On behalf of Fianna Fáil I welcome the referendum bill before the House today. We will be supporting the passage of the Bill and we will be campaigning for a Yes vote in the referendum which will follow. We do so as the party which brought Ireland into membership of what is now the European Union, which has supported the reform and development of the Union through the years and which is absolutely committed to the idea of nations working together to overcome common problems.
As we said repeatedly before the Government eventually agreed to hold a referendum, if this treaty is a significant one, if does represent a significant step towards resolving the European debt crisis, then it is right that the people be consulted. We were the first party to call for a referendum and we are the only pro-EU party which called for a referendum before the Attorney General told her colleagues that there was no alternative.
While we are strongly supportive of this Bill we are not uncritical about the Treaty’s limitations and the poor way in which it is being handled.
Ireland and Europe
People are rightly suspicious of arguments for Treaties which are based solely on past achievements rather than future prospects. However, understanding the need for this treaty requires an appreciation of why helping the European Union to address key failings is in our national interest.
Equally it is necessary to counteract the arguments of those who try to dismiss and demonise the Union, failing to ever acknowledge its profoundly positive record.
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. No other economic, social or political model could have come close to enabling Europe to conquer the types of poverty and violence which previously defined its history. Only five years before the Coal and Steel Community was agreed and launched the European project, the continent experienced a deep and severe subsistence crisis, with a mass grinding poverty and simmering conflict.
Ours is a pro-EU party because we recognise this record of profound progress and because 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 far too high and living standards are under pressure. However, we do need to remember the simple fact that both living standards and employments remain significantly higher than they would be if Ireland were outside the Union or the Euro. Membership gives security for those wanting to invest and it gives opportunity for those who want to export. Hundreds of thousands of jobs are in this country because of our membership and record in the European Union.
Let us also not forget that the Union also remains an immense force for good in areas such as equality, education and working conditions.
People can summon up all the ideological fury they want to condemn the Union as some elite conspiracy to do down ordinary, but the fact is that the Union has done more for the people of Ireland and Europe than any left or right-wing ideology.
We have not seen our people conscripted into a European Army. We have not become a nuclear state. We have remained in control of key national policies. The rights of ordinary people have been dramatically strengthened
Not one credible piece of evidence has been produced to suggest that Ireland could have achieved current living standards and employment levels without the EU. The Union’s relentless opponents have spent forty years failing to acknowledge clear and unambiguous progress which it has enabled. Until they are willing to present a more balanced picture they will continue to be more interested in promoting their own interests.
All of the evidence is that it is in Ireland’s vital national interest that the Union be strong and successful. This is the core sentiment which we must bear in mind in this debate.
The Treaty cannot be separated from the context in which it was proposed –the deepest recession experienced by Europe since the Second World War.
The mounting crisis in 2008 to 2010 saw the Union completely failing to engage. It continued to seek to work within pre-crisis policies. The idea developed that the troubles being faced by individual countries were fully their own responsibility. This is the approach which led to unreasonable requirements on Ireland concerning bank debts. It was also the approach which caused the Irish and Portugeuse bailouts to be required. The insistence that existing rules would remain unchanged undermined confidence and led to the situation nearly spiralling out of control last year.
It is increasingly clear that the Irish bailout would not have been required had the policies in place today been there in 2009 and 2010. The ECB’s support of the financial system would have directly countered the panic which forced the taking on unreasonable levels and types of bank debt. A more secure financial system and the existence of bailout funding would have directly reduced pressures the dramatic increases in borrowing costs.
The narrative that all problems have had at their course the failures of individual countries was deeply wrong and it is long past time for it to be corrected.
Last year’s series of emergency summits and last-minute deals escalated the sense of crisis and directly damaged economic confidence. The mid-year deal for Greece which was extended automatically to all current and potential countries accessing bailout funding was only ever a stop-gap solution. While our government was busy praising itself for getting a deal which it didn’t negotiate and which was four times what it had asked for, others began to discuss longer term measures.
