Amendments Nos. 1 and 2 cover similar ground. In amendment No. 1, I try to spell out some of the aspects more specifically. There is a slightly different piece of work being done in amendment No. 3. Fundamentally, these amendments provide for reports both on the operations of this Bill and on the operations of the mechanisms which are being updated by this legislation. The specific area of focus for me is related to the precautionary condition credit line.
Amendment No. 1 provides that there would be, by 31 December 2022, just over 12 months from now, a report laid before both Houses of the Oireachtas on what potential reviews there may be of the European Stability Mechanism and its operations, including the potential revisions of the Annex III criteria, which is a specific area of interest for me and which we discussed previously, to better reflect the outcomes from the EU economic governance framework which, as the Minister rightly highlighted, was relaunched in September - it was initially there in 2020 but was suspended - and is open for pubic engagement until December.
I encourage people to engage because the governance framework we have at an EU level is going to be really important. We know mistakes were made in regard to that governance framework in the past, whereby, as I have highlighted before, things like the smart, sustainable and inclusive growth initiative, which was a very well though-through plan under Europe 2020, was very much put aside in favour of economic and short-term fiscal targets. There were the 11 points put forward by the former head of the European Commission, Mr. Juncker, which later needed to be supplemented by a social pillar because the way economic governance had been focused, with the emphasis on austerity and short-term fiscal governance and targets over the long-term development goals for the EU and the states within it. That led to a fracturing of our social fabric and resulted in many missed opportunities. Many of us have an eye at this time to COP26 and climate action. We lost a lot of time in terms of making the transitions we should be making in respect of sustainability during the period when the focus was constantly on the short-term fiscal targets and the EU semester process excessively focused on that.
The semester process is gone, the recovery and resilience process is functioning and we now have the discussion on what comes next. I do not necessarily want to fight over old battles but I want to make sure we do not embed old structures. Unfortunately, the criteria that are currently proposed under Annex III are very much the same criteria, including fiscal criteria, that we had in the past. For example, Article 14 allows that the board of governors of the ESM may decide to change the eligibility criteria. I might be ruled out of order for trying to change the actual mechanism but the board of governors, which Ireland has a role in, may decide to change the eligibility criteria around precautionary financial assistance and may amend Annex III in that regard. These are things that are potentially likely to happen. One of the key factors that may influence how they happen is the decisions that are made on what kind of economic governance framework we want to have, where all of this fits into it and, I hope, a recognition of the failures of the past.
Another point to consider is that as well as the review of economic governance, there is a parallel process underway in the form of the Conference on the Future of Europe. My participation in that forum was the reason I was not able to engage directly with the Minister on Committee Stage. I thank colleagues for having brought forward points of concerns. One of the conversations at the conference is around what we are going to prioritise, what the focus will be, whether we can make the kinds of long-term transformational changes that are needed and how we can facilitate public investment. The tools we had, including the precautionary credit line, were found to be inadequate in the face of a crisis like Covid. In fact, we had a situation with that credit line where we had to change the rules and waive many of the requirements in order to be able to act with the speed and in the way we needed to act to give the fiscal stimulus that was vital and very much welcomed across Europe. Indeed, that went a long way towards rebuilding public faith in, and engagement with, the European project.
The point is that there was a solidarity response, although, unfortunately, it was not extended to the wider world in terms of a TRIPS waiver. Be that as it may, within the European Union, there was a solidarity response and there were speedy mechanisms deployed. This pointed up that the tools we had available were not fit for purpose and were, in fact, getting in the way. When we talk about things like the climate crisis, for instance, or the massive transformations that are needed in terms of something as simple as the UN Convention on the Rights of Persons with Disabilities, CRPD, with people in that cohort making up 14% to 18% of society across different EU states, that creates a whole shift. When major changes are needed and there is a major deficit to address, including the deficits in public services that came to light during the Covid crisis, we need economic governance policies that facilitate long-term thinking and a fiscal response that is flexible and recognises the environmental boundaries and social imperatives.
It seems like I am bringing a lot into this discussion but I am doing so because I know the Minister is aware of all of this and is fully engaged in the European discussion. Nothing is closed. We are not in an Overton window position where we have had business as usual and now we have a small window in which we are doing things differently during the Covid period but we will then will go back to the same as before. The Minister has acknowledged that we are facing periods of radical change and transformation and that how we in Ireland and our fellow EU states are able and willing to respond to that is crucial. The two major conversations, namely, the Conference on the Future of Europe and the review of economic governance, are fundamental.
