European Council Meeting: Statements

The Taoiseach

Last week's meeting of the European Council was a significant one. Important steps were taken in regard to both budgetary discipline and firewalls — issues of great importance to this country — and progress was made towards taking Europe beyond the current crisis.

Of course, much remains to be done in the period ahead both to put shape on the new arrangements and to ensure that the necessary firewalls are in place. As I stated when I addressed the House last week, it is important that the decisions taken be, and be seen to be, implemented. While it will not be the last word in the matter, last week's outcome was a good one for Ireland and for the future stability of the euro, and it should be welcomed by the House.

In advance of the meeting, I spoke and wrote to President van Rompuy setting out Ireland's key priorities, which include decisions to stabilise the eurozone through stronger firewalls and new rules; the need for the removal of the PSI provision from the ESM treaty; and to signal the Government's intention to pursue the application to Ireland of the new financial instruments that did not exist at the time of the initial recapitalisation of the Irish banks. I am satisfied progress was made on each of these issues.

Our meeting began on Thursday evening over dinner, when President van Rompuy set out the results of the work he has undertaken on foot of the mandate we gave him in October to identify steps to strengthen economic union. In taking this task forward, he worked closely with the president of the euro group and the President of the Commission. He also consulted all member states on the best way forward. His report and the measures it proposed were well balanced and widely welcomed. They formed the basis of the substance that was agreed.

On strengthened economic policy co-ordination, we agreed what has been called "a new fiscal compact". Essentially, this is a set of reinforced budgetary rules for countries within the euro area. Specifically, we agreed that government budgets should be balanced or in surplus. Looking at where Europe is now, this is an entirely sensible proposition. We agreed that this rule shall be deemed to have been respected if, as a rule, the annual structural deficit does not exceed 0.5% of GDP. There is no doubt that this is a challenging ambition, but we agreed that it is necessary if we are to send a strong signal that we are serious about what we are doing. We will work carefully through the country-specific implications for Ireland once negotiations are under way.

It is, of now, a political agreement. Given the nature of what is involved, there are some very detailed technical and legal considerations that will need to be teased out carefully or analysed by experts before any legal text is adopted. This is an important process in which Ireland will be fully and actively involved.

To underscore our seriousness of purpose, member states will carry over this commitment into national law at constitutional or equivalent level, and the European Court of Justice will have a role in ensuring this is done properly. We are examining this requirement carefully, particularly in regard to how it dovetails with the fiscal responsibility Bill now being prepared.

We agreed that euro area member states that are in breach of the existing rules on excessive deficits will be obliged to work with the Commission and the Council in an economic partnership programme detailing the structural reforms required to get back on track in a sustainable way. The implementation of this programme and annual budgetary plans will be monitored by the Commission and the Council. This does not mean allowing the Commission or another entity to draft the budget for countries, which of course is their democratic responsibility. We also agreed that the rules for the excessive deficit programme should be tighter for member states in the euro area. Specifically, there will be automatic consequences for a member state that exceeds the 3% ceiling unless a majority in the Council decides not to adopt a Commission recommendation in this regard.

On 23 November the Commission brought forward two important new proposals on monitoring and assessment of draft budgetary plans and on strengthening economic and budgetary surveillance of member states experiencing or threatened with serious difficulties. Last week, we agreed these important measures should be examined swiftly so that they can be in force for the next budgetary cycle. Under this new legal framework, the Commission will examine the key parameters of draft budgetary plans and, if necessary, adopt an opinion on them. Where a plan is seriously non-compliant with Stability and Growth Pact requirements, the Commission will be able to request a revised one.

If we have learned anything from the current crisis, it is that while we share a currency and are deeply affected by the fiscal approaches of other member states, we do not yet have the rules necessary to match that interdependence. Last week's meeting, therefore, agreed that we should deepen our co-ordination to better reflect our closer connections. The President of the European Council has been asked to report on this in March 2012. The new arrangements will mean more co-ordination of the fiscal plans of member states. This is not something that should be a concern to Ireland because we are already in the process of preparing a fiscal responsibility law that will ensure the mistakes of the past Government and reckless lending which led us to our current position will not be repeated in the future. Ensuring that other member states toe a similarly disciplined line is something we should welcome. It is, of course, necessary to ensure that we advance on the basis of sound reasoning and careful analysis and with proper regard to the requirement for democratic legitimacy and political accountability. These are not desirable add-ons; they are central requirements.

In addition to the aforementioned elements of the fiscal compact, last week's meeting also moved to strengthen the stabilisation tools or firewalls. This is part of a programme of immediate action to answer current pressures in the markets. Again, this is welcome from an Irish point of view and I pressed the issue strongly in the lead up to the meeting. We agreed to accelerate the entry into force of the European Stability Mechanism, the permanent replacement for the EFSF, with the objective that it be in place in July 2012, a year early. This is important because the ESM has several advantages over the EFSF, including a more streamlined operation due to the fact that the ESM does not rely on guarantees in the same way. We agreed that the EFSF should remain active until mid-2013, as previously planned, and that it will continue to ensure the financing of ongoing programmes as needed.

Importantly, we agreed that the requirement for private sector involvement, PSI, should be removed from the ESM treaty and that we would strictly adhere to established IMF principles and practices in this regard. I have long argued that this should be done, including in my meetings with Chancellor Merkel and my discussions with President van Rompuy, President Barroso and Prime Minister Cameron. PSI is a serious impediment to those member states, including Ireland, which seek to regain market access in the future. I am glad that partners listened carefully and responded positively.

We also indicated that we would reassess the adequacy of the overall ceiling of the EFSF and ESM of €500 billion in March 2012 and that we stand ready to accelerate payments of capital into the ESM if needed to maintain the required ratio between paid-in capital and loans and to ensure a combined effective lending capacity of €500 billion. To further underpin our firewalls, member states will consider providing up to €200 billion in the form of bilateral loans to the IMF to ensure that it has adequate resources to deal with the crisis. This does not have consequences for Ireland because we are in a programme and would not be expected to contribute but we will monitor progress with keen interest, including whether parallel contributions are forthcoming from the international community.

Having reached agreement on the substance of what is involved, our meeting turned to the steps needed to put it in place. We agreed there was considerable scope for making progress through secondary legislation where this was possible within the framework of the existing treaties but it was also clear that some of the steps we agreed to take require primary legislation. President van Rompuy sought to proceed with the support of all 27 member states but when this did not prove possible for reasons that have been aired extensively in the subsequent period, we agreed to proceed by way of an international agreement involving all the euro area member states and any other member states which wished to come with us.

A number of my colleagues have now entered into a process of consulting government partners and parliaments and it appears likely that 26 member states will agree to participate. The obvious exception is the United Kingdom, which felt that it was not in a position to agree. This is a disappointing development, although it is clearly for the UK Prime Minister to decide how best to advance and defend the UK's interests. In approaching the meeting I hoped that we could find a way forward for all 27 member states as a strong signal of complete unity and common purpose at European level. I am also conscious that the UK is our closest neighbour and is often our staunchest ally at the European table. It brings a unique perspective that will now be missing from these important debates. We will, of course, continue to work as closely with the UK as we have done in the past. Our relationship is deep and wide, based on important common interests across a range of EU policy matters. We share an especially strong commitment to the Single Market. I will continue to work with the Prime Minister, with whom I spoke yesterday evening, to ensure nothing is done to damage that most important achievement of the Union. I expect to speak to him again in the coming weeks. What has happened is disappointing but I do not wish to exaggerate its import. The UK has decided not to participate in the specific arrangements we agreed at last week's meeting. It has not in any way turned its back on the European Union, as the Prime Minister made clear in his speech to the House of Commons this week.

Part of President van Rompuy's report in March will pertain to relations between the EU and the euro area, which may help us to make progress on this important discussion. In the absence of agreement among all 27 member states, we agreed to proceed by way of international agreement. Last week, we reached a political agreement which now needs to be given technical and legal effect. Work is now under way on the part of the legal services of the Commission and the Council and once an initial text has been prepared, it will be shared with experts from member states. I appreciate there is great interest in this House in what the adoption of the agreement will mean for Ireland, including whether a referendum will be required to ensure that we are in a position to ratify what has been agreed. The simple fact is that until we have a legal text to consider, it is not possible to say. Important issues must be considered in detail and the Attorney General will want to fully study the texts before offering advice. This is not something that should be rushed but I reiterate my commitment to do whatever is necessary once this scrutiny has been completed. If a referendum is found to be necessary, that is what will happen.

I wrote to President van Rompuy ahead of the last week's meeting to alert him to the points I would be making. I told him plainly that the Irish people expect our actions to restore the stability of the eurozone and reinforce Ireland's prospects of regaining our economic sovereignty. In my letter and my presentation to colleagues at the meeting, I explained the cost to Ireland of capitalising banks in a manner that protected European as well as Irish citizens. I stated that the cost, at €63 billion or 50% of GNP, has been uniquely onerous. I indicated that I would be seeking access for Ireland to new European financial instruments which were not available to us at the time and that I would be doing so in the interest of equity and of making our burden of debt more sustainable. For example, in October the European Council agreed measures to ensure adequate capitalisation of Europe's banks, including a role for the EFSF.

I told colleagues that such facilities should be applied in Ireland's case as if they had been available at the time the Irish Government put money into the Irish banks. In making that case, I underscored the fact that we will continue to meet, on time and in full, all the obligations of our programme. We are simply seeking to re-engineer our debt burden through the possibilities now available to others.

Last week's meeting was focused on the big picture of how to stabilise the euro and deal with the eurozone crisis. It was not an occasion at which national issues were on the table for decision. However, I set out our case strongly and gave colleagues a clear understanding of the scale of our predicament and challenge. I told them that, together with the Minister for Finance and other Ministers, I will pursue the matter further in the period ahead. I am confident that in due course we will be able to make positive progress in a way that makes a real difference for Ireland and for our people. I intend to leave no stone unturned in that regard.

Deputy Micheál Martin

Last week's meeting of the European Council was one of the most critical in the history of the European Union. This summit was charged with providing a final and decisive answer to a crisis that is hitting all 17 states in the euro and is a direct threat to the wider European and global economies. It was the fifth time this year that leaders met determined to draw a line under the crisis by acting decisively and in unity. They promised a firewall to contain the crisis and to do whatever it would take to return Europe to rising growth and employment.

For anybody who wants Europe to work, for anyone who believes that countries are stronger when they work together and for anyone who recognises the great history of the Union the outcome of the summit was close to a disaster. There is no secure firewall. The flaws in the euro have not been fixed. There is no plan for growth. To make things worse, these failures have been linked with a deeply damaging political split which developed in the name of an agenda that does absolutely nothing about the real causes of the crisis. We are now heading into a three-month period of discussions which is almost designed to destroy what confidence is left in the European Union and the euro. There has been no serious move away from the agenda that has comprehensively failed over the last year and a half. This agenda drove Ireland and Portugal out of the bond markets and has put other countries in great difficulty, and it may shortly involve the downgrading of the credit of every eurozone country.

The leaders of Europe handled this summit appallingly. They maximised division, minimised discussion and produced a set of agreements based on little more than hope that failed policies can be made to work if they are given one final push. The only thing left to cling to is the chance that there is still time left to do something before further — and this time irreparable — damage is done.

