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Dáil Éireann debate -
Wednesday, 6 Jun 2012

Vol. 767 No. 1

European Council: Statements

I am pleased to have the opportunity to brief the House on the outcome of the informal meeting of the European Council on 23 May, especially in the wake of the outcome of last week's referendum. The decision the people took last week was another positive step on our road to economic recovery. It was a forward-looking choice that sent a signal well beyond these shores that Ireland was serious about tackling its problems, securing its recovery and charting a clear path to growth. It removed any lingering doubt about Ireland as a place in which to invest and do business. It made us more attractive to those looking for locations in which to build their businesses and create jobs. Ireland already had an excellent offer to make. The decision taken last Thursday strengthens it further. It brings greater security, greater certainty and greater confidence.

I take the opportunity to pay tribute to the steadfastness of the people and the courage and determination with which they have faced up to the exceptional difficulties with which we have had to grapple as a country in recent years. We have had to take painful decisions which have real consequences in the lives of real people. It has not been easy for anyone and is particularly challenging for some.

Last Thursday, however, the Irish people stood above the fray and pointed to the type of future they wish to build together with our partners in Europe. I assure them that the Government is keenly aware of the exceptional burden of responsibility it carries as a result. As I said throughout the campaign, the stability treaty will not solve all of our problems, but it is one of the foundation blocks on which our economic recovery will be built. Its endorsement by the Irish people greatly strengthens the Government's hand as we face into another important meeting of the European Council later this month. Building on the informal discussions that took place last month, that meeting will seek to forge an effective growth agenda for Europe as a necessary complement to the new treaty. Ireland will be a fully active participant in a process during which critical decisions will be made for all member states, and for eurozone members in particular.

An urgent part of that agenda must be an effort to stabilise the European banking sector. It is a fundamental aspect of settling the crisis in the eurozone and something to which this Government is committed to working urgently to solve. The Irish people have made enormous sacrifices to contribute to the economic recovery of Ireland and of Europe. I set this out in clear terms when I spoke to the many European leaders who offered their congratulations on the referendum outcome. I told them that we must urgently turn our collective minds not only to growth but also to ensuring a solution to Europe's banking difficulties and to addressing the related question of debt sustainability. Ultimately, that must mean severing the link between sovereign debt and banking debt and thus ending the vicious cycle which continues to allow pressure on one to amplify pressure on the other.

I have no doubt that a comprehensive solution or solutions will be found and that addressing Ireland's situation will be part of that. We know how difficult - indeed, dangerous - the situation can become when the link between the sovereign and banking debt is allowed to weigh down recovery. Our national experience of that pernicious link counts for a great deal as we move to contribute to the solution at a European level. We do not advocate that others follow the path foisted on us. Experience of the crisis has shown that while Europe does not always move as swiftly as some, including this Government, would like, a consensus is eventually found in favour of progress. The time for action has arrived. These problems will only be solved when political leaders face up to the responsibilities arising from the crisis and make political decisions accordingly. On many occasions we have seen what was previously unthinkable become today's commonplace thinking. I remain confident that a consensus will be reached on dealing with the banking issues, and I hope it will be reached urgently. It may involve the European Stability Mechanism or other European institutions. In any case, it is the result, not the form, that counts, and I will work creatively and constructively with partners to bring about that result. I assure the House and the Irish people that, together with my colleagues in government, including the Tánaiste and the Minister for Finance, I will put Ireland's case as strongly and robustly as I can.

Europe needs a success and Ireland can offer one. There is a European interest in ensuring our debts are manageable and that our banking burden is acknowledged and addressed. Last week's decision was a strong and positive one for Ireland which allows us to move forward with a focus on the growth agenda that was the subject of the informal meeting of the European Council on 23 May and which will be the main focus when we meet again at the end of the month. Discussion at the informal meeting was, as the President of the Council, Mr. Van Rompuy, intended, free and open, although no conclusions were adopted. The Commission put forward a range of ideas and issues that were discussed and referred to at the meeting, including the implementation of the Stability and Growth Pact, bank restructuring and a return to normal lending, the adequacy of financial firewalls, and new sources of revenue such as financial transaction taxes, energy taxation and measures to combat tax evasion. Needless to say, we did not agree with all of these proposals. There were also proposals regarding steps and conditions for the joint assurance of debt. In respect of structural reforms, there was a suggestion that member states implement EU recommendations as part of the European semester process, and reference was made to the opportunities arising from the Single Market, the single patent, the digital economy, network industries and so on. There was also discussion, in reference to targeted investments, regarding Structural Funds, project bonds, a European Investment Bank capital increase, the future budget of the EU and the cohesion and competitiveness agenda.

Although no conclusions were agreed, there was sufficient consensus to enable the President to identify a number of key themes and issues for the discussion ahead. First, it was clear that all subscribed to the view that actions aimed at growth must complement and not detract from efforts to ensure fiscal consolidation. There will be no sustainable recovery without sustainable finances. Second, the process of structural reform through the Europe 2020 process must continue. Last week the Commission brought forward its most comprehensive assessment yet of where each member state stands and the steps each must now take. In Ireland's case the recommendation was that we continue to press forward with implementation of our EU-IMF programme. For many others, the Commission pointed to the need to tackle some very difficult and sensitive issues, including pension and labour market reforms, in the interests of building a sustainable future. I strongly urge partners to take these recommendations on board.

Third, the President, Mr. Van Rompuy, identified three pillars of a growth strategy for Europe. The first pillar is mobilising EU policies to support growth fully, which means making urgent progress on important legislative proposals such as the Single Market Act and the energy efficiency directive. Plans for implementing the European patent must be finalised by the end of the Danish Presidency. This is something Ireland has long supported as having the potential significantly to reduce costs for innovative businesses. The few remaining outstanding issues in this regard must finally be put to bed. Mr. Van Rompuy also called on colleagues to ensure the full and consistent implementation of existing legislation. This is an area in which Ireland has been pressing forward, with our most recent results on the Internal Market "scoreboard" the best we have achieved so far. We are determined to maintain our strong performance in this regard.

The second pillar identified by Mr. Van Rompuy is the stepping up of efforts to finance the economy through investments and improved access to credit, especially for small and medium-sized enterprises, in which EU funds can play an important part. In our discussion, many pointed to the role the European Investment Bank could play and, in this context, it has been asked to consider an increase in its capital for financing projects across the EU by our June meeting. There was also much discussion of the potential of project bonds, and a welcome for the recent agreement between the Council and the European Parliament enabling the launch of the pilot phase this summer as a first step. I put forward the proposition that these bonds should apply to projects other than transcontinental infrastructure, that is, that they should be applicable in a national context, subject to appropriate conditions.

