Dáil Éireann debate -
Wednesday, 13 Mar 2013

Vol. 796 No. 2

European Council: Statements

The Taoiseach

The European Council will meet in Brussels tomorrow and Friday. As is traditional at the spring meeting, economic policy matters will be at the top the agenda. This will not be a crisis meeting, like so many in recent times, as there is now a degree of stability in the markets. As leaders, we must not let this lead to complacency or a loss of momentum; rather, we must make every effort to use this vital opportunity to underpin stability and drive forward the reforms that will deliver growth and jobs. That is the message I intent to bring to the meeting.

I will advocate that we place a firm focus on implementation of the many and varied measures we have already agreed to - implementation in terms of the economic surveillance involved with the European semester; implementation of our structural reforms and consolidation efforts; implementation of the compact for growth and jobs; implementation of our economic governance framework; implementation of what we have agreed to in addressing unemployment, completing the Single Market and introducing smarter regulation; and, critically, implementation of banking union. The meeting will be about implementation.

The European Union is facing a credibility test - we must show people that we are capable of standing by what we have agreed to and delivering what we have promised. Before I say more about the European Council, it might be useful for the House if I update it on progress on the multi-annual financial framework, MFF, even though it is not formally on the agenda on this occasion. Discussions at the European Council will be opened, as usual, by an address by the President of the European Parliament, Mr. Martin Schulz. He will come from this week's plenary meeting of the Parliament which will express its view on the agreement on the MFF reached by the European Council in February. There is a general expectation that the Parliament will vote in favour of a resolution calling on its negotiators to advance some of the issues of greatest importance to the Parliament such as flexibility, a mid-term review and own resources in the negotiations with the Council which Ireland, in holding the Presidency, will lead. I expect President Schulz to set out the Parliament's view in clear and forthright terms, which is as it should be. In my meetings with him I have reassured him that while our role is to represent the Council in the discussions ahead, we will work in good faith with him and his team in the interests of securing an agreement. This is very much in the best interests of the European Union and all of its institutions.

To better understand the Parliament's position, I plan to meet President Schulz and President Barroso on the margins of this week's meeting. It is important that we keep up momentum. While the agreement reached at the European Council last month was an important achievement, there cannot be an MFF without the assent of the Parliament. That is what we are working to secure and I look forward to keeping the House informed as we proceed. It is in everyone's interests that it is concluded during Ireland's Presidency.

As I mentioned, this week's meeting of the European Council will conclude the first phase of what is called the European Semester 2013. The key output in this regard will be guidance to member states on the preparation of member states' stability programme updates, under the Stability and Growth Pact, and national reform programmes, under the Europe 2020 strategy. The European semester process provides us with a basis for developing a shared appreciation of the priorities for action at both EU and national levels, as we seek to return to a path of sustainable and job-creating growth. The main EU-level focus is on supporting the development and implementation of jointly agreed priorities, while the main focus at member state level is on restoring competitiveness and bringing about a stronger alignment of budget priorities, employment policies and structural reforms. The effective management of the processes involved in the European Semester 2013 is an important priority for our Presidency of the Council.

The European Council this week will reinforce very strongly the five headline priorities of the annual growth survey, including in light of the Presidency Synthesis Report, which was presented by the Tánaiste to the General Affairs Council in Brussels on Monday of this week. This Synthesis Report reviews discussions on the annual growth survey across various formations of the Council and is firmly supportive of the annual growth survey's orientations for actions by member states supporting competitiveness, growth and jobs. This means pursuing differentiated, growth-friendly fiscal consolidation; restoring normal lending to the economy; promoting growth and competitiveness for now and into the future; tackling unemployment and the social consequences of the crisis; and modernising public administration. It is critical that we maintain the momentum behind national level reforms in these areas, underpinned by the goals of the Europe 2020 strategy - supporting growth that is smart, sustainable and inclusive.

I expect that our discussions in Brussels will also be informed by the recent agreement by EPSCO Ministers on the principles of the youth guarantee. Getting consensus here was an important Presidency achievement and, as the House is aware, this deals with unemployment and employment process for young people in particular. While we work to put in place conditions necessary to support a general recovery in economic activity, we must also ensure responses from our education and training systems that are effective and appropriate to changing labour market conditions. This means supporting employability, including through new partnerships with the workplace. There are currently 7.5 million young people across Europe who are not in employment, education or training. This represents approximately 13% of our fellow Europeans, aged between 15 and 24. This is simply unacceptable. To deal with that the European Council must act urgently. It has been clearly shown that youth unemployment can have lifelong effects, and everybody knows this. That is why we need to grapple with this challenge now through the rapid implementation of the youth guarantee as a key vehicle for mobilising support in this area. The youth guarantee is but one step towards addressing this problem, and I intend to insist that we build on this first step. As the House is aware, the European Council put a figure of €6 billion into the MFF for youth employment and to deal with youth unemployment over the course of the period to 2020. The overall objective of the guarantee schemes is to provide young people with better prospects for their future by ensuring that supports are available to them to enter the labour market. While acknowledging that different member states face very different implementation issues, I expect that progress will be supported by the youth employment initiative of €6 billion which was endorsed by the Council in February.

I look forward also to co-chairing the Tripartite Social Summit tomorrow morning in Brussels. This is an important meeting with social partners at EU level and will provide a welcome opportunity to discuss with representatives of trades unions and of business the central issues in meeting the challenges of recovery. We will also exchange views on the social dimension of EMU, including social dialogue.

