I call the Taoiseach to make a statement on the European Council pursuant to Standing Order 102(a), under Standing Order 43.
European Council: Statements
I advise Deputy Troy that, along with the Minister for Children and Youth Affairs, this morning I launched a pilot project from McAfee, an Internet company based in Cork, that deals with cyber-security and the education of children. It would be worth the Deputy's while to look at the pilot project, which involved 3,000 children, volunteers and mentors. It was very helpful given the nature of what is going on out there.
I heard it on "Morning Ireland".
I am pleased to brief the House on the outcome of last month's meeting of the European Council, which took place in Brussels on Thursday and Friday, 24 and 25 October. As I told Deputies in my statement in advance of the Council, I had three clear priorities for this meeting - namely, to contribute to a productive discussion on the digital economy, innovation and services as vital sources of future growth for Ireland and Europe; to push for action on developing digital skills to combat youth unemployment; and to urge partners to reach agreement on the final elements of banking union. As I told the House on 23 October, I wrote to the President of the European Council, Mr. Van Rompuy and my fellow leaders in advance of this meeting and advised them that Ireland is now preparing to exit our EU-IMF programme and that a successful and sustainable exit will be a very significant and positive step both nationally and at EU level. The stability of the eurozone and the wider Union is critical to help maintain and anchor our recovery. I emphasised the importance of delivering on our commitments and of maintaining and building on the achievements for which we have together worked so hard. In particular, I emphasised the need to ensure that the banking union is completed on time and the need to hold firm to our deadlines for agreeing the remaining legislation on deposit guarantees and on a single resolution mechanism. I stressed the necessity, as agreed in June 2012, of breaking the vicious circle between bank and sovereign debts that forced Ireland into a programme in 2010, at a time when there was a different consensus in Europe on the merits of bailing in creditors of failed banks. Breaking this link is important not just in ensuring that our impending return to full market financing can be a durable success story for the entire eurozone, but also for the longer term credibility and stability of the eurozone and of the Union.
I highlighted the need to maintain our focus on growth and jobs as the key goals to which all our policies and programmes must contribute. Nothing should deflect us from our focus on getting our young people into the workforce and creating productive and healthy lives for themselves. I believe our young people could be the main beneficiaries of the high-potential digital sector. We need to maximise this potential. As I said to the House prior to the meeting of the European Council, the reality is that most new jobs are created by fast-growing young firms in sectors such as cloud computing. With over a quarter of digital sector employers across Europe finding it difficult to fill vacancies, there is clearly more we can and need to do in aligning our education and training systems with the needs of 21st century employers.
There are now early signs of recovery in Europe's economic performance. The numbers for the second quarter of this year show GDP up slightly in both the EU and the euro area for the first time since the end of 2011. Net job creation has resumed in most member states, including, of course, in Ireland. However it is clear that unemployment remains unacceptably high on foot of a period of deep and protracted recession. It is also clear that there is more we can and must do to support a stronger EU-wide recovery so that unemployment falls faster. This means, above all, unlocking new investments in the real economy so that successful firms expand their activities at home and abroad, including new firms and new growth areas. From Ireland's point of view - I stressed this to the meeting - this is about growth in the digital sector, supporting real jobs, and ensuring our people, including our young people, have the digital skills to access the employment opportunities that exist and will grow. I also emphasised the opportunity represented by the many unfilled ICT jobs at a time of mass youth unemployment in so many member states. A presentation given by the Commission indicated that 1 million job vacancies will exist in this area by the end of 2015. This is our clear domestic emphasis. It is being implemented through the interlocked Action Plan for Jobs and Pathways to Work strategies. It is the emphasis that we must continue to strengthen at European level, building on the successful Irish Presidency programme. That is why I attach particular importance to our October discussion on the digital economy and innovation. With so many new jobs created by fast-growing young firms, it is appropriate that we seek to create the right conditions to support new growth areas. This includes early and tangible progress on SME access to finance.
Our discussions were informed by a very valuable presentation from President Barroso, which highlighted three key messages. First, innovation in both the private and public sectors is key to raising our productivity levels and is driven by ICT investment. However, Europe is clearly lagging here. EU investment in ICT as a share of overall investment is currently running at less than half the equivalent US rate. Second, this means Europe is not making the most of digital economy opportunities. A striking example is that the US, Korea and Japan between them account for almost 90% of the world's 4G mobile subscriptions, compared to just 6% in Europe. This is in stark contrast with Europe's leading position in the 1990s in setting global standards. Third, fragmented market rules are a key bottleneck that must be addressed. Our Single Market must become a digital single market, with clear dividends for both consumers and job-creating SMEs. We should not have any digital barriers. If we have removed physical barriers between countries, we should not have digital barriers. This last point in particular picks up one of the central themes of our Presidency - namely, that the next phase of Europe's recovery must involve a Single Market of the future, notably a digital single market, and the need to ensure that the legislation supporting the Single Market keeps up with new market trends and the way our citizens now live their lives.
The European Council agreed three political responses. The first of these is pressing ahead with work on a truly connected continent. We have already set a clear goal under the Compact for Growth and Jobs of having a well-functioning digital single market by 2015. We must now deliver that goal. In practical terms, this means breaking down digital barriers in areas such as online shopping and cross-border roaming charges. It also means having the right market rules for unlocking a new wave of investments in next-generation broadband and 4G mobile services. These investments can underpin productivity growth and provide a direct boost to the real economy. The second key area is making it as easy as possible for consumers and businesses to do their business digitally. Governments and public administrations will have a crucial role to play here, and must work harder to keep up with the rapid pace of market developments. This should be a win-win proposition, with some estimates suggesting potential efficiency gains of up to 20%. Building trust and confidence must of course be at the heart of our efforts. I attached particular importance here to the modernisation of our data protection frameworks, including careful attention to the role of streamlined market rules in supporting new growth areas. There was clear acknowledgement in this context of the enormous potential offered by developments in areas such as big data and cloud computing.
The European Commission will also complete its review of the EU copyright framework next spring.
I expect this will identify clearly the next steps needed here which will fall to the incoming Commission to take forward in the second half of the year.
Leaders also discussed taxation of the digital economy. There is widespread consensus that the changes that have occurred require a response but that it must be a global response; therefore, this is best handled in the OECD's base erosion and profit shifting framework. We agreed that, where appropriate, member states should co-ordinate their positions to achieve the best possible outcome in the context of that framework and that we would return to it in December.
The third area of agreement is a strong push on digital skills, including stronger linkages with ongoing work on youth employment. With estimates that one quarter of European employers are finding it difficult to fill vacancies, there is more we need to do to align the education and training systems with the 21st century reality. In that vein, I took the opportunity to inform my colleagues of the Dublin web summit which took place last week and which was such an outstanding success.
The October meeting also took stock of progress on other key initiatives being advanced within the framework of the Compact for Growth and Jobs. We agreed that work must continue to ensure the youth employment Initiative would be fully operational from the beginning of 2014. I highlighted our work towards implementing the youth guarantee in Ireland. I will participate next week in an important conference being organised by President Hollande in Paris which is intended to ensure continued political momentum.