Anyone paying attention to events in recent days will have been repulsed by the spectacle of assorted euro-haters dancing with joy at the idea that the European Union is under threat. This is not just a British phenomenon; throughout the Union, there are reports of those who have fought the Union at every turn claiming that they are being proven right. Wherever anti-EU forces have any influence, they are trying to make a bad situation much worse. There are reports of the Dutch Government's majority being under threat. In the Czech Republic, the president's appointee in the national bank is working to veto the agreed funding. Elsewhere, anti-European Union forces are seeking to maximise the damage they can do.

It is one of the greatest failings of Europe's leaders that they are encouraging the idea that to be pro-European Union one must support their agenda or be seen as a eurosceptic. This is dismissive and counter-productive. In fact, the people who are most concerned about the agreement — the people who are most angry with the leaders who put it together — are those who most want the Union to work. My party is proud to have led Ireland into the great programme of European integration. In every poll for every referendum, our supporters have been the most enthusiastic about the Union. Following the vision first outlined by Seán Lemass in the 1930s, we are a resolutely pro-European Union party. There is not now and there never will be any wavering on this point. Anyone who tries to read anything else into our comments during this crisis is wrong. We want Europe to be strong and successful. That is why we believe the agreement reached at this summit is both foolish and damaging.

We in no way object to the discussion on giving the Union more powers. What we object to is the failure to give the right powers. We also believe the Government has followed a flawed strategy. It has been incapable of escaping from its obsession with scoring political points at home and has therefore abandoned a major opportunity to shape events. It has also spent too much time on whether there will be a vote on the agreement and not enough on what will be in it.

Unfortunately, more and more people are asking whether the euro is worth saving. Equally unfortunately, they are getting only general rallying cries in response. The euro was a major experiment when it was launched, and its chief architect, Jacques Delors, has stated that problems in its construction are the direct cause of today's crisis. However, in spite of this, the evidence shows that the euro has enabled significant growth throughout the Union, which has been maintained even after the declines of the last few years. In Ireland, the story is even clearer. For example, a study released this week by researchers based at the ESRI and Trinity College concluded that the adoption of the euro has had a significant and positive impact on our exports, which has increased over time. It showed how it has provided boosts of between 30% and 60% in various markets.

Being part of a large currency has been of enormous benefit to us in attracting investment and giving companies a solid foundation on which to access and increase opportunities. The creation of a large number of jobs has been enabled by the euro. There is no doubt that if we were forced to have our own currency, there would be a further severe and long-term impact on both employment and living standards.

The euro has been good to Ireland. It is key to our return to growth, and we need to play our part in helping it to survive. Part of this is that we should be willing to speak out when the policies being pushed are wrong. Every piece of evidence shows that the introduction of stronger fiscal rules is a marginal part of the agenda to tackle the crisis. Ireland was fully compliant with both the existing and the proposed fiscal rules throughout the entire decade before the crisis. In contrast, Germany and France regularly broke the rules. Soon after his election, President Sarkozy even invited himself to a meeting of finance Ministers to announce that France intended to break them for a bit longer.

In his television broadcast, repeatedly in this House and in his contribution to last week's summit, the Taoiseach has steadily increased his support for the idea that stronger fiscal rules would have prevented the crisis and our bailout. He wrote to President van Rompuy: "[T]he Irish people are paying the price now for the absence of such rules in the past". This is not only wrong, it directly undermines Ireland's negotiating position. It says to the leaders of Europe that everything is Ireland's fault and fails to make the increasingly undeniable point that Ireland required a bailout because of the lack of a lender of last resort and our willingness to take decisions in the interest of the whole of Europe. This last point is one that the Taoiseach began to make last week, but he undermined his own argument by insisting on domestic political point-scoring.

The Taoiseach is right to join everyone else in welcoming the removal of private sector burden sharing from the agenda of sovereign bailouts. Where he continues to be wrong is in his failure to explicitly point to how the raising of this issue last year directly and rapidly undermined Ireland's ability to borrow. That relates to the Deauville meeting with President Sarkozy and Chancellor Merkel.

As I said in March and in a number of debates since then, my party supports the idea of incorporating fiscal rules into legislation. This is not question of whether there should be such rules but of how they should be set. I find it no less than incredible that the Taoiseach agreed new rules last week without having access to a single study on their possible impact. I asked this question of the Taoiseach yesterday, and it was clear that there was no such study.

The Taoiseach

The programme we are in supersedes those figures.

Deputy Micheál Martin

No, I am talking about the study on what was agreed. The Taoiseach, along with others, adopted a tough series of commitments relating to structural deficits and the reduction of debt.

The enforcement procedures are such that these rules will effectively set the entire economic framework for the future of this country. Not one person in the Council chamber last week could say what would be the impact of these rules. This is madness.

We want to be supportive of the new measures but early examinations of the new target figures are deeply worrying. It would appear that they will significantly undermine growth and hold back employment, while reducing government debts to a far lower level than the 60% mentioned. Analyses of the impact of the deficit limit suggest that it will lead to countries having almost no debt in the long run. In other words, it would involve significant austerity on effectively a permanent basis. In the name of saving the European sovereign debt market, these rules would end up closing it down.

Before there is any move to finalise agreements on these new fiscal control rules, detailed studies must be carried out and made publicly available. Many of the current troubles arose from politicians 20 years ago taking decisions about the euro without detailed evidence or discussions. This cannot be allowed to happen again. A decision of such magnitude, with such a profound impact on the social and economic future of Europe, should not be taken on the basis of plucking figures from the air because they sound tough.

The rush to enact these rules is being done in the name of showing resolve, which would supposedly restore confidence. This is nonsense. The idea that Italian debt is under pressure because the government has not enacted a strong enough law about future budgets would be laughable if it was not the policy signed up to by the Taoiseach and his colleagues last Friday. The real issue remains the uncertainty about the ability of governments to refinance existing debt. This uncertainty can only be dealt with if Europe has a significant lender of last resort. It is almost shocking that the Council spent hours reaching an agreement on fiscal rules and did not even discuss addressing the central role of the European Central Bank in inflating this crisis.

Mr. Draghi is right when he says the bank's agenda is narrow, clear and independent. It is, however, not as narrow as he is interpreting it, and there is an urgent need to reform its work. It remains a mystery why the Taoiseach agreed to Mr. Draghi's appointment without discussing these issues with him. This is a bank that raised interest rates after a recession had started.

The Taoiseach

For the Deputy's information, Mr. Draghi was at the meeting and explained ECB monetary policy on a number of occasions in the course of the night.

Deputy Micheál Martin

I said it is a mystery why the Taoiseach agreed to his appointment. I am not talking about last Friday. He was appointed on the nod, with no discussion about the mandate of the ECB and its role in the crisis. That is my point. The Taoiseach had a say in that and he did not even question him about the policies or the ECB's approach.

The Taoiseach

The point about the meeting is that there was a discussion about the ECB at the meeting, because he was there.

Deputy Micheál Martin

I spoke to the Taoiseach yesterday and the Taoiseach said that he made it clear. My point is that there was no idea of addressing the central role of the ECB or changing its mandate. There was not, and the Taoiseach should not pretend there was.

The Taoiseach

I explained his remarks about that.

Deputy Micheál Martin

Yes, and I have articulated them in my speech. Everything I am saying is quite correct and accurate.

The Taoiseach

I am trying to be helpful to the Deputy.

Deputy Micheál Martin

The point is that the summit did not address the mandate of the ECB, which is the crucial issue, or the capacity of the ECB to be the lender of last resort.

The Taoiseach

I am trying to be helpful and explain what he said about that.

Deputy Micheál Martin

It concentrated on the German agenda of fiscal rules alone. This is a bank that raised interest rates after a recession had started and risked creating a depression by raising them before it was over. It is so obsessed with the idea that targeting an inflation rate of close to, but below, 2% is the answer to every problem that it has even produced an iPhone application in which hitting this target delivers high growth, full employment and the award of central banker of the year.

The ECB's moves relating to longer-term financing for the banking system are welcome, but they are not enough. They ignore the causes of the uncertainty, which is making capital flee European banks. The exposure of these banks to sovereign debt is a huge cause of uncertainty about future risk. This new financing is treating a symptom but not the cause. Equally, the bank's secondary market purchase of bonds continues to enable investors to leave the market as their perception of the risk to the primary bond market continues to grow. The ECB is willing to spend an extraordinary amount of money on protecting the banking system and reducing yields in the market for existing sovereign debt. If much of this was even theoretically available to the primary debt market, the crisis would be over in the morning. The arguments against allowing this are now devoid of credibility.

There are indications that yesterday's Spanish bond auction was aided by international co-ordination. Its impact is very welcome but all evidence shows that a failure to change the basic policies will leave the underlying problem unchanged. After every past summit, co-ordinated interventions have delivered nothing more than short-term relief. Within the existing rules, this could be done by giving a banking licence to the EFSF. In the longer term there should be a treaty change to include economic growth in the European Central Bank's mandate and to explicitly allow it to buy sovereign debt. It is inexplicable that the Taoiseach and others did not even raise the issue last week. I strongly encourage him to return to the Council on this issue. It is one on which it is worth fighting a referendum, if that is what is required.

The bringing forward of the ESM's start date is welcome, as is the agreement to provide Europe-specific funding to the IMF. Taken together, however, they are no firewall. They involve having funding ready to provide bailouts while the ECB continues to drive countries into needing those bailouts. They also amount to little more than a year's worth of funding for the three countries under the most pressure at present. After the failure of the October package, the leaders simply came up with a different way to fund the package. They did not take any additional radical decisions.

Another item missing from the agenda was the creation of funding to support development and stimulate the European economy during downturns. Fiscal control does not amount to a fiscal union. The Taoiseach was correct to raise the fact that the debt which Ireland took on as part of a common European Union approach should be recognised through a significant refinancing. I believe these debts should be at both a low rate and of a long duration. They are the core of our debt issues.

Mixed messages from the Government about debt sustainability, easy agreement to the fiscal control agenda and the failure to have any diplomatic initiative have not helped negotiations. It still not too late, however. The Government should significantly ramp up its efforts on this matter.

As can be seen from the text of the Merkel-Sarkozy agreement last week and from the daily comments from senior French Government sources, the people who directly drove this agreement see it as a means of forcing the harmonisation of corporate taxes. The current legal position is clear. Ireland has the right to decide its corporate tax rate and rules. Whether this remains the case under the deal will become clear when we see the text, but the Government's failure to put it in the deal must be a concern. Equally, the threat to our financial services sector is undeniable. Those driving intergovernmentalism have made it clear that it is part of their agenda——

The Taoiseach

It is not necessary because it is part of the EU treaty.

Deputy Micheál Martin

——particularly President Sarkozy.

Acting Chairman (Deputy Joanna Tuffy)

Only one speaker may speak.

The Taoiseach

It is part of the EU treaty.

Deputy Micheál Martin

Last Friday, the Government was eager to push the idea that there is nothing to be worried about. The Minister of State, Deputy Lucinda Creighton, said on "Morning Ireland" that corporation tax was not on the agenda at all.

The Taoiseach

That is correct.

Deputy Micheál Martin

In spite of this, and in spite of the Taoiseach saying just now that it is correct, page 3 of the summit communiqué states explicitly that leaders discussed the co-ordination of tax policies and how tax policy can support economic policy co-ordination and contribute to fiscal consolidation and growth.

The Taoiseach

There was no discussion on tax.

