It is a pleasure to address the Chamber on this Bill. It is also a pleasure to see the Seanad sitting on a Monday. The work rate has increased enormously since my time and I am very impressed.
At the end of next month, the people will face a decision with important consequences for the future direction of the country. In deciding whether Ireland can ratify the stability treaty, we will be sending a strong signal to the international investment community and determining our future relationship with our colleagues in the euro area. These are no small matters and it is important that people take the time to inform themselves in order that they are in a position to make the best decision possible for themselves and their country. I assure the House that there will be no complacency on the part of the Government and no question of taking the people for granted. We know from hard won experience the vital importance of voters having the information they need available to them ahead of a referendum. We are committed to ensuring they have that information. We will shortly send a copy of the treaty and explanatory material to each household, which will be followed up in due course with an information leaflet.
The Referendum Commission, under the chairmanship of Mr. Justice Kevin Feeney, will also play an important independent role, explaining the proposition, raising awareness of the referendum and encouraging a high level of turnout. However, we know that this will not be enough and that the case must be made person to person, door to door. We will be taking the arguments to every town and village, workplace and community throughout the country.
The polls at the weekend again highlighted that many people have yet to make up their minds, which is not surprising given the nature of the decision to be made. There is a great responsibility on us as their Oireachtas representatives to play our part in furthering the debate, which debate it is hoped will be honest, setting out fairly the arguments. That will be the approach of the Government.
The question to be put to the people is in some ways a straightforward one, namely, whether Ireland will ratify the treaty. The treaty is not too long or complex. It contains a modest 16 Articles and a few pages of recitals. It is hoped the people will take the time to read it. The implications of our decision cannot be restricted simply to the immediate words of the pages of the treaty. They must be set in the right context.
Europe has struggled to get to grips with the most severe and unprecedented crisis in recent years, and it is not over yet. Our recovery remains fragile and a number of countries continue to face pressure and scepticism in the markets. The EU and its member states have worked hard to restore stability and rebuild confidence. This treaty must be seen as part of that vital work, alongside the other steps that have been and remain to be taken. No one is suggesting that this is a fix for all our problems, far from it.
The Government has long argued that discipline and reform, however necessary, could not on their own ever be sufficient to get Europe back on track and on the road to economic recovery. Thanks in no small part to the arguments we have advanced, there is now also a sharp focus on the need for an active growth and jobs agenda at the highest level within the EU. Jobs and growth are now a central feature of the agenda of each meeting of the European Union Council of Prime Ministers and Heads of State. Parallel with this stability treaty, which we are now debating, there is already in place a jobs and growth agenda. We cannot tolerate a situation where in some member states there is a youth unemployment rate in excess of 50%.Europe cannot afford to waste the potential of an entire generation.
Since the crisis broke, the EU has strengthened the rules underpinning the euro, making it harder for member states to play fast and loose and get away with it. The EU has also put in place important rescue mechanisms, including the EFSF and the ESM, to ensure that there is a safety net for member states that find themselves unable to borrow on the open markets. To improve the capacity of these mechanisms to function as an effective firewall we have boosted the funds available to them and increased their flexibility. Ireland has benefitted directly and significantly from these arrangements, including from the reduced interest rate that now applies.
Europe has also, albeit late in the day, become increasingly serious about the structural reforms that member states need to undertake if their economies are to be sustainable into the future. As we meet, member states are submitting their annual national reform programmes under the Europe 2020 process. These will form the basis for detailed country-specific recommendations to be adopted at the meeting of the European Council in June. This is the context in which the treaty must be seen. It is an important part of a wide and committed range of action by the EU to address and resolve the crisis it has faced.
I now tun to the key elements of the treaty. At its heart, the treaty contains what has been called a fiscal compact, namely, an agreement among the countries that ratify it to maintain sound and sensible budgetary policies in which, taken over the cycle, they do not spend more than they raise and agree to return their debts to sustainable levels. It is made clear that they are doing so not in the interests of some dubious and abstract ideological position but to support the EU's objectives of sustainable growth, competitiveness and social cohesion. These are surely goals that everyone in this House can endorse.