The October European Council also highlighted the importance of finalising work on the new joint risk-sharing instruments between the Commission and the ECB to address the credit constraints still facing the job creating sectors. These should expand the volume of SME loans across the European Union from the beginning of next year and increase the alignment with the new multi-annual financial framework. The problems of financing SMEs will continue to be an important area for Ireland and the Union as a whole and I have no doubt that we will be returning to that issue again.
The Council welcomed, too, the important proposals made by the Commission in the area of regulatory fitness, REFIT. We need to see our digital and smart regulation agendas as complementary. This is about eliminating unnecessary red tape and reducing transaction costs for the businesses than can and will create new jobs. I fully support this. It was also an important endorsement of the work being taken forward by the Commission to ensure full implementation of the services directive, including on remaining barriers in the area of regulated professions. We agreed to annual reporting on the necessary national level reforms and that the Commission would make further proposals in the first quarter of next year.
One of the most immediate priorities, as emphasised by the Heads of State and Government at the June European Council, is to progress the banking union, as this is key to restoring financial stability to the euro area. We must follow through on the 29 June 2012 statement by the Heads of State and Government and break the link between the banks and the sovereign. I welcome the call by the European Council for the Eurogroup to finalise guidelines for European Stability Mechanism, ESM, direct recapitalisation in order that the ESM can have the possibility to recapitalise banks directly, following the establishment of the single supervisory mechanism. Parallel to this, the work on all other building blocks of a reinforced EMU must continue.
President Draghi updated the European Council on the steps being taken by the European Central Bank to support banking union. It remains my view which I reiterated to partners that not only must we implement what we have committed to, we must also strive do so within the deadlines we have agreed. In that regard, the European Council's reiteration of the urgency and importance of completing the banking union is welcome. I welcome the regulations for the single supervisory mechanism, SSM, recently adopted. This is an important step towards banking union.
With regard to the preparations for the ECB's asset quality review which is to be followed by stress tests, the European Council agreed that member states would make all appropriate arrangements, that European instruments would be available and that the ESM would have the possibility to recapitalise banks directly. As decided in June, the European Council will return to all of these elements in December with a view to taking final decisions. The ECB's comprehensive assessment of the banks of the member states participating in the single supervisory mechanism is key to restoring confidence in the European Union's banking sector and in helping to restore normal lending conditions to firms and households. Ireland will, of course, fully co-operate with this comprehensive assessment of its banks in advance of the ECB taking over direct supervisory responsibility. We fully support the creation of the single resolution mechanism, SRM, supported by the single resolution fund as the natural complement to the SSM. With the SSM coming into full effect towards the end of 2014, it is important that the SRM follow soon after. The October European Council called for agreement on the SRM by the end of the year and this will be the subject of further discussions at our December meeting.
Strengthened economic policy co-ordination was also discussed. The Heads of State and Government acknowledged that enhanced economic policy co-ordination should be accompanied by increased national commitment and ownership and December's Council is due to return to this subject.
At the December European Council we will discuss the policy areas identified by the Commission in the 2014 annual growth survey and the macroeconomic issues highlighted by the 2014 alert mechanism report. The Commission will also provide a first overview of the implementation by member states of the country specific recommendations. Ireland, as a programme country, did not receive country specific recommendations in 2013, but we will participate fully in the 2014 semester process.
The Lithuanian Presidency also updated the European Council on the state of play of preparations for the eastern partnership summit to take place in Vilnius on 28 and 29 November. Ireland is supportive of the aims of the eastern partnership.
The European Council expressed its deep sadness at the recent deaths of hundreds of people in the Mediterranean on their way to Lampedusa. The unfortunate victims were migrants seeking to reach Europe from Africa who had lost their lives when the boats carrying them sank. To this end, a task force for the Mediterranean has been established, led by the European Commission and involving member states, relevant EU agencies and the European External Action Service, to develop a strategy to identify priority actions in the short term.
The Heads of State and Government also issued a statement in response to the further recent revelations concerning data gathering activities by US intelligence agencies which have caused considerable concern among European citizens. In the statement the leaders underlined the close relationship between Europe and the USA and the need for this valuable partnership to be based on respect and trust, including in the activities and co-operation of secret services. They stressed that intelligence gathering was a vital element in the fight against terrorism and that a lack of trust could adversely impact on the co-operation on which such intelligence gathering depended.
Although not on the agenda and not least given the interest of other leaders in the subject, I took the opportunity, both in my letter in advance of the meeting and in contacts with colleagues around the European Council, to update them on our impending exit from the EU-IMF programme. I said we would be exiting in December. The economy is growing; employment is growing; our budget is on track, and our debt will peak next year. We also have significant cash reserves and these elements, taken together, mean that Ireland is in a strong position as we exit the programme. There was strong support among colleagues for our efforts. We have access to the ESM bailout fund of €500 billion, the same as any other eurozone country.
On the crucial issue of financing of the economy and, in particular, financing for SMEs, the European Council agreed additional measures. Banking union was recognised by the European Council which reiterated the importance of making progress by the end of the year. I look forward to returning to the House before the December meeting.
The latest meeting of the European Council was largely a formal affair. The Council had many important topics on its agenda, but it reached no decisions beyond what had already been well flagged and predictable. For all of the Taoiseach’s repeated claims that job creation and growth are the absolute focus, nothing agreed at the summit will make a major contribution to dragging Europe out of the current prolonged crisis. There is no urgency or ambition, only a growing complacency. The Taoiseach has told us that he and the other members of the Council are delivering huge progress, but the evidence is very different.
In the past few days the European Central Bank has again cut growth forecasts for the euro area. Following the logic of the ECB's analysis, it is likely that it will also cut its forecast for growth in Ireland. In the middle of the Government’s escalating campaign of self-praise it refuses to acknowledge that it has missed every one of its own growth forecasts. Progress on fiscal consolidation has been the result of interest rate reductions handed to Ireland as a result of negotiations in which we did not participate and the impact of measures 70% of which Fine Gael and the Labour Party voted against. The ECB is now stating much of the eurozone risks falling back into deflation. Given that the Bundesbank has started talking about the risk of rising inflation in Germany and the possible need for interest rate rises to stop this, there is a risk that the ECB will fall back into the old default policy of setting rates which damage rather than help growth.
The reality of lower growth and threatened deflation is completely excluded from the picture painted by the Taoiseach.
Collectively, the leaders have provided no credible map forward for the European Union to become a driver of growth and fix the serious flaws in the design of the euro. One of the major reasons for this is that many leaders such as the Taoiseach appear more interested in managing the media than pushing for action which is ambitious enough to help.
The summit took place in the early phases of the Government's plans for a massive outbreak of self-praise next month. Starting at the Fine Gael conference and continuing through a mounting media campaign, the intention is to signal the end of the troika programme as a glorious achievement.
By choosing a party event to make his only significant comment about this issue-----
I am not crowing over here.