Deputy Micheál Martin

I repeat that page 3 of the summit communiqué states explicitly that leaders discussed the co-ordination of tax policies and how tax policy can support economic policy co-ordination and contribute to fiscal consolidation and growth. It was discussed. Given that yesterday the Minister of State referred insultingly to many journalists having been too lazy to read the summit communiqué, she should clearly be more careful in future.

The scale of the political damage done at the summit will take some time to work out. The scenes on Friday were a disgrace and reflected a badly prepared summit and a set of leaders who did not seriously try to overcome easily surmountable problems. Mr. Kohl, Mr. Mitterand and other past leaders would not have let this happen. Reports that it was stated at the European People's Party, EPP, summit on Thursday afternoon that Britain would not be able to be accommodated are extremely serious. Will the Taoiseach, who is a vice-president of the EPP, confirm or refute these reports?

It is unprecedented that there would be a formal veto and split on the first day of a two day summit. This is the first time in the history of the Union that leaders failed to find a compromise that all could sign. Whatever Britain's demands and however ineptly they were promoted, it appears that some leaders were eager to have this split. Certainly, this is implied by their actions since then. Commissioner Rehn is a sensible and considerate man and I take his position seriously that existing treaties, even recently agreed directives, cover the issues discussed.

This is, however, irreconcilable with the position President Barroso took yesterday that the changes are so significant and Britain's position so unreasonable that this is the only way vital steps forward can be taken. President Barroso so does not appear to be taking seriously his duty to build bridges between countries rather than helping to tear them down.

Britain is our biggest partner and competitor. We need it to be active in Europe. We cannot afford any risk that our firms will be subject to controls and taxes from which British firms will be exempt. This is not a marginal issue and I am surprised at the failure of the Government to be able to give a coherent account of its position on Britain's demands.

Whatever lies behind this must be tackled immediately. President Sarkozy should be told unequivocally that he is not the spokesperson for the 26 countries. He might believe there is a new era of deep integration on the way, but he has no right to speak for us and act as if it is a great victory that Britain is becoming, at best, a semi-detached member of the Union.

Friday's breakdown was a betrayal of the spirit in which the Union was built. It reflected a group of leaders who have not systematically engaged each other. They have not built alliances or shown the imagination or generosity required to work effectively together. In the weeks leading up to a vital summit, the Taoiseach held his only proper bilateral meeting with a eurozone leader since he was elected and had a telephone chat with Prime Minister Cameron. According to his reply to questions yesterday, that was the sum total of his diplomacy before the summit.

He was clearly not alone in effectively standing on the sidelines of the summit. I know from my conversations with Prime Minister Rutte and others last week that governments throughout Europe are extremely uneasy with developments, in terms of policies and divisions. Many support the agreed approach, but others have serious reservations.

From August onwards the Government's main strategy has been to try to avoid anything which would require a referendum. The Taoiseach, Tánaiste and Ministers went through hoops to avoid telling us exactly what their positions were on key issues. The letter to President van Rompuy was withheld from this House in spite of repeated requests for a discussion on the Taoiseach's proposals.

Reinforcing the Government's unprecedented level of contempt for the Oireachtas, it then leaked the letter to RTE in order to try to manipulate coverage of the first day of the summit. There should be no doubt about the position on a referendum. If what has been agreed is significant, there should be a vote. The leaders of Europe have said that these changes are fundamental and will, at a stroke, restore confidence. Therefore, we should take this issue off the table.

There should be a referendum on measures to strengthen the euro. However, the proposals currently on the table will not strengthen it and are weakening the Union. The deal may well have unravelled before any decision has to be taken here. The summit will be recorded as one of the worst in the Union's history. It has reinforced failed policies and cast aside principles of solidarity and respect which builds the Union. For the sake of Europe and its citizens, we should all hope there is still time to undo the damage caused last Friday.

Deputy Gerry Adams

I wish to share time with Deputy Pádraig Mac Lochlainn.

Acting Chairman (Deputy Joanna Tuffy)

Is that agreed? Agreed.

Deputy Gerry Adams

Last week, in advance of the European Council meeting in Brussels, the Taoiseach wrote to Council President Herman van Rompuy. He told him: "Ireland has acted in the interests of the euro area by not imposing losses on unsubordinated bank bondholders and as a result has paid an extraordinary high price to protect the wider European banking system from contagion." He went on to say that he would raise this matter with colleagues during the course of the summit.

Yesterday, during his briefing for Opposition leaders, he made it clear to me that he did not formally raise the issue of the extraordinary cost to Irish citizens of his policy and that of the previous Government of bailing out the banks. He did say he raised the need to "re-engineer our debt burden" with other leaders but that the summit was the wrong meeting to put forward Irish interests. He said there would have been no tolerance of any government raising its own specific issues. He said the focus was on the euro crisis.

However, when I raised this issue with him yesterday during Leaders' Questions, he claimed I was misrepresenting him. I was not misrepresenting him. I repeated accurately what he told me. Maybe he misunderstood my question and gave me the wrong answer, but I did not misrepresent him. I will not misrepresent him or anyone else. I do not do business like that. Why would I? There is no point. I reject the assertion that I put words in his mouth.

In his letter he said his intention was to seek political support "from colleagues around the Council table for a process which would ensure that Ireland continues to make progress towards debt sustainability and an early return to the markets". Did the 27 members of the Council discuss his appeal? If so, what was the response? What commitments did he secure from his colleagues? If the content of the summit statement released last Friday is anything to go by, it is clear, as it is in the Taoiseach's statement today, that the issue of Ireland's debt burden and the crippling austerity being imposed on Irish people to service this burden was not raised properly by him nor were any commitments secured.

The deal struck by 26 EU leaders on Friday, 9 December, in Brussels will not solve the eurozone crisis. Who knows what will happen, but in my opinion it will make matters worse. The agreement is not a fiscal compact. It is an austerity compact. It seeks to impose right-wing austerity policies in perpetuity. The difficulty for all of us is that the Taoiseach agrees with this. The agreement was not imposed on him and he was not coerced or cajoled into it. It reflects his policies and political stance as leader of the Fine Gael Party and vice president of the EPP. It also reflects the position of the Labour Party.

Figures produced by the Central Statistics Office yesterday showed that the long-term unemployment rate has increased from 6.5% to 8.4% over the year and that long-term unemployment accounted for more than 56% of unemployment in the third quarter. We have also discussed how the most vulnerable people are affected by these policies. Austerity does not work, except for the elites. The policy of austerity in perpetuity, which will be enshrined in law, is bad for Irish citizens and citizens across the EU.

Seeking to emasculate our economies as part of the reinvention of capitalism is bad enough, but the agreement last Friday also seeks to undermine member states's democracy. Additional powers are to be given to the European Court of Justice and the European Commission to police the new 0.5% deficit ceiling and the existing provisions of the Stability and Growth Pact. These powers will enable the court to adjudicate when member states are in breach of the new austerity rule. This is a very significant development, the implications of which are as yet very unclear. The Taoiseach should have taken the opportunity today to clarify and set out his view on its implications.

Section 4 deals with the new austerity rule and states: "Such a rule will be introduced in member states' national legal systems at constitutional or equivalent level." The Taoiseach has agreed that the new austerity rule will be introduced into our Constitution and national legal system. For the information of the Taoiseach, there is no equivalent level with our Constitution. We are a State with a written constitution, which happens to be a good thing. Other states do not have written constitutions and the rule will be introduced at equivalent level to our constitutional position.

In his statement today, the Taoiseach said he is examining how this requirement dovetails with the fiscal responsibility Bill which is now being prepared. That baffles me. I asked the question yesterday and the Taoiseach responded in the same way. Did he not figure this out before he agreed to the deal? Did he not know what it involved? Is he now saying that primary legislation may have equivalent status to constitutional law? As I understand it, the difference is very straightforward; this Parliament can change law, but only the citizens can change the Constitution. As such, the position the Taoiseach has put forward is absolutely wrong.

We are told that the so-called golden rule — there is always a good buzzword to describe something which is bad for people — will empower the Commission to impose specific fiscal and budgetary policies on democratically elected Governments. The people elect a Government and that Government sets out its policies and seeks to implement them. The Taoiseach has railed against the Fianna Fáil Party and the Green Party for giving away our sovereignty, yet he now proposes to cede a large portion of that sovereignty in perpetuity. Moreover, he proposes to do so through the backdoor, by way of legislation. The transferring of powers from democratically elected politicians and member states to unelected judges and civil servants in Luxembourg and Brussels takes real power away from citizens. It is anti-republican and anti-democratic. The bottom line is that the agreement reached last Friday in Brussels will significantly reduce the ability of any future Government to implement policies under its own steam. Elections will become effectively meaningless and pointless because anything the people vote for will, under this new rule, have to be run past people in other states over whose election we have no control. It is totally undemocratic.

None of this will be any surprise to the Taoiseach. He was not bounced or shoved into this agreement. In his speeches in this House before and after previous summits, he stated his support for such developments. In a debate just before the summit he said, "Ireland supports the creation of stronger economic governance throughout Europe and especially throughout the eurozone". On that occasion he talked about the bilateral meetings conducted by the President of the European Council, Mr. van Rompuy, and indicated that senior Irish officials were engaging in those meetings. In all such negotiations, a great deal of the spadework is done in advance and we know the direction in which it is going. With that knowledge, the Taoiseach can use his influence to steer matters in a certain direction. Unfortunately for the rest of us, he was going in the same direction as the French and German Governments and some of the other larger states. The reality is that he was happy to give away these fiscal powers even before he went to the summit. Now he is examining whether the various provisions, particularly those relating to clause 4, can be brought in through some avenue other than a referendum.

There is an economic alternative to what is proposed in this agreement. It is encompassed in the principle upon which the Labour Party stood in the last election, as summed up in the famous phrase "Frankfurt's way or Labour's way". It is about decency and fairness. It is about stimulating the economy, encouraging growth, getting people back to work and protecting the most vulnerable of our citizens. It is about having core values which seek to have the economy working in protection of social guarantees for citizens in respect of public services, including health, access to education and the right to a home and a good environment. That is the alternative to what is currently proposed.

While the Taoiseach has repeatedly said this is a political agreement, the last paragraph clearly states that the objective is to make a treaty. There is still space for the Taoiseach to reflect on the issues raised here, to review his support for what is a bad deal and to return to our partners in the EU on that basis. My party cannot and will not support the transfer of more powers from the Oireachtas to Brussels. Nor will we support the imposition of a draconian 0.5% deficit ceiling by way either of primary legislation or a constitutional amendment. The Taoiseach can say what he wants about my party, but he cannot deny we have been consistent on these issues from the very first referendum, when I was a very young man, in 1972 or 1973. The Sinn Féin position, supported at that time by others who are now in government, has been consistent at every single referendum in pointing out the undemocratic nature of the European system. We are not against the European Union; rather, we want a different type of union which values citizens, is based on equality and sees all states as equals.

The Taoiseach

Is the Deputy in favour of the euro?

Deputy Gerry Adams

We argued against Ireland's entry into the euro at the time. It was exactly the right decision.

The Taoiseach

Does the Deputy support the euro now?

Deputy Gerry Adams

I will respond to that later.

The Taoiseach

I am interested to hear the Deputy's view.

