JOINT COMMITTEE ON EUROPEAN UNION AFFAIRS debate -
Thursday, 24 May 2012

General Affairs Council: Discussion with Minister of State

Chairman

We have a quorum and the committee is in public session. I remind members, guests and witnesses to switch off their mobiles phones. It is not good enough to have them on silent. They need to be switched off totally otherwise they will interfere with the recording equipment.

The first item on the agenda is a discussion on the forthcoming General Affairs Council meeting. On behalf of the committee I welcome the Minister of State with special responsibility for European affairs, Deputy Lucinda Creighton. She will attend the General Affairs Council meeting next week and has agreed to meet us today. I understand she will also brief the committee on the outcome of the previous General Affairs Council meeting held on 24 April.

Minister of State at the Department of Foreign Affairs and Trade (Deputy Lucinda Creighton)

I thank the Chairman. I am delighted to have another opportunity to brief the Joint Committee on European Union Affairs ahead of this month's meeting of the General Affairs Council, GAC, in Brussels on Tuesday next, 29 May, and I appreciate the committee taking time at this busy period to allow me to do so.

The GAC will meet for a morning session next Tuesday at which I will represent Ireland. The substantive focus at this month's meeting will be the multi-annual financial framework, MFF, and preparation of the June European Council. Next week's meeting will afford Ministers a first opportunity to have an orientation debate on the full "negotiating box" for the next MFF as prepared by the Danish Presidency. Ministers will prepare for the June European Council through consideration of the annotated draft agenda for the meeting, which has now been made available by President Van Rompuy. Ministers will also briefly touch on preparations for the G20 summit in Mexico next month and on the monitoring mechanism for Croatia. As I look ahead to next week's meeting, it will be helpful also to update the committee on the discussions at the previous General Affairs Council meeting.

The first item on the agenda next Tuesday is a discussion on the EU's next multi-annual financial framework. The December European Council called on the incoming Danish Presidency to press ahead with work on the MFF. The Presidency has been preparing a so-called "negotiating box", a draft outline of the final agreement on the MFF, which it will present to the June European Council with a view to settling as many issues as possible although, of course, nothing will be agreed until everything is agreed.

The March and April GAC meetings considered separate elements of the "negotiating box". Committee members will recall that in March we discussed those sections of the MFF relating to smart and inclusive growth apart from cohesion and the connecting Europe facility, security and citizenship, global Europe, administration and EU instruments which fall outside the MFF. At last month's GAC we discussed the CAP and cohesion policy elements of the MFF, the two largest areas of expenditure. Discussion went along expected lines. A group of member states which are net contributors, the so-called "Friends of Better Spending" tabled a paper focusing on growth and employment, while many of the members of this group repeated earlier calls for a smaller MFF. Similarly, the so-called "Friends of Cohesion Policy" group of mostly eastern member states tabled a paper calling for a greater emphasis on cohesion spending and for the Commission proposals for cohesion spending to be considered the minimum acceptable.

In my contribution I stressed the need for the new budget to be focussed and targeted where it is needed and where it can have impact, for example, in helping us to tackle unemployment, particularly among the young. I also stressed that for Ireland the Commission's proposal for CAP funding was the minimum acceptable. It is clear to me that we are not yet in the phase of the negotiations where the positions adopted by member states will be reconciled. While we now have a full picture in a draft "negotiating box" covering all of the possible elements of the budget there are, as yet, no figures on the table.

Discussion at next Tuesday's GAC will be the first time that Ministers have looked at this complete draft "negotiating box". Our position on the MFF is quite clear. As committee members know, we want a properly funded and properly functioning European Union, with the right mix of priorities, a fair allocation of resources and a focus on jobs and growth. We see a need for continued food security and safety, which warrants only gradual changes to the CAP. We also have an express national interest in defending our share of CAP payments.

We want to identify all possibilities for benefitting from available EU funds, especially in the Europe 2020 areas, including competitiveness, productivity-enhancing measures, employment, climate change and energy. In particular, we want the MFF to reflect the importance of job creation as well as growth. We warmly welcome the emphasis being placed on support for research and development through the Horizon 2020 programme. We have made clear there should be restraint in the EU's administrative spending, in line with the efforts towards fiscal consolidation being made by member states, not least of all by Ireland.

The key issues, and the most difficult ones, in the MFF negotiations in the coming months will be the overall size of the MFF, the relative proportions allocated to CAP and cohesion and other headings, and the funding of the EU budget, including arrangements for rebates and corrections. I do not expect these questions to be resolved until close to the end of the negotiation process. The Presidency will try to get agreement on as many areas as possible over the next month, but it is likely there will still be very many open areas by the time of the June European Council.