-----and by mixing it with talk about what he intends to do after the next election, the Taoiseach has confirmed the nature of the campaign.
The Deputy never heard us talk about green shoots or turning corners, as we heard previously.
The campaign is proceeding with such energy that even the most gullible would be well advised to step back and see what is actually going on.
Let no one be fooled: there is no negotiating of exit terms from the troika programme. The programme is coming to an end after three years and we would have to negotiate to avoid exiting it. It is cynical, even by the standards of the Government, to try to redefine the end of the programme as "negotiating an exit", particularly as Fine Gael and the Labour Party voted against measures which delivered 70% of the savings in order to meet the programme's targets. The issue at hand is whether Ireland will have available to it a guaranteed fund from which it can draw if market rates are too expensive. Such a back-stop would reduce the risk of holding Irish bonds and as a result, reduce the cost of borrowing for the State.
The budget announced last month involved a large amount of putting off decisions. In nearly all areas of spending no multi-annual figures were provided and the Government threw up a large cloud of smoke over what its medium-term targets were. The Minister for Finance, Deputy Michael Noonan, has commenced a round of meetings on which he provides expansive off-the-record briefings, but he has not provided a single scrap of paper stating what he hopes to achieve or the basis on which the Government will take its decisions. Reports claim that the Government's main objective is to avoid anything that looks like a programme. This morning's report that it will probably not seek a formal back-stop arrangement was presented as usual in off-the-record briefings to journalists rather than in a forum in which questions could be asked. This is, of course, being claimed as a position of strength. If that is so, why did the Government not state up-front that it did not see the need for a conditional credit line? Why did it not produce a document showing that it would be of no benefit? Why did it enter into the process of stating it was exploring options?
Both the ECB and the IMF stated publicly that this credit facility would make Ireland's medium-term funding more secure and cheaper. The Commission took a position on both sides of the fence, claiming that the facility would help but would not be essential. No doubt one of the Commission's objectives is to limit the number of calls on the inadequate bailout funds provided by member states. Given past experience, what we are seeing is yet another example of a Government driven by putting political strategy first in everything. The single most defining characteristic of the Government's approach to European affairs has been its refusal to ever state exactly what its policy is. Its primary objective in negotiations is always political – manoeuvring to hail whatever emerges as a great victory.
We are two years into a process of discussing the future structures of Economic and Monetary Union, but the Government has yet to state what it thinks is required. When negotiating the fiscal treaty, for the first time ever, the Government produced no statement of objectives and no White Paper explaining its approach. From European sources, it emerged that the only requirement of the Government was that whatever emerged should involve avoiding a referendum. There was nothing about fixing the euro or Europe developing the ability to fund real growth measures, merely a political demand which was hidden from the people. This approach has been followed in every single negotiation. The failure to produce a specific proposal before negotiations is due not to a fear of showing our hand but to the fact that this might undermine the ability to claim credit for what emerges.
We saw this with the reductions in the interest rates on Ireland's EU loans. The reductions were delivered at summits for which Ireland had not put the issue on the agenda and circulated no papers. It had been seeking reductions of only one quarter the size of what was granted to other countries and automatically extended to Ireland. Within minutes of a deal we had not sought, the Taoiseach's staff were putting out statements rewriting history and indicating that doing nothing had actually been a cunning plan.
There was the agreement to break the link between sovereign and banking debt. This also came about without a significant input from Ireland, but the Taoiseach and his Ministers were active in talking about the significant financial benefits which were about to flow to Ireland at the time. The Minister, Deputy Michael Noonan, while encouraging talk that it could be worth up to €60 billion for Ireland, stated he would not say what we were looking for in terms of bank recapitalisation because it would give away our hand and we might only receive the minimum. Over one year later we have received exactly nothing and the Minister still will not say what we are looking for. As one commentator astutely put it, look closely and what one sees is not substance but masterful misdirection. This is happening yet again at the end of the troika programme. The first phase of the campaign-----
The Deputy never mentioned the promissory note.
I did. I did so last week.
The Deputy did not.
The first phase of the campaign was to get people to believe the programme was not ending on schedule but that an exit was being negotiated. The next phase is to avoid defining specific objectives for a post-bailout back-stop and the final target is to hail whatever happens as a significant victory.
The Government has refused to level with the people on how much a back-stop might be worth to Ireland; it is refusing to give commentators and the public alike any fair basis for assessing what emerges. Until this is done, all we can be sure of is that the Government is again putting political strategy ahead of everything else.
The media-first policy of the Government was also seen in the summit's discussion of banking union. On the day the Taoiseach spoke to the Dáil, he chose to leak his letter to other leaders to journalists rather than publish it in order that we and the public could ask questions. In a session such as this that letter was not revealed. It was not circulated, which shows the primacy of the Government's focus. It is about media management heading into the meetings, etc., and the issue was not even dealt with here transparently by the Taoiseach.
At least there was a letter.
That sums it up: "At least there was a letter." Cover one's back, cover the tracks.
Not like when we came into the Department of the Taoiseach and there had been no trace left.
The Taoiseach can send a press release stating we sent a letter to all of the Heads of State and that the Government is great altogether. Then he leaks it, but he does not seem to think it is worthwhile that we discuss the letter here.
There had been no trace left beyond.
It is worse than WikiLeaks.
Why could the Taoiseach not do this?
Cleaned out; there was no record for posterity.
I asked the Taoiseach for a record of his meeting with the President of the European Council, Mr. Van Rompuy, but he would not give it to me.
The Deputy was in America when the call came in the middle of the night.
The Taoiseach opposed it. I asked him for it, but he has persistently refused to provide the documentation on another figment of his imagination.
We did not answer questions in the middle of the night.
The Taoiseach should not go on too long now-----
The Deputy did not ask questions in the middle of the night.
-----because he has been the least accountable Taoiseach to the Dáil I have ever come across in terms of what he is prepared to make available to us.
The Deputy worked for a few of them.
Every Cabinet committee the Taoiseach establishes is designed to avoid people getting their hands on information for months and years afterwards.
Not at all.
Another power grab.
What has been agreed to so far is not a banking union. The single supervisory mechanism, the single resolution mechanism and the deposit guarantee directive under discussion will not create a genuine banking union. Risk will not be shared across the eurozone and there will be no uniformity in regulation. The biggest problem with this is not that it will precipitate a new financial crisis but that it will embed a level of caution and restriction in the system. This will keep undermining vital lending. A genuine banking union would rapidly restore confidence and begin to open up lending for cash-starved businesses, particularly small and medium-sized enterprises. The communiqué calling on the Eurogroup to finalise ESM recapitalisation guidelines was no more than a way of avoiding the topic. The summit's generic call on members to strengthen the co-ordination of economic policies is meaningless. The statement that there will be a "shared analysis" of economic policies would be positive if leaders were willing to speak up for a change to the damaging policy of universal austerity. In particular, the large structural surpluses being run by some economies cannot continue to be ignored.
