Simon Harris: Fiscal realities and opportunities of a united Ireland

First of all I want to sincerely say I welcome the fact that we're having this debate this afternoon. Colleagues will recall it came up on questions to me and my role as finance minister here a number of months ago and there was a view that it was a debate that we should be having and it was a debate worth having and I'm very pleased that we've been able to facilitate it in government time today. My apologies in advance that I won't be able to stay for the duration of all of the debate but a number of government colleagues will of course be here to participate but I was eager that we had this conversation kicked off before the summer recess and I'm pleased we've managed as an Oireachtas to facilitate that as well. Can I say at the outset I'm obviously committed as I know everybody in this house is to realising the full potential of the Good Friday Agreement for all of the people of this island and at the core of that agreement is the principle of consent. The recognition that the future constitutional status of Northern Ireland rests in the hands of the people. That principle was democratically endorsed by the people of Ireland North and South and remains the foundation upon which I believe progress is built and should be built. Guided by Article 3 of the Constitution as amended by the people in 1998 the government's approach is to foster reconciliation, to deepen relationships and to prepare for the future through respectful dialogue and engagement. Thus in the event of a referendum delivered within the consent provisions of the Good Friday Agreement the government will make all necessary preparations in accordance with the terms of the Constitution and the principles and procedures of the agreement. Let me in going off script make the point and one of the reasons we're having this debate today when we had that question time a number of months ago in Finance there was a recognition that if and when and I believe when there is a referendum in this country one of the big issues of debate is going to be the issues around the economy, the issues around the old island economy, the issues around the cost but also I hope the issues around the benefit. So today while I doubt we have managed collectively to answer every question I hope we certainly put on the record of the Dáil the information, the insights, the data that we have but also perhaps the further data that is required or the further pieces of work that we believe collectively is required as well. Before getting into that can I say the government have maintained a sustained focus on reconciliation and trying to strengthen the three relationships at the heart of the Good Friday Agreement. Relationships between communities in the north, relationships between north and south and relationships east and west between Ireland and Britain. By strengthening these relationships and fostering greater partnership and understanding we can unlock the full potential of our island and create lasting opportunities for future generations. In government we have made this commitment real, we have made it tangible through the shared island initiative. Here we have prioritised the essential work of building co-operation and reconciliation and have brought about an ambitious agenda to deliver meaningful progress while remaining steadfast and fully implementing the Good Friday Agreement and its potential. To date the government has advanced the largest ever programme of all island investment to build a more connected island through the shared island initiative backed by a 2 billion euro fund. In April 2025 we launched a new phase of a joint research programme with the ESRI focusing on strategic policy and co-operation possibilities for the island and in December 2025 I launched the first report on what will now be a new annual ESRI series to analyse economic trends across the island and I think that comparative data year on year will indeed be helpful. Overall this government continues to and wants to continue to deepen our partnership with the Northern Ireland Executive, with the UK government in its role as co-guarantor of the Good Friday Agreement and we are working to fully harness the agreement to foster reconciliation between the different communities of this island. The topic of today's debate, the fiscal implications of a united Ireland, is one of the most important questions in any discussion about Ireland's future. I occupy a number of roles within government and within politics including my role as leader of the Fine Gael party in which I've outlined my view, my party's view and the next steps we intend to take but I obviously speak today in my role as Ireland's Minister for Finance. The debate that we need to have from a fiscal point of view needs to be informed by evidence, needs to be informed by analysis on the opportunities and the challenges that constitutional change may bring. Let me be clear and I think we've got to be clear, we've got to be honest and if you don't mind me saying so, I heard Deputy McDonnellby ask this on radio recently and you know people look for very clear and very straightforward answers in relation to fiscal costs and we've got to be truthful about this as the Deputy was, you know it does remain highly uncertain because it's a very dynamic situation. That's the first point I wanted to make as Minister for Finance. Recent studies on the impacts reach widely different conclusions and it's also important to acknowledge that and that's largely because they rely on a different set of assumptions, you know all of this is based on a set of assumptions and those assumptions, there's a whole variety of them, which public spending obligations would transfer to the new Ireland, how would the tax code be applied, how Northern Ireland's economy might develop over the long term as part of a unified Ireland and indeed the extent if any of ongoing UK fiscal commitments and I note the debate and discussion around that. So for example, Gaearleach, to