Deputy Pádraig Mac Lochlainn

The Taoiseach will remember the two Lisbon treaty campaigns. The first followed the decision by the people of France and the Netherlands, in referenda in their respective countries, to reject the proposed European constitution and the direction in which Europe was going. In France, in particular, there was a huge engagement with civil society, including townhall meetings throughout the state, and the people ultimately decided to reject the proposition. However, unelected officials in Europe, in cahoots with our elected leaders, decided to rejig the constitution, abandon the national anthem and flag and so on, and repackage it as the Lisbon treaty. When it was put to the Irish people, the same process took place as had done in France, with townhall meetings throughout the State, and the Irish people rejected the proposition.

Did the EU then take a long, hard look at itself and seek a new direction? Absolutely not. Instead we had the spectacle of Mr. Sarkozy coming to the French Embassy in Dublin and beguiling the Irish people. The second Lisbon treaty campaign saw both party leaders opposite promising the moon and stars, offering gold, frankincense and myrrh to the Irish people and promising us a wonderful future if only we would cease blocking progress in Europe. We are now in an economic mess because of the direction that was taken in Europe. Yet the Government cannot even tell us whether a referendum on last Friday's agreement will be held. Instead, it is hedging around the text of the agreement and citing the need for advice from the Attorney General. When we repeatedly asked the Taoiseach in the Chamber to publish the advice from the Attorney General regarding the failure to put the European Stability Mechanism, ESM, agreement before the Irish people, he refused to do so and would not even inform us of the logic and rationale behind that decision. I am not terribly confident of our chances of getting a say on this matter. We will have to wait and see.

I will read out a list of names before inviting the Taoiseach to identify the common denominator: Peter Sutherland, former Attorney General and former Irish Commissioner in Europe; Mario Draghi, President of the European Central Bank; Mario Monti, technocratic new Prime Minister of Italy and former Commissioner in two different portfolios; Antonio Borges, former head of the European division in the IMF, recently resigned; Otmar Issing, board member of the German Bundesbank and the ECB; and Lucas Papademos, new technocratic Prime Minister of Greece and former head of the Greek Central Bank, which is partly responsible for the mess in which that country finds itself. What is the common denominator? All of them have either served on boards of Goldman Sachs, advised that company or presided over deals with it. The people who are primarily responsible for the mess and economic devastation caused across Ireland, Greece, Portugal, Italy, Spain and so many other countries are at the head of this and are pulling the strings, controlling the mechanisms.

The Taoiseach is father of the House. I have asked him on many occasions if he ever imagined that he would sell a pup to the Irish people and that he would see the rewarding of those who, through their greed and recklessness, destroyed the hope of so many people across Europe, and who have remained at the helm and are calling the shots. This is a hijack of democracy. It is a scandal on which future historians will judge us harshly. What side will the Taoiseach take? He could have made his stand at that summit; he could have found some inspiration from those who came before us. He could have argued that this is economic madness. There is no solution to the banking crisis, no solution to the debt crisis and certainly there is no solution to the investment challenge. This is absolute insanity that at a time in a cycle of recession, of profound economic hardship across the Continent, but particularly in the peripheral European states, we would actually push more austerity onto the people; that we would not counter the cycle - as has always been the classic advice in economics; that we would not intervene; that we would not use our public combined immense resources to stimulate the economy to give our people hope; that we would not use the resources of the European Investment Bank to twin with other member states to address this crisis; that we would not punish those responsible; that we would not challenge those who have caused this recklessness; and that we have not fundamentally changed the international financial system to make it learn the necessary lessons and that we would hold it accountable. How can we stand over this? This is the hijacking of our people's democracy. This is a surrender of our hope and our ambitions to the lobbies, to the people who control the corridors in Brussels. When will we confront these people?

I believe the Taoiseach knows in his heart that I am right and that he agrees with me. At what point will he make that stand? At what point will he give hope to the Irish people who are weary, in despair and who have been burdened by all the cuts? At what point will he make his name in history for all the right reasons? The Taoiseach has big choices to make over the next couple of years. He can either go along with this insanity, this madness and condemn our people to a lost decade or he can put his name in history and he join those proud names remembered in this building. I ask him to look at the busts of those heroes in this Chamber. He can either join them in the annals of Irish history or he can join Goldman Sachs. The choice is his.

Deputy Richard Boyd Barrett

I am sharing my time with Deputies Shane Ross, Mick Wallace and John Halligan.

It is evident that despite all the hoopla, last weekend's summit meeting of EU leaders was a spectacular failure. The record decline in the euro, the collapsing stock markets, rising bond yields, downgradings and threats of further downgradings of European debt, all testify to the failure of yet another summit. Summit after summit, failure after failure. The failure of the strategy being pursued by EU leaders and by the Taoiseach, has long been evident to ordinary workers and citizens and to the vulnerable, both in this country and in Europe, who are suffering mass unemployment, forced emigration, brutal austerity, cut after cut. Now, the speculators who caused the crisis, before whom the Government kneels and prostrates itself and demands that we kneel and prostrate ourselves, are betting that the Taoiseach's plan will not work. They are voting with their feet and they are betting that Europe is going down.

The Fianna Fáil Government slaughtered this country with austerity to bail out the banks and they handed us over to the troika. By the way, they did not mention the ECB mandate when they were doing all this. When those of us who campaigned against the Lisbon treaty did talk about the ECB mandate and its failure to consider anything other than inflation and profit, we were ignored and ridiculed by Fianna Fáil. Nonetheless, I welcome their conversion on the road to Damascus.

The Taoiseach's Government continues with the attacks on school children, on lone parents, on the elderly, on the disabled, resulting in unemployment — the very thing he said he would prioritise — getting worse, not better. In response to this situation, where the troika simply demands even more austerity, he comes back from this summit proposing that we support a pact based on permanently establishing a policy of bailing out the banks and permanent austerity visited on the people of this country and the people of the rest of Europe. He tries to cover that with talk of firewalls. What the hell are we talking about? Human shields would be a better description for what is happening and the policy being pursued by the European Union which is being implemented here. Our citizens' livelihoods, services and incomes are being used as shields to protect bankers, bondholders and speculators. I ask the Taoiseach if there is any destruction he will not visit on our economy and which the EU leaders will not visit on the European economy, its citizens and even now, the European Union itself, which is threatened with break-up in order to protect a currency or to protect the people behind that currency or the speculators and the bondholders. Which is more important, the people, the citizens, their services, their livelihoods, their right to a job, or a bloody currency and the bondholders who stand behind it?

As we said yesterday, with this pact the Taoiseach proposes to set in stone a Stalinist-like centralised command economy of permanent austerity and permanent inequality. I wonder whether the EU leaders are quietly looking at China where there is economic growth and thinking that dictatorship seems to work in China. A brutal regime which does not give its citizens any rights results in economic growth. Perhaps they are looking at Russia where elections are being rigged and are deciding this is the economic model we should follow. It is a very alarming thought that this is the direction in which Europe is heading. The historic gains of fighting for democracy and for the right of citizens to control their economic and political affairs, to decide on their political representatives and institutions, are being systematically demolished.

It is indicative of that sort of contempt for democracy and for the needs and wishes of our citizens that the Government is trying to do every piece of gymnastics possible to avoid a referendum. Frankly, I do not know how the Government can argue for one second that a referendum is not necessary. This deal is not even within the structures of the European Union, it has no bearing, therefore, on measures we have passed in referenda. It is a new pact of a more anti-democratic Europe which is simply a creature, an agent, for the markets, for Goldman Sachs, for the bankers and the bondholders.

I appeal to the Taoiseach and to the Tánaiste to stand up for what is right, to stand up for the citizens of this country and, indeed, for citizens across Europe whose interests should come first. Democracy, jobs, public services, equality, fairness and decency can be achieved if there is a willingness to bring these markets under control. Is it not embarrassing for democratically elected leaders across Europe to be dictated to by the markets and financial institutions which wrecked our economy? Their actions make a mockery of the Taoiseach and our democracy. He should stop it and stand up for the people.

Deputy Shane Ross

The relative merits of the markets in this argument will probably belong in another place. A few minutes ago, the euro dropped in value to $1.29, a 12 month low. The value of shares is falling throughout Europe today, while Italian bond yields are rising. Whatever the merits for Ireland in the deal agreed at the European Council, the European and global markets are giving it the thumbs down and saying it is a disaster. Standard & Poor's, for example, is about to downgrade various European banks and may also downgrade the sovereign debt of certain European nations.

What benefit has Ireland obtained from the deal the Taoiseach brought back? It does not appear beneficial as it threatens the two principal dynamic areas of the Irish economy, namely, the International Financial Services Centre, IFSC, and the multinational sector. The spat which occurred on Thursday and Friday at the European Council when Britain pulled out of the deal has been well publicised.

Deputy Peter Mathews

There appears to be some interference with Deputy Ross's microphone.

The Taoiseach

Deputy Boyd Barrett's Stalinist politburo is on the telephone.

Deputy Richard Boyd Barrett

The Taoiseach would be better off worrying about the politburos in Brussels and Frankfurt which are doing all the dictating at the moment. My party's politburo operates openly.

Deputy Shane Ross

I will move seats.

The IFSC is obviously threatened by the fact that it will compete with the city of London on different terms if the British secure the exemption they seek from any deals on a Tobin tax or other threats in the financial area. If a Tobin tax or financial transaction tax is introduced, as appears to be the intention of the deal, the IFSC will be at a competitive disadvantage. If the British get the bit between their teeth and decide they will compete on laxer terms, many of the companies which have located here for tax reasons will move to the United Kingdom because the tax advantage they enjoy here will be removed. Given that the Taoiseach did not refer to this issue, I am interested in hearing his response. If the approximately 33,000 jobs involved either peripherally or directly in the IFSC are threatened, the position will get worse. The IFSC is a vibrant and expanding area of which we can be proud. It should have been defended at all costs because we cannot afford to lose it.

The second area that is threatened by the deal is undoubtedly the multinational sector. I do not accept for one moment the dissembling that is taking place in respect of the 12.5% corporate tax rate. Let us make no bones about this issue; the people who are pulling the strings in Europe want us to lose our corporation tax rate. President Sarkozy and Chancellor Merkel made it plain yet again last week that the 12.5% rate was in their sights. While no specific agreement on the issue was reached, as they stated last week, they have our corporate tax rate in their sights. The corporate tax base was mentioned and agreed on at the weekend. The distinction that is always being made between the corporate tax base and corporate tax rate is a semantic and Jesuitical one. The Taoiseach's statement in March that the introduction of a consolidated corporate tax base would open the back door to the corporate tax rate is correct. The term "corporate tax base" is being used to mollify us while Europe introduces what it describes as a "fiscal union" and what the Taoiseach describes as "fiscal co-ordination". Once we have a fiscal union, we will move on to tax harmonisation, by which point we will have travelled down the corporate tax road. Corporate tax is in the sights of others and we are powerless to do anything about it. This can be seen from the fact that the issue was not on the table.

Acting Chairman (Deputy Joanna Tuffy)

The Deputy's speaking time has concluded.

Deputy Shane Ross

I will take some injury time for the delay caused by interference to the microphone.

The deal reached last week threatens the multinational sector and our 12.5% tax rate. A more serious question is where is Ireland's place in Europe. Do we have any friends in Europe? The removal of the United Kingdom leaves us isolated at the table. We may be on the inside but we are on our own. The Taoiseach and his colleagues are fond of saying Ireland has earned great political capital in recent times by putting our house in order according to the diktats of Europe. I do not want to be patted on the back by Sarkozy and Merkel. The political capital we earned was used up yesterday when Kevin Cardiff's nomination was accepted by the European Parliament. It was used up in an unprecedented move to have the Government's nominee passed, mainly through the European People's Party, against the wishes of the relevant committee of the Parliament.

