Vol. 412 No. 5
16 Mr. Bell asked the Minister for Finance if he will outline the instruments of economic and social cohesion which the Irish Government consider necessary as an integral part of Economic and Monetary Union; and if he will make a statement on the matter.
41 Mr. J. Bruton asked the Minister for Finance if he will make a statement on the enhancement of the powers of the European Parliament in the context of economic and monetary union.
59 Mr. Pattison asked the Minister for Finance if the Government intend to publish a White Paper establishing their assessment of the draft proposals for economic monetary union and outlining its preferred form with particular reference to the control and democratic accountability of both the European Central Bank and European economic policy; if so when; and if he will make a statement on the matter.
71 Mr. Flanagan asked the Minister for Finance his position on European Monetary Union and the timetable he envisages for the establishment of a European Central Bank and a single currency.
I propose to take Questions Nos. 16, 41, 59 and 71 together.
As regards economic and social cohesion, there can be no doubting the considerable importance which Ireland attaches to this issue and our formal submission to both Inter-Governmental Conferences last January, and our contributions to the subsequent discussions, have underlined that fact. Any satisfactory outcome at the Maastricht European Council will have to include a strengthening of the present Treaty articles on cohesion. This is essential if a framework is to be provided within which the Community can develop the instruments necessary to secure adequate progress in this area. Political commitments designed to underpin this framework will also be essential. I would add that, while expenditure instruments, for example, the existing Structural Funds, are one aspect of cohesion, other instruments relating to the revenue side, of the Community budget and to the formulation and implementation of common policies and actions are also of importance.
At this stage, I should like to make the general point that the Luxembourg draft Treaty on the union, which was laid before both Houses of the Oireachtas last July, reflected the position after six months work in the Inter-Governmental Conferences on economic and monetary union and on political union. Following further discussion under the auspices of the Dutch Presidency, a revised treaty proposal on economic and monetary union has now been produced and this is now the working document for the Inter-Governmental Conference on this topic.
As is clear from that document, economic and monetary union will create new areas of competence for the Community. In addition, a new institution, the European Central Bank, will be created to manage a single currency and a single monetary policy. It follows, therefore, that the existing institutional balance will have to be examined in the context of the changed circumstances which will be brought about by full economic and monetary union. Of course, this is a matter which is also being given detailed consideration by the Political Union Conference.
With regard to the European Parliament and economic and monetary union, the Luxembourg draft treaty proposed that Parliament should have a particular role in relation to the democratic accountability of the European Central Bank and that it should have a consultative role in the decision to advance to Stage III of economic and monetary union. The recent Dutch Presidency draft treaty suggests other areas where Parliament might reasonably have some involvement, for example, in relation to the rules necessary for the co-ordination of economic policies within the Community.
While no final agreement has yet been reached on these proposals, discussions within the Conference on Economic and Monetary Union would indicate that there is a genuine appreciation of the need to provide Parliament with a relevant role in this area.
Concerning the publication of a White Paper, the Government have indicated that, prior to any referendum which may be necessary following the completion of the Inter-Governmental Conferences, a White Paper will be published which will cover all aspects of the proposed changes in the treaties.
I think Ireland's general position on economic and monetary union is quite well known at this stage and does not require too much reiteration. We strongly favour this advance towards closer integration within the Community and, while appreciative of the benefits which may accrue from our participation in that union, we are also concerned to ensure that those benefits are distributed in an equitable manner.
Finally, on the specific issue raised by Deputy Flanagan, the current draft treaty envisages that the European system of central banks will be established shortly before the move to the final stage of economic and monetary union and that it will take upon itself the full exercise of its powers from the first day of that stage. The beginning of the final stage of economic and monetary union will also see the irrevocable fixing of exchange rates which is designed to lead, without undue delay, to a single currency. The treaty will not include a date for the final stage since the move to that stage will be contingent upon a number of developments with the Community.
Arising out of the Taoiseach's detailed reply, may I ask him if he would like to comment on the question of a derogation, a subject we are hearing quite a bit about at present in relation to the overall position of monetary union which would have an adverse and terrible effect in the Border area, and on how he sees this question fitting in with the policy on cohesion with regard to monetary union?
No issue of derogations arises at this stage. Our efforts at the moment are entirely concentrated on achieving satisfactory assurances in regard to economic and social cohesion so that the benefits of economic and monetary union through the Community will be equitably shared and that all regions, particularly peripheral regions, will benefit.