The Commission is also to report this month on the reprogramming of the current Structural Funds to support growth, jobs and training. We will also discuss at our next meeting how the Union's new budget, the multi-annual financial framework for the period 2014-2020, can be geared to growth and job-creating policies. I made the case very strongly at the meeting that we live in exceptional times when exceptional measures are needed. Any new initiatives in the area of financing will be very welcome and will help to create the stimulus Europe needs. However, they must be focused on those member states that have borne the brunt of the crisis and where they can have maximum impact. We cannot allow questions of scale and of bureaucracy to determine the shape of our strategy. There are other issues that arise in this context, including the question of a financial transactions tax, in respect of which I again made the Government's position clear, namely, that we could not support a measure which placed us at a competitive disadvantage.

The third pillar identified by the President is job creation. We must ensure a job-rich recovery in Europe. The Government has already demonstrated the priority we attach to this agenda through our action plan for jobs and the pathways to work policy. Mr. Van Rompuy called for greater prominence to be given to national jobs plans in the Europe 2020 process and for better synergy between European and national instruments, including the Structural Funds, with a particular focus on combating youth unemployment. These issues - mobilising European policies, better financing of the economy and job creation - will be at the heart of our discussions when we meet later this month. The banking situation will also be part of that agenda. Our discussion last month also pointed to the need for a longer-term debate about how to take economic and monetary union to a new stage. The President is currently working with the Presidents of the Commission, the European Central Bank and the Euro Group on what the main building blocks of this might be and how the work should be taken forward. He will report back on this discussion at our next meeting.

Last month's meeting of the European Council was an important staging post ahead of the one that will take place at the end of this month. There are vital issues at stake in terms of building economic recovery and securing growth. Nothing could be more important, here or in Brussels. Following the outcome in the referendum last week, Ireland is now in a stronger position to advance and defend its interests and the Government will continue to leave no stone unturned in this regard. We are committed to an Irish recovery and to a European recovery.

We are committed to a strong and stable euro and to a credible and durable monetary union. I look forward to participating in a full and active way in the important and critical discussions that lie ahead and I will keep the House fully informed of these discussions as they take place.

Will the Taoiseach organise the distribution of an up-to-date text of his speech because there were a number of significant insertions, in particular in the middle after he said there were no conclusions to the summit? I know we can access the speech later but it would be useful if it could be sent to us. Clearly, the Taoiseach's speech illustrates how quickly the situation is moving. Belatedly at the end of his speech, he mentioned that banking would be on the agenda, although the script writer did not have banking as one of the key issues for the next meeting. The issues were job creation, better financing of the economy and mobilising European policies, and the Taoiseach added the banking situation.

Over the past year and a half, we have had a steady stream of these European Union statements. In its contributions, Fianna Fáil has concentrated on making constructive suggestions rather than join other voices on this side of the House who prefer to attack everything and pretend there are easy answers. We believe this crisis is too serious for the type of politics which the Government used to win votes in the general election and others are now following.

Today, I will again propose specific actions which need to be taken by the leaders of Europe. However - I have to be quite clear in this - the refusal of the Taoiseach and his colleagues to show any ambition or urgency is becoming ever more stark. It remains the case that in the 15 months this Government has been in office ,nobody has set out clearly what it is that Ireland is pushing for in Europe. All we have seen is support for the proposals of others once they look as if they have a chance of being accepted.

The most recent informal summit of EU leaders was another in a long line of meetings where nothing concrete was achieved and Europe's problems continued to mount. Indeed, the Taoiseach in his speech more or less accepted that when he said there were no definitive conclusions. Events have already overtaken the empty optimism and vague generalities which the Taoiseach issued when the meeting concluded.

After four years of emergency meetings, the situation today is that Europe is on the edge of a deeper and more profound crisis. Last year there was a chance for bold action to keep the eurozone intact and stop the domino effect of countries being driven out of the bond market. That chance was wasted because of a reluctance to take any bold action. An incremental approach of doing the minimum possible to get some relief continues to do immense damage.

Today, it is accepted by nearly everyone that the eurozone will lose at least one member. The sovereign debt crisis has escalated with Spain and Cyprus requiring help, perhaps as soon as in the next few days, and Italy may shortly follow. Allied to this, the financial system is again in turmoil with emergency funding being all that is holding it together. Where last year the issue was maintaining a 17-member eurozone, now the issue is whether we can prevent a lost decade of deflation and unemployment which will be felt far beyond Europe.

This is no time for sitting back and respecting the niceties of established protocol. There is an emergency under way which can only be addressed if the leaders of Ireland and Europe take radical and rapid steps. We need a real diplomatic initiative which reaches agreement within weeks and not the months being signalled. Specific actions are required to restore the fiscal, financial and employment situation in Europe. The time has come for Ireland to say unequivocally what it is calling for and for a real diplomatic initiative to be launched behind it.

Last week's referendum gives us real credibility in this task. We need to follow it up with real action and not just statements targeted at the Irish media. During one of these debates last year I said that protecting the democratic legitimacy of our engagement with the European Union was absolutely essential. This legitimacy has been built up over the course of 50 years but will disappear if the people are excluded from important decisions. For this reason, my party was the first to call for a referendum on the stability treaty, arguing that the Government's preferred route of parliamentary ratification could cause immediate and lasting damage. Thankfully, the Attorney General was able to convince her colleagues to proceed with a referendum. While the rushed manner of the vote maximised the risks, the outcome was a decisive one.

Just as important the Irish people have said very clearly they want Ireland to participate in a wider European effort to tackle this crisis. They have rejected unilateral and isolationist policies and reaffirmed their belief in a Union which has enabled immense progress which remains intact, even today. They are angry with the failures of Europe's leaders but they still see Europe as the only context in which we can grow and prosper.

There has been an effort by anti-EU groups to diminish the result by claiming that it was secured by scare tactics. The same people based their entire campaign on claims that the treaty's passage would lead to a slash-and-burn policy for public services and the end of all national sovereignty. For some the campaign was just an opportunity to seek political gain, the clearest example of this being last week's High Court case to get publicity rather than address a serious issue. The people saw through these cynical tactics and passed the referendum by an overwhelming margin.

During the campaign I spent as much time as possible engaging directly with people in their homes and communities. I found the thousands of people to whom I talked to be highly engaged with all the issues surrounding the treaty. They had an instinctive understanding of the need to put aside party politics. The people have spoken and we need to be careful neither to over-claim or dismiss what they have said.

The result says three significant things. It says that Ireland understands the need for a credible mechanism to ensure sustainable public finances over the long term, that we want to have the possibility of accessing EU funding if this is the only affordable way of paying for public services, and that we want Europe to lead a solution to the crisis in which we and many other countries are caught. As anyone who pays even basic attention to the news can see, the treaty is not capable of solving the crisis by itself. It is one part of a wider framework. This treaty should have been accompanied by other measures. It has been claimed that going first with the fiscal controls is necessary to get others to agree more radical steps. The time for those steps is now.

The sovereign debt market for all but a handful of eurozone countries is either closed or becoming unsustainably expensive. In most cases, this is in no way justified by the fundamentals of the countries concerned. Britain and the United States of America have higher debt and deficit levels than the eurozone and yet their costs of borrowing are actually falling. A fundamental design flaw of the euro remains that investors can be unsure about the redemption of their bonds because of the absence of a lender of last resort. This is driving up risk and effectively closing down the market. By its secondary market bond purchases, the European Central Bank has made matters worse.

