Controlling fiscal policy 'could cure region's ills'
Time is running out for Northern Ireland to rebalance its economy, a firm of business advisors said.
PwC said the Northern Ireland Assembly needed more powers to regenerate business and guard against future cuts from Westminster.
Its chief economist, Dr Esmond Birnie, told the Northern Ireland Economic Conference: "Northern Ireland's past economic performance was fuelled by a steady increase in public spending, but those days are past and we must now become the authors of our own future prosperity.
"However, despite successive reviews of the economy having identified our economic shortcomings, the ability to tackle local problems with local solutions remains elusive."
"Time is not on our side," added Dr Birnie. "The region is already facing over £1bn of unfunded spending pressures with the possibility of worse to come if the US and eurozone crises worsen.
"Without additional devolved fiscal flexibility, the Assembly will find it difficult to attract high levels of inward investment and stimulate a competitive and export-focused private sector."
Despite an announcement last week that air passenger duty will become a devolved power, thus saving Northern Ireland's only transatlantic air link, the Assembly needed greater economic flexibility for the future, he argued.
Mr Birnie said powers to legislate for tax incentives, which could encourage research and development and sustain jobs, would maintain foreign direct investment. And while cutting the rate of corporation tax would be a move in the right direction, Dr Birnie said it alone would unlikely be enough to attract enough overseas investment to dramatically increase productivity and research and development.
"Driving research and innovation need specific tax incentives and greater fiscal flexibility than the Assembly currently enjoys and it should look carefully at what additional tax varying powers it would need," he said.
"The Secretary of State's announcement of a joint ministerial group to determine the costs, administrative changes and legislative vehicle for transferring corporation tax powers to Stormont is the perfect vehicle within which local ministers could negotiate for these powers.
"The Scottish Parliament is using the progress of the Scotland Bill to expand their proposals for greater devolution of fiscal powers and the Assembly could follow their example."