I welcome the fact that the Minister of State, Deputy Paschal Donohoe, last week decided to reverse Government practice and begin at least to talk about developing specific Irish policies relating to the future of Europe. Like many others I am still not sure about his linking of a Korean pop star to the issue, but his speech was a half-step forward. I hope he will build on it by producing specific proposals.
He struck the right note there.
I would also encourage him to push the Taoiseach and the Tánaiste to address beyond empty platitudes the issue of Britain’s referendum on EU membership. Ireland has a significant national interest in Britain’s future in the European Union. We must make our position plain and prepare for any eventuality.
We have made it plain.
The summit’s conclusions on the digital economy and innovation mark incremental rather than significant progress. Policies agreed some time ago are inching towards implementation. A genuine single market in digital services will be of significant benefit to Ireland. It is an area which has been prioritised by the enterprise agencies for a number of years and this activity has had a big impact. The strongest part of our economy throughout the crisis has been our export-oriented sector and businesses involved in advanced technologies have been particularly strong. This did not happen by chance; it was a result of choices made over the period of a decade and more sustained commitment to the required investment in people and infrastructure. The Taoiseach’s always-partisan approach to policy and to politics has meant that he has opened many facilities that emerged from this process while pretending they appeared from nowhere.
Recently I have met with different people from the sector, particularly from the research teams which provide the foundation upon which everything is built. They are extremely concerned about the gap between the words on supporting genuine innovation and the reality of what is happening. The recent budget includes a major cut in funding for the sector. Important researchers are leaving our system. All of the research centres being announced by Ministers continue work that is already well under way, although it is often rebranded to allow Ministers to claim to be doing something new. Worst of all, other successful research teams are being closed to fund the Government’s strategy of moving funding away from more basic research and into a narrow band of areas chosen by Ministers. At a recent event in UCD the distinguished professor of physics Brian Cox said of this approach, "It makes sense until you actually think about it."
Earlier this year Ministers announced that a new strategy for science, technology and innovation is to be prepared. Since then there has been no consultation with anyone. If the Taoiseach is sincere in his support for this sector he should insist that a proper consultation process be undertaken before any more changes are made, and this should include a genuine debate in the Oireachtas.
Most of the summit commentary was devoted to revelations about spying. I welcome the approach of European institutions on this matter and the direct approach to US authorities undertaken by the European Parliament. The comments of countries with large intelligence services of their own brings to mind Captain Renault walking into Rick’s bar in "Casablanca" and exclaiming, "I’m shocked - shocked - to find that gambling is going on in here". If our partners in the Union want to be taken seriously on this issue they should begin by being open about their activities where these impinge on the freedoms of European citizens.
There has been much talk about extending no-spying agreements between friendly nations. If this degenerates into larger countries reaching an accommodation and ignoring their moral obligations to smaller states then it would be a disgrace. Our Government should insist that these agreements be extended to smaller countries. In particular, this matter should be formally raised with the British Government. The very least we are entitled to is an assurance that our Government has not been and will not be spied on.
We are informed by commentators and by Deputy Martin that the European Council meeting was a formal affair. It was noted by some commentators that it was supposedly tamer and less robust than normal because the make-up of the German Government had not been finalised. We know that Ms Merkel will be the head of state but negotiations on the coalition government are ongoing. Germany now has the most important say in European economic matters, and due to the actions of consecutive Irish Governments it now has control and a significant say over Irish economic and budgetary matters.
The agenda of the European Council meeting was thrown into disarray because of the recent revelations of US spying on EU member states, their diplomatic offices, and even the mobile phones of their heads of state. That was the elephant in the room during that meeting. I note a statement issued by the heads of government to underline the close relationship between Europe and the USA and the need for this valuable partnership to be based on respect and trust. The Taoiseach referred in his contribution to the digital economy and the importance of building trust and confidence. However, those revelations must have caused difficulties in the room with member states who are possibly involved in spying on other states. The Tánaiste is reported to have visited the US embassy in Dublin to discuss whether this Government is being spied on or was spied on in the past. I am sure the Tánaiste will not make public the details of that meeting. However, he informs us that he has received assurances from the US Government on the matter of military war planes in Shannon, although these are suspected to be less than factual. I am unsure how forthcoming the US authorities will be with regard to this latest matter.
The spying revelations have only come to light due to the foresight - and, many say, the bravery - of Edward Snowden. It is clear that the US never intended the details of its huge spying operations, including on so-called allies, to be made public; nor did EU countries want the details to be made public because of the difficult and awkward situation in which they find themselves. This is due in the main to the negotiations over the Transatlantic Trade and Investment Partnership or TTIP, a major free trade agreement between the US and EU that would go far beyond and behind each other's borders to systematically enforce a near-single market between the two - so much so that corporations from either the EU or US could have the power to strike down domestic laws within the EU. While the EU and US are discussing co-operation on the digital industry and progress on new European data privacy laws, the scale and depth of spying by the US on the people with whom it is negotiating continues to be revealed.
Did the Taoiseach discuss this issue with his European counterparts at the Council meeting? Will he support the call for a suspension of the TTIP negotiations? To make matters even more interesting for the EU, the breaking news over the past two days is that the British embassy in Berlin had a spy nest installed on its roof to carry out covert electronic surveillance on Angela Merkel's Government. It is clear the Cold War seems to have broken out across Europe and we are only now heading into the winter. The opposition party Die Linke has stated that if the substance of the allegations proves to be true it will call for a special EU summit to discuss possible financial sanctions against the British. I ask the Taoiseach if the Government would support such a move.
Before this latest Council meeting my party colleague, Deputy Gerry Adams, raised with the Taoiseach the possibility of Ireland's leaving the bailout programme and the reality behind the spin. Will the Taoiseach accept that because of arrangements agreed by the Taoiseach, Ireland will be under German and EU surveillance for a long time, and that next year's budget, like this year's budget, will have to be signed off in Brussels, Frankfurt and Berlin?
Last week, a Sinn Féin delegation met the troika and was informed that the chances of Ireland being able retroactively to recapitalise its banks through the ESM fund are "very slim" - those were the words used. When the delegation members asked the reason, the European Commission representative told them there were political circumstances that would have to be taken into account and that the potential for this was low.
The IMF representative said it was an issue the Government should continue to pursue with officials in Europe. With whom does the Taoiseach agree in respect of these matters? While the private banking debt remains as our sovereign debt, ending the bailout programme will not change the reality of austerity for ordinary people and it increases the risks of needing another bailout. In his contribution the Taoiseach mentioned his own views on sovereign and banking debt and what he outlined to the meeting but he did not outline exactly to the House the response of other members. It would be useful in respect of post-Council meetings if we were to get a sense of whether there was consensus on the position and what the other players in the process are saying.
Before the Council meeting the Taoiseach wrote to all 27 leaders and the Council President, Mr. Van Rompuy on this issue. What were the answers to his letters? Has anything really changed? The Irish people were told in June 2012 of a game-changer. In November 2013 are we any closer and when will we see the game-changer?