give you some sense of some of the range of data that we've heard, a study by DCU and Ulster University estimated last year that reunification could carry an initial net fiscal cost of around 3 billion euro per annum for the Irish state, for what I'm calling Ireland. The same study also suggested though that a unified economy could reach fiscal break-even within five to nine years, assuming Northern Ireland's reintegration into the EU and considerable productivity improvements within the north. On the other hand and perhaps at the other end of the spectrum, research published by the Institute of International and European Affairs in 2024 presents a much more, from a purely fiscal point of view, pessimistic outlook and it projects annual costs of up to 20 billion for the Irish state for up to two decades and I think their assumptions are driven by the need to align welfare, pensions and public service pay across the island as well as the loss of funding from the UK central government. My own department published a report called Shared Island, Shared Economy in 2024. It found that the Northern Ireland specific fiscal deficit, that is to say total expenditure in the north, less total tax revenue raised in the north, is in the region of around £7 billion sterling in 2020. However, too often the debate begins and the debate ends with estimates of simple fiscal transfers or of headline cost of transition to a unified island. These are of course important considerations, they must be honestly addressed, they should be put out there, they should be scrutinised, but they are only one part of a much larger economic picture. The question is not simply what a united Ireland would cost, but what a united Ireland could create. One of the most significant opportunities, I believe, lies in services. Services account for the overwhelming majority of economic activity across these islands, yet Northern Ireland currently sits outside the EU single market for services. Constitutional change would provide businesses across the island with seamless access to one of the world's largest integrated market services. It could be assumed that labour mobility would also become a powerful driver of economic growth. While people already move freely across the border, employers, education providers and workers do continue to navigate different regulatory systems, qualifications, tax arrangements and employment frameworks. So we have a porous border where people move quite rightly across the island, but they don't do it with absolute ease and there are a number of regulatory taxation and employment challenges that are faced. It would also support more coherent investment in education, in apprenticeships and in lifelong skills across the entire island. The transition to the euro, which I presume would be a part of the discussion, would represent another important structural advantage. Operating within a single currency would eliminate exchange rate risk, would reduce transaction costs for businesses and for consumers and would simplify cross-border trade and investment. Perhaps nowhere would the economic dividend be more visible than in the north-east and the north-west of the island. For too long, counties such as Donegal, Derry and Tyrone have found themselves at the edge of two separate jurisdictions, rather at the centre of one coherent economic region. Equally important would be the ability for state bodies to operate across the entire island. Agencies responsible for enterprise, industrial development, research, innovation and infrastructure would be able to plan and deliver on an all-island basis, rather than duplicating effort or working within jurisdictional constraints. I make these points because I think it is an important debate, but sometimes reduced to a lazy debate, as to please produce one singular figure that answers all of these complex fiscal questions. I can tell you as the Finance Minister of this country, and based on what I've put on the record of the House, that's not possible, but it's also not intelligent. This is a much more dynamic situation. There are fiscal issues, there are serious economic and fiscal issues to be considered, but any discussion about a unified Ireland, a united Ireland, a new Ireland, but the island of Ireland operating as one, that simply reduces the economic conversation to one headline cost, misses the point. And that's really one of the points that I want to make today. Having said that, none of this suggests the transition would be without significant cost, of course it wouldn't, nor would it be without significant complexity. It would require careful planning, sustained development, it would require responsible fiscal management. But fiscal analysis must capture both sides of the ledger. That's why the fiscal debate should not be framed solely about what we inherit, it should be framed about what we're capable of building north and south, and purely today, from an economic point of view, the benefits of that over time. Overall, research consistently highlights that the ultimate fiscal outcome will depend heavily on the terms of any reunification settlement, and the extent to which economic convergence is achieved across the island in the years following reunification. The fiscal position in year one would, of course, not remain static. Over time, costs and revenues would evolve as both economies adapt, grow, and become integrated. How these opportunities are managed, and the extent to which these benefits are realised, will be the key determinant of the long-term fiscal impact. In other words, these outcomes are not pre-determined. They will be shaped by the policy choices we make, the policies we pursue, and the decisions we make. On one hand, these future fiscal trends come with considerable uncertainty. On the other, they point to one fact, that the fiscal deficit in year one would be significant regardless of how we wish to cost it. We cannot expect reunification to come at no fiscal cost. It is vital, therefore, to bear in mind the current fiscal