What is the nature of the fiscal compact that lies at the heart of the treaty? First, it requires that a government maintain a budgetary position over the cycle that is balanced or in surplus and sets out technically how this is to be achieved. Is this, as some have argued, a recipe for continued austerity? The answer is absolutely not. The treaty does not suggest how much countries should aim to tax and spend, rather it indicates that choices should be balanced. This is a sound approach in a time of economic uncertainty. The treaty is, therefore, about stability and a more secure future.
The rules also contain the necessary flexibility to ensure they can be applied in the real world. The timeframe for compliance to be set out by the Commission will take country specific sustainability risks into account and progress will be measured as part of an overall assessment. There is an explicit acknowledgement that a temporary deviation may be required in exceptional circumstances, defined as an unusual event outside the control of the country in question which has a major impact on the financial position or periods of severe economic downturn. As is the case with much within the treaty, the rules are very closely aligned with what already is in place in EU treaties and laws, the main novelty being the requirement to introduce an automatic correction mechanism at national level which will kick in if the rules are in danger of being breached. The Government intends to do this through the fiscal responsibility Bill.
On the issue of debt, the treaty echoes the terms of the recently agreed six pack of legislation which requires member states to chart a course back to compliance and to the 60% debt-to-GDP ratio requirement which has been in place since the Treaty of Maastricht. In assessing what this may mean for Ireland it is vital to recall that the treaty makes it crystal clear that the terms of the programme we have agreed with the European Union and the IMF will continue to prevail over the terms of the treaty — something the Government fought for and won in the negotiations. Ireland's funding under the current programme remains protected under the treaty.
In highlighting the most important elements of the treaty it would be remiss of me not to mention the link to the European Stability Mechanism, ESM, not to scaremonger, as some would have it, but to ensure the people have the full picture available to them as they make up their minds. The treaty makes it clear that in the future only those countries which have ratified the stability treaty will be able to access emergency funding under the ESM. That link simply reflects the reality that those who are putting their money at risk in lending to others, as Ireland may have cause to do in the future, have an expectation that the country concerned is prepared to run balanced and sensible budgetary policies. This should not have been seen as something unusual. All exceptional lending, whether to countries or individuals, comes with conditions attached. We have seen how stringent the terms of our own EU-IMF programme are.
The Government does not believe Ireland will need to access the ESM and it is our strong intention to lead Ireland out of our programme and back into normal borrowing on the open markets at as early a date as is possible. If we decide not to ratify the treaty, we will leave Ireland without an important safety net. Whether we like it, that will send a negative message to those thinking of lending to Ireland or investing money here. It will suggest the position has become a great deal riskier; as we know, confidence and certainty are the lifeblood of investment, without which investors who create jobs will look to safer harbours elsewhere. A decision to lock ourselves out of the ESM will make it more, not less, likely that we will need it. People must weigh this issue very carefully in deciding how to cast their vote.
The Government is committed to ensuring a full and informed debate ahead of the referendum on 31 May which is now less than six weeks away. The materials we are making available, including on the dedicated website stabilitytreaty.ie, are designed to be accessible and informative. I hope people will take the time to read them and make up their own minds. I also hope they will see the decision ahead is an important part of Ireland’s road to recovery and that a vote in favour of ratification on 31 May will send a strong positive signal about the country to our European partners and the wider world. It will say that Ireland is looking to the future with confidence and that we are committed to sensible, sustainable economic policies that will allow this Government to get people back to work, to grow our economy and to create jobs. There can be no going back to the failed boom and bust policies of the past. It will say that we are remaining where we want to be, in the EU mainstream and at the heart of the euro, and that we are committed to ensuring a strong and stable currency. It will say that investors can look to Ireland with confidence. There is no increased risk and no uncertain future. It will say that Ireland is moving forward. That is the outcome I want for Ireland and that is why I, along with all of my colleagues in government, will work might and main for a positive outcome. I strongly commend this Bill to the House.