This week's European Council will also take stock of progress in implementing the compact for growth and jobs. This means, in particular, EU-level actions that will support the more country-specific orientations of the European semester process.

Our Presidency results, in pressing ahead with the Single Market, will directly contribute to this debate. As holders of the Presidency, we are prioritising agreement on the key Single Market Act I files that are ready for delivery. We regard as essential priorities key files such as accounting, professional qualifications recognition, public procurement, posting of workers and e-identification and e-signature - some of these are quite complex. At the same time we are aiming for as much progress as possible on key Single Market Act II files, as these are published over coming months. I look forward to this week's meeting of leaders highlighting progress on the Single Market, as a concrete means of driving growth and job creation. Importantly, this year for the first time, we will have the monitoring of Single Market happening within the framework of the European semester process, and this is an important further step.

I expect that we will also look at the idea of smart regulation, with a view to a reduction in the overall burden of regulation, particularly on SMEs, which lie at the heart of domestic demand and sustainable job creation. That is why for instance the Minister of State, Deputy Perry, is changing the situation here to provide that by the year end there will be one portal for application for licences in respect of doing business in Ireland in particular sectors.

The financing needs of the real economy are a further crucial focus in terms of EU-level actions supporting growth and jobs. This means restoring normal lending conditions and unlocking productive and growth-enhancing investments. To this end, I expect the European Investment Bank, EIB, will continue to play a crucial role, especially as with the recent increase of €10 billion in the ElB's capital, and this will allow the bank to lend an extra €60 billion to support jobs and growth.

This week's European Council will take stock of the ongoing work on the strengthening of the economic and monetary union, or EMU as it is referred to, which President Van Rompuy was tasked with following up on by leaders last December.

President Van Rompuy and his office are currently conducting a process of broad consultation with a view to him presenting a road map, as it is called, to the June European Council. As holders of the Presidency, we are co-operating closely with President Van Rompuy in this work, including through the facilitation of discussion among Ministers across a range of relevant formations of the Council. It is true to say that as we take further steps to strengthen economic governance and EMU more generally, these will certainly need to be accompanied by steps aimed at strengthening democratic accountability and legitimacy. To ignore this issue, or to underestimate its importance, would weaken the exercise, but we must also be careful to ensure that as we move ahead we do so on the basis of recognised value being added. I do not believe in change for change's sake. We have achieved a lot to date but that must be put in place before we move ahead. Even more importantly, we must keep our people with us as we strengthen EMU. The European Council will return to these issues for a broader discussion at its meeting in June.

This week's summit meeting will again address the important issue of an integrated financial framework - or banking union. The Irish Presidency is giving top priority to progressing the legislative files in this area. I am pleased to say that the Irish Presidency won broad political support at ECOFIN earlier this month for the compromise package reached with the European Parliament on the capital requirements directive, or CRD IV as it is referred to, and we will now work to iron out the remaining technical issues with a view to reaching a final agreement by the end of this month. That is an important advance in its own right.

On the single supervisory mechanism, we are working intensively with the Parliament, with a view to finalising the legislative process here within the next few weeks. We are also working hard also to see the operational framework for the direct recapitalisation of banks by the ESM finalised by the end of our Presidency. Nationally, of course, this issue takes on particular significance for Ireland, given that it will also address the issue of the definition of what constitutes legacy assets.

As Presidency, we are also striving to ensure that agreement is reached on the bank recovery and resolution directive and on the deposit guarantee scheme directive by the end of June. We look forward also to the submission by the Commission of a legislative proposal on a single resolution mechanism by this summer. The agreement last June to break the link between sovereign and banking debt was a watershed moment in the crisis. In December, we set ourselves ambitious timelines for achieving the various pieces of legislation that are necessary to underpin that commitment. We now need to keep the pressure up for delivery. We cannot afford either complacency or loss of momentum.

Tomorrow night, following the European Council's working dinner session on the European semester and economic issues, the 17 euro area leaders will convene for a euro area summit meeting.

The President of the ECB, Mario Draghi, will introduce the discussion on developments in the euro area. As well as considering those ongoing challenges, leaders will also adopt a set of rules of procedure for future euro area summits. We will complete our discussions of economic matters on Thursday evening. On Friday, the European Council will discuss the EU's strategic relationships, particularly its relationship with Russia.

EU Foreign Affairs Ministers, including the Tánaiste, took part in a broad-ranging discussion on the relationship with Russia at the Foreign Affairs Council on Monday of this week and the key elements of that will inform our discussion. This is a timely opportunity to discuss this as there is a shared understanding in the EU of the need to fashion a stronger, more coherent approach to Russia, to the benefit of both sides. One of the key themes running through recent discussions on Russia has been the extent to which the EU and Russia work together, in terms of mutual trade and investment, in our energy relations and as partners in international fora, in the pursuit of peace and security.

The simple facts are that the EU is Russia's largest trading partner and Russia is the EU's largest energy supplier. That is an important consideration given the global changes in energy sources and pricing. This relationship has been further enhanced by a complex institutional framework enabling both sides to engage in regular political dialogue - indeed Russia is the only partner with which the EU holds a summit in each Presidency. The EU and Russia also co-operate effectively on critical foreign policy issues, including Afghanistan, counter-terrorism and the Middle East peace process. As in any important relationship, however, there are issues where we see eye to eye and issues where our interests, and indeed the values that define those interests, can differ very much.

