Dáil Éireann díospóireacht -
Wednesday, 15 Jul 2020

Vol. 995 No. 1

Pre-European Council Meeting: Statements

The Taoiseach

I will attend a meeting of the European Council this Friday and Saturday, 17 and 18 July 2020. While EU leaders have met five times in recent months by videoconference, and twice by videoconference with leaders from neighbouring regions, this will be the first time that leaders will meet in person since the special European Council held on 20 February and since the start of the current Covid-19 crisis. It will also be my first time to attend a meeting of the European Council as Taoiseach.

The essential focus of this week's meeting will be the proposed budgetary package for the EU for the next seven years, that is the multi-annual financial framework, MFF, and a new recovery proposal, Next Generation EU, to support and accelerate economic recovery across the EU in the wake of the Covid-19 crisis.

In advance of this week's meeting and in preparation for our discussions, I have engaged with a number of my counterparts, including Charles Michel, President of the European Council, Ursula von der Leyen, President of the European Commission, and fellow leaders, Angela Merkel, Mark Rutte, Gitanas Nauseda and António Costa. In these engagements I have expressed my strong support for an ambitious MFF focused on economic recovery and the green transition, and a recovery fund to match the scale of the greatest challenge we have faced for decades. An unprecedented challenge demands an unprecedented and collective response.

I will approach this week's meeting in a constructive manner and with the aim of reaching agreement. As I told President Michel, I very much hope that it will be possible to reach agreement. In recent times, the EU has experienced considerable division and discord. It would send a strong signal to our citizens if these divisions could be set aside in the interests of reaching a compromise outcome that sets the EU on the path to recovery and to a better future. However, I will only sign off on a package that is fair, balanced and meets Ireland's needs. Of course, political agreement in the Council is a first step. Once it has been achieved, the consent of the European Parliament is also required for the MFF to come into operation from the beginning of next year.

President Michel presented his new proposal, or negotiating box, last Friday in the form of draft conclusions for this week's meeting. The revised negotiating box is receiving careful consideration by all relevant Ministers and Departments. We had an initial discussion of it at Government on Monday and the Cabinet committee on Europe will consider it further tomorrow. What is clear is that President Michel has set out an ambitious proposal for strategic recovery for Europe. It focuses on repairing the damage caused by Covid-19 while also setting clear direction for a fairer, greener digital future grounded in shared EU values.

President Michel recognises the need for the right overall balance in any final package that can be agreed by 27 member states. From his discussions with European leaders, including my own constructive exchanges with him on 1 July, he has identified six building blocks as a basis for possible political agreement. The first is the overall size of the package, whereby he proposes a new multi-financial framework of more than €1 trillion in 2018 prices, based largely on the package considered by leaders in February. The second is broad continuity with the current position on the issue of rebates, an issue of significant concern for a number of member states. The third is the size of the new recovery fund, whereby he proposes retaining the ambition of a new €750 billion instrument funded by exceptional one-off borrowing on capital markets, as proposed by the European Commission in May. The fourth is the balance between loans and grants in the new instrument, whereby he proposes retaining the balance proposed by the European Commission of €500 billion in direct funding through EU programmes and €250 billion in new loan-based financial instruments. With regard to the fifth, on allocations from the recovery and resilience facility, which forms the bulk of the new fund, he proposes that 70% be committed in 2021 and 2022 using the methodology proposed by the Commission in May, with the remaining 30% of funds committed in 2023 when further data will be available, allowing greater responsiveness to the evolving economic impact of the crisis. The sixth is governance and conditionality, on which he proposes that these new arrangements be embedded in the existing European semester process and aligned with the country specific recommendations adopted by the Council each June.

President Michel also proposes ensuring appropriate linkages between funding and the rule of law, an issue I have raised with him, and setting a 30% target for the share of the overall package meeting climate-related objectives consistent with climate neutrality by 2050, the Paris Agreement, and the do-no-harm principle of the European Green New Deal. This will undoubtedly be an important aspect of our debate when we meet. The EU is not simply an economic partnership or a trading bloc. It is a community of values and laws to which all member states must be committed, and by which they must operate.