There will be further discussion of the MFF at the informal meeting of European Affairs Ministers in Denmark on 10 and 11 June, which I will attend on behalf of Ireland. I look forward to meeting the committee on 21 June, in advance of the European Council, for an in-depth discussion of the MFF. In any case, I expect the Cypriot Presidency in the second half of this year to schedule regular GAC discussions of the MFF, and committee members will be delighted to hear they will have many more opportunities to consider this matter.

Next Tuesday's meeting will also look forward to the meeting of the European Council on 28 and 29 June on the basis of a draft annotated agenda, which has now been provided by European Council President Van Rompuy. Clearly the deliberations at the June European Council will be informed by the discussions which leaders had last night at their informal dinner in Brussels. As the Taoiseach made clear in the House on Tuesday, last night's meeting was not intended to take formal decisions or draw formal conclusions - that will be for the meeting next month - but instead was intended to encourage a free-flowing engagement among leaders on the necessary steps to strengthen Europe's efforts to boost sustainable growth and jobs. President Van Rompuy framed last night's discussions, which the Taoiseach attended for Ireland, around four "building blocks". These are sound national economic policies; EU policies bringing added value; measures to improve the financing of the economy; and measures to strengthen job creation.

Under the first building block, leaders took stock of implementation of the structural reforms agreed in the framework of the Europe 2020 strategy and the European semester process. President Barroso briefed the meeting with a preliminary assessment of the national reform programmes and gave a preview of the package of proposals to be adopted by the Commission on 30 May, particularly the set of country-specific recommendations. With regard to action at the EU level, the Single Market agenda continues to be a priority. President Van Rompuy had identified in particular a number of initiatives where high-level political commitments have not been followed through and he has pointed to delay on certain issues, including the EU patent and energy efficiency. We are fully supportive of efforts to remove these blockages, and it is in our vital national interest that we progress these issues as quickly as possible.

There was also a discussion of how to improve financing of economic growth. There are ideas with real potential, including increasing the capital of the European Investment Bank in order to support small and medium enterprises and the development of key infrastructure, but we must ensure that any new arrangements will be capable of delivering where they are most needed and where they can have greatest impact. The Government has also expressed strong support for the project bond initiative as having the capacity to leverage private funding for important infrastructural projects, but scale must not be allowed to become an obstacle to delivering investment and money to where it is most needed.

We have also expressed an openness to looking at what remains within the framework of the Union's existing budget with a view to considering how it might best be deployed. As I have already said, it will also be important that the Union's next budget be growth-oriented, contributing to the maximum extent possible to the generation of growth and jobs. For Ireland, we see the agrifood industry as a central and highly dynamic motor of innovation, growth and jobs. European investment in this sector, via the Common Agricultural Policy, remains money very well spent.

Next month's European Council meeting will also conclude the European semester by exchanging views on action to be taken at a national level and endorsing country-specific recommendations. Heads of State or Government will review progress and discuss how the EU can deepen its trade and investment relationships with key partners. It is clear that increased trade can make a significant contribution to growth and jobs creation in Europe. With the WTO Doha round stalled, the EU is keen to strengthen trade and investment ties, in particular with key partners and those countries whose markets are growing at a significant pace. Again, this is something that the Government supports.

The June European Council will have its first substantial discussion on the multi-annual financial framework, MFF, on the basis of a full "negotiating box" prepared by the Presidency. The discussion will also focus on how the new MFF can best contribute to the creation of growth. It will be expected to approve procedural conclusions to guide the process in line with the agreed timetable, which sets a target to reach agreement on the next MFF by the end of 2012.

The European Council will further take stock of progress in major justice and home affairs files, including Schengen governance and asylum. The European Council may also address specific foreign policy issues, which will be elaborated upon closer to next month's meeting. The GAC will, of course, have a further opportunity to prepare in detail for the European Council at next month's Council meeting, which will precede the Heads of State and Government meeting. I will come before the committee prior to that event.

Next Tuesday's General Affairs Council will also discuss preparations for the upcoming G20 summit in Los Cabos, Mexico, on 18 and 19 June. The Commission will inform member states of the outcome of the preparatory process and outline its expectations for the agenda and possible deliverables of the summit. Ministers may comment on the preparations for the summit. Ireland is not a member of the G20 but the EU is represented by President Van Rompuy and President Barroso at G20 summit meetings. The EU position in advance of meetings is usually prepared by the European Council, which last March adopted conclusions on the G20 summit. This will be the last opportunity for the General Affairs Council to consider the summit before it takes place.

Mexico is the current holder of the G20 Presidency, and its priorities are economic stabilisation and structural reforms, strengthening the financial system, improving international financial architecture; enhancing food security; and promoting sustainable development. This year's G20 summit is expected to focus on deliverables within these priority areas. President Van Rompuy and President Barroso will send a joint letter to EU Heads of State and Government prior to the summit setting out their expectations for the meeting. As Ireland is not a member of the G20, this is a valuable opportunity for us to take part in preparations for the summit.

