Statement by FF Leader Micheál Martin TD at Sub-Committee on Referendum on Fiscal Stability Treaty

Today Fianna Fáil Leader Micheál Martin addressed the Sub-Committee on the Referendum on the Intergovernmental Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union (Sub-Committee of the Joint Committee on European Affairs). The Referendum has been scheduled for Thursday, May 31st next.

Below is a copy of Deputy Martin’s opening statement to the Committee

I would like to thank the Committee for the invitation to appear today. Your hearings on the Fiscal Treaty have been very wide-ranging and informative. You have heard a lot of expert opinion concerning the impact of the Treaty’s provisions and also general political comments from a wide range of sources. This has been a very positive and constructive process.

Over the last 12 months I have spoken about resolving the European economic crisis more than any other topic. It is an absolutely central part of achieving the return to growth and job creation which everyone wants.

In a range of speeches in the Dáil and a recent lengthy address at the Institute for International and European Affairs I have set out in great detail my party’s position on this Treaty and on the much wider and more important reform agenda which is urgently needed. Instead of simply repeating what I have said before I would like to briefly summarise our position and to comment about the debate which will be held over the next six weeks.

Fianna Fáil is proud of its record in leading Ireland to participate in the EU and to have supported the process of development which has given us today’s European Union. Even at this moment of deep crisis, the Union’s record remains one of having enabled a relative prosperity and peace which would have been impossible otherwise.

We are a pro-EU party because we believe it provides the only credible context in which a small, peripheral country such as Ireland can succeed. Many people are suffering today because of the impact of the recession. Unemployment is too high and living standards are under pressure. However, let us be honest and acknowledge that sine 1973 Ireland has benefitted greatly from being inside the EU.Being an active member plays a huge part in being able to attract foreign direct investment to Ireland.

Membership gives security for those wanting to invest and it gives opportunity for those who want to export. The Union also remains an immense force for good in areas such as equality, education and working conditions.

We are pro-EU but this does not mean that we are uncritical. In fact, we believe that the duty of everyone who wants to the Union to work is to work to improve it and address its shortcomings.

As the recession built through 2008 to 2010 it became clear that the Union did not have the policies, the powers or the funding required to tackle the growing crisis. In reality the attempt to stick rigidly within rules agreed in the pre-crisis years made the situation much worse. Confidence was sapped and countries were left without the security of back-up support.

In late 2010 it was finally agreed at the European Council that new approaches were needed to restore confidence and growth. The creation of a formal rather than ad-hoc bailout mechanism came too late, but it was a major development. The ‘six pack’ measures showed a framework for fiscal stability emerging and, crucially, gave the ECB a context to intervene more aggressively to stop what could have been a more catastrophic financial meltdown.

Overall, the agenda has been limited so far, but it is at least underway.

Fianna Fáil supports the Fiscal Treaty not because it is the answer to Europe’s problems but because it is an essential part of the answer. A stronger and more transparent set of budget rules for countries sharing the Euro is part of what most experts say is required to secure long-term access to debt markets at affordable rates.

It is entirely consistent with the principles we and others signed up to 20 years ago in the Maastricht Treaty and it reflects a clear need given the scale of deficits here and elsewhere.

In terms of our current situation, a combination of transparent and robust budget rules combined with access to non-market funding are two core elements of Ireland returning to the bond market at an acceptable rate.

Fianna Fáil believes that the Treaty will have no negative impact on budget decisions which will be taken by the Oireachtas in the medium term. In fact, the Treaty may make those budget decisions easier than they would otherwise be.

One of the great errors in some past referendum campaigns was to allow the debate be dominated by responding to attacks on the real or imagined text before the people. I believe that the people have a right to hear a positive case made and that will be our priority. However, I would like to address some of the main criticisms which have been made.

The main slogan used against the Treaty is that it is an ‘Austerity Treaty’. This implies that the Treaty will require more austere budgets than would otherwise be in place. I don’t believe that this stands up to serious scrutiny.