I note from the recommendations of the Council meeting that the same empty rhetoric on youth employment is being used. We are told that "the fight against youth unemployment remains a key objective of the EU strategy to foster growth, competitiveness and jobs". We know to our cost that the small amount of money that is being put aside is far too small to make a significant dent in European youth unemployment. For example, the National Youth Council of Ireland has highlighted the Swedish model as the preferred option for Ireland. This would cost an estimated €6,600 per person, or approximately €400 million, which could be provided by a combination of Exchequer funding and matched funding from the EU.
We know that to their shame the Labour Party and Fine Gael MEPs recently voted against increasing EU funding for youth employment measures. I do not know the explanation for this.
The Government also announced a cut to the jobseeker's benefit for those under 25 years of age in its 2014 budget. Young people aged between 21 to 24 will lose almost 33% of their weekly payment while 25 year olds will lose 25% of their payment. It is easy to see that the Government and its MEPs can talk the talk about a youth guarantee, but when it comes to real jobs and delivering real jobs, it cannot deliver.
Sinn Féin's pre-budget 2014 measures included a proposal to ring-fence wealth tax income for jobs for young people. We believe this would provide an additional investment to get our young people into appropriate training and back into full-time work.
The Government and its MEPs need to get serious about supporting and assisting the unemployed youth of Ireland. They need to drop the rhetoric and follow through with some practical activation measures.
We were all shocked when more than 350 people died after their boat got into difficulty near the Italian island of Lampedusa, an issue mentioned by the Taoiseach in his contribution. I think we can all agree right across the House that the EU needs to do more to assist migrants who are trying to reach the European Union in increasingly dangerous ways, due to the daily poverty they struggle against. This brutal and avoidable tragedy has caught the EU's attention and it is vitally important that steps are taken to ensure nothing like this ever happens again and that the Mediterranean Sea does not become a graveyard for poor and vulnerable migrants. It is important that the push factors that are behind these migrants risking their lives, such as poverty or their being victims of human trafficking, are addressed. Were these factors discussed at the Council meeting and, if so, what is going to be done to address them? We know that human trafficking is happening on a huge scale around the world and victims are ending up in every member state. What practical steps, if any, will the EU take in this regard? This is not an issue that can be tackled by one country alone. It needs increased co-operation and support between countries to ensure that vulnerable people do not end up being economically and sexually abused by even more sophisticated criminal gangs.
Does the Taoiseach support increased co-operation between EU states and countries in neighbouring regions to tackle this growing problem? It is obvious, even to the most naive, that strict and robust measures must be put in place to track vessels carrying these migrants, which are usually dangerously overloaded, and ensure that if they encounter a difficulty in international or national waters that everything humanly possible is done to ensure their lives are saved and that they receive humanitarian care and supports.
Due to our geographic location we have not had to face this issue as much as southern European countries, but the State's treatment of asylum seekers through the direct provision system is a scandal and a disgrace. The direct provision system, which systematically institutionalises asylum seekers, has operated for the past 13 years at a huge financial and human cost. I hope the Government will use the EU focus on migration to look at the broken system and move toward ending direct provision and replacing it with a reception system that meets the needs of all refugees.
I have posed a few questions to the Taoiseach. If we are serious about addressing these and Council issues, as part of the Taoiseach's address to House when outlining the Irish position on many of the difficulties facing this country and the European Union it would be useful if he were to include some of the responses to the Irish position.
The next speakers are the Technical Group, Deputies Clare Daly, Thomas Pringle and Finian McGrath, each of whom has five minutes.
Obviously the time is limited. I wish to refer to one issue. Clearly the issue which unsurprisingly dominated the EU summit was the revelations of the wholesale spying by the United States Government on its European counterparts, including many leaders of European Union countries. Naturally, such a scenario would provoke outrage and condemnation across the board or almost across the board - in many ways the Taoiseach stood out like a sore thumb for the wrong reasons against that backdrop by displaying himself as either unwilling or unable to understand the significance of what was going on. Obviously he was joined by David Cameron who would not be in any position to give out about any other country's surveillance regimes given the conduct of the GCHQ. To me and many Irish citizens the attitude displayed by the Taoiseach is at variance with that of most people in this country. It is important to put that on the record because many people are beginning to question whether there are any limits below which he will not sink in his slavish adherence to our masters across the water, as he appears to view them. There appears to be a belief that he is the leader of the 51st state of the union rather than an independent sovereign country. He could have played a lead role in this area but instead he chose to diminish the significance of what was taking place.
On the one hand he acknowledged what had happened to Angela Merkel's telephone as an appalling situation, if it was true, [I think he said] but then he went on to downplay the significance of that by joking that nobody would listen to his own telephone and, if so, that he would not really mind about that at all. That is not good enough. It is an absolute understatement of the potential invasion of Irish privacy which is going on here and the very serious issues at stake. Rather than deal with the issue he, again today, said intelligence gathering is very important in its role against terrorism. How could bugging Angela Merkel's telephone be dealing with the war against terrorism unless, of course, it is the economic terrorism which Mrs. Merkel and her counterparts are unleashing but I do not think he would have a problem with that considering that he agrees with it? The reality is that this has been a serious attack on the rights of all European Union citizens. It is imperative that an investigation be conducted into potential spying on the Irish public. The people have a right to know that information. It is inconceivable, given the role of Ireland as a gateway for US companies into the European market, our role in facilitating tax avoidance by many US corporations, among others, and our role in handing over Shannon Airport to the American establishment against that backdrop that mass surveillance has not been under way in this country or a trawl for information.
For the Taoiseach to say there is no indication that that is the case belies the reality of the information that exists. Of course denials are made by the authorities when the information is put to them and they only really admit it when they are caught out. The Taoiseach needs to take cognisance of that because the evidence demonstrates the opposite of what he said.
I was very pleased to see Edward Snowden interviewed last week around the time of the European gathering. He acknowledged that he felt the sacrifices he had made in his young life were vindicated by the discussions and the attention being put on mass surveillance as a result of the revelations he put in the public domain at enormous personal cost. He put on the record that massive oversight of Government intelligence agencies must be stepped up. We have a role to play in that regard. He made the point that citizens have to fight against the suppression of information about affairs of essential importance to the public. He said that those who speak the truth are not committing a crime. He went on to talk about how spy technology and surveillance is now clearly a global problem. As citizens who believe in openness and transparency, we have a moral duty to ensure that our laws and values limit surveillance programmes and protect human rights. The Taoiseach is the leader of an independent, neutral country in Europe. Many of the European authorities who were kicking and screaming about the United States engage in inappropriate surveillance themselves, although probably not to the same extent. We are in a unique position in that we could lead the way and have an open and informed debate to deal with this global problem.
One of the main issues coming down the line is banking union, which has been mentioned in passing in the House on a few occasions. It is interesting to note that in his communiqué to the Council, the President of the European Council, Herman Van Rompuy, devoted two sentences to banking union. Banking union will be vitally important for this country in the future given the stress tests and asset quality reviews currently being undertaken by the European Central Bank. I take it that the banks in this country that are part of the review will also be covered by the single resolution mechanism, SRM, and the banking union when it comes into play next year. It is not clear what the role will be for national governments in terms of banking union in the event of capitalisation being required. The ECB has stated that member states should make all appropriate arrangements, including national backstops. Where will the national backstop be in the priority that will be applied under the banking union in terms of where the recapitalisation will come from?