The draft Council conclusions on the monitoring mechanism for Croatia will be briefly discussed at next week's GAC. These conclusions have already been agreed at working party level but the issue has been added to the agenda at the request of a member state. In-depth discussion is not envisaged and I do not foresee any reopening of the Council conclusions on the monitoring mechanism. I appreciate the attention of members and I look forward to hearing comments. I will, of course, as ever be very happy to respond to any questions.

Deputy Joe O’Reilly

At the outset I thank the Minister of State for her continuing commitment to and engagement with the committee. I am happy that in her report she mentioned as an absolute priority for Ireland the Common Agricultural Policy. The maintenance of the minimum amount proposed by the Commission in the multi-annual financial framework should be held for the Common Agricultural Policy. It is important that there is no reduction in that amount but is the Minister of State confident about that outcome?

The Common Agricultural Policy is very significant for Ireland in the context of the 2020 Harvest proposals and developing the agrifood sector, as the Minister of State mentioned. It is also important that this country should be able to dispense the funding in a way that would achieve the two objectives of fairness and redistribution of income to small farmers and the weaker sections of the agricultural community, which is right; and the support of viable production in order to achieve our overall ambition. It is important that the Common Agricultural Policy amount is kept and that the process should not be overly prescriptive. There should be no inhibition in the way the funding is dispersed so that this country can pursue its own objective of good production levels and redistribution of income. We are best placed to gauge that at domestic level. I humbly suggest that this point be made at European Council level, and discretion should be kept local to the greatest possible degree.

I am also happy with the entire thrust of the document as it relates to jobs. The Tánaiste spoke today in the Dáil on Leaders' Questions about how youth unemployment is of enormous significance. It is a major issue for all of us. Any attempt to deal with unemployment must have that section as a primary focus. I am delighted that we will press on with the issue. How does the Minister of State see that being delivered to this country? Will the European Investment Bank help out or, as the Tánaiste mentioned, will there be structural funding that has not been used within Europe? I am wondering about the vehicle to be used and the level of national discretion. Speed is of the essence and we should get this show on the road, for want of better terminology. We must respond to unemployment as a priority. I am convinced that a very important backdrop to the Council meeting will be that the Minister of State goes there with a resounding "Yes" vote from this country on the treaty. That will give her, and I appreciate her comments in that regard, authority and a bargaining position, first, to maintain the budget for the Common Agricultural Policy, CAP, second, to maintain the national discretion over it and, third, to enhance our jobs agenda and get a focus on youth unemployment. A "Yes" vote will give the Minister the moral authority to be strong in that regard.

Deputy Timmy Dooley

I welcome the Minister and her officials and compliment her on her ongoing work on behalf of Ireland, which is very welcome. As a former member of this committee, she is well positioned to return and brief the committee on an ongoing basis-----

Deputy Lucinda Creighton

I learned it from the best.

Deputy Timmy Dooley

-----and to understand our position on the issues as they arise. Flattery will get the Minister everywhere, perhaps even a "Yes" vote.

I concur with the previous speaker, particularly about the CAP. It is a while since I have attended a European affairs committee meeting in which there has been such concentration on and discussion of the CAP. That is welcome because the CAP has the capacity to be a fundamental driver in the recovery of our economy, based on the recognition over the last number of years of the importance of food security, the important asset this country has as a recognised producer of quality food and the potential growth in the European market over the next ten to 20 years, in which there will be ongoing demand. It comes at a time when we must recognise the importance of a supporting mechanism through the multi-annual financial framework, MFF.

While the past two years for the agriculture sector, particularly for milk production, have been buoyant and positive, the years prior to that were very difficult. Now, milk prices are beginning to contract again and there is a negative outlook on world markets for milk prices, so it is important we do not lose sight of the necessity to continue to have the support of the Common Agricultural Policy not only to ensure security of supply but also to ensure the safety of the food consumed in Europe. For that reason it is a fundamental support not for farmers but for consumers. The importance of the CAP is often misunderstood. It is seen as a cheque in the post for the farmer but, sadly, that is a misrepresentation of what the CAP does. It has been a price stabiliser for the consumers of Europe, an insurance policy for the quality and traceability of food and it ensures security of supply. The Minister's recognition of that is important.

I wish to mention the initiatives being discussed as part of the agenda, particularly the necessity to kick start employment with a focus on employment for young people. Unemployment is the biggest blight across Europe at present and the only way we can work towards economic recovery is by targeting employment and job creation. People talk in abstract terms about stimulus and growth strategies but, at the end of the day, it is about getting people back to work. We must have effective concrete initiatives. While I very much support the areas of training and research, in the past they have acted almost as a shield or screen for solving a problem, where one gets a number of people into training or back into education without interrogating to the greatest extent possible for what exactly they are being retrained. Sadly, in my view it has been a box ticking exercise across Europe. One gets so many off the live register into training or education, but what is the ultimate purpose if the jobs will not be there?