In August it became clear that there would be flexibility on providing extra funding for support programmes but only if the legal basis for fiscal control was significantly strengthened.
The process by which this Treaty was developed was easily the worst for any Treaty between European states in the last fifty years. It was rushed, there was a lack of proper debate and no effort was made to achieve unanimity even though the final text is overwhelmingly based on already agreed policies.
Through this the only stated negotiating objective of the Irish government was for something good to come out and that treaty changes should be avoided if at all possible.
As a result of this flawed process the Treaty we are debating today is important but not nearly comprehensive or ambitious enough.
It is part of the answer to Europe’s crisis but nowhere near the full answer.
This is the first time that any government has brought a proposal for a European Treaty to the Dáil without first publishing a White Paper. Past White Papers have served as a definitive statement of the implications of each Treaty’s implications in an Irish context. They may indeed have been read by relatively few people, but they have provided an essential foundation for debate.
As far as we have been able to ascertain, in the five months since leaders agreed the main provisions of this Treaty the government has not sought or published a single piece of analysis of its understanding of the detailed provisions of this Treaty. We actually have the ridiculous situation where the government says that it has been advised that a constitutional amendment is required to ratify the Treaty but it has not explained the reasoning for this. There has been no detail whatsoever provided to the Dáil or to the public as to what is viewed as so significant in this Treaty that a vote is being held against the government’s clearly and repeatedly expressed wishes. The Explanatory Memorandum is a one page effort which simply says that a referendum is required for ratification but nothing else.
This is a very bad way to start a serious debate about a measure which is an important part of the wider agenda of restoring growth and job creation to Ireland and Europe. In effect the government has ignored its duty under Standing Orders and precedent to provide member of the Oireachtas with briefing sufficient to ensure a fully informed debate.
I would like to note the ongoing and valuable hearings of the Referendum Sub-Committee of the European Affairs Joint-Committee. However, given the fact that we are holding this debate before they have finished taking evidence or even begun drafting a report, the government is clearly not too concerned with paying more than lip service to their work.
Thankfully, the gap left by the government has been filled by independent experts who have been active in providing detailed analyses of the economic and legal implications of the Treaty. Their work, most of which has been published, provides a solid independent basis for considering the Treaty and reaching an opinion on it.
As I have said, our position from last year has been that any European Treaty should be brought to a referendum irrespective of whether or not a legal loophole to avoid a vote could be found. The effort to avoid one would have been legally risky and caused lasting damage to pro-Europe sentiment. It would have made it close to impossible to go back to go back to the people with the more significant changes which are desperately needed.
After the final text emerged we sought independent legal advice as to the exact significance of what had been agreed. It is a very lengthy piece of advice but it can be summarised. While the Treaty involves little that is new in policy terms it does have significant implication in terms of the legal standing of fiscal rules. The Treaty significantly strengthens rules which are for the most part already part of European law and ratified by this and other countries. This is, of course, its primary purpose in terms of the restoration of confidence in fiscal management within the Eurozone.
In terms of the form of ratification; the relationship between national and international law is not the same in every country. The only way in which the Oireachtas could safely ratify certain of the commitments in this treaty is through a constitutional amendment. This is particularly true of the requirement that the fiscal rules not be open to easy amendment within national parliaments.
The fact that this is an inter-governmental treaty between EU member states rather than a full EU treaty is legally extremely significant. It clearly deprives certain elements of the Treaty of the protection from challenge afforded by previous amendments. At an EU level, there remains a question as to whether the institutions can play all of the roles ascribed to them in the Treaty, but this is not a matter which we can address. Prime Minister Cameron’s December comment that “you can meet but you can’t use this kit” was petty but there is little doubt that someone will take a case on this issue.
It has been reported that Deputy Pringle is to take a legal challenge to ESM Treaty. We do not believe that this will succeed and the people of this country should earnestly hope that it does not. It manifestly does not come within the terms of the Crotty judgement as it imposes no limitations on the free exercise of the powers ascribed to different institutions by the Constitution. What it does do is provide a mechanism where other are willing to give countries much needed funding.