These six building blocks are accompanied by important proposals in two further areas. Alongside its proposals for spending, the Union must also provide itself with the revenue it needs. To date, this has largely been provided by member state contributions and it is my view that this should continue to be case. However, in addition to current sources, President Michel is proposing a new own resource starting in 2021, based on the weight of non-recycled plastic packaging waste. I have signalled that this is something I can support. However, I remain to be convinced about other proposals in the new negotiating box, including one based on the emissions trading system possibly reformed to include the maritime and aviation sectors.

I do not believe that now is the time to consider further sources, such as the carbon border adjustment tax or a digital levy, on which President Michel 's text asks the Commission to bring forward early proposals. Ireland's position on digital tax is well known. We support the work under way at the OECD. Furthermore, with the EU in the middle of a severe economic crisis, we should be very careful about introducing innovative new taxes, the consequences of which are unknown and which could seriously impede Europe's economic recovery.

In my discussion with President Michel and others, I also highlighted the economic impact of Brexit on Ireland. In all scenarios, Brexit will have a negative impact on important sectors in our economy, which are already dealing with the unprecedented challenges of Covid-19. If we do not succeed in reaching agreement with the UK on a free trade agreement, the impact will be all the more severe. No set of arrangements will replicate the access and benefits of the UK being a member of the EU and being within the Single Market and customs union. I expressed my strong view to President Michel that just as we as a Union are all standing in solidarity with those most impacted by Covid, so we should be able to support those most impacted by Brexit. The inclusion in this latest negotiation text of a proposal for a new Brexit adjustment reserve to counter the adverse consequences in worst affected member states and sectors is, therefore, most welcome.

While the details of this new proposal remain to be worked out, we are ready to work constructively with partners to ensure that it is targeted where the need is greatest and that the consequences of Brexit for Ireland are fully understood and reflected. In summary, I welcome President Michel's proposals as the basis for negotiations at this week's meeting. They are an advance on previous proposals in meeting Irish concerns, although there are other elements on which we will need to see further progress before a final agreement is reached.

In line with the priorities in our programme for Government we will work constructively to agree a package focused on Covid-19 recovery and which sets out an ambitious strategic agenda for Europe. We will seek to maintain the Common Agricultural Policy budget at current levels and meet other priorities such as climate action, Horizon Europe, Erasmus and programmes such as PEACE PLUS. The negotiation of the new CAP will be critical for the next decade of farming, especially with so many pressures on the Irish farming sector and on family farms at present. As they have shown, our farmers and rural communities are ready to meet the challenge of the climate transition. A properly funded Common Agricultural Policy is a vital tool in this regard. The CAP is an important, long-standing and well-functioning policy. A strong, progressive, sustainable and resilient agrifood sector will continue to provide European consumers with high-quality and secure food into the future. I will be making this case strongly at the meeting.

Ireland is now a net contributor to the budget, reflecting the strong economic growth we have witnessed in recent years. As a country that has benefited from the solidarity of our partners in almost 50 years of membership, including in providing us with vital funding at times when it was needed most to drive our economic and social development, Ireland remains prepared to offer the same solidarity to those countries that continue to lag behind in economic terms. As our history shows, contributing to growth in one member state helps to build prosperity and markets for all.

In recent months Covid-19 has caused a crisis without precedent at global and European levels. As well as managing and controlling the pandemic, mitigating and recovering from its impacts, including the extensive economic damage it has inflicted, remain at the top of our agenda. Reaching early agreement on the next MFF and recovery fund will be a strong signal that the EU is determined to chart the pathway to recovery together at this difficult time. I hope it will be possible to make strong and positive progress at this week's European Council meeting.

The Minister of State, Deputy McConalogue, will respond when today's statements conclude.

Deputy Mary Lou McDonald

I am sharing time with my colleague, Deputy Brady.