Whatever concrete measures are brought forward, there must be a verifiable outcome at the end. That is where the audit trail is important. Audit trails should be put in place in advance to see where people who reach the required outcome then move to the next course. We all know people in our constituencies who have become permanent course hoppers, as it were. They do it because it provides them with access to social welfare. In many cases it is not even their intention to seek employment at the end of the course, it is just a means to get a payment for survival. That is understandable, because everybody will do what they must to survive, but there must be far greater effort and far more joined up thinking in this regard not just in Ireland but also across Europe. We must learn from countries that have succeeded in doing this well in the past.

The Minister briefly mentioned the meeting last night. Will she discuss that further? There was no specific outcome but it is clear from comments by President Hollande that the treaty will not be renegotiated and that it is not necessary to renegotiate. That is in line with much of the commentary from the "Yes" campaign here over recent weeks. The development of an effective growth strategy can come as a bolt-on component to what has already been agreed and is required to be dealt with by way of a constitutional referendum. For that reason it is incumbent on everybody on the "Yes" side, both in the Government and in the Opposition, to use the last six or seven days of the campaign to get the message across that the treaty is not negotiable; that it is the best shot we will get at it and that we must work constructively and collectively across Europe to develop the additional component, which will ultimately be the route to success in dealing with the crisis.

Deputy Paschal Donohoe

I welcome the Minister and her colleagues to this meeting. I concur with the points made by my colleagues about the treaty and the importance for our country of it being passed.

I wish to raise two matters for the Minister's consideration and response. The first relates to the discussions taking place about the role of the European Stability Mechanism, ESM, and how it might be used in the future. We must pass the treaty to have guaranteed access to the ESM. There are two elements being discussed which could be of gigantic importance to Ireland in the future. The first is the granting of a banking licence directly to the ESM and the second is the role of the ESM in supporting other countries should their banking systems need support. The clear lesson learned from the experience of Ireland is that when the national balance sheet becomes overburdened with the cost of supporting the banking system, it becomes extremely difficult to disentangle both and allow a country or its banking system to move forward in the way both want. The option that is being discussed in respect of the role of the ESM in that in the future and the role it might play for Ireland is of huge importance. Perhaps the Minister will respond on that.

My second point relates to the commentary I hear developing about Greece and its potential exit from the eurozone. I was delighted to hear the Taoiseach state during the week that it is Ireland's firm view that Greece should remain within the eurozone. I am appalled to hear European leaders and people in other positions talk about this and how that is happening at present. I firmly believe that the exit of any country from the eurozone at present and the discussion about it amounts to people playing with fire. To my grave disappointment, there appears to be an underestimation of this. The economic consequences that it would unleash, not just for Greece but also for the countries that wish to remain inside the eurozone, is a matter of huge interest and importance to Ireland. Second, the political consequences of all this, in terms of what could happen to that country and the impact it would have on other countries in that region, appear to be severely underestimated. I believe the European Union and the eurozone should do whatever it takes to enable the resolution of these matters while a country remains inside the eurozone, if its people decide to do so. Anything less than this conviction will unleash consequences that we will rue for a long time to come. The Government has taken the correct stance, not only for Ireland but for Europe. I would appreciate a response from the Minister on that point.

Chairman

We will deal with these questions before I call the other members offering. Will the Minister of State curtail her responses to approximately ten minutes?

Deputy Lucinda Creighton

I try not to be long-winded but I do not always succeed. I will address the issues as they arise. Deputy O'Reilly asked if I was confident about the outcome of the CAP negotiations. I have full confidence in the capacity of the Minister for Agriculture, Food and the Marine, Deputy Simon Coveney, to deliver. Obviously the horizontal negotiations take place at the General Affairs Council, but the detail of the legislative measure that will define the renegotiated Common Agricultural Policy are negotiated by the agriculture Ministers. The Commission has proposed a total of €371 billion for the Common Agricultural Policy over the seven-year period, with €281.8 billion for direct payment and market support in pillar 1 and €89.9 billion for rural development in pillar 2. That is very significant. Our task is to ensure we maintain those figures.

I have stated at the most recent General Affairs Council, in other fora and at bilateral meetings with other member states, which is part of the process, that this is the minimum that Ireland could accept. We have some important and influential allies in our defence of the Common Agricultural Policy. It is not as broadly based as the cohesion group, or the zero growth group, the so-called Friends of Better Spending, but none the less we have a very focused and determined approach. Nobody is under any illusions about what is expected by Ireland. Everybody cannot go to the table defending the national interest, we must make a convincing case. We talk about the importance of new technologies, research and development, and all of these fit very well into the Common Agricultural Policy, which is often presented as if it is an outmoded policy of the European Union. The two engines of the European Union policy is CAP together with cohesion policy. The CAP has been successful and can innovate and improve. As Deputy Dooley said, the Common Agricultural Policy is not just about the plight of European farmers but about consumers as well and ensuring that the EU can provide quality assured produce.