The willingness of governments to stretch the competencies of the Union to include providing loans to member states has been an extremely welcome development. The ESM Treaty is one we should want to ratify and see operational as soon as possible – hopefully with a much larger amount available to it.
Over the last twelve months Fianna Fáil has repeatedly raised European issues in this House. Our concern has been to push for actions which are ambitious enough to tackle the crisis. Our leader has set out a very detailed position on the specific measures which we believe should be promoted. Our basic position is that we will support any measures which can genuinely contribute to the achieving of two overriding objectives:
1. Saving the Euro while returning the Eurozone to the path of growth and stability, and
2. Protecting the democratic legitimacy of the European Union.
We believe that the future relationship between Ireland and the European Union has to be fundamentally based on supporting measures to achieve these objectives – and it is in terms of these objectives that we have assessed our position on the Fiscal Treaty.
In relation to the Euro, it is important to say that it is under pressure but it is worth saving. The positive case for Ireland is that it has directly enabled incredible growth in employment in many areas. It has aided increased exports of between 30 and 60% to different global regions. These jobs have actually been the most secure in the recession and form part of the strongest part of our economy.
The negative case is that the adjustment which would be required if we left the Euro would be much more dramatic and severe than even the tough adjustments underway. We would face higher borrowing costs, a much worse business climate and a direct danger to employment in major parts of the economy.
In relation to democratic legitimacy, the holding of a referendum is vital, but so too is the fact that nothing is being proposed which undermines the accountability of the Union and its states to their citizens. In fact, the cooperation and transparency provisions of the Treaty enhance accountability.
Fundamentally the Eurozone is actually an economically strong. The problem is that it has failed to address three core design flaws in monetary union. Firstly, the mandate of the ECB is too narrow and its powers are too. Secondly, it needs a unified system of bank regulation and a single resolution regime. Thirdly, it needs a more substantial fiscal union, in particular strong fiscal rues and increased funding for investment.
This Treaty delivers an important part of this third point.
Stronger Fiscal Rules
Sharing a single currency directly limits each participant’s ability to act by themselves. Coordination and agreed controls are an absolutely essential part of not only a currency Union but long-term shared growth.
The fiscal rules authorised in the Maastricht Treaty and finalised by the Council during Ireland’s 1996 Presidency, lack all credibility. They were flouted repeatedly when it was not necessary and a convincing case developed that a much stronger legal basis was required in order to regain confidence that they will be implemented.
The six-pack measures which were agreed in 2010 and are now in operation gave much greater depth and substance to the fiscal rules. They have introduced a new level of transparency and oversight which makes the past of manipulation of debt and deficit figures by some countries almost impossible. They have helped restore some confidence for investors.
The need now is to ensure that these measures cannot be undermined for short-term reasons. This is the core of the Treaty. It is a reasonable and proportionate demand given the experience of the last decade and a half.
In relation to how the fiscal rules are presented, the government needs to watch its tendency to over-spin and over-politicise everything. It is simply wrong to claim that Ireland would have avoided a profound recession if these rules had been in place. The details of their own economic analyses and projections in 2002 and 2007 shows that they themselves believed that Ireland had a strong structural surplus and a secure growth rate of 5% per annum.
The main attack on the Treaty is that it somehow entrenches permanent austerity here and throughout Europe. No matter how much the slogan ‘Austerity Treaty’ is trotted-out it will still not be true.
For this attack to be credible we would have to see an alternative where there would be more money available for public services and to avoid tax increases. No such scenario has been provided. In fact, the accumulating evidence is that this Treaty represents the road of the least austerity.
It will reduce the interest rate we have to pay to borrow money to fund the deficit and refinance debt. If it does so to a comparatively modest 1% over the medium term it will represent a net saving to the state of over €1 billion every year.
The challenge to the Treaty’s opponents is to put aside the sloganeering and show the people some basic respect by setting out the detail of their alternative. Where do they propose we borrow money and how can the reduced interest rates which will come from the Treaty be matched?