I note that the Taoiseach said in his contribution that the European Council agreed that member states would make all appropriate arrangements. Who decides what are appropriate arrangements, and will depositors be brought in for recapitalisation? Is it an appropriate arrangement that the taxpayer will have to become involved in recapitalisation before the ECB steps in? These are key questions on which decisions must be made and on which we must be clear in this country before we finalise the introduction of the banking union. It goes to the heart of what the Government has said with regard to the famous statement of June last year in which we got a mention in the communiqué about the legacy recapitalisation we did in order to save the euro and whether that will be fulfilled. Personally, I do not believe it will be. The Government is dragging out the issue over the next year and eventually we will see that it will not happen. The so-called national backstops will probably come into play before we get any sign that the ESM might be used. The issue is vitally important and must be clarified in the national interest. It must be clarified in the House and we must have a full debate on the matter to ensure that we and the Irish people know exactly what is involved and what is being entered into.
I accept that the decision has been put back to December, but there was some discussion on the strengthening of economic policy co-ordination and reform contracts or competitive packs, as they were called during the election campaign in Germany. The Commission will provide a first overview of the implementation of country-specific recommendations and this will be the basis for further monitoring and implementation. Work will be carried forward to strengthen economic policy co-ordination with the objective of taking decisions in December. It appears that we will have to enter into binding contracts that have been dictated by the Commission and the ECB on our economic policy. When will we regain economic sovereignty if we exit the bailout on 15 December, if we are being forced to enter into so-called binding contracts?
Reference has been made to a solidarity mechanism. How will we contribute to it? What will it be and how will it be funded? Will it be available to us? I seek clarification on those issues. In terms of the reform contracts, competitive packs or whatever they will be called in the future, the Commission stated that it is fair to assume that the kind of beefed-up supervision and enforcement envisaged would most likely require EU treaty change. Will the Government enter into such an arrangement for a change to EU treaties without reference to the Irish people? It is interesting to note that it has been reported that the Constitutional Affairs Committee of the European Parliament sent a confidential document to get legal advice on how the European Union could participate in national referendums. If we have a referendum on the issue in the future, will we see the European Union campaigning in this country? Under the Constitution, such decisions are supposed to be for the sovereign people to make.
I thank the Acting Chairman for the opportunity to speak on this very important debate on the European Council. Before I go into the detail of my points in the debate, first, I formally wish the Minister of State, Deputy Paschal Donohoe, all the best in the future in his new role as Minister. I did not have an opportunity to congratulate him and to say well done and good luck in the future.
I thank Deputy McGrath.
It is important that all Members of the Oireachtas keep a close eye on what is going on in the European Union and particularly in the European Council. It is also important for Independent Deputies to be part of the watchdog for Europe. A strong distinction should be made between a eurosceptic and someone who has a critical eye on Europe and the decisions made there. Many people, particularly from some of the establishment parties, label people regularly in this House. If we see a disconnect between the European establishment and citizens, it is important to highlight it. It is up to all of us to be vigilant in the debate. Therefore, we must watch, examine and scrutinise EU decisions. We must also keep a close eye on the Government and how it responds and works at European level. On many occasions I feel the Government took its eye off the ball.
I was not too impressed with what I heard this morning about the Government blaming the European Commission, for example, for cuts and hiding behind the European Union following decisions it made. The situation was grossly misrepresented to the citizens of this State. I am being deliberately vague as this information will be brought before the House in the near future. I await further details on the facts concerning the particular allegation. I raise it in the context of the European Council meetings, as all information from the European Union should be clear and honest. Governments must face that reality. Misleading citizens should never be an option when it comes to decisions of the European Union.
I listened to the main points made by the Taoiseach. He referred to the digital economy and developing digital skills in order to combat youth unemployment. He also urged parties to reach agreement on the final elements of the banking union. I warn the Taoiseach to be vigilant and not to get involved in a lap of honour following the exit from the bailout in December. It is important that the Taoiseach and the Government wake up to that reality.
There must not be a lap of honour syndrome because there is nothing to celebrate, since we still have a major problem. I raise this genuinely because it is important to do so. According to the European Commission yesterday, Ireland's economic growth will be weaker than expected next year, in line with slower-than-expected GDP growth across the eurozone. In its closely watched autumn economic forecast, the Commission stated that it expected eurozone GDP to rise next year by 1.1% and not by 1.2% as predicted in May. Pressure mounted on the European Central Bank to cut interest rates.
External factors, such as the slowdown in emerging economies, were cited as the main reasons for the cut-in-growth outlook. The Commission has said that the “ongoing necessary adjustment process” in eurozone countries as they implement fiscal consolidation measures will “continue to weigh on growth for some time”.
It is important to face the reality. The Commission also stated unemployment would be higher than expected in 2014, at 12.2% compared with the 12.1% predicted earlier this year. Even Olli Rehn, the European Commissioner, has demanded further action, but that is not something one will hear around this House or in many quarters across the State. I raise this because we must be very cautious about the economy and what happens in regard to economic growth and job creation.
There is considerable focus on the digital economy, and I strongly support the new ideas thereon. Let us not forget, however, that there are certain young people who are not directly involved in ICT jobs. There are many people in the country who are not skilled enough to take on jobs in the ICT sector. This needs to be factored in. I urge the Minister to raise this at European level. It is important that all Members of the House keep a close eye on what is going on in the European Union.
The Minister of State will now respond to questions.
I welcome the opportunity to urge the Minister of State to guide us on some of the finer points. Was there any discussion last week on the ESM and the retrospective funding of our pillar banks? In June of last year, a decision was taken at Council level to break the link between sovereign debt and the banks' debt in terms of capitalisation. We were told at the time that the Taoiseach had negotiated extensively and was successful in that regard. A formula of words was arrived at that could mean anything and which has meant very little. There is still no flesh on the bones of the notion that the ESM or ECB will provide any funding in recognition of or to compensate the Irish sovereign for the moneys put into Bank of Ireland, in particular, and AIB. At the time in question, the measure was hailed as paving the way for that to happen. Commentators from other countries and some of the soundings from other parliaments indicate that the ESM will provide facilities only in the event of a future requirement to shore up the capital reserves of financial institutions across the Union. Can the Minister of State help us in any way in clarifying the position on any effort to recompense the State for the decision that had to be taken?
With regard to the Taoiseach's contribution on the European Council agreeing that member states would make all appropriate arrangements after the ECB's asset quality review, what does "all appropriate arrangements" mean?
I thank both Deputies for their questions. The answers to many of their points lie in paragraphs 41 to 44 of the conclusions of the European Council. On Deputy Dooley's question, the Government is very much focused on ensuring that the commitment made to breaking the link between the sovereign and banking systems will be upheld. We have been very clear that, in order to do that, a robust banking union must first be set up to provide a framework in which these issues can be dealt with. Paragraphs 41 to 44 make clear the commitment of the Union to doing this.