Ireland is a country with untapped potential in the agrifood sector. There is so much more that we can do. We are already European leaders as well as world leaders in some aspects. We can grow that potential. I am very confident about the outcome of these negotiations in terms of the hard figures but I am also very confident about how we can leverage that and the scope and potential of the CAP for the European Union as a whole, not just for Ireland.

Deputy Coveney is very engaged in the process of dispensing direct payments. I think we can be satisfied in the way the negotiations have gone. We agree with the Deputy's perspective that the best level to assess the way in which payments should be disbursed should be at national rather than at European level. That is the principle of subsidiarity. That fits in very well with the general approach of the European Union. It is certainly something that the Government is and will continue to fight for.

I do not think there is anything to add to Deputy Dooley's points, because I think they have been covered. Both Deputies raised the question of unemployment, which is the greatest challenge facing the European Union. A decrease in the number of those unemployed will not happen without growth. The growth agenda is in essence the jobs agenda. We need effective concrete initiatives. The European Commission has identified the countries with the highest levels of youth unemployment and each of those member states, including Ireland, has been tasked with identifying clear targets and objectives which must be implemented. That process is being led by a dedicated unit in the Department of the Taoiseach. There is a great deal happening and the national lead approach is very important.

There is already a very ambitious growth agenda for the European Union in the form of the Single Market Act. Structural reforms to deal with blockages have been identified, such as the European patent in the area of energy efficiency, which has significant scope in Ireland. I could add the implementation of the services directive. All these measures individually have the capacity to add about 2% to the GDP of the European Union over a fairly short period, which is not insignificant at a time when economies are struggling to grow. I do not think we should throw out the baby with the bath water, just because people are now talking about project bonds, Structural Funds and so on. If we implement even three quarters of what has been set out in the Horizon 2020 agenda, and all the clear targets that have been agreed by European leaders in recent months, most recently at the March European summit, there is unlimited potential, particularly for a country like Ireland which has a high tech, open economy that is heavily dependent on foreign direct investment and exports. We need the Single Market in services to become a reality urgently, and there is great scope if we achieve that.

The concept of project bonds is not new and did not just come about on foot of the French elections. There is a pilot scheme under way on project bonds. It is a limited scheme that must be stepped up. The framework is in place, and a great deal of work has already gone into this on the part of the European Commission. The greatest challenge for Ireland is that project bonds are not just designed to assist big transnational projects at European level, because obviously that would disadvantage a small country, particularly a small island country like Ireland. As recently as the informal submit last night, the Taoiseach was adamant that we need to ensure it is tailored to be focused and to assist the countries that need it most. The bailout countries are currently the countries that need it most. We will see something concrete coming from the summit in June to help focus and target the project bonds.

The better use of Structural Funds will be integrated into the negotiations for the multiannual financial framework, MFF. Every leader is focused on the better and more efficient use of funds. We must do that with our domestic budgets. It must be replicated at European level. It would be misleading to suggest that we can take Cohesion and Structural Funds that have yet to be spent in other member states for our own use. That is a very misleading view. Structural Funds are allocated to member states on foot of detailed negotiations. They cannot be plundered by other member states. We cannot arrive in other member states and say: "Thank you very much. We will take your allocation of Structural Funds." If unspent or unallocated Structural Funds were to be pooled, the consent of all member states would be required. We need to inject a little realism into what we are talking about. Some ways in which those funds could be used as a guarantee, perhaps in relation to the European Investment Bank or as project bonds, are being considered. Those are very different proposals. The idea we can plunder funds that have been allocated to other member states is not a reality. It is important to be honest about that.

I wish to discuss some other elements of this debate that are important. There is a huge imbalance among member states, especially between northern Europe and southern Europe, in terms of unemployment levels, and youth unemployment levels in particular. Major labour market reforms need to take place across the EU. Clear proposals have been made with regard to recognition of professional qualifications across the EU, for example. This is a specific part of our efforts to ensure we complete the Single Market in services. A country like Ireland that has talented young lawyers who cannot get work - we produce too many lawyers and there are not enough positions for them - should be trying to find opportunities for them in other member states. The barriers in terms of professional qualifications need to be eliminated post haste. There needs to be much more flexibility. We can do a great deal by being a little creative and by working harder.

Chairman

A vote has been called in the Dáil. If the Minister of State could conclude her remarks in the next couple of minutes, that would be great.

Deputy Lucinda Creighton

Yes.

Chairman

Then we will suspend the meeting.

