Before the debate was adjourned I was discussing the broad economic guidelines which have been agreed at Commission level. It is worth spending a couple of minutes thinking about how that happens. As I understand it, Ireland is represented at official level in discussions of the monetary committee. The monetary committee subsequently submits its considerations to the Commission and the ECOFIN council. They are normally rubberstamped.
Until this year, none of us paid a great deal of attention to that. However, it will become a great deal more important in future years and will form at least one of the pillars informing the political remit of the central bank, the economic policy of the ECOFIN council and the euro eleven committee. It is very important that we have a distinct democratic input to the formation of those guidelines. It is also important that this House knows the contribution being made on behalf of Ireland to those guidelines. None of that information is in the public arena. The deliberations of the monetary committee are, by statute of the European Treaties, held in private. This position is not acceptable. In future these guidelines will become very important in informing the way in which European economic policy is decided. We need look no further back than a couple of months ago when we were effectively told we were spending too much, that excessive tax cuts had been granted, that we should stop spending too much and should not grant any tax cuts in the upcoming budget.
It is incumbent on us to maintain a certain measure of independence. We must maintain, inasmuch as we can, independence in the way in which we distribute the benefits of growth in society. We should look to maintain independence in the whole area of tax harmonisation because the agenda has moved on over the past six months to a year. Tax harmonisation has gone from being something for which people hope some time in the future to being very much towards the top of the agenda. Not for the first time the co-ordination of DIRT tax is being discussed by the ECOFIN Council. Perhaps more importantly, we will undoubtedly be required in time to co-ordinate corporation taxes, and there are those who hope we will also co-ordinate income taxes. This is a process we should do our best to resist. I am not naive in the matter. I realise it is something we cannot avoid forever if it is the will of the bigger countries, but we should do our best to resist it, at least for the time being.
The discussions over the past weekend about the EU budget are also of considerable importance to Ireland. I was somewhat concerned by the reported remarks of the Taoiseach in relation to that budget. He is reported to have said that we could live within the current 1.27 per cent limit provided reform of CAP was not as thorough going as had been suggested. This suggests, in traditional Irish fashion, that our primary interest in the EU budget is the CAP. If one looks at the overall figures, that has been the case in the past. I emphasise that, while we acknowledge the dependence of many parts of the farming community on the CAP, there are others who also have their call on EU funding. We have started to spend money, hesitantly but in some ways effectively over the past while, on inner city communities, on local development and support and on infrastructural development in areas which are not as well off as others. That focus has to continue, and form an important part of the demand we make on the EU budget into the future.
I have never understood why the transitional process is as long as it is. I was interested to hear the Minister confirm that he wants to give himself power in this Bill to terminate the transitional process any time after 1 January 2002 and does not necessarily see the joint circulation of currencies continuing until 30 June. I have never understood why it is necessary to have a three year changeover period in the first place. The argument usually advanced is that it will literally take that length of time to produce the notes and coins. It is beyond me why it should take five or six years to produce notes and coins. It seems this is inviting an additional period of potential instability. It is not a road that we need necessarily have gone down, although I accept at this stage it is unlikely we will change that.
Reading the detail of the Bill, is it necessary to go through, for example, legislation in relation to the criminal law, to review the fines imposed and change them into euro? The Minister said that contracts would be automatically denominated in euro during the changeover period and law would also be denominated in euro in so far as it was relevant. However, that provision is not in the Bill. Perhaps the Minister and his officials could help me in that regard. The Minister also spoke about the fact that we would be able to use cheques and other negotiable instruments from 1 January next. I would like more detail as to how this will work. At the moment there is this phenomenon called a eurocheque. Using a eurocheque issued by an Irish bank one can in theory go into a premises in Holland or Germany and write a cheque in the local currency which will then clear through one's own bank in time. Anybody who has ever tried to use it will realise that the principle is very good but it does not work very well. It seems that if we are to use cheques and other instruments of that kind, there is a need for the banks, if they are not already doing it, to improve their clearing systems so that we can use cheques in a way that means something to ordinary people, tourists as well as business people.
The Minister gave us some clarification, but there are one or two issues that need to be teased out in relation to transaction charges and commission that the banks will charge during the changeover period. At the moment, if an ordinary individual wants to buy currency the bank will offer a particular rate, it will offer business a different rate, and a different rate again to the wholesale market. I understand that following 1 January next, there will be one rate and one rate only, so that there will be no discrimination between business, the wholesale market and individual customers. Perhaps the Minister would confirm that. Certainly there can be no justification for spreading a risk if there is no exchange rate in the first place.
We also need clarification in relation to the transaction costs. It is my understanding that the banks have agreed to charge minimal non-commission transaction and administrative costs for changing over between euro and Irish pounds or any of the other individual currencies. Has agreement been reached on the level of those costs because there is a danger that if it is excessive customers will quickly become cynical about the advantages in relation to transaction costs etc., that were meant to accrue following the introduction of the single currency?
I would be interested to hear the Minister's reflections on the bond market. He will know that many people who are active in the bond market believe it will not do well out of this, that the demand for Irish bonds will diminish considerably and that demand for Irish Government debt will also diminish considerably. Clearly there will be a need, if we want to stay in this market, for the NTMA and Government to market Irish Government debt quite aggressively after 1 January next since the obvious advantages which it holds at the moment will simply disappear. I would be interested to hear whether there have been discussions with the NTMA and whether Government has made any specific decisions in relation to that.
Deputy Noonan began his contribution by saying that effectively EMU is a political project. My party has endorsed it as such. It has potential economic disadvantages which we have gone through many times in this House. The fact that sterling will remain outside EMU is clearly a potential competitive disadvantage. It will impose a need for flexibility in areas where currently flexibility is not to be found. There are other disadvantages and potential difficulties, but on the passing of what I think will be the last legislation on this historic move, it behoves us all to be positive and say that on the balance of advantage to Ireland this is something we should do both for our economic benefit and because it is an economic necessity.