situation. In 2025, total net tax receipts in our jurisdiction amounted to 106.5 billion euro. However, we can all recognise that exceptionally strong corporation tax receipts masks the underlying position of the public finances. When these transitory revenues are excluded, the underlying general government balance in 2025 was a deficit of 7.1 billion. In that context, the scale of any reunification-related cost, at least at the start, would be significant. An annual cost of 3 billion would amount to less than 3% of total tax revenue, while an annual cost of 20 billion would be equivalent to almost one-fifth of all tax revenue receipts. I make that point to show the range of assumptions that are out there. Either figure would clearly have a material impact on the public finances, affecting not only the headline budget position but also the underlying fiscal balance. This illustrates why the range of estimates matter. They are not simply academic differences. Each figure would have a significant implication in terms of spending, tax and resilience. Any assessment of reunification must, therefore, be firmly rooted in the context of our fiscal position and, indeed, the level of taxation borne by citizens and businesses. It is very much a mixed picture. It is much more dynamic than people who want to reduce conversations to tell me the figure right now. Certainly, there will be a cost, a significant cost, a broad range in terms of what that cost could be, a significant difference in terms of the impact of that cost, depending on where it ends in the range, but that is year one and perhaps the years ahead. It is not a static number. Very much, the decisions that a new Ireland would decide to make would very much depend on the fiscal journey our country would be at, is my best assessment of the points that I am trying to make. Over the longer term, my department's Future40 research also examines how both domestic developments and global megatrends could shape the Irish economy and could shape public finances over the next four decades. This also serves as a useful context for the debate. Future40's message is clear. Ireland's future will be shaped by powerful forces, demographic change, digitalisation, the climate transition and an increasingly uncertain global economic environment. As policy makers, the task will be to anticipate these challenges, to invest wisely and to ensure that our economy and our public finances are resilient to meet the challenges of the decades ahead. And vitally, we must acknowledge that these pressures will exist regardless of our future constitutional arrangements. These are pressures that we know we are going to face. An ageing population, increasing healthcare needs, the transition to net zero and the need for continued investment in housing, energy and infrastructure will place a significant demand on public resources. Future40 serves as an important reminder that our fiscal capacity is not unlimited and therefore choices will inevitably arise about how best to deploy finite resources. It is important that we begin examining these issues now. Preparing for the future means understanding the economic, fiscal and societal implications of all possible futures, including the prospect of a united Ireland. Any future constitutional change must be underpinned from an economic point of view by rigorous analysis, responsible financial and policy planning and a clear understanding of how that will impact the lives of people across this island. Questions of public services, healthcare outcomes, pensions, taxation, infrastructure, housing, education and economic competitiveness aren't simply secondary considerations. I'm not suggesting anyone believes they are. They have to be at the centre of any informed discussion about Ireland's future. The research undertaken to date has clearly demonstrated that the range of potential fiscal outcomes is wide and uncertain. This uncertainty must encourage more debate on the topic. That's why we're having this debate today. We shouldn't run from this conversation. In fact, we should run to it. We should embrace it. It is an important conversation to happen. It's only through evidence-based research. It's only through open discussion. It's only through rigorous scrutiny, including putting all the information out on the table, even that we might find challenging, that we can ultimately reduce uncertainty and crucially deliver what people will need in this debate, transparency and clarity. So today's debate is not meant to advocate for one particular outcome that we probably share a few and what we'd like that outcome to be over time, but it is to try and all our, and for the first time that I certainly remember in a long time, if not, if not ever, but I certainly don't recall this before, it's to try and put as much facts and data and information on the record of this house to ensure that citizens and policymakers alike are equipped with the information needed to make informed choices. But it's also to try and push back as I have tried to do in my contribution against the headline figure. It is a much more dynamic environment than that too. Getting the right answers is built on the meticulous work of asking the right questions and let's today during the course of the debate record those questions, the questions that people believe need to be answered. The economic and fiscal consequences of constitutional change are too important to be left to assumptions. They require evidence and they require scrutiny. As we've seen in academic research, as we know in many ways, the conversation about Ireland's future is underway. Our responsibility now is to ensure that that debate is respectful, that that debate is inclusive and crucially that that debate is grounded in evidence. It's in that spirit that we have tabled this time today on a cross-party basis. I look forward to a productive discussion this afternoon and this perhaps being a jumping off point for more discussions and scrutiny in the time ahead. Go raibh maith agat. you