Deputy Lucinda Creighton

Okay. I will quickly respond to Deputy Donohoe's question on the role of the ESM and how it might be used in the future. I want to make it clear that the Referendum Commission has answered this question beyond doubt. We will not have access to the ESM if we do not ratify this treaty. I believe the ESM will have to be granted a banking licence in the future. My personal view is that it will happen within a matter of months. There is no alternative to that outcome. There is a realisation of that at European level. As the Deputy said, there is speculation to that effect in certain quarters. I think it is going to happen. We need to be at the races. Mr. Colm McCarthy, an economist for whom I have great admiration, wrote about this matter in the Sunday Independent last week. Given it is inevitable this will happen, we will need to be part of the process so we can benefit from it. We should ensure we have a strong hand so we can ensure Ireland benefits from it in the obvious way. The questions of supporting other countries and providing direct support to banks in other countries, which is also something that will inevitably have to happen, are two sides of the same coin, in effect. Again, we want to be part of it.

Sitting suspended at 12.15 p.m. and resumed at 12.30 p.m.

Chairman

I remind members to ensure their mobile telephones are switched off. I spoke to the Minister of State during the suspension. As we will have to conclude the meeting by 12.50 p.m., I ask those who remain to ask questions to limit their contributions to two minutes.

Deputy Bernard J. Durkan

I apologise but I will have to leave the meeting immediately after speaking. I want to develop some of the themes that have already been identified. I will not repeat what has been said by other speakers but a couple of important elements need to be addressed.

Deputy Donohoe asked about Europe in its present juncture and the willingness of member states to help each other. It is important that the euro not only survives but is seen to be capable of surviving. However, another issue that also needs to be borne in mind is that members of the eurozone or the Union should not be seen as opting out of their responsibilities. If the message gets out to the marketplace that any country, large or small, is opting out of its responsibility in regard to the treaty there will be disastrous implications for cohesiveness and general responsibility in that area. Those who promote the notion that we do not need to worry about anything because the euro will survive and somebody will have to bail us out are wrong. This is the road to disaster. We have the capacity to survive and we are doing what is required to make it happen. However, it will only come about as a result of each member state recognising it also has responsibilities.

A rethink on Europe is beginning whereby instead of individual member states thinking from the outside, there is general recognition we must think from the inside as Europeans. We in this country cannot think in an abstract way as if we were remote from Europe, not dependent on it and not expected to make a constructive contribution to its future, and the same applies to all member states. One of the biggest responsibilities for Ireland's Presidency and for other presidencies over the next five years will be to swing away from individualisation and towards collective European thinking and vision. Once this is established we will be on the right track.

Chairman

On behalf of the committee I congratulate Deputy Durkan on the anniversary he celebrated last week of being in politics for 35 years. Well done and keep it up.

Deputy Lucinda Creighton

Hear, hear.

Deputy Bernard J. Durkan

Thank you very much.

Deputy Seán Kyne

I welcome the Minister of State and her officials to the meeting. I commend her on the comprehensive report she presented. I also welcome the four building blocks of President Van Rompuy mentioned by the Minister of State in her report and the continued efforts of the EU on growth and job creation. I also welcome the project bonds initiative. In any discussions we have had with the Minister for Transport, Tourism and Sport, Deputy Varadkar, on road projects, such as the Galway outer bypass or the N17-N18, we are told they will not happen without investment from outside the State. No public private partnerships have been entered into for a number of years due to the lack of confidence in the country. Project bonds would certainly help. A positive vote on the treaty would give a mark of confidence to international investors in this type of project, which has been lacking for a number of years despite the continued improvements of the Government. Will the Minister of State comment on this? Are President Hollande's views on eurobonds gaining any traction? Has there been a softening of views on eurobonds in certain quarters?

I concur with my colleagues, Deputies O'Reilly and Dooley, on the Common Agricultural Policy. I am confident the Minister, Deputy Coveney, will do an excellent job next year during his chairmanship of the agriculture committee to maximise the amount of funding. I concur with Deputy O'Reilly that individual countries need discretion on domestic spending.

In recent years we have seen the collapse of the construction sector. Despite many job announcements, including 1,200 highly qualified jobs in Galway, construction sector jobs will be very important in getting people off the live register. The construction sector has always provided a certain amount of employment in this country and this is why unemployment figures are stubbornly high.

Chairman

The next speaker is Deputy Pádraig Mac Lochlainn and I advise him speakers are limited to three minutes because we must vacate the room in 15 minutes.

Deputy Pádraig Mac Lochlainn

I apologise for missing the opening comments of the Minister of State but I read her speech. I want to tease through the growth agenda which President Hollande's election has brought in. What specifically does the Irish Government seek to achieve? What is our position on eurobonds and the European Investment Bank? Do we believe there should be a 50:50 or 75:25 investment ratio between the European Investment Bank and member states? With regard to the EFSF will a banking licence be required? The trade union movement in Ireland has stated €10 billion of stimulus from the National Pensions Reserve Fund, the European Investment Bank and pension funds in Ireland would be required to drive the economy. What do we suggest is required to get a balance between the targets we will have to meet if there is a "Yes" vote next Thursday and what we need to turn around the economy? How firm is this? The Minister of State said the treaty is stand-alone and we will require an additional growth pact. Will she outline what the Irish Government wants it to be? What is her negotiating position and starting point?