The only conceivable alternative which can reduce risk and lower the cost of borrowing is for the joint guaranteeing of government bonds. These have been termed eurobonds and they would mean higher costs for a handful of countries but they would immediately return long-term stability to the market. The adoption of the stability treaty gives a credible legal foundation for the controls necessary to make eurobonds work.

The financial system is also engulfed in a spiralling crisis and various stress tests did not restore confidence. It is effectively paralysed and causing immense hardship by refusing to lend to businesses and families. In Spain and elsewhere banks need urgent funding to stay open. This is not coming from investors and requests are already being made for EU funding. Compounding this problem is the fact that there is no uniform framework for winding up failed banks. As a result, every bank failure brings with it the threat of unknown contagion.

In so far as it is possible to get agreement on anything, there is agreement that the eurozone desperately needs uniform bank regulation, including a uniform bank resolution regime, a common deposit guarantee modelled on the American system and a central fund to aid the recapitalising of weak but saveable banks. Even agreeing this in principle would bring immediate relief to the sector.

Unfortunately, every time there is a story pointing to some progress, another quickly follows saying that Germany will not agree. In regard to desperately needed financial reform, the head of Germany's powerful regional banks wrote at length on Monday about how they think things should remain as they are. Martin Wolf summarised a growing despair with Germany's position last week when he wrote that its position on the seven main proposals to stop a meltdown in the euro appears to be no eurozone bonds, no increase in funds available to the ESM, no common backing for the banking system, no deviation from fiscal austerity, no monetary financing of governments, no relaxation of eurozone monetary policy and no powerful credit boom in Germany.

Germany is entitled to its views and to assert its position without being faced with the insulting and infantile idea that it is trying to dominate Europe. However, the German Government and Parliament are profoundly wrong. A major reason for this is their determination not to relive the country's traumatic past.

Let us be clear: Germany and other countries such as the Netherlands are right when they say the financing of governments by central banks puts upward pressure on inflation. However, what the inflation hawks are missing is the fact that economic trouble always and everywhere comes from deflation or excessively low inflation. The hyper-inflation of the 1920s is worth studying, but it has little relevance to the modern economy of Europe or the ability of central banks to fund expansions within safe limits. Recent research has made the point that extremism was actually fostered during the severe deflation which came later.

There is no point denying how the German mindset has been scarred by events at a time when money was so devalued that it took a suitcase full of bank notes to buy a loaf of bread. German monetary orthodoxy served the country well when it had a national currency, but it has not served and is not serving the euro well. The time has come for Germany to be told very directly that there will either be a radical move on euro level involvement in sovereign bonds or Europe will be dragged into a much deeper and longer economic decline. It is also time for countries to point out how the euro has directly enabled a large part of the surpluses which Germany is so reluctant to share.

The comment yesterday from Berlin about not setting a precedent by refinancing or reducing Ireland's bank-related debts was depressingly ignorant regarding everything that had happened in the past three and a half years. It does not indicate that Ireland has put its position forcefully. Although Ireland has tackled its deficit problems with urgency and great sacrifice by its people, a significant proportion of the bank-related debt was incurred only because of wider European fears of contagion. These fears are not a feature and the claim that an unacceptable precedent could be set is nonsense.

Ministers are wrong in talking about getting ESM funds for bank debts. This would solidify the debt and simply reduce the interest rate to a reasonable level. Ireland should not have to carry the debt in this manner. Given the technical reality that it cannot simply be written off, it can be placed on a level where it places no serious burden on our search for debt sustainability. If those concerned really want Ireland to show the way out of th crisis, having extremely long terms for this debt and at a negligible rate is the main way they can do so.

Last year the Taoiseach and the Tánaiste delivered many speeches in Dublin in which they praised themselves for launching a diplomatic initiative. They never actually got around to doing more than giving these speeches. We had a ridiculous situation where they claimed credit for an interest rate reduction which was four times what they had asked for and extended to every country. They have been timid and reluctant to set out a strong position and push for it. Ireland must stand up and say exactly what it is in favour of and work with others to get it. When even restrained newspapers are talking about the risk of economic meltdown, there is no time left for hesitation. The people of Ireland have said they will do nothing to make circumstances worse. They have shown their desire for the European Union to take a lead. What we need now are leaders who are capable of rising to the challenge.

It is less than a week since the people voted on the fiscal treaty - the austerity treaty. Almost as soon as the votes had been counted, Government sources began to leak that the Government was seeking a better deal on the bank debt on the back of its referendum victory. The Taoiseach has told us that he spoke to Ms Angela Merkel on Friday, but he has refused to tell us what she said to him. Yesterday the spokesperson for the German Finance Minister rejected firmly the Government's advances and said firmly that Germany saw no need for movement. That is hardly surprising, given the refusal by the Taoiseach to pursue these issues since he took office.

One of the critical matters at this point relates to the interpretation of the vote in the referendum. The Government's European counterparts have interpreted the outcome of the Irish vote as an endorsement of the policies of austerity and bank bailouts. This is hardly surprising, given the Taoiseach's support for these positions. The authorities do not realise or perhaps have chosen to ignore the reality that a large section of the citizens in Ireland who voted "Yes" did so through gritted teeth in the face of Government and Fianna Fáil scare tactics. The strong "No" vote and the acknowledged reluctance of a section of "Yes" voters show that a very large percentage are opposed to the Government's austerity policies and the hand-over of Irish fiscal powers to the European Union.

It is up to the Taoiseach to fulfil his referendum commitments to remove the burden of the banking debt from taxpayers and initiate job stimulus projects. The Government promised jobs, investment and stability, on which Sinn Féin will be holding it to account. Fine Gael and the Labour Party have famously reneged on all of their major election promises and must not do so on their referendum promises. They should not regard the result as an endorsement of their austerity policies.

I have said to the Taoiseach before, albeit not in a personal manner, that he needs to stand up for the interests of Irish citizens. It is not acceptable for him to continue to sit on the sideline in the hope some other state will negotiate a deal from which Ireland could benefit. For example, the Spanish Government is seeking EU assistance in dealing with its banking crisis to avoid heaping the burden of bad banking debt on the shoulders of its citizens, as Fianna Fáil and the Green Party did in this state.

The Taoiseach may recall that Sinn Féin has argued consistently for the banking debt to be kept within the banking sector, separate from sovereign debt. Until last week, the Taoiseach rubbished this idea. I welcome his apparent and belated adoption of Sinn Féin policy. Sinn Féin was the first party in the Dáil to argue that the current level of Government debt was unsustainable. We all now acknowledge that the debt needs to be reduced significantly. There is a compelling case for the writing down of bad banking debt. However, this can only be secured if the Government seeks it and follows up with a very serious political effort in this regard.