The EU and its member states have in the past year expressed regret and concern about internal developments in Russia that have challenged the ambitions of those who would wish to see a further growth in political pluralism, and at the level of the individual, in personal freedom and freedom of expression. These concerns are also likely to be discussed at the European Council, including the challenge of how best to communicate these concerns to our Russian partners in a frank and constructive manner.

In our Presidency, as a member of the Council, and nationally I intend to play a fully engaged and constructive part during the deliberations on each of the agenda points at this week's summit meeting. As I said at the beginning of this short contribution, a push on implementation will be an important outcome of this week's meeting. To date Ireland, and the officials working for Ireland, have achieved quite a deal. We would like to think that by the end of our Presidency in June we will have again delivered, as have all other governments who have held the Presidency, a really effective Presidency in the interests of this country and of the Union as a whole. I will, of course, report back to the House, when appropriate, after this meeting of the European Council.

Deputy Micheál Martin

The agenda for this week's summit yet again lacks either the urgency or the ambition required to tackle the immense problems facing the citizens of Europe. Since the last summit growth has fallen and an even deeper recession has been confirmed. Over 26 million people are now registered as unemployed including a further rise in youth unemployment. Uncertainty has returned to the bond markets. The latest projections show that no significant recovery is on the cards across Europe. Yet the leaders of Europe are to hold a two day summit which will consider no new initiatives and will again endorse a strategy which has not worked and will not work.

The items to be discussed, and the draft conclusions, reflect a group of leaders who appear to have given up trying to find a better way forward. They seem completely unwilling to do anything other than implement fiscal controls and hope that lower trade barriers will solve everything. It is an unbalanced agenda which refuses to address the urgent need for strong countries to try to stimulate growth. It is particularly surprising that the Irish Labour Party is quietly going along with an agenda which appears fully to satisfy only the British Conservative Party. Before and after every summit the Taoiseach comes into the Dáil to talk about how giant steps are being taken to promote growth and jobs. The detail never matches the rhetoric. No action being discussed at this summit is capable of making anything but a minor and probably distant impact on the economy.

Over the past two years the Taoiseach has firmly established his reputation as the most partisan and tribal holder of his office. Every day in this House he responds to legitimate questions with snide political point scoring.

The Taoiseach

Who wrote that for Deputy Martin?

Deputy Micheál Martin

He is certainly the first Taoiseach ever to take domestic politics on the road with him when he goes on international trips. This has stopped him consistently pushing Ireland's strongest arguments for the debt relief which is so important for our future.

The Taoiseach

I attend all my meetings.

Deputy Micheál Martin

Throughout 2011 he said that Ireland's problems were entirely its own fault. He went to Berlin and the strongest argument he could muster was that it would be a win for the whole team to help Ireland. By October last year he had finally started to recognise the role of the European Central Bank and EU-imposed policies in driving Ireland out of the bond market. On Monday he sought to ratchet this up a bit more. He could not help throwing in a few partisan digs and heaping praise on his Government. He even managed to keep a straight face when attacking a bank guarantee for which he voted and which he re-enacted twice as Taoiseach. He also ignored his own repayment of unguaranteed, unsecured bonds long after the European panic had died down.

Many people were struck on Monday by the fact that the new sharper demand for relief comes from a Government which has spent most of the past month declaring that it has sorted out everything to do with bank debt. The speeches of the Taoiseach and Tánaiste about how they have closed a chapter on bank-related debt are now apparently forgotten. This ongoing inconsistency is not just confusing for the public but it gets in the way of Ireland achieving the scale of relief which the justice of its case deserves.

In the debate on the promissory note deal I laid out a series of additional reliefs which Ireland deserves on the basis of being treated equally and in light of policies agreed after 2010. In the midst of the Government's euphoria my party welcomed the deal but pointed out major, in fact possibly more significant, issues which had not yet been dealt with. There is nowhere on the record a statement from the Government setting out all of the measures from which it believes Ireland should benefit. The Government has not yet published information covering more than the next two years' impact of the promissory note deal. We know what it means for long-term re-financing but the net interest cost to the State has not been outlined and is entirely subject to ECB intervention.

There are several outstanding areas in which Ireland deserves further relief. Existing loans should be placed on the same duration and interest rates as those available to others. Last week the Government attempted to spin that it was delivering a breakthrough for Ireland. It quickly emerged that the EU is considering a deal which involves each of the bailout countries. There is no Ireland-specific initiative. The sustainability of current bailouts is crucial for market confidence for all eurozone countries. This should have been on this week's agenda. The ECB should return to Ireland all the profits it is making on the holding of Irish debt. It is making half a billion euro in profit on Irish bonds and this should be returned just as similar profits are being returned to Greece. The ECB should allow the Central Bank of Ireland to retain its new holding of Irish bonds to maturity. If these are sold as soon as possible, which is something elements of the ECB says it wants and has the power to demand, it will cost us €1 billion a year in lost interest. This would wipe out most of the benefit of the deal for our annual budget. We need to define legacy debts and the role of the European stability mechanism in returning funds to Ireland as a result of Ireland's role in supporting the euro currency when it took on board such substantial bank debt, particularly in the pillar banks. Taken together, these measures represent a large sum of money which would relieve pressures on services and struggling families.

London was probably the worst place for the Taoiseach to go to open a new line of argument on Europe because of the attitude of the Conservative government to the Union. Its agenda is a destructive one which wants to strip Europe back to being merely a free market.

It rejects the broader more progressive agenda of the Union which is vital for ordinary citizens. Britain has opted out of trying to help Europe through its crisis. A tough message in Berlin or Frankfurt would have been far more impressive.