Senator Fidelma Healy Eames

I welcome the Minister of State and her officials. I apologise for missing her presentation because of a Seanad vote. The Minister of State flagged our mutual concern about high youth unemployment throughout the eurozone in countries such as Greece, Ireland, Spain and Slovenia. During a recent debate in the Seanad I asked the Minister of State whether she and the Government would consider holding a high level event on youth unemployment during our Presidency. Has any progress been made on this? It is very important that we bring forward sustainable solutions. Some eurozone countries are doing well with regard to youth employment so there are lessons to be learned. As Deputy Durkan stated, collectively we have much to give if we share it.

The notion of project bonds is very interesting for key infrastructure. I support Deputy Kyne's comments on the key infrastructure we need here, such as the Galway city outer bypass. Does the Minister of State promote the notion of project bonds as a means of addressing youth unemployment? One of the biggest investments we can make is in human capital and the human capital at risk here at present is young people. Why not use project bonds as a measure to invest in solutions for youth unemployment? It would take much creative thinking but that is what we need to produce solutions.

The Taoiseach has been speaking about the need for a growth agenda for a long time but it required an election in France to bring this issue into the European narrative. The French President, François Hollande, managed to have the issue of eurobonds placed on the table for discussion yesterday evening. The introduction of eurobonds or the mutualisation of Europe's debt could be realistic means of bringing the debt crisis to an end, although the Germans, Dutch and Finns are strongly opposed to the idea. What does the Minister of State envisage will be the outcome of this process? Are eurobonds becoming a more realistic option?

Yesterday, the President of the European Parliament, Mr. Martin Schulz, launched an attack on the German Chancellor, Angela Merkel, for promoting policies that drive up borrowing rates across Europe. The interest rate on German bonds currently stands at 0%, which essentially means Germany has access to free money. Is Mr. Schulz's criticism of the Chancellor fair? Do President Hollande's decision to raise the issue of eurobonds and Mr. Schulz's attack indicate the tide is turning against German policies?

Chairman

I ask the Minister of State to respond and make some concluding remarks.

Deputy Lucinda Creighton

I have to draw a deep breath as I feel as if I am facing one of the tongue twisters that used to feature on the "Bosco" programme. I have many questions to answer in a short period. I fully concur with Deputy Donohoe's comments on Greece. President Van Rompuy has been clear in his support for Greece's continued membership of the eurozone. I was disappointed to hear the comments made by the head of the International Monetary Fund. It was unwelcome that Ms Lagarde should speculate about a Greek exit from the euro. We need to understand the implications for the future of the currency if it changes from a monetary unit that is durable and permanent to one in which member states may opt in or out of participation. The implications for the cohesiveness of the currency would be damaging in such a scenario. While I do not believe we can quantify how damaging they would be, it is a scenario that Ireland clearly wants to avoid.

Those of us on the "Yes" side of the referendum campaign are all talking about stability and certainty in the currency union, which is what the treaty is all about. Discussion about breaking up the currency, which is what a Greek exit would amount to, is thoroughly irresponsible and no one in the Irish Government is engaged in such speculation. We are very supportive of Greece's continued membership of the currency union.

This brings me to the point made by Deputy Bernard Durkan. This is not a question of having membership of the euro without responsibilities. We all have major responsibilities and while the abdication of responsibility did not cause the full scale of the crisis in the European Union and western world, it made a fundamental contribution to the instability we are enduring in the European Union. Countries failed to abide by the rules, take a transparent approach to their public finances and meet the terms and conditions of the Stability and Growth Pact. As a bailout country, Ireland has led the way in terms of meeting all of our programme targets and honouring our commitments. It is important that every member state understands it must honour the commitments into which it has entered. Eurozone members cannot simply tear up an agreement by thanking those who provided them with loans and refusing to be bound by the terms and conditions attaching to them. This applies to all of us and is an important point to make.

Deputy Durkan also referred to European countries helping each other. In the 14 or 15 months since the election, this committee has repeatedly discussed the need for cohesiveness and a mutual approach at European level. I passionately believe in the need for such an approach and it continues to be a priority. It also underpins the fiscal treaty, the purpose of which is to ensure we obey rules, take responsibility and help each other. Although we can argue that it is terrible that solidarity is being eroded in the European Union, we must also be realistic given that we are in the middle of the most serious global economic crisis since the 1920s. It is understandable, therefore, that solidarity is being tested but we have come through it pretty well. A third world war has not broken out; on the contrary, we have stuck together. While we may have fundamental disagreements at times, we have worked through our problems and are trying to find common solutions.

Deputy Kyne asked about the potential of project bonds. This is part of the discussion. The Deputy made a good point on the opportunities available for strategic transport infrastructure. It is not for me to comment on a particular project - perhaps the joint committee will invite the Minister for Transport, Tourism and Sport, Deputy Varadkar, to appear before it to discuss specific projects - but there are certainly projects in the transport, communications and energy fields which offer major potential for investment in strategic infrastructure in conjunction with the project bond system. The project bonds are a joint venture between the European Investment Bank and European Commission and the Government will play its part by making concrete proposals in this regard in advance of the June summit.