As the Acting Chairman is indicating I must conclude, I will make one final point. Treaty change requires a referendum. I reiterate the point made by my colleague, Deputy Boyd Barrett. Why are we so frightened of a referendum? It seems the only strategy being pushed by the Government at the weekend was to ensure a referendum does not take place because it would be defeated. We should be very happy to put a referendum to the people and make our arguments for or against, not only with regard to the previous deal but also the deal agreed at the weekend. Thus far and to its shame, the two pillars of the Government's strategy, namely, to save the euro and protect Irish interests, have not been achieved. It is up to Irish people to give a verdict on the agreement, not a Government which was dictated to by eurocrats, Chancellor Merkel and President Sarkozy.

Deputy Mick Wallace

The Taoiseach will not have been shocked by the failure of the recent summit to solve the European crisis. Pleasing the markets and solving the crisis appear to be strongly linked outcomes. Most people will agree that the markets are unlikely to be satisfied until the European Central Bank agrees to be lender of last resort. The Germans, however, have other ideas. Germany has controlled wages for the past ten years and is the second largest exporter in the world. It has a strong economic base and believes ECB intervention in this area erodes its strength. It is caught in a twist, however, because the failure of other European economies to recover will mean fewer people will buy its exports.

Despite a series of summits this year and a great deal of discussion on what should be done next, little progress has been made. I would be surprised if countries like Austria and Holland were to agree to adopt the same fiscal policies and ways of doing business as countries like Greece and Italy. I do not envisage that such countries will agree to be told how they should run themselves. The notion that people from many different cultures will agree to do things in the same way is fanciful.

The Taoiseach said: "The new arrangements will mean more co-ordination of the fiscal plans of member states. This is not something that should be a concern to Ireland". It should be a concern to us. Does the Government respect the views of the Irish people and the right of the Irish people to have a say in how they are governed? We can change the Government every five years if we do not like the way things are being done. We like to think the people we elect will have an influence on how we are governed. If all of these rules are made in Europe, the Irish people will not have much of a say in how things are done. Will we agree how we should deal with health, education and welfare benefits, or will the Europeans tell us how we should approach such matters? It seems they are already doing so, in some ways. I do not believe that is something the Irish people want.

I am not advocating that we help to bring about the collapse of the euro. We will encounter huge problems, especially in the short term, if the euro collapses. I am aware that half of the AAA-rated countries in Europe are outside the euro. Norway, Sweden, Denmark, Switzerland and Britain still have the AAA rating. If the price of staying in the Europe that is being offered to us is that austerity will be written in stone for the next ten years, the Irish people are entitled to have a say in the matter. It is not for me to say whether we should take it or leave it.

Acting Chairman (Deputy Joanna Tuffy)

I ask the Deputy to conclude so that Deputy Halligan will have some time.

Deputy Mick Wallace

Deputy Ross took half of my time.

Deputy Finian McGrath

The Deputy will need to have a word with the Whip.

Deputy Mick Wallace

I would like to read a sort extract from an article in the Financial Times that was written by Gideon Rachman. Many people like him are worried about where we are going. The article states:

Mario Draghi, the president of the ECB, has officially ruled out a vast expansion of its bond-buying programme. But the ECB has agreed to lend lots more money to European banks on easy terms — and they in turn will probably have their arms twisted to buy government bonds. But loading up shaky European banks with otherwise unsaleable government debt is not a sustainable solution. It might succeed in preventing the European economy from suffering a heart attack. The trouble is that the only alternative to a heart attack seems to be slow suffocation. The fiscal compact essentially commits all EU countries to tough austerity measures, without providing any permanent mechanism for transferring money from prosperous bits of Europe to those that are stuck in a semi-depression. A "transfer union" is still anathema to Germany. The only immediate prospect offered to the indebted states of southern Europe [and other peripheral countries] is "internal devaluation" — for which read cuts in wages and pensions, higher taxes and much higher unemployment.

I do not think what we are being offered is very attractive.

Deputy John Halligan

Will the Taoiseach consent to the view that the vast majority of Irish people see this EU deal as a transfer of a significant amount of power from this House to the European Commission, the European Council and the European Court of Justice? At the same time, it will condemn the Irish people to years of further austerity measures. We are conceding more of our power and sovereignty to what is, in essence, a non-elected government. The tighter fiscal rules that are being agreed at European level will not solve the debt crisis. The draconian deficit ceiling of 0.5% of GDP will block economic growth and lead to greater poverty and unemployment. It is clear that any deal that is based on austerity measures and bows before the greed of the bank markets defies logic. It cannot work and it will not work.

The intense focus on the fiscal reform agenda is utterly marginal to the crisis in Ireland. People's debts are continuing to rise while their incomes and the value of their properties are falling. How will it solve anything in Ireland at a time when debts are rising while property prices and incomes are falling? Does the Taoiseach accept that any deal based on austerity measures will not work? It will fuel what is being called the age of austerity. If the Government keeps imposing cuts and increasing taxes, our economy will continue to contract and our deficit will grow. I am not an economist but I imagine that if we continue to reduce spending in our economy, which is exactly what we are doing, the economy will be unable to grow. All the evidence suggests that the economy is not growing. It is certainly not growing at the level at which we expected it to grow over recent years. The measures that have been set out for the next few years will further deflate the economy. It will not grow in such circumstances.

I disagree with those who say they are concerned that there is more in this deal than meets the eye. On the contrary, there is less in the deal than meets the eye. A number of major issues that threaten the shared currency have not been addressed in the deal. They have not been resolved. The agreement does not tackle the core of the crisis. It does not give certainty to the marketplace. Can the Taoiseach say he is confident that the deal that has been worked out will give certainty to the marketplace? I do not think he can. Many top economists would agree with me. The deal fails to specify where the money will come from next year. It is possible that another bond crisis is imminent. The deal does not mention what will happen in such circumstances. Where will the money come from?

The agreement is being guided by a limited and narrow-minded belief that the problems of the euro area stem from excessive levels of debt and default. I suggest the lack of growth and the inability of countries to generate sufficient nominal income and service their debts are equally as important. Those matters are not dealt with in the deal. I would say much more about this if I had time. Given that we are signing up to an agreement that rules out debt forgiveness, is it not the case that the recovery must instead come from rapid economic growth? If the Government continues to pursue austerity measures, where is the growth supposed to come from? The Taoiseach should listen to what economists and real people are saying. There has been a reduction in spending levels. People recognise there is a serious economic problem. They are beginning to get wise about how an economy runs and works. To put it simplistically, I agree with the many people who are saying that if we continue to reduce spending in the economy, there is no chance on earth that our economy will grow.

Acting Chairman (Deputy Joanna Tuffy)

We will move on to questions. There are 40 minutes remaining in this debate. I will start by allowing one Deputy from each group to ask questions.

Deputy Micheál Martin

What does the Taoiseach know about the reports that certain EU leaders have reservations or difficulties about the far-reaching pact that has been arrived at between EU countries? It was reported overnight that the Dutch, Belgian and Hungarian Governments are in difficulty on this matter. The Czech Government has said we are starting from "a blank sheet of paper". The issue is that the bar has been set high by those who have decided a new treaty must be arrived at within three months. The dangerous vacuum that has been created can only add to the uncertainty in the marketplace and undermine confidence in the capacity of the Union to sort this out in a comprehensive and resolute way. Has the deal fallen at the first hurdle? I would like to repeat a question I asked the Taoiseach yesterday. Did the Government undertake an economic impact assessment of the commitments made in this political agreement? I refer, for example, to the 60% debt criterion, the 0.5% structural deficit of nominal GDP and the 1/20 rule.

Economists now say there is no real basis for these figures which are more or less plucked out of the air and are entirely arbitrary. We need to be extremely clear and frank about this. Are we putting arbitrary figures into legislation or into our Constitution? We must determine all of that.

Was any economic impact assessment undertaken by the Department of Finance or the Government in advance of the summit? My understanding, from the Taoiseach's replies to me yesterday, is there was not. Did the Commission provide the leaders with any economic impact assessment of these measures?

The Taoiseach raised the issue of Irish debt and correctly pointed out that we did our bit to protect the wider eurozone at the time, in advance of the facilities and mechanisms which are now in place to deal with the broader recapitalisation of bank debt, and so on. I understand his position in regard to the promissory notes. We support an early resolution of that matter. I am surprised there was not a better response from members at the summit.

In terms of some unguaranteed senior bondholders, is the Taoiseach stating they must all be paid and that he does not envisage any write-down, for example, of the Anglo Irish Bank debt, given all that has happened after the Greek default and the decision taken about that country? I am not fully clear about this. The communiqué gives signs that Greece is an exception, a unique case.

Acting Chairman (Deputy Joanna Tuffy)

I will stop the Deputy there.

Deputy Micheál Martin

There is an argument about the Anglo Irish Bank debt given that some of the bondholders are unguaranteed and unsecured. The ECB is forcing the Government to pay them. Did the Taoiseach flag that issue during these talks?

The Taoiseach

The figures of 0.5%, 60% and 3% mentioned by the Deputy are referenced by the Growth and Stability Pact and have been in existence a long time. I stated yesterday I would check in respect of any works being done by the Department of Finance on the economic impact of the measures. I will return to the Deputy on that.

The leaders from outside the eurozone who attended the meeting the other night stated they would return to their parliaments and discuss the political agreement that was reached. These included the Swedish and Hungarian Prime Ministers. The Dutch Prime Minister has a particular situation in regard to his Government. A number made the point of having to refer to their parliaments. As of now I do not know the outcome of those deliberations. I understand Prime Minister Reinfeldt was to discuss the matter yesterday in his parliament where he relies for support on the opposition parties. I am not sure about the outcome.

On bank recapitalisation and its extent, the decision taken at the Council meeting in the summer was clearly to the effect that what happened in Greece was a once-off situation. The point we have been making in this House is that because of the extent of the borrowing for recapitalisation of our banks, at €63 billion or 50% of GDP, the facilities now available under the EFSF, and to be given under the European Stability Mechanism, ESM, were not available at that time. We clearly registered our concern about private sector involvement, or PSI, being included in the ESM facilities and made a very strong case. A number of other countries did so too but Ireland in particular made the point it should be removed. It was removed and that is welcome. Now we will try to have provided the facilities that are now available under the EFSF and will be under ESM. These are in reference to the extent of the banking recapitalisation debt and the loans we must now repay which were borrowed at high interest rates. If we can get that included in the facilities it will allow for a lower interest rate over a longer period and be of significant saving to the taxpayer. That is where the focus of our political——

Deputy Micheál Martin

Why did they not sign up for that? Why did the Taoiseach sign up for that on Thursday without getting that agreement?

The Taoiseach

The meeting was about the euro and the eurozone crisis. The presentation I made in raising that issue, which was sent formally to President van Rompuy, was intended to explain to people the challenge a country like ours faces.

I noted Deputy Martin's comment to the effect that he would not have signed up to this agreement. The consequence would have been that Ireland would have been the first member of the eurozone to walk away from this agreement. That would have left us in a very different position from that of any other eurozone country, a position where, after 40 years of negotiation, contact and dialogue with European colleagues, we would be put on the outside.

Acting Chairman (Deputy Joanna Tuffy)

I will interrupt the Taoiseach. Other people want to ask questions. The Taoiseach can come back to this issue in his final speech.