The principal decision which will be taken at the summit is to sign off on the latest part of the European semester. This process embodies the overall economic strategy of the Union. The draft conclusions confirm the idea that European leaders continue to believe that fiscal controls are the primary means for tackling the crisis. They are holding to this line in the face of overwhelming evidence to the contrary. The only people who believe there is no need for anyone to cut their deficits are those who either ignore reality or are only interested in exploiting public suffering.

There are many countries such as Ireland where the facts of deficit and debt levels mean that bringing down the deficit is an essential part of restoring confidence. Of course, there are many ways of doing this and our Government has chosen to do so in a way which is directly undermining public support for fiscal changes. However, the majority of member states do not face similar conditions. The co-ordinated and ongoing contraction of public spending is damaging the European economy. Common discipline has been adopted for dealing with deficits but no such common discipline has been adopted for badly needed stimulus. In recent weeks, a series of studies has confirmed that the pan-European fiscal contraction is not only driving down growth but also reducing government revenues and, thus, making it harder to hit deficit targets. The policies which the summit will re-confirm this week are directly damaging Europe and driving unemployment.

The fiscal treaty contains provisions which allow budgetary adjustments over a longer period. For countries which have a sustainable debt situation, the lack of any proposed stimulus funding threatens to make the recession worse. The European Council President, Mr. Van Rompuy, has written to all EU leaders to ask that they use this summit to give an extra push to Single Market measures. He has said, as did the Taoiseach on Monday, that these proposals are core to delivering growth. Broadening and deepening the Single Market is in the best interests of Ireland because of our highly competitive sectors which will benefit. It may also help slightly increase the long-term growth trend of the Union as a whole. What it certainly is not, however, is a way of tackling the crisis at hand. There are no projections from any economic body showing these Single Market measures having a significant impact in the next few years.

In light of this, it is wrong for the Government to be acting as if this is the way for Europe to tackle the crisis. It is much worse that the Government sounds as if it is signing up to the Tory agenda of reducing Europe to a free-trade area. This is the attitude which has led to a cut in the European Union's budget at a time when it badly needs an increase. It is also the attitude that means vital social and economic policies of the Union are being cut back. One cannot claim to have an agenda for growth when the Common Agricultural Policy, CAP, and the Research Horizon 2020 budgets will be cut by over 10%.

This summit is considering no urgent measures to help Europe's struggling regions. It is recommitting the Union to a narrow agenda, based solely on fiscal controls and encouraging trade. It will ignore the need for stimulus spending by those who can afford it. It will address none of the urgently needed structural reforms to the Union. This summit will be another missed opportunity and may, unfortunately, see European leaders waiting for the next crisis before snapping out of their growing complacency.

An Ceann Comhairle

I call Deputy Adams who I understand is sharing time with Deputy Crowe.

Deputy Gerry Adams

The Taoiseach claims this summit will not be a crisis meeting but it is obvious he does not know that the European Parliament has rejected the EU budget. Perhaps he does not believe this constitutes a crisis.

The Taoiseach

That was expected.

Deputy Gerry Adams

The rejection of the multi-annual financial framework shows how distant the summit can be from the Parliament in terms of where electoral opinion stands.

The Taoiseach

The President of the European Parliament, Mr. Schulz, informed me that this was quite likely to happen. At the same time, however, the issue of own resources, flexibility and a mid-term review would leave the negotiation gates wide open. We will work on this during our Presidency.

Deputy Gerry Adams

Deputy Crowe might deal with this as he is better briefed on it than I am. As we hold the Presidency, it may give the Taoiseach an opportunity to negotiate for a better budget and one that deals with issues such as youth unemployment and other matters.

Last week's Eurogroup finance Ministers meeting considered the use of the ESM, European Stability Mechanism, to recapitalise banks. It is nine months since the Eurogroup committed to separating banking sovereign debt. The Government told us then it was a game changer and a seismic shift. It appears little progress has been made since then and a number of deadlines have passed. We were originally told that the details would be worked out by October 2012. As the Taoiseach said earlier, however:

The agreement last June to break the link between sovereign and banking debt was a watershed moment in the crisis. In December, we set ourselves ambitious timelines for achieving the various pieces of legislation necessary to underpin the commitment. We now need to keep the pressure up for delivery.

Will this issue be discussed at the upcoming summit? Has the Irish Presidency made progress on what is a critical issue for people? Every day without retrospective recapitalisation of the Irish banks is another day when the people here carry the burden of failed banking policies. It is far from clear that any move to recapitalise Irish banks retrospectively is being discussed.

On Monday in London, the Taoiseach was critical of how the policies imposed on this State by Frankfurt and Brussels compounded the mismanagement of the State under Fianna Fáil. The Taoiseach has been in office for two years and nearly €20 billion of the money given to the banks has been under his watch. How much of the €30 billion of the people's money which was given to the pillar banks by the Government and its predecessor will we get back? The Government told us that Ireland would be treated equally yet this issue seems not to be high on the Government's or EU's agenda. We always make a point of wishing the Taoiseach well before these summits. At this summit, he must insist that if the ESM is to be used to recapitalise banks, then it must apply to legacy debts.

Any deal agreed on reform of CAP farm payments scheme must be equitable and fair. As negotiations on the reform of the single farm payment enter a crucial phase, there is an intense and widespread debate in the farming community. Despite some of the perceptions being created, there are substantial numbers of farmers who wish to see a move away from the current scheme to one which will ensure a fairer and more sustainable system for small to medium-sized producers. The perception among the many small to medium-sized producers is that the debate has been skewed in favour of larger producers who are in receipt of large payments.