The last statement on the role of this system in dealing with existing difficulty came from the statements from the Eurogroup at the ECOFIN before the summer. It was made very clear there that, on a case-by-case basis, other member states would examine the application of the fund. The priority of the Government is very clear; we want to ensure that when a banking union is in place, such a mechanism will be an option for our country in dealing with the sustainability of our debts and creating a banking system that will be capable of meeting the needs of the people we all represent.
On Deputy Pringle's specific point about the interplay between European banking stops and national banking stops, which formed the thrust of his earlier contribution, the aforementioned conclusions cover the matter. Paragraph 42 states, "Member States should make all appropriate arrangements, including national backstops, applying state aid rules." It is also acknowledged in the conclusions that the ESM will play a role in dealing with that difficulty. That forms the heart of the discussion that is taking place. There is an understanding that national backstops will play a role. The documentation refers to the Deputy's point on the hierarchy of needs. Depositors with deposits above a certain threshold would be asked to make a contribution to the cost of a failing bank. One would then look at the role bondholders would play. One of the very important areas of the negotiation that is to take place over the coming months will be determining the interaction between European and national backstops. The Government is very clear that there ought to be a robust European backstop system in place. We believe this because unless there is complete clarity regarding where the money will come from in the event of a banking collapse, the kind of difficulty our country has gone through in the past could be created again. We do not believe it is in the interest of Ireland or of Europe for this to happen.
May I contribute?
Does the Deputy just want clarification? He may not ask another question but just seek clarification.
It is not another question; my point is kind of linked but essentially the same question. The Minister of State says the matters associated with the mechanism used to give recognition to the investment of the State will be dealt with on a case-by-case basis. That is the kind of language that is now emerging. It is stated that other member states and the ESM will examine the matter depending on the case we put forward. We are weakening our hand in the negotiations by not taking a conditional line of credit as we exit the bailout. I am not directing my remarks at the Minister of State in saying the Government is engaged in a political posturing exercise by stating we have had a clean exit, that things are great, that there is a bit of confidence and that we are going well. I have no problem with the principle of that but, unfortunately, it is undermining the capacity of the State and its negotiators to return to the member states and contend that we have a very considerable debt burden. It is largely unsustainable and if there is a lower level of growth than projected, our staggering debt pile may become unmanageable. It is scarcely manageable at present. I am sure Deputy Mathews will agree with me when he gets an opportunity to contribute. By making a political statement at home, we are actually weakening our argument in front of those we need to convince.
Before the Minister of State responds, I will allow Deputy Pringle back in as he is seeking clarification on an earlier question he posed.
Can I take it from what the Minister of State said earlier that the ESM will actually be at the end of the process? Is it the case that the depositors will be burned and the taxpayers will be burned before the ESM actually comes into the process? Is that what is emerging from the European Council?
In response to Deputy Pringle, I did not say that. I said that at the end of the hierarchy that is in place or that is being negotiated at the moment, there is a role for backstops within all of that. We are very clear that within those backstops there must be a significant and clear European system in place. As evidence of that I would just point to conclusion No. 43 which calls on the euro group to finalise guidelines for the ESM for direct recapitalisation so that the ESM can have the possibility to recapitalise banks directly following the establishment of the single supervisory mechanism. That is the conclusion that came out of all of this. It says that at the end of the hierarchy that we have discussed, backstops of a kind will be available. The role of the ESM is laid out in all of that.
In response to the points raised by Deputy Dooley, while I can fully appreciate that his political comments are not directed at me, I feel an obligation to respond to them. I am struck by Deputy Dooley's remarks, as well as those of his party leader, regarding this matter. I can understand the sensitivity of this issue for Fianna Fáil. After all, Fianna Fáil is the party of the promissory note and the bailout. This Government ended the existence of the promissory note and will ensure that this country can exit the bailout programme. I can completely understand the sensitivity of this for Fianna Fáil and why its members are using the language they are using in this discussion. That party put in place a bailout programme that had an unaffordable rate of interest attached, anchored by the payment of a promissory note that it said could never be changed. Both of those things have been changed by the current Government.
Deputy Dooley made reference to the issue of an application for a precautionary credit line. This Government is not going to adopt the same kind of casual attitude to these matters as that adopted by the last Government, which included Deputy Martin in its ranks. We are going to very carefully weigh up all of the options that are open to our State to ensure that we can make a sustainable exit from the bailout programme and that our country can fully fund itself in the future. It is a matter of the most immense importance. We will carefully weigh up all of the options in the coming weeks and make a decision that we believe is in the best interests of this country, economically and socially. That is another point of difference between the process that we will adopt in this regard and the one adopted by the last Government, of which Deputy Martin was a member.
I also welcome the Minister of State and wish him well in his new role. Having said that, I am hugely disappointed at the position that other Members and myself have been put into - there are too many of us now in this House - as a result of the choreography of passing legislation and voting. Here we are, making statements post the European Council meeting but the arrangements for statements prior to the Council meeting precluded me from engaging in any meaningful conversation with anybody before they went to that meeting. I think that is pathetic. The letter that was a precursor to the Council of Ministers meeting, signed by the Taoiseach, was also pathetic and an embarrassment.
I wish to raise a number of issues. First, was any amount of debt for write down, whether that was bank debt in the two remaining pillar banks or Government debt held by the Central Bank, discussed or requested at the meeting? The answer to that is either "Yes" or "No" but my guess is that the answer is "No". I ask that question because the remaining Irish banks are zombie banks. The foreign banks are getting out of this country. If they saw green shoots in the economy, they would stay. Is that not the case? They are not staying because they want to clean up the detritus and the destruction on their balance sheets and just get out. They now want to concentrate on smaller units of banking in their own host countries.
When I hear terms like "asset quality review" across European banks, I hear nothing more than obfuscation and fog. The assets that are held in a lot of European banks are Government bonds. They are the assets and those bonds, depending on their attractiveness or doubtfulness, go up and down in value. Yields go up and down, depending on the speculative cash that follows assets, whether they are bonds, assets or equities. At the moment, hedge funds are investing in equities, which is why there has been an increase of almost 25% in equity prices on the markets. The funds got out of bonds and went into equities.
The bank capital across Europe is highly fragile but this fact is being hidden behind a fig leaf of long discussions and so on. AIG is suing the banks in the United States because of the sub-prime loans they created. The sub-prime loans were the source and core of the problem in the United States but that is not the case in Europe. The problems in Europe relate to all sorts of other assets and off-balance sheet exposures that we do not even fully understand yet.
The most important task for members of Government and the Civil Service to undertake now is to read the book by Joseph Stiglitz, The Price of Inequality, which is now available in paperback.
Does the Deputy have a question?
Has the Minister of State read it?
It is worth reading.
Why, during the budget debate, did the Minister for Finance say that Ireland's debt to GDP ratio is expected to be at 124%? It is not. That is the Government debt to GDP ratio. The Government debt to GNP ratio is about 140%. When one adds in household debt and non-financial corporate debt or SME debt, Ireland has the highest debt ratio in the world.