This weekend the European Council will meet to discuss the multi-annual financial framework for the EU, as the Taoiseach said. The MFF will shape and direct the financial policies and priorities of the EU for the best part of the next decade. It will have a significant impact on the lives of ordinary workers and families in Ireland. The discussions on the MFF come at a time when member states are still reeling from months of battling with the Covid-19 epidemic and with the significant social and economic shocks that have arisen as a result of the pandemic. This is, therefore, perhaps the most critical multi-annual budget in the history of the EU.

It is essential that the mistakes of the past, made in the face of another seismic crisis, are not repeated. Ten years ago we faced a different crisis, an unprecedented recession as a result of the banking crisis. The decisions taken and the political choices made at that time were undoubtedly the wrong ones. Austerity was chosen over stimulus and investment, and across the EU ordinary citizens paid the price. Economic recovery was stifled, jobs and incomes were obliterated and the draconian fiscal rules allowed right-wing governments to cut vital public services when investment was so badly needed. In Ireland, we are still living with the devastating results of those bad choices. The scale of the harm done is most acutely felt in the profound damage inflicted on our health services and housing system. The austerity era also shaped an economy that is deeply unfair and where hard-working people see their incomes hoovered up by the crippling cost of living.

The experience of ordinary workers and families over the last ten years shows us that the EU's budget for the next decade, and its response to Covid-19, cannot be shaped by the policies of slash and burn. Covid-19 is a crisis. Crises bring challenges and tragedy, but they also bring opportunities and hope for the future. With this multi-annual budget the EU has a big opportunity to turn away from the dead-end fiscal policies of neoliberalism and privatisation and to take the first steps in creating a new era of investment in the well-being of workers and families and delivering prosperity for all.

The President of the European Council has prepared a revised plan, and it is not fit for the purposes I have set out. The proposal combines the recovery fund with the seven-year budget. This creates a financial muddle in which essential programmes, such as the Common Agricultural Policy and social expenditure, are put in direct competition with Covid-19 recovery funding. Indeed, it is hard to imagine a worse outcome for workers, farmers and small businesses in Ireland and across Europe. The proposed rebates for Germany, Austria, Sweden and the Netherlands miss an opportunity to spend the not inconsiderable resources of the EU on the basis of genuine, targeted, objective need.

I too welcome the new €5 billion Brexit reserve, but I am deeply concerned about the new EU taxes that are proposed. It appears that those in the EU who are resistant to progressive change are determined not to let a good crisis go to waste. Of course, marrying the recovery, our climate objectives and a new green deal is the correct path, but that in turn must also be married with social justice. We cannot have a regime of taxation that falls on those least able to pay and which does little, if anything, to deal with the real climate crisis coming down the tracks. I am concerned that the pathway we are seeing is the wrong one. Ordinary families and workers cannot be made to shoulder the cost of this emergency, as they were forced to carry the cost of the banking collapse. That would be unjust, unfair and reckless for the future of Ireland.

The Irish Government must be to the fore in arguing for a new departure for the people of Europe. The choice is clear. We can have a new decade shaped by the failures and hardships of the past or we can have a new decade of opportunity, growth and prosperity. This time of crisis can be the time when the work of building a new and equal Europe finally begins. This is a rare chance for real change and it is a chance that should not be wasted.

Deputy John Brady

As this is the first time I have had the opportunity to meet the Taoiseach in the Chamber since his election, I congratulate him and wish him well in all his endeavours in the time ahead. I also congratulate the Minister for Finance, Deputy Donohoe, on his recent promotion to a new role at the heart of what he terms to be the economic engine of Europe. In his own words and those of the Government, he assumes his role with a pledge to fight Ireland's corner in Europe and being freshly possessed with an infusion of assumed attributes which he believes mark him out as one of the shining lights of the Government. It gives me pause for thought. Given the difficulties with a certain project here at home, I wonder if the Taoiseach might consider the possibility of charging the Minister for Finance with responsibility for the completion of the national children's hospital, as it appears to be beyond the abilities of both the former and current Ministers for Health.