Over 80% of farmers receive an average payment of just over €5,000. Just 1.62% receive more than €50,000 but that accounts for over 10% of the total payments. There is, understandably, resentment regarding the perception that farmers on lower incomes and payments are in some way unproductive. However, as we all know and as applies to other aspects of the economy, the largest employers and providers on this island and in this State are the small and medium-sized enterprises. What are needed are fair and equitable proposals for the future of CAP. It is also vital that a viable scheme is introduced to encourage the transfer of land to younger farmers to aid future development of the sector.

The recent horsemeat controversy is ongoing. Last night, another product had to be taken from a supermarket's shelves when it was found to contain traces of horsemeat. Thousands of processing jobs and farm livelihoods are dependent on the beef and food sector across this island and the EU.

There is a need for proper traceability and labelling to prevent manufacturers cutting corners by importing inferior or totally different product than advertised. Falsely labelling a product as 100% Irish when it is not undermines the reputation of Irish food produce internationally. Another important point, which has not been ventilated well enough, is that this behaviour totally undermines the rights of consumers. This is a blatantly criminal effort to defraud consumers. Although the EU claims to have one of the most developed traceability systems in the world it is clear that this is a Europe-wide criminal scam and the systems in the processing sector are not 100% fit for purpose. Will this issue be dealt with at the Council meeting? Will the Taoiseach provide an update on what steps have been taken at a European level to deal with it?

The EU heads of mission Jerusalem report was handed to EU Governments in January. I welcome the commitment given by the Taoiseach earlier this week to have the report dealt with under Ireland's EU Council Presidency. Will the Taoiseach confirm that the report will be raised at the forthcoming EU summit? The report suggests that Israel and Israeli settlements in east Jerusalem and the West Bank represent the greatest single threat to the two-state settlement. It finds Israeli policy to be systematic, deliberate and provocative and aimed at making it impossible for Jerusalem to become the capital of two states. Given our history of peace making and conflict resolution on this island there is a particular responsibility on the Government to raise these issues.

If God spares us it will be June before we know it. We are half way through March and that leaves only April and May and then the Irish Presidency will end. It would be a total disaster if we did not use the Presidency to promote peace in the Middle East and to stand up for the rights of citizens there.

It is hard to hear what I am saying when the Minister for Finance is talking.

Acting Chairman (Deputy Bernard J. Durkan)

We can hear you loud and clear, Deputy.

Deputy Gerry Adams

No. It is hard for me to hear.

Acting Chairman (Deputy Bernard J. Durkan)

We can hear you. You are being heard loud and clear.

Deputy Michael Noonan

I am sorry, Deputy.

Deputy Gerry Adams

Will the Taoiseach call on other European leaders to act on the report's recommendations?

Will the Taoiseach indicate whether the issue of the future composition of the European Parliament will be on the agenda? When does the Taoiseach foresee this issue being dealt with by the European Council? Under the proposals this State is set to lose one of its seats in the European Parliament. Has the Government taken action to protect this Irish seat or does it intend to do so? The French Government used its veto on the issue of a seat at the European Parliament. If the French are prepared to act in their national interest at the Council then why can the Taoiseach not take the modest step of vetoing the loss of an Irish seat at the European Parliament?

Deputy Seán Crowe

The Taoiseach is probably aware that the EU multi-annual financial framework has been overwhelmingly rejected by the European Parliament. The resolution rejected the Council's proposals on the MFF and it was carried by 506 votes in favour and 161 against. That represents a hefty majority against the Council's proposals. The unhappiness of most of the MEPs who have commented on the MFF has been common knowledge. Five of the six major political blocs in the European Parliament urged their members to vote against the passing of this regressive budget. Despite the fact that there was a good deal of pressure from many Governments on MEPs they came into the European Parliament today and rejected the proposal. The Council proposal would have meant that for the first time in 56 years the EU budget would have been cut. That would have made no sense. The main argument was that while the EU has continued to face into this crisis with its huge socioeconomic problems it is continuing to expand and it would make no sense to try to cut the budget for this period.

The issue with the EU budget is not only the size of the expenditure but also what the money is used for. The proposal by the European Council did not change the overall structure of the budget. The Council missed a real opportunity to refocus the budget strategically to promote growth and jobs. The EU Parliament's rejection of the budget has presented the Taoiseach with a lifeline and an opportunity to renegotiate a better deal. It gives all leaders throughout Europe a fresh opportunity to consider this area. Rather than seeing it as a setback - many will maintain it is just that - I see it as an opportunity to reconsider the budget area and how we spend our money.

Savings in administration would have been made under the proposed budget and I broadly welcome those, but one issue the budget did not touch was the waste involved in having two seats for the European Parliament, one each in Brussels and Strasbourg. Ending the monthly charade of decamping thousands of MEPs, officials, documents and so on from Brussels to Strasbourg in favour of a European Parliament with only one seat has the potential to save an estimated €200 million per year or €1.4 billion over the seven year period of the current budget. I cannot understand it. Will the Taoiseach indicate whether member states will include this change in any new budget arrangements?

The reality is that the Council's budget was an austerity budget and would have locked the EU in austerity for the next seven years. It did not contain sufficient spending to boost investment in jobs and growth and it would have left member states starved of strategic investment in key areas. The Government has told us repeatedly that the No. 1 priority for EU leaders is jobs and growth. Does the Taoiseach not accept that the Council's proposed budget only set aside a limited budget investment for jobs and growth? The EU Parliament's rejection allows the Taoiseach to argue for greater investment in jobs and growth, something the EU desperately needs. I hope the Taoiseach takes the opportunity given to him by the EU Parliament and that he uses Ireland's EU Council Presidency to negotiate a pro-growth, pro-jobs progressive budget.