This ties in with Deputy Mac Lochlainn's questions on the Government's position on a range of issues. We will set out very clearly and precisely in advance of the June summit what we are seeking. The Government has had discussions on a range of issues and we will have a broadly positive position on eurobonds, which is not new. I was the first Government Minister to state we needed a system of eurobonds and debt mutualisation at European level. The Commission describes eurobonds as stability bonds.

Deputy Pádraig Mac Lochlainn

Everything is about stability these days.

Deputy Lucinda Creighton

We love the word "stability". The proposal on eurobonds has three options of which I am sure Deputy Mac Lochlainn is aware. While there are different levels of integration, we must reach a Europe-wide agreement on one or other of the options. We will do much work and put a great deal of thought into this issue in the coming weeks.

We must formulate a clear position on the European Investment Bank. We support increasing the paid-in capital to the European Investment Bank to leverage its capacity to lend to member states. The 50:50 ratio is a good one but if we could secure a more favourable ratio we would certainly explore the possibility.

I commented on the issues of the banking licence for the European Stability Mechanism and the project bonds. The key issue is flexibility which returns us to the question asked by Deputy Kyne. This is a matter of ensuring that project bonds are not limited in scope and are not only available for major infrastructure projects, as the latter scenario would suit the core, mainland European countries and not necessarily the small number of islands which are member states of the European Union. Project bonds must be fair and balanced and give adequate opportunities to Ireland. That will be a key target and objective in our negotiations on the issue.

I referred to the issue of labour flexibility, which is vital to the growth agenda. We must progress this issue and make it easier for young people to move around the European Union and secure employment, especially given the shortages of young workers in some member states and the excessively high number of unemployed young people in other member states. Addressing this problem is a no-brainer. We spoke about the demographic shift in Europe and the need for young workers to come to Europe from Africa and other parts of the world to address the crisis caused by our ageing population at a time when we have rates of youth unemployment of 50% in some member states. We must join the dots in this respect, which may sound easier than it is in practice but must be our main priority.

As always, Senator Healy Eames asked a wide range of questions, which is welcome. On the Presidency event on youth unemployment, I am very involved in the referendum campaign and have been travelling the country addressing public meetings in recent weeks. For this reason, I have not discussed this event with officials. However, as stated, 160 meetings will be held under the Presidency, one of which will be on youth unemployment. Their work is under way and officials in my Department and the Department of the Taoiseach are working extremely hard on the issue. I will take stock when the referendum is completed in the week after next. In June I will, at the very kind invitation of the Chairman, address the committee with more detail and substance on the preparations for our taking over the European Union Presidency.

The issue of project bonds as a means of addressing youth employment was raised. If we can mobilise project bonds for various strategic investment projects, the vast majority of people to benefit would be young people working in construction or the professional fields. That is an inevitability. We will be targeting that in the event that we are successful in bringing some of these initiatives to this island.

There was an argument that it took the events of the French presidential election to bring growth into the narrative but I do not agree. It has focused the media attention on the issue but in political circles we have been very much focused on growth for the past year or more.

Senator Fidelma Healy Eames

Absolutely.

Deputy Lucinda Creighton

The question was asked whether eurobonds are a realistic option and I believe they must happen. The process will take time. Anybody who believes we can have eurobonds without signing up to the fiscal compact is deluded. We must have rules in place and creditor countries exist. Germany will pay approximately €180 billion into the European Stability Mechanism to reach the €700 billion level which we spoke of in the past few weeks. It is reasonable that the Chancellor of Germany can give assurances to the taxpayers in Germany who will foot that bill, having pumped billions into bailout programmes for Ireland, Greece and Portugal.

We must be realistic. If we want these common projects, which bring about closer fiscal integration, and we want what are effectively federal solutions to our challenges, we must sign up to the rules to make that happen. The first step is a "Yes" vote next Thursday, 31 May. If we want eurobonds or project bonds or if we want to convince the AAA countries to pay into these projects, we must sign up to rules to ensure that those countries can give taxpayers some assurances. It is not an unreasonable proposition.

Deputy Pádraig Mac Lochlainn

The Minister of State is not reluctant in advocating a "Yes" vote.

Chairman

On that note, on behalf of the committee, I thank the Minister of State for coming here and we wish her the best for her meeting. We will be meeting again shortly as there is a proposal to have the European Communities (Amendment) Bill 2012 on Second Stage in the Dáil on 6 June. It is likely we will meet as a committee, with the Minister of State, on 14 June. It should be interesting.

The joint committee went into private session at 12.55 p.m. and adjourned at 1 p.m. until Thursday, 7 June 2012.