In January the Taoiseach told the Dáil that he had never sought a write-down of Irish debt and that we would not have the term "default" written on our foreheads. At some point he needs to spell out when he changed his position on this issue. He knows by now that if he does not seek a debt write-down, he will not get one. He needs to spell out exactly how he plans to convince European leaders to agree to a fair deal for Ireland. Some proponents on the Government side argue that the Taoiseach does not want to show his negotiating position. However, he is showing it to us when he says his policy is working and that Ireland can and will play its part, etc.

The informal summit had as its focus job creation and growth. When the Taoiseach came back with the treaty - I read his speech again - he never once mentioned job creation, despite my challenging him on that occasion. We have argued consistently for a focus on job creation and growth, which need to be central to the debate. One cannot cut one's way out of a recession. The jobs and growth strategy needs to be central to any strategy to deal with the current economic crisis. I, therefore, welcome the Taoiseach's late-in-the-day conversion to the jobs and growth agenda.

The Taoiseach promised clarity during the referendum campaign, but he seems to be arguing that austerity and stimulus can go hand in hand. They cannot; it is not possible. It is interesting that throughout the debate the Government has blamed officials at European level for spreading stories, as it did this morning, although it makes full use of officials to engage in spin, as it did last week. It seems no firm conclusions were reached at the informal summit, as is clear from the Taoiseach's notes, except that the attendees at the crisis meeting agreed to call another crisis meeting.

In the Taoiseach's statement he pays tribute to the steadfastness of the people. I agree with him. We are no mean people. We have the ability, culture, history, tenacity and determination to survive this crisis. We have survived worse in our proud history.

The Taoiseach notes that this crisis has not been easy for anyone. That is not true. The golden circle and the elites are still doing very well indeed. It is working people, the plain people of Ireland, who are carrying the weight of the Government's policies and the Taoiseach must deliver for them. He needs to honour his referendum commitments.

The urgent crisis facing almost half a million people in this State, and God knows how many millions across the European Union, is unemployment. We have the added problem of emigration. We need to see some urgency from Irish and European leaders in tackling this crisis. As I stated previously, the Government also needs to remove the burden of banking debt from Irish citizens and it needs to initiate genuine jobs growth initiatives rather than rhetoric, talk of it or the election promise followed by referendum promise.

When the Taoiseach spoke to us last before the informal Council meeting he warned that at this Council meeting, "The intention is that we will not at this stage take decisions or draw conclusions." Why would the Council take decisions, given the current situation where unemployment is sky high across Europe and when there are queues for soup kitchens in many places, not just in Greece? I would suggest that the inconvenience of a referendum in this State may have had something to do with the reluctance of EU leaders to put their plans down on paper before the austerity treaty was passed here because we were told the treaty was the bad cop that we had to see before we could see the good cop of investment and a growth plan.

The treaty has been passed and the clear differences in attitude among the less well-off section of our people towards it has been brought to light. Post the informal Council, is it time to ask the Government to show its hand and state clearly what it is looking for in terms of a growth plan?

According to a report published this year by the International Monetary Fund, less government spending during periods of economic contraction lowers incomes in the short term and raises unemployment, particularly long-term unemployment. The report's authors reached this conclusion after examining 173 episodes of government-imposed fiscal austerity over the past 30 years, with the average deficit reduction equal to 1% of GDP.

They found that a 1% deficit cut had the effect of reducing real incomes by about 0.6% and raised unemployment by nearly 0.5%, and it gets worse. The IMF report also found that in cases where governments chose to pursue austerity programmes instead of deficit spending, income and employment levels frequently did not return to pre-recession levels even after five years. Recovery was even more painful when multiple countries tried to impose austerity measures simultaneously, as is currently happening in the eurozone, since not every country can devalue its currency to boost exports at the same time.

With that in mind, I suppose we need to get to the crux of the issue. What is the Government's negotiating position? What does it regard as an adequate stimulus package to get the Irish economy moving?

I asked the Taoiseach the following questions on the previous occasion. Is the Government promoting or supporting an increase in the investment capacity of the European Investment Bank and if so, to what level? Chancellor Merkel and her Government's submission for the next Council meeting at the end of June amounts to approximately €10 billion for all of Europe. As the Taoiseach will be aware, the Irish Congress of Trade Unions has talked about a package of €10 billion for Ireland alone, which has a population of less than 1% of the European Union. If that is the sort of ball park Chancellor Merkel is in, the Taoiseach would need seriously to challenge that.

The board of the EIB has been asked to report to the June meeting on the capacity for future lending for qualified structural projects.

Is the Government supporting changing the investment rules of the European Investment Bank, in particular, the 50:50 lending ratio, at which Sinn Féin has looked and suggested a 75:25? That would be extremely important to Ireland in terms of using the National Pensions Reserve Fund as a means to drive forward.

I welcome these opportunities for this House to-----

Both Ministers were out there in the past fortnight talking about that issue with the EIB directly.

I acknowledge the "Yes" side put and won its argument. That is fair enough. That is democracy. However, the Government also has a huge responsibility to deliver. The Taoiseach will be aware that a considerable section of the Irish people who voted "Yes" did so with gritted teeth and with a concern around future funding. I understand their concerns. Their hope is with this renewed chance and mandate that the Taoiseach has been given to go and get that deal once and for all. This is the moment of truth. It is here in front of us. Now we must have a deal on banking debt. We must have a real strategy for growth and investment. This will be the Government's litmus test in the next period.

The Government has not done negotiating to date and does not stand up for Ireland. Maybe, for the sake of clarity, the Taoiseach would outline what exactly the Government regards as an adequate stimulus package. What would be required? Is it the roll-out of next generation broadband? Is there a programme of school building? Are there road projects, such as the A5 road to Donegal and Derry? What are the projects? What is the strategy? How many jobs will be created? We need to see the detail. We need to know what the Taoiseach is looking for at European level and what strategic alliances he is seeking to build at European level.

We are told the EU master plan has three arms. The first is the one we know all too well. It is euphemistically referred to as having "sound public finances". In reality, what this means is a complete ideological inflexibility to consider anything except austerity as a way out of Europe's economic trough. It is this policy that has seen the return of mass emigration to Ireland and has left one in two young Spaniards unemployed. It should be yesterday's policy but new life has been breathed into it in this country by harnessing the fear of the people. It is the policy adopted from day one of this crisis which, despite its obvious failure, is still somehow being championed by the German Chancellor and foisted upon others under threat of deadly consequences. This arm of the plan does not work. We know this because Greece has had a second bailout and Portugal and this country have more or less admitted they will need a second bailout because the first one, and its austerity, did not work.

On a side point, one area where the EU has sought to make an impact, at least in terms of the media, is on youth unemployment.

I am hopeful that this is one area where the Taoiseach may be able to expand on what initiatives were discussed or will be discussed at June's meeting. My colleague, Senator Kathryn Reilly, has tried to get some clarity on this, even to the extent of making a freedom of information request. We need clarity and detail on the Government's strategy in terms of stimulus and bank write-down of debt.

We are told that "structural reforms" comprise the second arm of the grand plan. What are these structural reforms? We are relying on titbits of information and some guess work. Perhaps the Taoiseach can enlighten us to what is being proposed here and what position the Government will take.