The Taoiseach referred to the €6 billion EU youth guarantee agreed as part of the EU budget negotiations at the last Council meeting. While I welcome any attempt to tackle youth unemployment in the EU much remains unclear about the nature and enforceability of the guarantee. Throughout the EU 22% of people between the ages of 15 and 24 years are unemployed and more than 30% of these have been unemployed for more than 12 consecutive months. Youth unemployment is one of the greatest socioeconomic problems the EU is facing and it must implement programmes to solve it. One of the greatest problems we are facing is the lack of hope throughout Europe and addressing this problem must be part of any package. The EU youth guarantee must be funded rather than simply a call on member states to make better use of the European Social Fund. Often, many young workers can only access precarious, temporary jobs or traineeships which offer little prospect of career progression. Youth policy needs to be more than recognised and visible; it must be robust and measurable. Action on this issue must address inequality in society and existing structural and systemic failures. Will the Taoiseach confirm that the guarantee will ensure that every person under 25 years of age in the EU will have access to and the right to qualified, adequately-paid stable employment and some sort of job security? Will they have a training or educational placement that will genuinely improve their chances and career prospects? Will there be operational programmes for young apprentices to enable them to finish training and begin fully-qualified work in their trades?

We are seeking practical measures. I genuinely hope the youth guarantee effectively tackles the youth unemployment problem in Ireland and the EU. Does the Government have any plans to tackle youth unemployment crisis here before the youth guarantee becomes operational? That is the big question to which people at home seek an answer. What exactly will be introduced to break the cycle of youth unemployment?

Acting Chairman (Deputy Bernard J. Durkan)

I call Deputy Shane Ross who, I understand, is sharing time with Deputies Richard Boyd Barrett and Seamus Healy, with five minutes each by agreement.

Deputy Shane Ross

I was in the City of London on Monday, where I met a number of prominent city people who asked me if I had come over with the Taoiseach who was in the Mansion House. They were not aware of the niceties of Irish politics. I told them I had not been invited to accompany the Taoiseach because I was not part of that cabal - I did not use that word. The Taoiseach will be interested to hear that they gave a eulogy about how well he was doing with the economy. Their analysis of what was happening here was very favourable. Although it was somewhat superficial, I let it go because I think it improper to express my own political opinions outside the country.

Ireland is in a difficult position in Europe because of the extraordinary approval given to the Taoiseach and Government policy outside the country. I suspect this approval is swallowed a little too eagerly by the Government, but it is not the approval those at home necessarily consider to be worthwhile. There is a disconnect between Christine Lagarde, Angela Merkel and others who heap praise on the Government and the people who are suffering from its policies. The Taoiseach should use the opportunity provided by the summit in Brussels to tell them all is not rosy in the garden and that they have a misconceived and rather flattering picture of what is happening in Ireland. It is time they woke up to the fact that issues are emerging in this county which threaten to undo much of what the Taoiseach, the Tánaiste and the Minister for Finance would describe as their good work and progress. It is an analysis with which I would not necessarily agree, but they should use it to their advantage nonetheless.

The Taoiseach should remind the European Union that it has a responsibility to come to the rescue of Irish banks which are still in deep trouble. The claim that somehow the banks are on the trail to recovery is not accurate. Later today the Taoiseach will launch a programme on mortgage arrears. This train is coming down the tracks and an accident waiting to happen, as the extent of the problem has not been acknowledged. He rightly blames the Opposition for its disastrous economic legacy, but his Government has sat on the mortgage arrears problem ever since it took power. In 2009 approximately 17,500 mortgages were in arrears. That figure now stands at 180,000. What the Taoiseach and Ministers describe as their restructuring efforts have failed abysmally. Half of the mortgages that have been restructured are already in arrears. He needs to tell the European Union that we are in deep trouble with these arrears, instead of saying we are going to solve the problem by ourselves.

The European Union has a responsibility because its banks lent the money that was lent on for these mortgages. He must get the Union to recognise this problem. The ESM must be used to recapitalise the banks because it is certain they will be looking for recapitalisation sooner or later in the light of the failure of the Government and the banks - they are in it together - to recognise the existence of mortgage arrears which will never be paid and cannot be paid. Pretending that the problem will be solved by more of the same failed policies will not work. If the Taoiseach can get the Union to recognise the need to write down and write off debts and for the banks to make proper provision for the bad debts that result from these mortgage arrears, he will have done a great service. The banks will need recapitalisation at some point, but that is the taboo we are refusing to tackle. If the Taoiseach tells our European colleagues that we are in trouble and will need recapitalisation because the banks' books do not recognise the debts, he will do us a favour. He should say to the European Union that all is not rosy here. We need its help and ESM money because there will be recapitalisation down the road.

Deputy Richard Boyd Barrett

Does the Taoiseach realise how frustrated people have become from watching the endless merry-go-round of EU summits? They are littered with fine phrases about jobs, economic growth and returning to normal lending, but the reality experienced by people is one of deepening stagnation in the European and Irish economies and the persistence of the scourge of mass unemployment. The fact that 26 million people are unemployed across Europe, of whom 7 million are young people, is a stinging indictment of the failure of EU governments. It is a tragic waste of human resources and potential. The European Union has failed to make even the slightest dent on this most important of issues.