The Taoiseach

I will deal with Deputy Ross's comments later. Deputies should feel free — the Tánaiste is also here to take questions.

Deputy Micheál Martin

I note his enthusiasm to become involved.

Deputy Eamon Gilmore

Yes.

A Deputy

Unlike his counterpart, Mr. Nick Clegg M.P., the Tánaiste is thinking with the Taoiseach on this one.

Deputy Gerry Adams

I have two questions. The Taoiseach appears intent on causing confusion about one of the key elements of the agreement he signed in Brussels. I call it "clause 4". I do not have time to read it all out but will read the first few bullet points, the first being: "We are intent on establishing a new fiscal rule." That is an enormous step — to bring in a new fiscal rule. The most important part of the document continues: "Such a rule will be introduced in member states' national legal systems at constitutional or equivalent level." This is the third time I have raised this point with the Taoiseach. In his statement today, the Taoiseach announced that the Government is examining this requirement. He did the same yesterday in response to my question, speaking very carefully, in particular in regard to how this dovetails with the fiscal responsibility Bill now in preparation.

What does this mean? Does it mean the Taoiseach is not sure the 0.5% deficit limit will be brought in through primary legislation? In that case, the primary legislation is being given the same status as the Constitution. The Taoiseach must explain this to us. I presume he had advance notice of all these issues because of the preparatory work going on, the bilateral talks he told us about that involve his senior officials, and so on. I presume he had prior legal opinion on this. Would he like to share it with us?

I believe the Taoiseach agrees with me on my second point. It is the lack of growth in this country and in the EU, which is the single biggest cause of the ongoing crisis in the eurozone. That is also the biggest challenge facing our people and the Government, with the need for investment in jobs, the retention of jobs and the need to stimulate our economy and get people back to work. However, this subject was not on the agenda. Did the Taoiseach speak to this issue? At the Council meeting did he call for growth and investment to be part of what was planned in the time ahead? This is particularly to the point given he tells us all the time this is his number one priority. If he did not speak to this issue why did he not?

The Taoiseach

This country is in a programmed situation for the next number of years, as the Deputy knows. The figures in question have been referred to in the Growth and Stability Pact for some time.

Deputy Micheál Martin

What about protection?

The Taoiseach

What was achieved on Friday morning was a political agreement. In order to have that properly assessed and analysed in regard to the impact in any one of the countries concerned a great deal of technical and legal work must be done and that is now under way.

Deputy Gerry Adams

Is it a conditional agreement?

The Taoiseach

What does the Deputy mean by conditional agreement?

Deputy Gerry Adams

Is it conditional on what will happen between now and March?

The Taoiseach

The political agreement was reached in the early hours of last weekend. Each country and its representatives will examine how this can be translated into a text which will be the basis for a decision by each country as to how it is to be implemented.

It means that at constitutional or equivalent level, what is involved will depend on the combined effect of national and European law. This is an issue that needs to be examined by legal experts both here and everywhere else. I am not qualified as a constitutional lawyer to give the formula here. However, what is necessary is that this political agreement must be teased out, analysed and understood so that the text that finally emerges can be put to the people of each of the member states by whatever facility they use. If that requires a referendum here, then that is what will happen as already outlined.

Regarding the implications of the commitment to structural deficits lower than 0.5%, the agreement states:

General government budgets shall be balanced or in surplus; this principle shall be deemed respected if, as a rule, the annual structural deficit does not exceed 0.5% of nominal GDP.

This has been discussed in the context of the Stability and Growth Pact for some time. The 0.5% figure will be taken as a rule while providing for important and necessary flexibility. It uses the phrase "as a rule", so it is not a rigid interpretation. Clearly, the language is intended to allow for exceptions. Again, this will be an all-important issue to be teased out in the complex work that lies ahead. Until that is finalised, it is too early to say what the precise long-term implications will be for Ireland, or for any other country for that matter.

Deputy Gerry Adams

The Taoiseach should read on from the part he quoted from the agreement.

The Taoiseach

We are in a programme which takes precedent over this until we emerge from it. The detail must be fleshed out and some considerable work lies ahead.

Deputy Gerry Adams

The Taoiseach should have read on from the part he quoted. He claims this rule needs to be defined but he has already conceded on it. The agreement states: "It will be defined by each Member State on the basis of principles proposed by the Commission. We recognise the jurisdiction of the Court of Justice to verify the transposition of this rule at national level." It has already been given away.

The Taoiseach

Nothing has been given away. Does Deputy Adams understand——

Deputy Gerry Adams

I do. The Taoiseach should not patronise me.

The Taoiseach

If he does, then fine.

Deputy Gerry Adams

I do understand but I asked a question.

The Taoiseach

Yet Deputy Adams understands the answer before I give it.

Deputy Joe Higgins

In the Taoiseach's extraordinary letter to the President of the European Council, President van Rompuy, he stated that by not imposing losses on unsubordinated bank bondholders, the Irish people have paid an extraordinarily high price to protect the wider European banking system from contagion. Is it not pathetic for the Taoiseach to appeal to a leading eurocrat on the basis of being prepared to bleed the Irish people dry economically to save the speculating bankers and bondholders in Europe? When the Taoiseach refers to "contagion", does he realise it is the language of the financial markets to the effect they move from country to country gambling and blackmailing entire societies to gouge ever higher interest rates and private profits from them? Does the Taoiseach believe this should be stood up to rather than bowed down before? How can he justify continuing the beggaring of the Irish, Greek, Italian and Spanish peoples by acquiescing to this arrangement?

Does the Taoiseach accept the bones of the agreement, which is all we know, are the institutionalisation of the diktats of those very markets? Will he accept that it, therefore, means the institutionalising of horrific austerity and the spancelling of countries which will stop them going beyond their borrowing limits which may be necessary at times for, say, job investment?

Whatever the lawyers say about whether a referendum is needed constitutionally — which I believe it is — giving such enormous powers to the European Commission and EU generally to hammer member states needs, as a matter of principle, to be referred to the Irish people. Accordingly, the Taoiseach should say today that there will be a referendum and the people will be consulted.

Will the Tánaiste and Minister for Foreign Affairs, Deputy Gilmore, explain the position of the Labour Party on a referendum? Has he noted the fear expressed in the Irish and European establishment that going to the Irish people might result in a rejection of this agreement and, therefore, throwing a spanner in their works? Will he agree this is not a reason not to go to the Irish people and, instead, also declare there will be a referendum?

The Taoiseach

Ireland has been a member of the European Union for some time. We have agreed on a whole range of measures over the years about how to conduct business, in respect of which Ireland has drawn down substantial funds. In writing to the Council President, President van Rompuy, I was explaining formally to him the scale of the challenge Ireland faces because of the unprecedented level of borrowing for the recapitalisation of our banks. If Deputy Higgins believes we should not enter into formal correspondence, then he should say so. What is involved is to get the burden of our costs down for our taxpayers. It is an enormous challenge on an enormous scale. Already, substantial savings of over €5 billion with some bondholders have been made.

This is a country that pays its way. As a sovereign country, it is important we do that. When we are out of this bailout programme, by paying our way we will have retained the respect of European institutions and leaders.

Deputy Richard Boyd Barrett

The Taoiseach is begging them and they are just ignoring them.

Deputy Joe Higgins

We are paying the gamblers' losses.

The Taoiseach

More important, we will be in a position to gain the confidence of the markets; if they invest in a country like this, they can be sure of a return.

The fiscal union was destroyed following the Deauville agreement which is why the private sector involvement, PSI, has been taken out of the ESM, European Stability Mechanism.

As leader of the Government and the country it is my job to put on the table a solution which we will follow through in reducing the high interest rates for the recapitalisation of our banks. The bailout burden actually stood at one point at 50% of our gross domestic product, €63 billion. This was to save European banks and citizens. As a consequence——

Deputy Joe Higgins

It was to save the speculators from their losses.

Acting Chairman (Deputy Joanna Tuffy)

Allow the Taoiseach to continue without interruption.

The Taoiseach

As a consequence of preventing that contagion, there is all the more reason we should follow through on the policy of being able to use the structures under the European Financial Stability Facility, EFSF, and the ESM to reduce our people's debt burden arising from the Irish banks' recapitalisation.

Deputy Richard Boyd Barrett

They are ignoring us.

The Taoiseach

As I said, when this text is finalised and agreed as putting the substance on the political agreement last Friday, the process by which it is implemented will not be the central issue; it is how effective it will be in having every country do its own work properly. Leaders will say that in the past we made agreements and signed on for conditions that were never adhered to and countries went off and did what they wanted. Now it is a case of countries measuring up in the way they do their fiscal competence.

I was able to inform the Council from first hand experience of the reaction in this country. When the troika examined the last quarter's performance to release the next tranche of money, it was so close to the budget that they wanted an indication of what going to happen in the 2012 budget. As the House will be aware, the Commission leaked that document in error or whatever to the budgetary committee of the Bundestag, which caused rightly holy hell not only here, but abroad. That point was strongly and clearly accepted by leaders around that table because there would be no point in having sovereign governments with a democratic responsibility to act on behalf of their people if Deputy Boyd Barrett's central bureau dictated all these things.

In response to Deputy Higgins, there is no intention of having somebody draft the budget for the Irish people. That is the legal responsibility of the elected Government of the people and that is the way it will be. However, one must be able to say what one's trend is and if one is going to be out of line, people will say, "I think you are headed in the wrong direction". It is our responsibility to do that here.

Deputy Richard Boyd Barrett

And to sell our State assets.

Deputy John Halligan

What about the referendum?

The Taoiseach

We are not afraid of any referendum at all and the Tánaiste and Minister for Foreign Affairs and Trade is well able to speak comprehensively, cogently and argue his case well. He will give the Deputy the answer from the Labour Party.

Deputy Timmy Dooley

I thought the two parties were in government together.

Deputy Eamon Gilmore

I spoke about the issue of a referendum in the House last Thursday and I made it very clear that if a referendum is necessary, a referendum will be held.

Deputy Joe Higgins

If.

Deputy Eamon Gilmore

With all due respect to the Deputy's omnipotence——

Deputy Joe Higgins

Omniscience even.

Deputy Eamon Gilmore

——we do not know if a referendum will be required——

Deputy Joe Higgins

Legally.

Deputy Eamon Gilmore

——until we see the text of an agreement worked up.

Let us consider what we are looking at here. When we talked here last Thursday, many people anticipated that what would be discussed at the summit would be the question of the amendment of the European treaties. As things turned, that is not what emerged from the summit. What emerged from the summit was an agreement to progress an international agreement, which has to be developed and worked on. There is a great deal of technical, detailed work to be done on it and a text will have to be produced. A timetable has been set down for the working out of that agreement, which is prior to March.

When we have the text of that agreement, we will look and see whether a referendum is required.

Deputy Richard Boyd Barrett

Surely the Government knows what is in it now.

Deputy Eamon Gilmore

No, one does not.

Deputy Richard Boyd Barrett

Some other bodies will monitor our budgets.

Deputy Eamon Gilmore

That is similar to many of these half cocked assertions the Deputy makes. He does not know what is in it. Nobody knows what will be in it until it is concluded.

Deputy Richard Boyd Barrett

Government representatives were at the summit. Do they know what they agreed?

Deputy Micheál Martin

Is the Minister saying that we signed up to something and we do not know what is in it?