The forthcoming European Council meeting has potentially massive implications for this country. That this is a small country which has had to face two serious crises in the space of ten years and now waits to face the implications for this island of the folly that is Tory Brexit is well ingrained in all our minds.

I cannot say with conviction, however, that the same is true of our colleagues in Brussels. Under the original proposal, Ireland would receive less than one quarter of 1% of the overall fund. Ursula von der Leyen, President of the European Commission, has spoken in the past week of how we have entered into the worst recession in 100 years, an economic forecast that predicts an 8% contraction in the year ahead, with the probability of only a partial rebound in the following year. Within this, President von der Leyen speaks of the themes of togetherness and solidarity, sentiments I applaud but which were sadly absent when Ireland was left to shoulder an unequal burden during the financial crisis of a decade ago. The mendacity of the banks revealed in the past week reminds us of the need for constant vigilance over the financial sector - a decade and a bailout later and still nothing but contempt for the Irish people. When President von der Leyen speaks of the fears of youth unemployment across Europe, of young people leaving in droves to find jobs elsewhere, it is all too painfully familiar for us in Ireland. Recently, when our airwaves were inundated with heartbreaking stories of how our young people in Australia and elsewhere were struggling to get home, we were again reminded of the ongoing price the lost generation is forced to pay.

Europe must be made to hear our pain, a pain which does not echo in the columns of the spreadsheets that give the detail of our economic performance. The fears of small businesses up and down this country cannot be reduced to quantitative terms. Ireland has more than earned its right to a fair and equitable share of the recovery fund. While I welcome the €5 billion reserve to address the impact of Brexit, we must resist any attempts to conflate the Brexit fund with the next generation fund. When the European Council President, Charles Michel, talks of repairing the damage caused by Covid-19 or reforming our economies and remodelling our societies, we must point to the damage wrought on our society and our economy not just by the pandemic but also by a decade of austerity, with a health system that was on the point of being completely overwhelmed before we had even heard of Covid-19, a housing crisis impacting on family organisation and social structures in a way perhaps not seen since the 19th century and, again, the pain of emigration. We must fight for every single cent we can take back from Europe.

I wish the Taoiseach better luck than the last Fianna Fáil Taoiseach, who went to Europe looking for a deal but ended up taking home the troika.

Acting Chairman (Deputy John Lahart)

Deputy Howlin is up in the gods.

Deputy Brendan Howlin

Indeed. I hope Members can hear if not see me up here. I wish the Taoiseach well in his first face-to-face European Council meeting. It is really important that he meet his colleagues face to face because personal relationships are extremely important in European Council affairs, as the Taoiseach knows very well.

This is, as he rightly says, a Council meeting that will be focused exclusively on money. The last time there was a negotiation for a multi-annual financial framework, we in this country were at the heart of it. I listened with interest to the contribution Deputy McDonald made, and she was right to an extent. It had nothing to do with the multi-annual financial framework in terms of supporting us during our economic crisis. The disastrous mistake was made at the heart of Europe when predominantly conservative governments that dominated, and still dominate, the European Council required the socialising of banking debt, a process that was obviously not in Europe's interest, caused great hardships and was not supported by the International Monetary Fund, which would have assumed that banks would be allowed to fail, that the pillar banks would be protected and that bondholders would take the consequences. That is an argument for another time.

The euro area now faces an unprecedented crisis, as the Taoiseach rightly says. It is expected that the GDP of the area will shrink by 8.7% this year and the GDP of the EU as a whole by 8.3%. GDP in Europe has collapsed by a massive 17% in the first six months of this year. A 17% recession in GDP terms in six months is unprecedented. The plan is therefore of critical importance. As the Taoiseach has outlined, it has a number of components.