The policy of debt and deficit reduction through slashing incomes and public expenditure has failed. The policy of bailing out private banks at all costs has not led to renewed or normalised lending to SMEs or the economy in general. In Ireland the policy of putting €64 billion of our money into the banks has not led to any meaningful action on the crisis in mortgage arrears which is causing suffering and anxiety in 180,000 households and placing a suffocating dead weight on the economy. Unless we deal with this problem, there will be no chance of meaningful economic recovery. The Government and Europe's leaders are hopelessly addicted to failed policies and the neoliberal dogma that by cutting public spending and incomes, the markets will eventually come charging over the hill to rescue us. They are hostages to Europe's banks and multinationals. Either they do not realise this or they will not admit it.

We will not achieve growth or employment, unless we have investment. Since the height of the boom, investment in the State has dropped by 70% and it is not recovering, despite the Government's episodic announcements about this or that project. The overall level of investment has collapsed and unless we reverse that collapse, there will not be meaningful economic recovery. This pattern is becoming evident across Europe and spreading to its heart.

As parties in government who have long been committed to the European project, Fine Gael and the Labour Party should consider that their beloved Union is now threatened with break-up because of its failure to deal with these issues. It should be a major cause for concern to those committed to the European project that one country is considering pulling out. God knows, if there was a referendum in Britain, it is very likely the British people would pull out, particularly given the malaise that now exists in Europe.

Deputy Eamon Gilmore

Which side would the Deputy take on that question?

Deputy Richard Boyd Barrett

I am for a social Europe. It would depend on whether it was a social Europe or a corporate Europe.

Acting Chairman (Deputy Bernard J. Durkan)

Socially and economically, the Deputy has eroded his time. His time is up.

Deputy Richard Boyd Barrett

I have four minutes and 53 seconds, so why did the Chair cut across me before I had finished?

Acting Chairman (Deputy Bernard J. Durkan)

The Deputy must bring his remarks to a conclusion.

Deputy Richard Boyd Barrett

I have a practical and simple proposal for the Government to increase investment in this country. It should ask the European authorities-----

Acting Chairman (Deputy Bernard J. Durkan)

I am sorry, but the Deputy's time has concluded. I ask him to resume his seat.

Deputy Richard Boyd Barrett

If the Chair had not cut across me 15 seconds before I had finished, I would have concluded by now.

Acting Chairman (Deputy Bernard J. Durkan)

The Deputy should give way to his colleague. His timekeeping is noted. I call Deputy Healy.

Deputy Richard Boyd Barrett

Those in the Chair have a habit of doing that.

Acting Chairman (Deputy Bernard J. Durkan)

The Deputy should not make that kind of remark.

Deputy Richard Boyd Barrett

Why should I not make it?

Acting Chairman (Deputy Bernard J. Durkan)

The Deputy should have some respect for the House, even if he has no respect for himself.

Deputy Richard Boyd Barrett

I have plenty of respect for myself. The Chair should show some respect for the House as well.

Acting Chairman (Deputy Bernard J. Durkan)

The Deputy is out of order and he knows it.

Deputy Seamus Healy

Debt is a huge millstone around the necks of the Irish people and taxpayers. The payment of billions of euro in debt every year by taxpayers is crucifying families in this country, particularly low- and middle-income families. This debt is not the debt of the people. We are not and were not responsible for it and we should not be asked to pay it. It is the responsibility of the banks, bankers and bondholders. At the forthcoming Council meeting, the Taoiseach must demand a write-down or mutualisation of that debt, because while that debt hangs over us the economy will continue to struggle and recession will deepen. One of the headings for the Council meeting is the implementation of strategies already agreed. These are strategies of austerity and cuts, but that policy has failed and is deepening and prolonging the recession.

This morning, I got a letter from the Mandate union which describes the situation in just a few sentences. The letter states that the recent job loss announcements and closures of B&Q, HMV, La Senza, Monsoon and Superquinn, to name but a few, are just the tip of the iceberg, that the reality in retail is that the whole sector is in crisis, with many companies, large and small, teetering on the edge of survival, and that the sector is suffering from a severe lack of purchasing power among consumers. This is the result of the policy of extracting billions of euro from the economy, which has put our domestic economy in huge difficulty. It has created a situation in which we have 430,000 people unemployed - over 14% of the workforce - of whom 60% are long-term unemployed. We have 27% youth unemployment and huge levels of emigration. The policy of cutbacks, austerity and the extraction of billions from the economy must stop. We must turn to a policy of stimulus and growth under which jobs can be created.

Another matter the Taoiseach should address at the Council meeting is the issue of reduced support payments for redundant workers. This is relevant in the context of the multi-annual financial framework or budget, which the European Parliament has refused to pass. That budget proposed a reduction from €3.57 billion to €1.05 billion, a reduction of €2.5 billion or two-thirds, in support payments for workers who have become redundant, workers such as those from Dell, SR Technics, Waterford Crystal and Abbott Ireland, which suffered 400 job losses in the recent past. This fund has been hugely reduced. The Taoiseach must ensure that cut is reversed and that the fund is topped up to ensure there are reasonable and sufficient supports for redundant workers.

Minister for Foreign Affairs and Trade (Deputy Eamon Gilmore)

I thank the Deputies who have contributed to this debate. As the Taoiseach said at the outset, the European Council will have an important focus on implementation. Shining a light on the ongoing need for implementation of the many measures which have already been agreed at EU level will represent an important outcome for Ireland and for the Union as a whole.