Does the Taoiseach agree with the provisions in the Dutch draft which would allow the British to opt out of moving to Stage III if their parliament do not want to go ahead? Does he consider that would have adverse implications for Ireland? Does the Taoiseach agree with the provision in the Dutch draft which would require a country moving on to Stage III to have a debt-GDP ratio which did not exceed 60 per cent in view of the fact that ours is now around 97 per cent? Finally, does the Taoiseach agree with the provisions in the Dutch draft in regard to penalties for countries which subsequently have what the council regards as excessive budget deficits?
There are still only drafts and are the basis of intensive ongoing negotiation. I do not wish to go any further than I have already gone by way of a comprehensive statement to the House quite recently. We are very much aware, for instance, that matters like the 60 per cent debt-GDP ratio would require major efforts on our part to comply with it. However, we are determined to do that; we are also strongly negotiating on matters of that kind and of course the area of penalties is also one which we are negotiating very strenuously because, in a way, it is anomalous to say the least, to say to a member state which is in difficulties that they have to be penalised, thereby adding to their difficulties. Commonsense would accept the reasonableness of that argument.
Will the Taoiseach agree with the estimate that the Irish economy would have to grow by something like 2 per cent each year for the next 20 years above the average growth rate of the European Community in order to achieve convergence with the rest of the Community? If so, what instrument does he see being put in place as a result of the new treaty to achieve that kind of growth and convergence? Is the Taoiseach aware — I am sure he is — that the European Parliament is of the view that there is a requirement for a coherent common industrial policy by the European Community which is, essentially, an interventionist position? Do the Irish Government agree with that and, if so, will they support the inclusion of a reference to a common industrial policy in the new treaty amendments which are being negotiated at present?
I would put it the other way round; we are fairly committed to and arguing for the concentration of economic and monetary union on the objective of creating employment, maintaining it and creating additional employment. It is one of the things we have specifically advocated and which we are determined to have included. That is the sensible approach for a country like ours. I would not accept the forecast by the Deputy as it is not very sensible to forecast 20 years ahead.
I will hear a final question from Deputy John Bruton.
I wish to ask a question.
I did not see Deputy Garland, I will facilitate him.
Will the Taoiseach oppose the provisions in the Dutch draft which would allow the British to opt out of the single currency area, thereby depriving the island of Ireland, uniquely in Europe, of the opportunity of being a single land area with a single currency?
In that regard all my actions and negotiations would be motivated by the desire to have all 12 member states able to sign a final agreement at Maastricht, and that a situation will not develop whereby any one member state would not be able to agree with the whole process of integration. I should not like to give any decision on the question raised by Deputy Bruton in that regard except to say that it is my wish and my hope — as a small member state with everything to gain from integration — that Maastricht will be successful overall. I am not sure the proposal on the table about opting out would necessarily be all that deterimental to this country.
It would deprive us of the benefits while leaving us the costs.
A final question from Deputy Garland.
Will the Taoiseach agree that the benefits to the economy accruing through the Structural Funds and other support grants do not adequately compensate for the wholesale dismantling of our indigenous industry through the workings of the Internal Market?
I do not agree with the broad thesis implicit in the Deputy's question. It is, undoubtedly, in the best interest of a small country like ours to be part of an integrated Europe with a single market and moving towards full economic and monetary integration. We must ensure in the negotiations that enshrined in that process, as an integral part of it, is the principle of economic and social cohesion. In that way we can ensure that peripheral regions of the Community, like ours, away from the prosperous centre, will benefit fully in the economic expansion which the integrated economic and monetary union will bring.
The Taoiseach misunderstood my first question with regard to the 2 per cent growth. I was not attempting to forecast growth over the next 20 years. The question was whether the Taoiseach would accept the forecast that we would need a 2 per cent growth over and above the average growth that may take place in the rest of the European Community in order to achieve convergence between the 12 member states and, if so, what instruments does he see causing such a phenomenal level of growth, given that his forecast this year is for 1.4 per cent?
There are too many imponderables involved to enable me to make any comment on that sort of statement.
I was asking what instruments he sees being used to achieve——
We now come to deal with a Private Notice Question from Deputy Noonan (Limerick East). The matter is in order and I ask him to put his question.