What guarantee has he got or is he looking for that this structural reform will not merely be more of the neo-liberal policies favoured by the EU Commission over the last decade? How is the Government positioning itself to reject any moves towards lowering of wages across the EU in the name of competitiveness?

How much has civil society, in particular the trade unions, been consulted about these so-called reforms? Experience has taught us that when this EU Commission speaks of "labour market reforms" workers should worry and organise themselves.

What does the Taoiseach say to the press speculation that has Germany pushing for further privatisation of state enterprises? Is this something on which the Government will take a stand or is it on-board with the destruction of the State, asset by asset?

Deputy Mac Lochlainn's time is used up.

I will wrap-up with this. The Taoiseach can see the range of questions, concerns and issues. The German Government has outlined its strategy and approach. It is time the Taoiseach outlined our plan and strategy to the people, particularly given the opportunity he has been given by those who feared the future and gave the Government one more chance with a "Yes" vote. Let us see what the Taoiseach does with it.

The next four Deputies, who will share time, are Luke ‘Ming' Flanagan, Stephen Donnelly, Mattie McGrath and Mick Wallace, each of whom has four minutes.

The European Union and its subset, the eurozone, are at a crossroads. We must have a debate on where we are going because we are not doing so at the moment. Currently, we are lunging from one crisis to the next with no overall plan. We must not sleepwalk into what are potentially the greatest changes to this nation state since its foundation. It is clear what eurozone countries must do for the currency to survive. There must be full fiscal and political union, and transfers of wealth to less well-off areas, in other words, a united states of Europe. This is not new thinking. It is something people such as Anthony Coughlan, who opposed the euro project, have called for since its inception. It is also a fact of which anyone with a brain in the newly formed Fine Gael, Fianna Fáil and Labour Party alliance was well aware. This is something the "Yes to every euro referendum" brigade have never admitted. The implications of such a move are immense. It would mean the end of Ireland as an independent state in terms of sovereignty, and let no one say otherwise or they are not telling the truth, just as the truth was not told to the people at the time we joined the euro in the first place. This is why we must debate the issue truthfully, but only if sovereignty means anything to this Government. The laying of wreaths at memorials for the men and women of 1916 suggests the Government does care. Its actions in dealing with Europe, however, show the Government is hell-bent on creating servitude rather than sovereignty.

Angela Merkel wants the currency to survive in such a way as to help the German economy, but its survival appears to do nothing for us. Germany needs to wake up to this fact and pay the price for the benefits it secures from the euro. The price is that Germany should subsidise the periphery, something there is no sign of it doing. The price is also that power should move away from individual nation states such as Germany and France. There was a time when I believed we were in a union of equals. We were told during the debate on the Lisbon treaty that if we voted "Yes" we would be at the heart of Europe. What a joke that seems to be now. When we look for fairness on bank debt, we are now told by the same people that we are irrelevant and not big enough. We were meant to be at the heart of Europe. This is something we were promised by the current Government. The European institutions have been bypassed and replaced with bilateral meetings and lunches between Germany and France.

One might have imagined that Mr. Hollande would be different but the first thing he did following his election was to go to meet Angela Merkel. One might think was the right thing to do but one does not do that in a club. If two members out of six in my local GAA club had a meeting by themselves, the club would fall apart, and that applies in the case of a GAA club rather than something on which all our lives will depend in future. Regardless, they meet up and do whatever they want, but not for our benefit.

I believe we should negotiate a withdrawal from a system based on bullying rather than equality. Unfortunately, however, at a time when we need a strong negotiator we have a Taoiseach who cannot even inspire confidence in a sizeable minority of his party. At election time we were told by him he would do something about the bank debt. He has not even bothered to ask. It says everything that although we have elected a Taoiseach to go and do that for us, the ordinary people in Ballyhea, County Cork, must take up the battle and do it for themselves. It is the equivalent of a father instructing one of his children to do the shopping and feed the other children while he spends the rest of the day in the pub. We expected more and I and my children expect more in future. The Taoiseach must do a better job. Otherwise he should be prepared for annihilation at the next election.

Today at 8 a.m. I went to the Capuchin Day Centre on Bow Street on the north side of Dublin. A queue of people were waiting for food parcels which they get in blue bags. The Capuchin Day Centre distributes these every Wednesday morning. I spoke to the man who has been running the centre for many years. He told me that in 2008, approximately 50 people used to come on a Wednesday morning. This week approximately 1,400 people will come, almost 30 times more than in 2008. He said that some children come in their school uniforms and arrive out of breath because their parents are rushing them there from school in order that they arrive before dinner closes. He spoke of a new poor, including people from the construction industry and self-employed people who have lost their jobs and businesses and who have become homeless. These people are struggling to pay mortgages and have so little money they cannot feed themselves or their children. This is what austerity means in Ireland today and this is what we must deal with. It is not an economic concept. It amounts to hungry men, women and children on Bow Street.

Without a deal on the bank debt such austerity will get worse in this country. In the past two days we have heard from those responsible in Germany that there will be no deal or write-down on the bank debt. Why is this? Why are the Germans saying this? What do those in Germany see when they look at Ireland? They see a country that pays its senior civil servants more than they pay theirs. They see a country that will award €250 million in pay rises this year while Germany will not. They see a Government that has agreed spending increases throughout the Civil Service from stationery and travel to office rent. They see a Government which sees paying other people's debts as a badge of honour. They see a Government that states publicly that it is not seeking a write-down.

Naturally, those in Germany maintain that they will not entertain a write-down of the €75 billion of private debt that the Irish people are being asked to pay off. Why is this? The Government has failed to make the hard political decisions. The soup kitchen on Bow Street has not seen even a €1 increase in its funding in recent years. Funding has been pulled from severely physically and mentally disabled youth in Wicklow. Under the budget, the Government will take 46 times more money from a lone parent with four children than from a high earner with no children, from whom it is extracting €100. The Government is not increasing higher end income tax because of a misapplication and a misunderstanding of economic theory. The Government is not getting a write-down because it has not yet earned the credibility to do so by making the necessary tough decisions. When the central European powers refer to Ireland, as they did yesterday at a European finance committee meeting, they refer to high wages and to our being bailed out by them. They do not refer to soup kitchens or the €60,000 that every Irish household is paying to the European banking system to stabilise it. The Government must up its game and change the conversation. It must change the view held by the central European powers about what is going on here and what is at stake. We owe it to the people and to the growing numbers in the queues on Bow Street on Wednesday mornings.

I am pleased to be able to speak on this motion. I acknowledge the people voted last week for whatever reason, whether because of fear or otherwise. Business people, those in employment and others were concerned, rightly, about the future of Ireland in Europe and its future as a country on its own. The people took a decision that it is better to be in the system rather than outside. This is why the Taoiseach, the Minister of State, Deputy Creighton, and everyone else should change their stance when they meet European leaders. We must let them know that we are not simply messenger boys.