In preparation for this week's meeting, I chaired a meeting of the General Affairs Council in Brussels on Monday. I assure the House that there is a shared commitment around the table to finding the right way forward and maintaining our commitment to getting public finances back onto a sustainable path while also providing space for the generation of growth and creation of jobs. This question is as vital for the Union and for the euro area as it is here at home. Getting the balance right will be at the heart of discussions at the European Council. In my discussions ahead of the meeting, including with President Van Rompuy, I have stressed that during our Presidency we are absolutely committed to this task. We are making good headway, for example, on the youth guarantee, on the banking union package, which is vital for stability, and on Single Market files, which have a real contribution to make, and we will keep the pressure up throughout our term. No lengthy debates about process and targets can substitute for concrete steps taken in the interests of our citizens, who need to be reassured that the compact for jobs and growth we agreed last June will make a difference. That is why the Irish Presidency is so dedicated to the agenda of stability, jobs and growth. In each discussion this week in Brussels, that objective will be at the heart of the Irish contribution.

This meeting of the European Council will see a conclusion to the first phase of this year's European semester. During our Presidency, Ireland has been strongly committed to ensuring its effective implementation. The semester is about steadying the economies of the EU member states, identifying where challenges are emerging and, most important of all, strengthening our response to challenges, including through structural reforms and increases in competitiveness, both of which will generate growth and jobs. To this end, we prepared a comprehensive Presidency synthesis report of discussions on the annual growth survey across a range of Council formations. I presented this report to Ministers at the General Affairs Council in Brussels on Monday of this week and I am happy to say it was very well received. It is a good piece of work and points the way forward.

The synthesis report clearly reinforces the priorities previously identified by the Commission, namely, fiscal consolidation, restoration of lending, promotion of growth, dealing with unemployment and modernisation of public administration. The outcome from this week's meeting should provide member states with useful guidance as they prepare stability programme updates under the Stability and Growth Pact and national reform programmes under the Europe 2020 strategy. It was clear from last year's lessons-learned exercise that the European semester should be an open and inclusive process, supporting meaningful engagement with parliaments and all relevant stakeholders at European and national levels. It is therefore appropriate that I acknowledge the work of our Oireachtas committees on finance and European Union affairs on the issue of enhanced parliamentary involvement in the European semester processes. I refer in particular to the COSAC meetings of parliamentarians from across Europe. This is further to the Ceann Comhairle's contribution to the European Parliament's Parliamentary Week of the European Semester at the end of January. These are important contributions to a key debate. Stronger economic governance arrangements need to be supported by stronger democratic legitimacy and accountability.

This is an essential requirement, rather than an optional extra. I expect that leaders will reflect this point in their conclusions this week.

I welcome the fact that the spring European Council will give specific emphasis to addressing unemployment, especially youth unemployment, which is undoubtedly the most pressing and urgent social challenge facing the EU today. This is a battle we have to win. The focus that will be given by leaders at this week's meeting is a close reflection of the priority the Government assigns to confronting the issue in Ireland. The breakthrough at the end of last month, when agreement on the youth guarantee was brokered at Council level by the Minister for Social Protection, Deputy Burton, as she chaired the Employment, Social Policy, Health and Consumer Affairs Council, sent a positive and most welcome signal that the Union is committed to realising the commitments previously made to address this issue. In conjunction with the youth employment initiative and the additional funds secured during the negotiations on the multi-annual financial framework, I am confident that the youth guarantee will make a real difference to the job prospects and lives of many younger people. They deserve nothing less.

It is important that this week's meeting will focus on making a reality of the unrealised full potential of the Single Market through the timely implementation of the Single Market Act I measures and the Single Market Act II proposals, when they have all been made available by the Commission. Similarly, I look forward to leaders highlighting the considerable potential that lies in smart regulation. Reducing the regulatory burden, especially on our small and medium-sized enterprises, should provide a competitiveness boost and enhance the potential for job-rich growth. The European Council will return in June to consider in detail President Van Rompuy's roadmap on four potential elements aimed at strengthening Economic and Monetary Union. I expect that leaders will highlight the need for steps towards deepening integration to be measured so they can actually add value and be accompanied by an equal commitment to strengthening democratic accountability and legitimacy. Ireland, as the holder of the EU Presidency, is working closely with President Van Rompuy to facilitate discussions among Ministers across a range of Council formations. I warmly welcome the continued focus by the European Council on the delivery and implementation of the various measures which constitute banking union, including the single supervisory mechanism.

The discussion that leaders will have at the European Council on the Union's strategic partnership with Russia is welcome and timely. The critical importance of the EU's relationship with Russia is borne out by the simple fact that the EU is Russia's largest trading partner and Russia is the EU's largest energy supplier. Beyond our mutual trade and investment, which are critically important for our economies and our citizens' welfare, the EU and Russia co-operate effectively in many international foreign policy areas in the pursuit of peace and security. I know from my work last year as OSCE Chairperson-in-Office and from my meetings with the Russian foreign Minister, Mr. Lavrov, that Russia plays a vital role on many issues by using its status as a permanent member of the Security Council and drawing on its extensive diplomatic experience and outreach. These issues include the protracted and delicate mediation with Iran to persuade it to abandon its nuclear ambitions, and the fight against terrorism. At the same time, there are some divergences in values. The EU needs to use the platform of its relationship with Russia to communicate its concerns about a number of recent developments, including those which relate to human rights. This week's discussion at the European Council will be an important one in that context. There will not be written conclusions on this issue. This should encourage the free-flowing and frank exchange that these issues merit.