Costs of united Ireland would equal pain of the austerity years, economists say

The costs of Irish unification would equal the worst of the effects of the austerity years between 2009 and 2011 and last for considerably longer, the Oireachtas has been warned.

However, the bill could be significantly reduced if Northern Ireland began now to reform its “discriminatory” education system and reform public services.

However, change would take decades, said economists, John FitzGerald of the Economic and Social Research Institute and Prof Edgar Morgenroth of Dublin City University (DCU).

The two recently published a report that put forward a number of estimated costs for unification, including a worst-case scenario that put the bill at €20 billion a year for 20 years, though their figures are contested.

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[ Cost of Irish reunification overblown and benefit underplayed ]

Defending their numbers in the face of criticism, they doubted that the United Kingdom would be generous in negotiations about future debt, pensions and welfare payments.

Writing off Northern Ireland’s share of the UK’s debt and continuing to pay pensions due to the North’s public sector workers and pensioners would be “a very bit financial hit” for London, they said.

The FitzGerald/Morgenroth report has been criticised by Prof Brendan O’Leary and Prof John Doyle of DCU who argued in an article written for The Irish Times that London would pay share Northern Ireland’s share of the UK debt and continue to pay UK pensions to those already entitled to them living in the North.

“Terminating payments of UK public pensions for former veterans, police, nurses, and teachers with full British citizenship rights would have devastating reputational disadvantages. It would be political folly,” wrote Mr Doyle and Mr O’Leary.

Such “generosity”, Mr FitzGerald told TDs and senators, however, would be “a strong incentive to Scotland to secede from the UK on the same generous terms”.

Mr FitzGerald and Mr Morgenroth doubted that the European Union would make a significant contribution, bar one-off goodwill contributions, to unification given Ireland’s wealth.

Northern Ireland’s current economic failings were blamed on low productivity, poor infrastructural spending and its “defective” education system that significantly discriminates against poorer children.

In addition, it annually loses up to two-thirds of the students, especially those from a unionist background, who go to colleges and universities in Britain every year and never come back.

Rejecting a pushback from Sinn Féin TD, Ruth Conway Walsh, they insisted that education reforms system would not bring quick gains.

The Mayo TD had argued that the investment made by the Republic in Deis funding for disadvantaged schools and lifelong learning shows that benefits can accrue quickly.

“Growing a child takes times,” said Mr FitzGerald, “If Northern Ireland education system might be reformed it might genuine equality of opportunity after 20 or 30 years”.

However, reforms would be fiercely opposed by both Catholic and Protestant middle-class parents who benefit hugely at the expense of others, both said.

“Northern Ireland has to sort that out for itself,” Mr FitzGerald told the Oireachtas Good Friday Agreement committee chaired by Fine Gael TD, Fergus O’Dowd.

Quicker productivity gains could be made if Northern Irish graduates working in jobs in Great Britain could be brought home, as happened south of the border in the 1990s.

Their report is not an argument against unification, Mr Morgenroth insisted, since it is up to people to decide what they want and what they are willing to pay.

German unification has cost between €1 trillion and €3 trillion and the costs “look like they will continue for perhaps another 20 or 30 years.

“So, that’s a high cost. It’s a price. But if you ask people in Germany whether they’re happy that Germany unified, the vast majority, over 70 per cent, say yes.

“They’re quite willing to pay the price because they value what they got for it than the price. That’s the big distinction,” he declared.