We have gained much from Europe since joining the European Economic Community in the early 1970s. We are now in a crisis and need help. We must be treated as an equal, rather than as lap-dogs to be given a pat on the head during photo-calls. This morning, the Taoiseach failed to answer a question on what Chancellor Merkel said to him in a telephone conversation. Did her words reflect the adage we have in Tipperary, namely, "Dúirt bean liom go ndúirt bean léi go raibh fear i dTiobraid Árann a bhfuil póca ina léine aige"? That is no good any more. Is he saying that dúirt bean liom go ndúirt bean léi go raibh fear i gContae Maigh Eo that has a pocket in his shirt? The pockets of Irish people are empty.

I will not relate more of the types of stories told by previous speakers. I meet people every day in my clinic, socially or on the streets who tell me they are suffering more than they can bear. Young people are being driven to emigration, while the lifeblood is being drained from businesses. People are also worried about their pensions and with good reason. Ireland must be treated fairly and that will not be the case until such time as we stand up to Chancellor Merkel and company. We must gain our rightful place among European nations.

Some months ago, a number of colleagues and I met representatives of the troika. I was shocked to learn they believed everything was grand in Ireland and the electorate had given the Government a mandate for its actions. The Government was elected on promises to do the opposite of what the Fianna Fáil-Green Party Government did. In the Tánaiste's eyes fire was not hot enough to burn the bondholders. As the old saying goes, the bondholders are now laughing all the way to the bank. People were labouring under false illusions. The Government should deal with high earners, including senior public servants, and address pensions and other blatantly unfair issues. I am sure the Germans are well aware of this unfairness. When our officials travel abroad to meet their counterparts, they are being paid double what others are paid, travel first class and stay in the best hotels. The time for playing games is over.

The Taoiseach indicated this morning that the forthcoming European summit will be crucial. The time for talking is over and the Government must take action. The German and French banks recklessly shovelled money into our banks and regulators in both countries failed. Half of the debt acquired through the bank guarantee cannot and should not be repaid because it was lent recklessly by foreign banks. We should agree to repay perhaps half of it over a longer term of 30 years or more. Ireland is not a bad debtor and will continue to pay its way, as it has always done. We cannot cope with the albatross of debt around our necks which is choking business and frightening the young and old alike. Will the soup kitchens we had during the Famine make a reappearance? We can no longer stand for this. The Government must show leadership and wear the green jersey. It must let it be known that while Irish people are proud and reasonable and will play fair, they will not be treated as serfs.

One of the weaknesses of financial regulators is that they must lie. Central bankers and treasuries must swear there will not be a devaluation or default until such time as they suddenly agree there will be a devaluation or default. Each time they lie, they damage their credibility. However, even as they continue to lie, they must also be trusted to control events behind the scenes. Trust, however, is in short supply. Just as our banks lied to secure a bank guarantee and for a long time thereafter, which completely undermined the moral justification for the State stepping in to bail them out, Spain is now in the same boat. I do not know for how long the Spanish authorities have told us that everything is grand. Two years ago when Banco Santander was threatening to mount a takeover of another large European bank it was lying about its financial position.

It no longer makes sense to continue to handle the crisis as it is being handled now. That the taxpayer must pay for the bad management and business practice of financial institutions is outrageous. Rather than seeking to obtain funding through the State, Spain is seeking money from the European Stability Mechanism. I, too, would seek money if I were in Spain's shoes but it would probably be better to seek it from the European Central Bank. If the banks will not repay the money over a long period, those that are needed should be nationalised. It is nonsense to continue imposing austerity on the most vulnerable in Europe to try to solve the banking crisis.

The message from Germany in recent days that eurobonds are out of the question as they do not suit the agenda and would give the wrong impression is hard to take. Speaking on joint guarantees or borrowings such as eurozone bonds yesterday, one individual stated they would give the wrong incentive and reduce pressure on debt laden countries to cut their budget deficits. Some people will not be happy until countries have been reduced to dust. According to the unelected President of the European Commission, José Manuel Barroso, Greece must respect its commitments, by which he means the package of pulverising privatisations, tax rises and cuts in jobs, pay and services demanded by the European Union and International Monetary Fund in exchange for loans which cannot be repaid and are reducing the country to beggary.

Eurozone leaders appear to believe they can resolve the crisis through internal devaluation, an approach that will not work. Germany is more than keen to remain in the euro. Based on its annual surplus of €160 billion, it is reckoned that the euro undervalues German exports by 40%. The reintroduction of the Deutschmark would, therefore, increase the price of German exports by 40%. Would Germany be able to sell Volkswagen cars in Spain, Italy or Greece for 40% more than the current price? That prospect is not a runner. Germany benefits from the current arrangement more than any other country. Chancellor Merkel argues that borrowers must pay up and sort out their problems. She may not like it but the lender carries as much responsibility as the borrower. Until she understands that, we will continue to travel down the wrong road.

We will now take questions for a period not exceeding 20 minutes.

How is it proposed to proceed? Will the Minister of State respond to each question, a series of questions or-----

I suggest the Minister of State should digest and respond to questions in groups of three.

I will try to ensure she does not have to ruminate for too long on my questions.

Let us hope they are digestible.

With the Acting Chairman's permission, I will ask three relatively straightforward questions.

Deputies should ask one question each.

I suggest that as a compromise each Deputy ask two questions.

I thank the Minister of State for her work to date. Will she outline clearly what the Government has proposed to deal with the issue of bank debt? Has it proposed a write-down of the debt or a lengthy extension of the repayment term at low interest rates? What response it received? Was it a "Yes", "No" or "Maybe"? Those questions combined are my first question.

What position has the Government taken on the issue of eurobonds? I understand a consensus had been reached in Irish political circles that the introduction of eurobonds would be a significant way of dealing with the mutualisation of our sovereign debt. I listened with interest to the Minister for Transport, Tourism and Sport, Deputy Leo Varadkar, raising a note of caution on eurobonds when he spoke on "The Week in Politics" programme on Sunday night. Eurobonds, he said, would be akin to Germany allowing Ireland to use its credit card as we saw fit and, by the same token, Ireland allowing the Greeks to use our credit card to spend money as it wished. I understood this analogy to be an attempt by the Minister to raise a flag of caution or dissenting view that eurobonds may not be the best way to address this problem. His argument appears to be that the overarching conditions that could attach to eurobonds, including the requirement it would impose on member states to justify individual borrowing events, would have the potential to be so onerous as not to be worth the candle. I am paraphrasing, but that is my understanding of what he said. I would like clarity on the issue. I do not expect to receive an answer on the other issue, as we did not get one from the Taoiseach earlier.

I would like the Minister of State to give as clear an answer as possible on the issue of a write-down. There have been many mixed messages sent and different things have been said by different people. Is the Government actively looking for a write-down on any portion of the debt, including the bank debt that has become sovereign debt, or is it looking for a restructuring that would essentially lower the debt burden?