The multi-annual financial framework is unchanged from the February, pre-crisis presentation. It consists of €1.074 trillion. There are rebates for a number of countries, including Denmark, Germany, the Netherlands, Austria and Sweden, with the new recovery fund of €750 billion to be paid through MFF programmes: loans, guarantees and grants. Of course, the devil will be in the detail. As I said in my last contribution, offering loans to countries such as Ireland right now is of little value. We can borrow at less than 0.25% interest, and did borrow €6 billion last month. Our short-term treasury bills are in negative interest rates. Access to cheap borrowing is not what we need. We need to ensure we have grants. I would be interested to hear what exactly the Government expects to achieve in financial terms. Perhaps the Minister of State, Deputy McConalogue, will indicate that. What will be the Government's objective when it sits down with its colleagues in the coming days?

The allocation of the recovery and resilience facility, RRF, will be critically important. Its stated objective is that the money will go to countries and sectors most impacted by the pandemic. As the Taoiseach indicated in his contribution, 70% of the money is to be committed next year and the following year, in 2021 and 2022, with the balance of 30% being allocated in 2023 and the whole sum being disbursed between now and 2026. Some 30% of the overall fund is to be devoted to climate-related issues. This is a really exciting prospect for us. We could potentially be the offshore wind engine of Europe, and the Commission is excited about this. We need to get on with that. I hope the Government will be very ambitious in the expenditure targets it sees for offshore wind and hope it will recognise, if I may be parochial for a second, Rosslare Europort as the ideal location for east coast wind. There are already significant proposals that need support to bring that about.

Just by way of an aside, I wish to mention the additional conditionality, which I welcome because it is really important, particularly in the context of the presidential election in Poland on Sunday, in which President Duda was re-elected. The maintenance of the rule of law and of European values will be one of the criteria used to determine eligibility for European funding. It is not good enough for any country to abandon the fundamental principles of the rule of law, freedom of expression and the separation of powers and expect to be part of the European family when it comes to the divvy-up of money.

From 2026, repayments will have to be made, an issue the Taoiseach touched upon. What is set out in President Michel's plans is a plastic waste tax, which I think we would welcome, although I think we have all been looking with horror in recent months at the billions of pieces of single-use plastic and disposables we have been generating, whether masks, gloves, shields or gowns.

Billions of pieces of disposable waste are being generated right now, which is a cause of concern. Others referred to the digital levy President Michel touched upon. He envisages this will be introduced by the end of next year, which is not in the distant future. I would be interested to hear the Taoiseach's view on how that is to be brought about and what his attitude to it is.

On the €5 billion Brexit reserve fund to be created and, to quote President Michel's, "to counter unforeseen consequences in the most affected Member States and sectors". That is very welcome. Some €5 billion is a significant sum but it is not that significant if it is to be divided up between a number of countries. We will see the details of how that is to be distributed in due course.

The Commission member, Paolo Gentiloni, in an article in the Financial Times, pledges to revive plans for a digital tax on big tech companies. In May, despite legal changes we have made in the past ten years in this country, the Commission warned that features of our tax law, together with that of Cyprus, Hungary, Luxembourg, Malta and the Netherlands, still facilitated "aggressive tax planning". We cannot have a situation where we are perceived to facilitate aggressive tax planning by anybody. Some have categorised us as a tax haven. We need to be very clear. We have made substantial changes but other changes need to be made. I strongly support the OECD process because we cannot change the conditionality of the competitive advantage of Europe vis-à-vis countries like Israel or Singapore by having a uniquely onerous tax regime. However, we need to ensure that multinational companies pay their fair share of tax and that has not been the case. Let us acknowledge that and let us bring - I hope with a new President in America - the whole base erosion and profit shifting, BEPS, process to a successful conclusion.

I am concerned generally with the propensity of the Commission in recent times to use Single Market rules designed to protect competitiveness in the Single Market as Trojan horses to attack states' taxation regimes. That has come into sharp focus in the Apple judgment today. We need to have an open and frank discussion about that and the Taoiseach might facilitate that at a future date.