Deputy Eamon Gilmore

We know what is in the agreement but we do not know——

Deputy Micheál Martin

Why did the Government sign up for something that the Minister does not know anything about?

Deputy Timmy Dooley

That is the Labour Party's position.

Acting Chairman (Deputy Joanna Tuffy)

One speaker at a time.

Deputy Eamon Gilmore

We do not know whether a referendum——

Deputy Micheál Martin

The Minister said he does not know what is in the treaty——

Deputy Eamon Gilmore

I am answering the question about whether——

Deputy Micheál Martin

The Minister said he did not what was in the treaty. I thank him.

Acting Chairman (Deputy Joanna Tuffy)

Deputy Martin's party will have an opportunity shortly.

Deputy Eamon Gilmore

We do not yet know what is the final text.

Deputy Pádraig Mac Lochlainn

Will we just throw away the document that has been circulated?

Deputy Micheál Martin

I want clarity on that. That is a stunning statement.

Deputy Eamon Gilmore

One does not know what will be in the text of an international agreement until it is concluded.

Deputy Micheál Martin

Then one does not sign up to it.

Deputy Richard Boyd Barrett

The Government has the substance and it signed up to it.

Deputy Eamon Gilmore

It is only at that point——

Deputy Micheál Martin

Then one does not sign up to it.

Deputy Eamon Gilmore

We have not signed up to an international agreement that has not been concluded yet. We have signed up to a political statement that emerged from the summit, which has been misrepresented in the House on a number of occasions. For example, assertions have been made here that it is an austerity agreement. Deputies should read it. It states that it will rest on an enhanced governance to foster fiscal discipline and deeper integration in the Internal Market as well as stronger growth, enhanced competitiveness and social cohesion.

Deputy Timmy Dooley

Through austerity.

Deputy Eamon Gilmore

Deputy Dooley did not read that bit.

Second, it has been asserted by a number of Members that there is no intervention here but there is a significant intervention here. There is an additional €500 billion for the EFSF in addition to what has been drawn down——

Deputy Micheál Martin

There is not an additional €500 billion. That will be next October.

Deputy Eamon Gilmore

——and an additional €200 billion for the IMF——

Deputy Micheál Martin

If it is collected.

Deputy Eamon Gilmore

——and a commitment that the size of the EFSF——

Deputy Timmy Dooley

The markets are all excited about that.

Deputy Eamon Gilmore

That may well be the case and that is all the more reason that we pull back from the political exchanges in this Chamber that are, frankly, going on in a bit of a bubble——

Deputy Timmy Dooley

I was being facetious.

Deputy Eamon Gilmore

——because the people are more worried about——

Deputy Gerry Adams

The budget.

Deputy Eamon Gilmore

——the state of the euro, where it is going and stability for the euro.

Deputy Timmy Dooley

That is why we are here.

Deputy Eamon Gilmore

For Members to come into the House, as one did, to say it is only about "a bloody currency". Let me tell the House about "a bloody currency". People are worried about the value of the euro in their pocket.

Deputy Richard Boyd Barrett

Which is going down.

Deputy Timmy Dooley

And this agreement goes nowhere towards reassuring the markets about the protection and retention of the euro.

Deputy John Halligan

The value of the euro and property is going down because of austerity measures.

Deputy Eamon Gilmore

The Government is committed to working to ensure stability and security is brought to the currency that we share.

Deputy Joe Higgins

The markets are threatening us.

Deputy Eamon Gilmore

The importance of that is, if we want to attract and secure investment in Europe, including investment in this country, and job creation, we have to deal with the problem in the eurozone. There is no point in anybody drifting away from that core mission, which has to be undertaken. That is objective No. 1.

Objective No. 2 is that we get within that context the best deal for this country.

Deputy Micheál Martin

This is a speech, not a reply.

Deputy Eamon Gilmore

That is why the Taoiseach wrote a letter to President van Rompuy and that is why he made it clear, given at the time the bank restructuring and bank recapitalisation was undertaken here, the instruments being provided for in this agreement were not available to us, we want access to them. I hear the scepticism being expressed about this but the same scepticism was expressed from the same people when we said we would not negotiate the reduction in the interest rate, which we did to the value of €10 billion to the taxpayer.

Deputy Robert Dowds

I have three questions. I am glad the Taoiseach raised the question of our debt last week.

Deputy Timmy Dooley

Can we get away from self-serving platitudes?

Deputy Micheál Martin

This is filibustering.

Deputy Robert Dowds

Do the leaders of the other countries in Europe appreciate the fact that if we have to go down the road of a referendum, people will expect some relief on that front?

Second, I appreciate also that the Taoiseach is trying to keep links open with Britain.

Deputy Timmy Dooley

On a point of order, I have nothing against the Deputy, but this should not be an opportunity for Government Members to question the Taoiseach and the Minister. There is, as I understand it, a parliamentary party structure that allows members of respective parties to question their own leadership. It is an abuse of the time available——

Acting Chairman (Deputy Joanna Tuffy)

The Deputy is wasting time.

Deputy Timmy Dooley

I seek the Chair's guidance.

Deputy Robert Dowds

I am a Member as well.

Acting Chairman (Deputy Joanna Tuffy)

Government backbenchers are not the Government and they are elected in the same manner as Deputy Dooley. They have every right to ask questions. I am going through this as fairly as possible. I am calling representatives of each party and I will get to the Fianna Fáil Party again.

Deputy Timmy Dooley

This is not reform. This is a sham.

Acting Chairman (Deputy Joanna Tuffy)

It is not a sham. Every Member is elected on an equal basis.

Deputy Timmy Dooley

I accept that.

Deputy John Halligan

How much time is left?

Acting Chairman (Deputy Joanna Tuffy)

There are less than 12 minutes left. Time is being wasted.

Deputy John Halligan

It is being wasted by the Government.

Deputy Robert Dowds

My constituents are as concerned about this issue as Deputy Dooley's.

Deputy Peter Mathews

Members should address the Chair.

Deputy Timmy Dooley

I accept that.

The Taoiseach

We are not in O'Donoghue's in Fanore now.

Deputy Robert Dowds

I have as much right to ask questions as the Deputy.

Deputy Timmy Dooley

The Deputy has greater access to the Tánaiste and Minister for Foreign Affairs and Trade than I have. He has a better opportunity to question the Tánaiste. That is no disrespect to the Labour Party.

Acting Chairman (Deputy Joanna Tuffy)

Will Deputy Dowds stop for a moment? At the beginning of this session, I outlined that I would go through each party and take a question from one Member in turn. Backbenchers have the same rights as Opposition Members, with all due respect. When Deputy Dowds has finished his question, I will then move back to Fianna Fáil, then to Sinn Féin, then to the Technical Group, and then, if there is a Government——

Deputy Micheál Martin

That is not the way it is done.

Acting Chairman (Deputy Joanna Tuffy)

No, that is the way to do it. That is the proper procedure. We are all elected as Deputies on an equal basis.

Deputy John Halligan

We have just had a Labour Party Minister——

Acting Chairman (Deputy Joanna Tuffy)

Will Deputy Dowds finish his question?

Deputy Joe Costello

On a point of order, the Government had its slot and the Opposition Members had their slot to make their points. When it comes to questions, it is open to the House. That does not mean the Chair will choose all the questions from the Opposition.

Acting Chairman (Deputy Joanna Tuffy)

It is at the discretion of the Chair.

Deputy Micheál Martin

It is at the discretion of the Chair. The Ceann Comhairle has made that clear.

Deputy Joe Costello

The Chair can select the questions from across the Members who are offering.

Acting Chairman (Deputy Joanna Tuffy)

Time is being wasted. I made the ruling at the beginning. It is at my discretion and I am doing it as fairly as possible.

Deputy Joe Costello

You are going straight back to the Opposition.

Acting Chairman (Deputy Joanna Tuffy)

I am. I outlined at the beginning the way I was going to do it. Nobody disagreed with me at the time. I will continue to do that. Deputy Dowds should finish his question.

Deputy Robert Dowds

The second question relates to Britain. I am glad the Taoiseach is keen to keep open our links with Britain and to encourage Britain to be as engaged in the EU as possible. I suggest that the next time the Taoiseach or Tánaiste is speaking with the British Prime Minister, they should highlight one of the consequences of Britain moving to a more removed position from the EU may be the break-up of Britain itself and that, should he want to keep Britain intact, it might be better to be more engaged with the EU.

On the third question, if we go down the road towards a more fiscally united Europe, has any thought been given to having more democratic control at the centre of Europe?

Deputy John Halligan

We could not have less.

The Taoiseach

I thank Deputy Dowds for his intervention. With regard to the debt burden, other leaders understand very clearly the challenge Ireland faces in its unique situation because of the scale of the borrowing for recapitalisation and the high level of the interest rates. That is the reason we wanted to follow this through, set it out formally and deal with it at the Council meeting, and we will follow on through from here.

I cannot predict what the decisions of the British Prime Minister will be and, clearly, a range of views arise from the meeting at the weekend. When speaking to the Prime Minister yesterday evening, we focused on the Single Market and on a clear understanding that Britain wants to be a central part of the European Union into the future.

In respect of Deputy Dowds' comments about a more democratic Europe, that is why, following the Lisbon treaty process there has been a change in a range of areas where the European Parliament, which is a directly elected representative of the people, now has co-decision responsibility with the European Council in a number of areas. That is the way it should be in order that the issues which are being teased out there can be dealt with thoroughly. The Ceann Comhairle will be aware it is the European Commission's responsibility to produce legislative proposals and it is the responsibility of the Council and the Parliament, in their different fora, to deal in debate with those proposals.

For example, Deputy Martin, or perhaps another Deputy, referred to the common consolidated corporate tax base, CCCTB. A proposal is coming forward from the Commission in that regard which the different fora are expected to discuss. We will participate in those discussions. We have set out our view on this in very clear terms, as have a number of other Governments. In the next reply, I will deal with the matter raised by Deputy Ross.

Deputy Micheál Martin

There is an increasing tendency on behalf of Government to hector or lecture people in terms of this debate. We are all concerned, or at least I am very concerned, about the survival of the euro, and I made that point very determinedly in my speech. I made the point that the summit addressed the wrong issue. The most fundamental issue is the mandate of the ECB and it becoming a lender of last resort. That should have been the focus of the summit, not what has become its centrepiece.

Yesterday morning at 8 o'clock I asked whether any economic impact assessment had been done in regard to this deal. It is clear no economic impact assessment has been undertaken in advance of the summit, which I find incredible. It should have happened and we should have one organised urgently for the benefit of Members of the House and the public. While the Tánaiste is correct that members of the public are interested they are the last to know about anything and the Dáil is the second last to know. The letter to President van Rompuy should have been given to the Dáil well in advance of the summit. This kind of operation of giving it to RTE in the news bulletin before the summit——

The Taoiseach

We did not give it to RTE.

Deputy Micheál Martin

That is what happened. We all know it. The bottom line is we were asking for weeks——

The Taoiseach

Deputy Martin is looking back on his own history and the way he used to do things.

Deputy Micheál Martin

This is what happened. We asked in the Dáil only a week beforehand. We had a summit debate and asked what was the Government's position time and again.

The Taoiseach

We gave it to the Deputy.

Deputy Micheál Martin

We could not get it from the Taoiseach.

The Taoiseach

We gave a private briefing to the Deputy yesterday and our colleague over here goes off and misrepresents me.