As I’ve said, the Treaty will enable Ireland to access funding at a lower rate than would otherwise be possible. That means less funding going on interest rates and more being available for public services. Equally, this funding allows the budget to be balanced over a longer period, reducing the severity of immediate cuts.

The real route to increased austerity is to take a position where Ireland has to pay higher interest rates or has no access to funding for its deficit or refinancing needs.

A related point has been the claim that the Treaty somehow marks the end of Keynesianism – where countries will no longer be able to invest for growth. I think this misrepresents the Treaty’s substance. The key concept is of the Structural Deficit. By definition this is something which can allow deficits at key times. This is exactly what Keynes advocated.

In relation to economic independence, the reality is that countries will continue to decide what their own tax and spending plans are. Where decisions are big enough to have an impact on the Euro area these will need to be flagged in advance. This is also reasonable and proportionate.

A separate issue has been raised about why access to the ESF will be conditional on the adoption of the Fiscal Treaty. We should remember here that what we’re talking about is the terms on which other people are willing to lend us their money. A requirement to be signed up to transparent and strong budget rules is at the low end of what could be demanded. It’s a reasonable and proportionate demand.

The de-coupling of the ESF from this Treaty would serve no positive purpose and could cause damage by suggesting that Euro members are not serious about fiscal discipline.

This is a focused Treaty which is not open to the types of wild misrepresentations we have seen in previous referendum debates. Its limited contents and its ratification process mean that there is no issue for renegotiation and there is no national veto.

I would also like to say that there are serious problems on the other side of the debate.

I think it is foolish and counterproductive to define this as a referendum on whether or not we want to be in the Euro. There are circumstances in which this is an arguable case, but it is a negative argument which will cause resentment. The Euro has a positive case which we should be willing to make rather than concentrating on nightmare scenarios.

Equally, it is wrong to try to over-claim the benefits of this Treaty. It would not have prevented our problems and it cannot be presented as a measure which will make sure that the crisis will “never again” happen.

This Treaty must form part of a wider effort to address the Euro’s flaws. We need to also propose reform of the ECB, unified financial regulation and an increased budget which will provide for investment in regions with high and rising unemployment.

I believe that outside of this committee’s work the debate is being handled badly. The late-May date for the referendum is too rushed and runs a number of risks.

Firstly it ignores the strong advice of the Referendum Commission and the experience of past referendums, that a longer period for preparations leads to the public being more informed. Last year we were promised longer preparation times for referendum information but in fact we are to get even less time. It may not sink the referendum but it is an unnecessary risk.

Secondly, there is a real risk that next month will see a rising uncertainty about the Treaty in a number of countries. The current favourite in the French election has said explicitly that he wants changes. There are issues in the Netherlands. In Germany, the SDP has said it will support ratification only if a financial transactions tax is pushed through – something which would be unacceptable for us and many others.

At the same time, there is to be no White Paper and the EUMATTERS website run by the government saw its support cut and it has now been discontinued. As a result, there is no government effort to present all sides of the debate in an accessible place.

It would have been more reasonable to allow at least an extra month for the debate and to increase efforts to engage the public.

My party was the first to call for this referendum and we were the only pro-EU party to call for it without requiring a legal opinion that it couldn’t be avoided. All of the evidence so far is that our position is strongly supported by the nearly 400,000 people who supported us in the last election. According to recent polls over three quarters of them intend to support the Treaty.

However, we will take nothing for granted. We will campaign constructively, responding to anti-Treaty arguments but giving absolute priority to positive arguments about the place of this Treaty as part of the answer to Europe’s economic crisis.

In the midst of an unprecedented crisis the Union must be willing to change to reflect the new situation. The Treaty is a fair and reasonable part of a broader response to the crisis. It will have a direct positive impact on Ireland and my party is committed to supporting its ratification.