I spoke on Second Stage about my concern that we have chosen to build the same old mechanisms into the new arrangements. They are slightly different because it is a case of doing things in advance rather than after the fact, but they are still the same fiscal criteria and debt ratios. There is scope in this agreement to change them. Amendments Nos. 1 and 2 make specific provision in that regard and amendment No. 3 is specifically around the precautionary conditional credit line. We had a situation where we had a supposed safety net for states for which only nine countries qualified. If the safety net does not work for a majority of European Stability Mechanism members, then it is not a safety net that works or is fit for purpose. We might press each country to get to the fiscal targets and criteria that will allow them to qualify for the precautionary conditional credit line but, in some cases, that would be asking countries that are under pressure to put themselves under further pressure to get to a level at which they can be helped. If there is a financial crisis in each of those countries, they are not going to be able to access the support. We have a situation where this credit line is not meeting its purpose The Minister acknowledged in his speech, as has been acknowledged in briefings previously, that it was a failure that the previous criteria served as an obstacle such that nobody accessed the precautionary conditional credit line. It certainly was of no use in regard to the Covid crisis.
What I am trying to do in amendment No. 3 is have the Minister be a champion within this process. We cannot change the process. I tried to do so in some of my amendments on Committee Stage but I know I cannot change the mechanisms. Nonetheless, the Minister and Ireland have a key role within that process. Amendment No. 3 is asking that the Minister, or his or her representative on the board of governors, would advocate, if we have a situation where more than half the members of the ESM do not qualify for the safety net, that there be a review of it. If we have a situation, as we have had in the past, where only nine countries qualify for the credit line, the criteria should be reviewed to ensure it is a credit line that can work and that people can reach. I am asking that in those situations, Ireland, through its role on the board of governors, would advocate for a review of the criteria, including the eligibility criteria provided for in Annex III, as is allowed for under Article 14.1 of the proposed schedule, and that powers be activated whereby the board of governors may decide to change the eligibility criteria for the ESM precautionary financial assistance provision and amend Annex III accordingly.
I advocate Ireland's triggering of the activation of the powers in those circumstances and having an appropriate review.
There are two things happening in these amendments. We could have argued against their grouping. In the first two, I am suggesting there should be a review of the Annex III criteria that reflects the outcomes of the economic governance review and the Conference on the Future of Europe. I ask that the Minister, in his report and engagement with the Oireachtas in this regard, indicate the position Ireland will take in the review. He should engage with both Houses of the Oireachtas or the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach on the position Ireland will take given the outcomes of the Conference on the Future of Europe and the review of economic governance. That is one proposal.
My other proposal, as contained in amendment No. 3, is that if the precautionary conditioned credit line does not work for, or is not within reach of, at least half of the ESM member states, Ireland should seek the triggering of a review of the criteria to ensure fitness for purpose.
Perhaps an amendment like mine will be proposed in the Dáil. It would be a worthy amendment. I would be glad if the Minister gave us a signal on this because it would be useful. I have indicated three reasons why a review of Annex III might be needed but, if for any other reason the board of governors decides to change the eligibility criteria for ESM precautionary financial assistance and amend Annex III, I hope the Minister will engage. It is stated the changes would come into force only after applicable national procedures. I hope the Minister will indicate to us today that he will consider engagement with the Oireachtas or the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach to be part of the applicable national procedure for Ireland if it is to take a position on proposed changes to eligibility criteria. Perhaps that is a matter the Minister will address in his answer.
The Minister will be aware of an amendment of mine that would not be in order because it deals with the shared document. It specifies that the applicable national procedure for Ireland should include consultation with the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach. Perhaps that might be revisited in the Dáil. It would certainly give some assurance. Could the Minister indicate that where the powers under Article 14 are being triggered or activated, he intends to engage with the Oireachtas on the position Ireland will take regarding the board of governors?
I thank the Minister for his engagement on this. I read the detailed comments he made on Committee Stage. I am aware that he understands very well the kinds of decisions we are making and the seriousness of our future direction, and that is why I hope he might be able to give a positive indication regarding the reports and reviews.