Deputy Micheál Martin

That was after the summit.

The Taoiseach

We had a discussion before the summit as well.

Deputy Micheál Martin

Paragraph 5 states: "The specification of the debt criterion in terms of a numerical benchmark for debt reduction (1/20 rule) for Member States with a government debt in excess of 60% needs to be enshrined in the new provisions". Does the Taoiseach understand what that means? Will he explain it to the House? Most economists who are analysing this suggest it means, in effect, that debt-GDP levels would be brought down to about 17% and that the whole issue of sovereign debt would be almost wiped out in time, if one was to follow these rules. That is why an economic impact assessment is required. We are signing up for something, in the words of the Tánaiste, when we do not know what is in it and do not know the full implications.

Acting Chairman (Deputy Joanna Tuffy)

I want to move on to the next question.

Deputy Micheál Martin

It seems the Government is saying, "Trust us. We have made a political agreement. We do not have a clue what it actually means. We have three months to work it out, considering the detail is complex". That is basically what is happening here. We need far more clarity in terms of what is actually agreed. I would appreciate it if the Taoiseach could explain paragraph 5 and the 1/20 rule.

Acting Chairman (Deputy Joanna Tuffy)

I will take a question from Deputy Pádraig Mac Lochlainn, then from Deputy Catherine Murphy and I will then ask the Taoiseach to conclude.

Deputy Pádraig Mac Lochlainn

In recent days, the Minister of State with responsibility for European affairs, Deputy Lucinda Creighton, said on national television that, essentially, what the Taoiseach apparently agreed or did not agree — today we are very confused in that regard — will make no real change. Do the Taoiseach and Tánaiste agree with the Minister of State that there is no real change? Was the 0.5% of GDP deficit ceiling already agreed between the Taoiseach and his EU counterparts? Is he saying there is nothing new there? Was the provision that the European Court of Justice would have jurisdiction to enforce the new austerity rule agreed beforehand?

Did the Taoiseach agree that the European Commission would have additional powers to oversee our national budgets? Was that already provided for? Was changing the voting procedure in regard to the excessive deficit procedure already provided for? Does the Taoiseach agree there is nothing to see here, no change, no implications for people? Does he agree with the assessment on the by the Minister of State?

Deputy Catherine Murphy

It took a long time to negotiate European treaties. They were very complex and legal, and there is a legal backup to them, which is the European Court of Justice. Stitched into the Lisbon treaty is an executive federalism where there is at least a sharing of competence across the Commission, the Parliament and the European Council. It seems we have jettisoned the things that are likely to give some level of certainty in favour of the supremacy of intergovernmentalism by way of this treaty. That is a very flawed process because it will put the economically strong countries centre-stage and will mean that the citizens of Germany will really be speaking on our behalf.

Does the Taoiseach have concerns about that legal arrangement? We can see the veto is of no value in this kind of a situation because, essentially, what happened was that a new arrangement was put in place rather than trying to operate within the existing structures.

Second, how are we supposed to reach the 60% of GDP deficit if the issue of debt will not be dealt with? The issue of sovereign debt is at the core of this.

Third, I have heard the Taoiseach state on several occasions, including in the briefing yesterday, that we are a programme country. That appears as though it is an apology and it comes across as though we are not an equal member. Where does the Taoiseach see us in terms of our position within the 27 members of the European Union and the 17 members of the eurozone?

The Taoiseach

That is a valid point.

Acting Chairman (Deputy Joanna Tuffy)

I call on the Taoiseach to conclude because the debate itself is due to conclude.

The Taoiseach

I thank Deputy Catherine Murphy for that intervention. Ireland is a central member of the European Union. The other member states look at this country, which unfortunately is in a programme, as one that has a clear fix on where we want to be and is making steps to get there. It is a start and we have a long way to go. Our European colleagues now regard us in a different light than they did seven or eight months ago, principally because of the work of the Tánaiste in rebuilding our international reputation with our colleagues in the Union.

This will be an international agreement between the eurozone countries and a number of countries outside the eurozone, depending on what their parliaments wish to do. Deputy Ross raised the question of fears about the harmonisation of corporate tax rates and dangers to the IFSC. The issue of tax requires unanimity and is governed under the European Union treaties. This political agreement of Friday last is not a European Union treaty and will be crystalised, in whatever form, into an international agreement. The matter of corporate tax rates or any issue of tax requires unanimity under the European Union agreements and it remains so. There is no intention of having a difference of competitiveness between the IFSC, which is so importance to us, and other locations. We have already made the case on many occasions that one could not have a transaction tax applicable in Dublin and not applicable in London.

Deputy Micheál Martin

Or in Hong Kong.

The Taoiseach

London, too, is part of a country that is a member of the European Union and, as the Commissioner pointed out, the regulations that apply under the European Union treaties will apply to London. Deputy Ross can put his fears at ease in that regard. This is important, both for confidence of investors here and for those who work in the IFSC. I met a number of companies with financial products in the IFSC in the past number of days and they are clear and happy that we are in this position.

With regard to Deputy Martin's question on paragraph 5, what is meant here is that if a country is above the required debt level of 60% of GDP a programme must be put in place to get back to that level in a series of steps and over a period of time.

Deputy Micheál Martin

The Taoiseach stated these were not new.

The Taoiseach

I stated 60%.

Deputy Timmy Dooley

On a point of order——

Acting Chairman (Deputy Joanna Tuffy)

That is not a point of order.

Deputy Timmy Dooley

The Acting Chairman has not heard what I am going to say. The point of order is that given that we have run out of time, would the Taoiseach consider extending the question period for another ten or 15 minutes?

Deputy Peter Mathews

Hear, hear.

Deputy Timmy Dooley

If that is not possible, could I also ask the Taoiseach to consider the establishment of a sub-committee of this House to tease through this issue? As he can see, there are many questions on all sides of the House from all parties.

The Taoiseach

I do not know whether Deputy Dooley was here this morning but I want to say this to him. He has had the time now. I made an offer earlier on the Order of Business to sit until 12 o'clock tonight. I made an offer to sit on Tuesday and Wednesday of next week. These offers were not accepted.

Deputy Gerry Adams

We do.

The Taoiseach

Deputy Dooley's time is up on this debate.

Deputy Timmy Dooley

Will the Taoiseach set up a sub-committee?

The Taoiseach

We will have plenty of opportunity to have further discussions about this in the future because it is important for every citizen.

Deputy Timmy Dooley

Will the Taoiseach establish a sub-committee of the House?

Deputy Eamon Gilmore

There is the Joint Committee on European Union Affairs.

The Taoiseach

The Joint Committee on European Union Affairs could be involved——

Deputy Timmy Dooley

I accept that.

The Taoiseach

——as could the Joint Committee on Finance, Public Expenditure and Reform in addition to the Dáil itself.

Acting Chairman (Deputy Joanna Tuffy)

It is not at the discretion of the House to change.

Deputy Timmy Dooley

I refer to a sub-committee with a specific responsibility like those dealing with the Lisbon and Nice treaties.

Deputy Micheál Martin

On a point of order——

Deputy Timmy Dooley

Can I ask the Taoiseach in regard to the Lisbon and Nice treaties?

Acting Chairman (Deputy Joanna Tuffy)

The order was set this morning.

Deputy Micheál Martin

——on the Lisbon treaty we set up a special sub-committee of the House.

Acting Chairman (Deputy Joanna Tuffy)

That is not a point of order.

The Taoiseach

I am not seeking to form special committees.

Deputy Micheál Martin

The Taoiseach should not be so intolerant. Can I make a point to him?

The Taoiseach

We will put a special item on the agenda for the committees that are appropriate to deal with this.

Deputy Micheál Martin

The Taoiseach should stop being so intolerant.

The Taoiseach

Believe me, we will have plenty of time to discuss this and every other option.

Deputy Micheál Martin

The Taoiseach will not have plenty of time. This is not enough time.

The Taoiseach

They had their offer this morning.

Deputy Micheál Martin

We did this on in regard to the second referendum on the Lisbon treaty.

The Taoiseach

They had their offer yesterday.

Deputy Micheál Martin

We set up a committee and we appointed a Fine Gael Member as Chairman. We set up a special sub-committee. We invited submissions from people outside to make their points about any prospective treaty and any issues. It was a useful exercise, which helped the public debate on the issues around Europe. It also helped the Members of the House to have a decent access to the debates. Why is the Taoiseach resolutely setting himself against something that is reasonable?

Acting Chairman (Deputy Joanna Tuffy)

That is not a point of order.

Deputy Micheál Martin

I would ask the Taoiseach to give consideration to it. He should reflect on it.

The Taoiseach

The same can apply to the Joint Committee on European Union Affairs and the Joint Committee on Finance, Public Expenditure and Reform. They have that opportunity.

Acting Chairman (Deputy Joanna Tuffy)

That is not a point of order. The order of the House was set this morning.

Deputy Micheál Martin

They do not. They have 101 things to do.

Deputy Timmy Dooley

Consider it.

Acting Chairman (Deputy Joanna Tuffy)

I will conclude the item. I call the Tánaiste to conclude briefly and then we will conclude the business.

Deputy Timmy Dooley

The Taoiseach should speak to Deputy Mathews who appreciates that it is a good idea.

Deputy Eamon Gilmore

First——

The Taoiseach

That is the Clare syndrome breaking out.

Deputy Peter Mathews

I did not get to speak today.

Deputy Timmy Dooley

He set up the sub-group.

Acting Chairman (Deputy Joanna Tuffy)

Would Deputy Dooley let the Tánaiste conclude?

Deputy Eamon Gilmore

First, this is a hugely important issue. That is why we had a debate about it last week. That is why the Taoiseach came into the House before the summit and spoke about it.

We have had a long debate and discussion here during the course of today. There are two committees of the House, both of which have a key role to play in this area. There is the Joint Committee on European Union Affairs, of which Deputy Costello is the Chairman, and that has a role to play. Clearly, the Joint Committee on Finance, Public Expenditure and Reform can discuss it. As far as Ministers are concerned, we are prepared to attend these committees and to have these issues teased out. We can make more time available here on the floor of the House, if that is required.

This is an issue which is hugely important for people in their everyday life. We are talking about the stability of the euro and all of the implications that flow from that for investment, for jobs and for the future of the European economy.

I will make one observation on the tone of this debate. One would think that Europe is somehow not us at all. We are part of Europe. We do not talk about this as though there is Europe and there is us. We have national interests to pursue within Europe and those were outlined——

Deputy Richard Boyd Barrett

Is it the Europe of the bondholders or of the people?

Deputy Eamon Gilmore

——in the letter the Taoiseach sent to President van Rompuy and reiterated by him at the summit meeting. It is in the national interest to ensure that the euro is secure and succeeds and that the measures agreed at the summit meeting succeed. These are issues to which we can return in future debates and discussions.

When we return to those, it would be interesting to hear where Sinn Féin stands on the euro, which we have not heard today. Is it in favour of the euro or not? Where would those here who have expressed views on the proposal to go further in terms of the fiscal arrangements borrow the money, particularly if they are not going to repay the money already borrowed? At what interest rate will they borrow it? If they cannot borrow the money, what level of cuts in public services and pay, and in social welfare rates, must they have imposed on the people of this country?

Dáil Éireann debate - Wednesday, 14 Dec 2011

European Council Meeting: Statements

A Deputy

Dáil Éireann debate -
Wednesday, 14 Dec 2011