It is disgraceful that Mr. Wolfgang Schäuble said that Ireland is doing "fine" on budget day. That remark was both arrogant and out of place.
I posed a number of questions during my statement earlier but one of the issues I stressed was that it is a waste of time for all of us if the Taoiseach comes into the House to outline the Irish Government's position on various issues but does not give us any indication of the position of the other governments in Europe. Perhaps as part of the ongoing discussions about Dáil reform that issue might be given some consideration.
The Taoiseach made reference to breaking the vicious circle between banks and sovereigns but what future plans were actually agreed in that context? He did not go into that in any detail. He spoke about Sinn Féin meeting the troika and hearing its views on bank capitalisation and so forth.
In the context of the TTIP negotiations, issues of trust and confidence are paramount. Yet running parallel to those negotiations is the major crisis concerning countries being spied on. Many believe that the discussions should be suspended, at least temporarily, in order to send a strong message to the United States that the Governments and people of Europe are opposed to such activities. Does the Irish Government have a view on that?
The Taoiseach made reference to the need to address the digital divide in order to fully realise the potential for job creation. He spoke about resourcing the education system and the fact that there is clearly far more we can do to align our education and training systems with the needs of 21st century employers. Everyone agrees with that but will more resources be provided in this area? We all know the reality in schools today and the difficulties being faced. If a computer breaks down, schools do not have access to anyone with the skills to repair it.
It is great having these big views on the world and how we will fix it. However, nothing will happen if these basic problems are not addressed.
I thank Deputy Mathews for his kind words. On the write-down of government debt, if he can give me any example of a country that pursued-----
I will come back to Greece. Can the Deputy give me an example of a country that pursued a write-down of its debt, either through a multilateral or unilateral action, that then resulted in its having a lower interest rate on its short- to medium-term borrowing? He referred to Greece. Greece has been through the largest debt write-down in the history of economics. Has he seen any reduction in the interest rates on its borrowings?
It negotiated it.
Allow the Minister of State to finish.
These are just the figures. The challenge for our State is that we need to borrow to close the gap between what is taken in taxes and what is spent on public services. The Government has decided that increasing the term of the promissory notes payments, doing what we can to support our banking system and closing the gap between spending and taxation will bring us to a point at which it will be affordable for the State to borrow again. As Deputy Mathews knows, the interest rate on our borrowings at the moment is between 3% and 4%. Those who advocate unilateral action must explain how we would maintain this low interest rate.
It can be negotiated.
We are well aware of the need to negotiate. If Deputy Mathews is calling on the Government to negotiate, which it is doing, there is also an obligation on him to be consistent. Do those who advocate unilateral action believe we could maintain the lower rate of interest on government borrowing that we have successfully achieved?
Yes, yes, yes and yes.
Deputy Mathews must bear in mind that less than two years ago, as he knows, it would have cost the State 15% to borrow on the financial markets.
It was the same for Italy and Spain.
Will Deputy Mathews allow the Minister of State to finish?
Our borrowing rates are now less than 4%. Deputy Mathews knows we have secured a larger reduction in our rate of interest on the financial markets than many of the countries he has mentioned. They are just the figures.
It will be up to people to see if that prediction is correct. I will reiterate that we have secured a rate of interest on our borrowing over the last year. It has happened. It is objectively correct. The State has been able to borrow at a fraction of the rate that applied two years ago. What the Deputy and others who are advocating unilateral action need to answer is how that low rate of interest would be maintained.
Cash bids up the price of bonds.
The Deputy asked whether I had read the books of Joseph Stiglitz. I actually have read his books. I read his books on globalisation, most notably one of his more recent books, Globalization and Its Discontents.
Has the Minister read The Price of Inequality? That is the one to read.
I look forward to getting the opportunity to read it.
I will buy the Minister a copy.
Will he get him a signed copy of the book?
Will Members please allow the Minister to respond?
I apologise for introducing a bit of frivolity into the proceedings.
Deputy Mathews is correct that the debt to national income ratio measurement was used by the Minister for Finance in the budget. However, he should acknowledge the predictions we have in place to see that debt to national income ratio fall. That is why the Government has a target next year for a primary budget surplus - so we can decrease the debt to national income ratio. This will allow us to prioritise tax revenues for the things on which we want to spend our money - that is, our schools and hospitals.
That is a negotiating position.
Deputy Crowe asked me about the attitudes of other countries. I am happy to outline the views of other countries with regard to the priorities we are talking about. Unfortunately, time will not allow me to do it today, but certainly in my appearances at the Oireachtas committees I am happy to outline as far as I can the areas of disagreement that other countries might have with us and what we are doing to further our own interests.
The Taoiseach is supposed to be telling us what happened at a European Council meeting, but one does not get a sense of what actually happened at it. He tells us the Irish position but we do not have a clue what was agreed on it.
What strikes me is Deputy Martin's claim that we do not outline what the Irish interest is, while the Deputy says we do. In the pre-Council discussions that we have here we say what we want to achieve, and in Dáil debates such as this we then say where we stand on it. If there is an opportunity to go into that in more detail at a committee meeting, I would be more than happy to.
We believe it is still very much in the interests of the Irish and European economies that the TTIP negotiations be progressed. There will be a significant gain for our economy and the European economy more broadly if those discussions yield an agreement in a few years' time. The last set of negotiations was due to take place in October, as Deputies may be aware, but they had to be deferred due to the difficulties in America. We believe the potential dividend of that agreement is of such importance to our country and other countries that it should be advanced, and I look forward to seeing that happen.
Will there be new funding to deal with the digital divide? One agreement made at the Council was that the European Structural Investment Funds, which will be in place between 2014 and 2020 and is one part of the overall package of the multi-annual financial framework - which, as Deputies know, is the multi-year budget for the European Union - will be used for ICT education and developing digital skills.
Regarding the banking union, I refer to conclusions Nos. 41 and 44 of the meeting, which I mentioned to Deputy Dooley earlier. These lay out where the process stands. There will be another set of negotiations between finance Ministers in the second half of November and early December, and the issue will then go back to the European Council. It is clear that a robust and well-functioning banking union is in our own interests and also in the broader interests of Europe.
Time does not allow me to go into any great detail in building on what the Taoiseach has said, but I will make three brief comments. I believe the conclusions will make a material difference to our ability to develop the digital economy. This is a sector that is growing at six to seven times the speed of other parts of our economy. The conclusions on banking union show the continued commitment of the Government to ensuring that commitments already made will be upheld and delivered. What I am certain about, having attended the meeting, is that there is a continued sense of urgency in dealing with the difficulties Europe has, particularly with regard to unemployment. It is fair to say that the feeling of acute panic and crisis that characterised previous Council meetings has passed, but the commitment to dealing with the difficulties we have discussed here is not diluted in any way. I look forward to giving an update to the House and to the Joint Committee on European Union Affairs on the next Council meeting in December.