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Do we really want a world without any regulation?

By Angela McGowan, chief economist at Danske Bank

Published 07/06/2016

Danske Bank's Angela McGowan
Danske Bank's Angela McGowan

I have been amazed over the last few months to hear some of the views about regulation that have been expressed as part of the EU Referendum debate. I have heard countless times a reference to a Brexit vote being necessary to "free ourselves from the shackles of Europe and its regulatory burden on our firms". It seems that everyone is buying into this notion that regulation is bad and de-regulation is the solution.

But do we really want to live in a world where there is very little regulation? The Conservative government of the 1980s and the Republican government under Ronald Reagan in the US persistently pushed for light touch regulation, arguing along the way that markets are self-regulating. Self-regulation does not always work. We know this because we have just spent nearly a decade trying to repair the damage done by that school of thought.

Most companies recognise that regulation is good for competition because it creates a level playing field for firms and ensures that consumers get a better product or service. Regulation is important for the labour market too. Workers in Northern Ireland should ask themselves if they really want to move to a culture where employers don't care much for work-time breaks, paid holiday entitlements, protections for agency workers or maternity leave. The bulk of these employee rights were pushed through by European legislation.

No EU-derived workplace protection is guaranteed to stay after a Brexit, so could we rely on a post-Brexit Westminster government to deliver similar labour market protections? We only have to look at the present government's recent policy moves in that area to find the likely answer. In recent years the UK government has restricted protections against unfair dismissal, reduced TUPE rights for people whose jobs are outsourced and has imposed an increase in employment tribunal fees to discourage people from enforcing their rights.

It is a view rarely put forward in the UK these days but I think balanced regulation is actually a good thing. Regulations are generally introduced for a reason, whether that's for environmental reasons, for social reasons or for consumer and worker protection. Good businesses, good politicians and good policy makers can appreciate that our world should not centre on just 'making profit' and 'driving down company costs'.

Ensuring that environmental and societal rights are properly balanced with business interests in an open and transparent way is an important aspect of maintaining our democracy. Businesses are important for creating wealth and jobs but I believe that democracy is threatened when businesses are allowed to bypass local legislation.

The drilling of an exploratory oil well in Carrickfergus at a site in Woodburn is the perfect example of a business and society imbalance occurring. On this occasion local citizens believe that business and political interests have disregarded their concerns around health and safety. But residents in Northern Ireland have every right to seek clarification on issues such as planning decisions and environmental impact studies and when those answers are not forthcoming they have a democratic right to seek a judicial review.

A judicial review would not be necessary in this instance if the oil exploration company and the local planning authorities had properly demonstrated to local residents that their plans to drill would not have a detrimental impact on human health and the environment.

Clearly communications have been very badly handled. We should now be looking at why this breakdown between the public and planning officials has occurred and learning lessons from current mistakes. With planning now in the hands of local councils this case does not augur well for our future planning capability.

Accountability and transparency strengthen public support for business planning and infrastructure projects - particularly in the area of energy supplies. Public scrutiny and openness in the decision-making process around planning issues are essential to democracy. Everyone should be watching this case very carefully to see how this matter is resolved by our elected representatives.

In next week's Economy Watch, we hear from PwC NI chief economist Esmond Birnie

Belfast Telegraph

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