It is also being argued that the Treaty ends the ability of the state to invest in growth. This is also not true. There are many routes to funding growth available, the only thing that is ruled out is the use of a structural deficit to do so other than in deep recessions. This is common sense.
Is there anyone who can credibly claim that Ireland needs the power to run unsustainable levels of borrowing during good times? That is effectively all that is being prohibited in this Treaty.
This Treaty has one very specific and immediate benefit in that ratification will qualify Ireland for future access to the European Stability Fund. In the absence of a Central Bank which acts as the lender of last resort the ESF is now the essential enabler of market access at affordable interest rates.
The ESF is the most important development of the last year and a half – and its absence in the early stages of the crisis cause real difficulties.
Opponents have been saying that this is effectively a ‘blackmail clause’. In reality what it involves is a demand that countries respect common rules if they want access to common funds. It would be at best arrogant for any country to turn to the rest of Europe and say we want your money but we’ll set our own rules.
My believes that the official German position on treaty changes is too rigid and is causing significant damage. However, the demand that the Fiscal Treaty be ratified before accessing ESF funding is perfectly reasonable and proportionate.
The Treaty includes a number of provisions relating to the coordination of policy and greater oversight. Few of these are novel and all are reasonable. They in no way challenge the basic construction of powers between states and the Union.
There is a serious issue with the manner in which the special Council for Eurozone leaders has been developing. Its dynamic is poor and its agenda far too selective. The failure of countries such as Ireland to speak up against the highly destructive and insulting behaviour of some leaders is a very bad start to what will now be a regular series of meetings.
After December’s summit the Taoiseach announced that there was no discussion of Corporate Tax issues even though the communiqué explicitly stated that it had been agreed to proceed to harmonisation through enhanced cooperate.
Others have begun sabre-rattling about the introduction of the financial transactions tax within the Eurozone.
These are red lines which this country can never cross and no one should be in doubt that this referendum confers no legitimacy on this harmonisation agenda.
My party has and will continue to actively support the ratification of this Treaty. We have held this position in spite of the government’s behaviour last year of bringing a new level of petty political partisanship into European matters. The failure to respect the tradition of consultation amongst the pro-EU mainstream until the referendum became inevitable showed this most clearly.
The nearly 400,000 people who voted for us in the last election are an essential part of any potential majority. As things stand polls show that over three-quarters of them are in favour of the Treaty – a support level far higher than amongst Labour’s base.
We will campaign on a positive message of the importance of the Treaty as part of a wider agenda. We will continue to actively push for Ireland to be more active in calling for vital measures such as the fundamental reform of the mandate and policies of the ECB.
At a time of great difficulty, we believe that the people of Ireland and Europe are dissatisfied with the timidity and failures of Europe’s leaders, but the Union remains a focus of their hopes for the future. They understand that a return to growth and job creation requires a central role for a more active and powerful European Union and this is what lies behind the high levels of support currently being seen in the polls.
No matter how the Tánaiste tries to spins it, the campaign is being rushed because of these polls. It may not affect the outcome but it undeniably increases the risks. It goes directly against the recommendations of researchers and the Referendum Commission and it breaks another promise of the government – in this case that there would be more time given to prepare for referendums.
The date also runs a substantial risk that the future of the Treaty will be in doubt because of developments elsewhere. The Tánaiste is wrong when he says there is a growth agenda which can satisfy Francoise Hollande’s demands. He has said clearly that he will not ratify until growth issues, such as the ECB mandate are addressed.
His election may not upturn our vote, but it introduces unnecessary risk.
This Treaty cannot be the end of reforms to address the economic crisis. It must be a starting point – a foundation for forcing more important measures onto the agenda.
It is a necessary and reasonable Treaty which will reduce the costs of borrowing to fund public services in this state. It is not a major innovation but it is a confidence-building measure.
My party strongly supports this bill as it will enable a referendum to be held and we will be campaigning for a Yes vote based on positive arguments and a belief that working with a stronger Europe is the best route back to growth and job creation.