 December 2011: €489.2 billion to 523 banks –
3yrs @ 1 per cent
29 February 2012: €529.5 billion to 800 banks –
3yrs @ 1 per cent
“Some banks, particularly in Spain and Italy, used portions of those
funds to buy higher-yielding bonds issued by their governments at a
time when most investors remained skittish, and it helped reduce
government borrowing costs.
But many banks primarily used the funds to pay down maturing
debts or simply deposited the money at other banks or with the ECB
itself, even though they yield less. The infusion fell short of some
politicians' hope that it would stimulate bank lending to customers
in struggling European economies.”
Wall Street Journal, 1 March 2012

40. Implementing reform is a real
challenge and this requires that
we win the hearts and minds of
the people.
Countries are faced with the
option of either profoundly
reforming their public
expenditure and social security
systems or putting their long-
term sustainability at risk.
Jean-Claude Trichet, 31 May 2004

41. 1. Cut government spending
2.Cut wages
3.Use central bank credit to
buy paper assets
4.Keep inflation low