I have listened to German colleagues, the German media and even German parliamentarians who were at the finance committee yesterday. They all talk a lot about the bailout and the German money which has been made available, thankfully, to this country to help us as part of the troika funding. However, I never ever hear them recognise the fact that the net flow of money is ultimately out of the country. We have given a vast amount of money - money that is not coming back - to bondholders, some of which are German and French and so on. Based on the Minister of State's own experience in the negotiations, is that a predominant position? Is there a lack of understanding of the fact that in terms of net cash flow,per capita we are bailing out their banking systems to a much greater extent than they are bailing out ours. Is that understood? If not, is there anything the Government can do and should be doing about it?

As many of the questions are interlinked, I will try to provide for as much clarity as I can.

The outcome of the referendum changes matters a little from Ireland's perspective on the debt burden. I do not wish to overstate it, however, as we have already been criticised in the media and elsewhere for linking the result on Friday with the issue of bank debt. I do not wish to do that because we have said all along that they are separate issues. The decision in the referendum was one for the people, but, of course, there is some interrelation. The "Yes" vote strengthens our hand and changes the way in which the Government is looking at this issue and the way in which we are looking for opportunities. There will be a period of reflection, both with the Department of Finance and the Economic Management Council, as well in the Cabinet more generally, to see how we can leverage the "Yes" vote to our advantage. We will be exploring all opportunities in this regard.

Deputy Gerry Adams is incorrect that the Spanish have looked for a specific role for the permanent stability fund to recapitalise Spanish banks. They have not done so. There have been much speculation and discourse in the media and among politicians here about opportunities this could potentially present for Ireland, but as it has not happened yet, we will have to wait and see.

We sought leniency and flexibility on the overall debt burden last year, as Deputies are aware. The Minister for Finance explored the options available with the IMF and our European partners, but it was apparent that there was no entertaining it at that stage. We did succeed in having the interest rate reducing and the maturities of our loans extended. The interest rates are almost at rock bottom in terms of how low they can go, which is good news. We have had this conversation many times and it saves the State about €10 billion. There has been a burning of subordinated bondholders. As it has been minimal, I would not like to overstate it, but there has been a certain amount of progress made. The main priority for the Government in terms of debt sustainability has been dealing with the promissory notes. I am very optimistic about what can be achieved in that regard. It is a separate issue from the overall debt burden and the question of banking debt being part of sovereign debt. However, to deal with the promissory notes, I am very optimistic that the "Yes" vote enhances our opportunities. I know some believed it might happen before the summer, but I never believed that could happen for the simple political reason that there were elections due to be held in France and Greece. I always considered there would be a window of opportunity in the autumn and think we will get a deal on the promissory notes.

The promissory notes are the first element. The second is the issue of banking debt forming part of sovereign debt. I am optimistic that something can happen in that regard, but I cannot yet be specific about what will happen. Some 23% of our sovereign debt is private banking debt.

The speculation about the role of the ESM in dealing with Spanish banking debt is just that, although we would be supportive in giving a role to the ESM in directly recapitalising Spanish banks. If that were to happen, we would most certainly be looking to have it done for Ireland in the case of at least some of our banking debt, which would make it more sustainable. We have said all along that our overall sovereign debt is just about sustainable, even though it involves a huge effort. I know we disagree on that point, but doctors differ. That is our position and we have been strident in communicating it to the rest of the world. We want to be seen as a country that is able to meet its obligations and so on. This brings us back to the issue raised by Deputy Gerry Adams about a default. It is absolutely clear that we will not default. This is not a Government which is talking about a default. We could potentially explore our options, whereby we would not default on our debt, but it would be dealt with in a different manner. In other words, the ESM would assume or take over some of the debt. However, that is speculative. I am trying to be as honest as I can, but I am certainly not making any commitment about a process that is very fluid.

Our position on eurobonds is clear. The Taoiseach, the Tánaiste, the Minister for Finance and I have all said we would be supportive of a eurobonds mechanism. Ultimately, that is the only solution to deal with debt levels across the European Union, specifically the eurozone. We have been supportive of this position since long before Christmas and it is finally on the agenda. While we can deride the outcome of the informal Council meeting two weeks ago and say it achieved nothing, the whole purpose of such an informal Council meeting is to enable to Prime Ministers to come together for a genuinely frank discussion and to put items on the agenda that were previously taboo. There were other informal summits at which Heads of State and Government came together, but they did not bring the taboo issues to the table. Therefore, it is a significant milestone that the issue of eurobonds was on the agenda for the first time. There is range of options; there is not just a one-size-fits-all solution. There are three proposals from the Commission, while other member states have different proposals. It is a question of arriving at a eurobonds proposal that is workable and acceptable to all member states. It is the most important solution to the crisis which would help to inspire confidence.

I disagree with the Deputy who suggested all of this meant we would see a united states of Europe and that we would cede all power and sovereignty. We have heard of that sort of Armageddon many times. I do not believe that. There can be a half-way house. There are some good articles inThe Economist of this week or last week that deal with the various stages and steps. It is not about a full-blown federation. One can have federal type solutions to certain elements. A banking union, for example, is something we would like to see. A system of eurobonds is something the Irish people and State would like to see. That does not mean we want a full united states of Europe. We are not talking about that but we are talking about closer co-operation. If we want our currency to survive, there has to be closer co-operation. It is a fact of life. I think we want our currency to survive. We had a resounding answer to that question last week when the Irish people voted in significant numbers to save our currency, in effect. We have a mandate from the referendum vote. We have a mandate with regard to the debt burden and to negotiating a better deal for Ireland. We also have a clear mandate to save our currency. I take that clear message from the outcome of the referendum and I am heartened by it. It means we can go to the table with clear proposals.

Today's debate is not the last before the Council meeting. We will be back before the summit at the end of the month. We will be working on more defined positions from the Government's perspective. We will be looking at ways to collaborate with other member states to put forward concrete proposals. Deputies can be assured we will have an opportunity to discuss those in more detail before the summit takes place.

A Deputy asked if I find, in my dealings with German colleagues, any recognition of aquid pro quo or of the fact there is not a one-way street where Germans pay into the EFSF, EFSM or the soon to be ESM and that Ireland has become a bulwark in terms of saving, and ultimately paying out to, bondholders, including German bondholders. There is a growing recognition of that but it is a slow process. The German media do not cover this issue. I use every opportunity to make this point. Yesterday, I met a delegation of German parliamentarians from the Bundestag. I believe they attended a number of committees of which Deputies are members. We had a full discussion. We must take every opportunity to make this point. Delegations from the Joint Committee on Finance, Public Expenditure and Reform have visited the Bundestag. We must get this argument into their thinking and psyche. We must do so through the media and the national discourse, and not merely through politicians. It is difficult and there is, sometimes, a one-sided view of this issue in Germany, unfortunately.

Deputy Mac Lochlainn, did you want to ask a question?

The substance of my question has been dealt with. I do not think I will get a better answer.

May I take that as a compliment?

I hope I am not breaking a protocol in saying I also took the opportunity, at yesterday's meeting of the Joint Committee on Finance, Public Expenditure and Reform, to give two barrels of an information shotgun to our visitors. They needed it because they did not understand the issue. That is a fact of life. I am appalled at the lack of understanding by members of the German delegation.

I offered them a strong coffee when I met them after the meeting of the joint committee.

May I put a question that people have been putting to me in the last 24 hours? Once the Minister of State knew the "Yes" side would win the referendum vote, how long did it take her to decide the question was one of bank debt? Before the count, members of the Government had been saying until they were blue in the face that the issue was not one of bank debt. The people need to know what game the Government was playing with them. In order to get a "Yes" victory, Government supporters said the referendum had nothing to do with bank debt. When the "Yes" victory had been achieved, they said it had to do with bank debt.

What have we got from the "Yes" victory? For a long time, opponents of the euro have been saying we are locked into the same interest rates as Germany and that when we need low interest rates, Germany may not need low interest rates, andvice versa. That situation, along with lack of regulation, caused many of our problems. News is coming through today that the ECB intends to leave interest rates at the same level. Who is this for? Is it for us, who need lower interest rates? It obviously is not. Is it for Germany again, which does not want lower interest rates because its economy is booming and chugging along nicely? What are we getting out of this, when did the Government change its mind and who benefits from maintaining interest rates at their current level? The Government told us the treaty would be a good thing for us. It obviously is not.

There has been considerable rhetoric, in the House and outside, about the need to stand up the German Chancellor, and I agree with much of it. However, rhetoric from the back benches of the Labour Party is suggesting it should be made clear to Chancellor Merkel that if she does not move on the issues we have talked about at length today, we should threaten to leave the euro and devalue our currency as a solution to our problems. That suggestion comes from a senior Labour Party backbencher.

Has that suggestion fed in to the thinking of the Government, or is it being reflected on by the Minister of State or by the Taoiseach? It has caused concern in the minds of some. It is welcomed by Deputy Luke Flanagan, which speaks volumes for the issue as it stands, but the suggestion is coming from the Labour Party and I ask the Minister of State to comment on it.

I am alarmed to hear "Hear, hear" from the back row of the Chamber. The notion it could be in Ireland's interest to leave the euro is farcical.

We might have no choice.

We have no intention of leaving the second largest currency in the world and leading the country off a cliff and into perdition, which is being advocated by some.

That is absolute nonsense and we have no intention of doing so.

It would be terrible to end up like Switzerland, would it not?

If Deputy Flanagan wants us to become a country with virtually no regulation, rock bottom taxation levels and so on, I would be interested to hear his proposals. They would have to be very much in contradiction of what he has been espousing in this Chamber for the past 14 or 15 months. However, making U-turns is, perhaps, something with which he is not unfamiliar.

The Government has taught me well in that regard.

If the Deputy wants me to answer his questions I will do so.

The Minister of State should stop throwing comments.

With regard to interest rates, the ECB is independent. It is too autonomous, in my opinion. It is for the governing board of the ECB to set interest rates. It is disappointing that the anticipated interest rate reduction did not happen on this occasion. I expect it will happen next month, at the very latest. Mr. Mario Draghi has been a revelation in the ECB. Dramatic strides have been made in providing liquidity to the financial system and preventing the collapse of banks and financial institutions all over Europe which are vital to the continuation of our economic activity. Mr. Mario Draghi has been a breath of fresh air in the ECB but I look forward to seeing more from the ECB.

We talk about eurobonds, a banking union and related issues, but we should also be talking about the mandate of the ECB. This is a sensitive issue and I have raised it with colleagues from other member states. Suffice it to say they did not leap at the opportunity I presented. However, this is something we must talk about.

Deputy Flanagan asked when the Government decided to link the referendum to bank debt. One advocate of a "No" vote, Mr. Declan Ganley, campaigned exclusively on the issue of bank debt. With Government colleagues, I repeatedly said the route to a better deal on our sovereign debt was to vote "Yes" rather than voting "No", and that a "Yes" vote would strengthen the hand of the Government. I said that repeatedly. It is factually incorrect to say we ran away from that discussion during the course of the referendum campaign. We did not.

I thank all the Deputies who participated in today's debate. Clearly, we do not always agree but that is the nature of democracy and it is helpful and fruitful for me to hear from Deputies and to engage in this exchange.

The importance of last month's meeting lay not just in the discussion that took place but also in the groundwork that was laid for the formal decision-making meeting of the European Council that will take place later this month. As I said, we will be back in the Chamber - the Taoiseach and I and possibly the Tánaiste - in advance of the meeting to have a similar exchange and to have input from Deputies.

As the Taoiseach said at the outset, Ireland now approaches that meeting in a stronger position as a result of the outcome of last week's referendum. We have argued consistently that budgetary discipline as encapsulated in the treaty must be accompanied by an equally robust and significant growth strategy. Budget rules alone will not enable us to overcome our difficulties. In last week's vote the Irish people have sent out a strong message. We are and will remain strongly committed and responsible members both of the European Union and of the eurozone. However, the time has come for Europe to address the same energy and drive to the creation of a clear and effective strategy for growth and job creation. That means progress on a number of key fronts. We must ensure all Union instruments, especially the Single Market, are fully mobilised. That means ensuring the high level decisions and orientations offered at European Council level are turned into concrete action at Council level. That is one of the biggest challenges we face in terms of growth and stimulus.

The Government should do something.

If we could simply implement the majority of the decisions that have already been taken we could add 4% or 5% to the GDP of the European Union as a whole. There is huge potential which is not to be dismissed.

President Van Rompuy has signalled his frustration at the gap that sometimes exists between rhetoric and delivery, a frustration I fully share. We must see urgent progress on measures that are regarded as having real potential to contribute to growth and job creation, including the long-awaited European patent and the energy efficiency directive. Making the most of the Single Market will be an important priority for the Government during our upcoming Presidency. Europe must also take steps to ensure there is a proper flow of finance into the economy to support growth and job creation. That means mobilising the European Investment Bank, project bonds and all potential sources, including the Structural Funds, in support of this goal.

We are in the throes of negotiating the Union's budget for the period beyond 2014. Ensuring this is fully aligned in support of our efforts to generate growth and create jobs will be an important task. We must also ensure a greater focus on the job creation dimension of economic recovery. The only way a recovery will be sustainable, economically, politically and socially, is if it gets people back to work. We in the Government have made clear the priority we attach to this through our action plan for jobs and our Pathways to Work programme. It is long past time for us in Europe to ensure we make the most of the synergies between efforts at national and European level to ensure they are having the maximum effect.

As the Taoiseach identified, a wider debate is under way about how we can take economic and monetary union to a new level. President Van Rompuy will report back to the European Council at the end of the month, following his deliberations with Presidents Barosso, Draghi and Juncker. I very much welcome this debate, which is an important one to which Ireland is ready to contribute positively and constructively. However, it should not distract us from the urgent tasks we need to tackle now. Generating growth is obviously a key priority but so too is overcoming the crisis in Europe's banks and ensuring debt sustainability. We need a collective approach and a solution that benefits this country. Irish people have made great sacrifices throughout the crisis in the interests of Irish recovery and European stability, and they deserve enormous credit for this effort. This is a message we will continue to bring to our European partners in the important debate ahead.

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