My final point relates to PEACE PLUS. I was involved in negotiating the PEACE IV programme as part of the last multi-annual financial framework. It was not easily won, let me say. There was no enthusiasm from the UK at that time to support it. It opposed any increase and any measure and wanted the overall budget decreased. We fought that but without the UK, has the Taoiseach a commitment that there will be an ongoing peace fund to tackle the difficulties that will continue to be faced by people North and South of the Border on the island of Ireland, particularly in the context of Brexit?

Deputy Cian O'Callaghan

I warmly congratulate the Minister of State, Deputy McConalogue, on his appointment. I am concerned after listening to the Taoiseach's comments, specifically around the recovery fund allocation and the new proposals being put forward which will be discussed at the European Council meeting on Friday and Saturday. Under the new proposals, 70% of the funds would be allocated straight away in a formula that is not at all favourable to Ireland and the remaining 30% would be allocated in 2022, depending on economic performance. Under these proposals, Ireland will receive one of the lowest shares of the fund despite having the third largest negative revision of GDP in the Commission's autumn and spring forecasts.

The European Commission formula relies on GDP being an accurate measurement of economic activity. As all of us know, Irish GDP and GNI are heavily skewed by the investment activity of foreign multinationals and investors rather than by the activity of the domestic economy. The Commission proposal is therefore heavily skewed against Ireland owing to foreign direct investment in Ireland and the resulting GDP distortion. In addition, as a small open economy, Ireland is more vulnerable to global trade shocks than other countries and this should be taken into account by the EU when coming up with these formulas for allocation of resources.

I am concerned by the comments of the Taoiseach, from which it appears that the Government is more or less happy with this proposal to be put before the European Council meeting on Friday and Saturday, so I ask the Minister of State to clarify this in his comments in the wrap-up. Is the Government essentially happy with these proposals, which are very unfavourable towards Ireland compared to other EU countries, or will we be seeking a substantial change to the formula? This is the crux of the European Council discussions that will take place and this question is at the crux of how Ireland will fare in the allocation of these resources. It is very important for our general interests, so I ask for clarification on that in the closing comments.

On the proposed revenue raising measures, I welcome the comments from the Taoiseach on support for the plastic waste tax. That is a sensible proposal and we are 100% right to back it. However, I am concerned about the lack of support for measures in terms of carbon. I am surprised, with the Green Party now in government, that the Government is not supporting these measures.

On the digital tax, the US has walked away from the OECD process on digital tax and threatened the EU with retaliation measures if the EU brings in a digital tax. I note the comments of Benjamin Angel, acting Director General of the European Commission's Directorate-General Taxation and Customs Union, on Monday, when he told a hearing of the European Parliament that we had to accept the OECD process is not moving as quickly as we hoped. He also said there would need to be a plan B on digital tax. We have seen that a number of corporations in Ireland and across the world are beginning to stand up to the digital platforms and to withdraw their advertising revenue in protest at hateful and misleading content. It is time Ireland showed some leadership on this and insisted digital corporations paid a fair share of taxation. Furthermore, it is important that the Government stops resisting attempts to bring in an effective digital tax. We must show leadership regarding digital platforms which are lax on stopping hate speech and cyberbullying and which are not paying a fair share of taxation and making a fair contribution.

On the Brexit funding and the proposed allocation of €5 billion for countries badly affected by Brexit, we need to know if the Government thinks this is sufficient funding, given that we are still looking at a potential worst-case scenario in terms of Brexit. We also need to know how much of that €5 billion we think will be allocated to Ireland. Will there be any constraints or conditions attached to that €5 billion funding?

In terms of the measures on climate, I welcome the 30% of the recovery fund that will be targeted at climate-related projects. However, on the one hand, while the EU is correctly investing that funding into climate-related projects, on the other hand we know that a lot of the other proposed funding will continue to go into toxic and polluting industries, in many ways cancelling out the climate-related investment. Research by Greenpeace has shown that a lot of funding at EU level continues to go into those industries. There is a strong case that all the EU budget and all of the recovery fund should be climate-proofed, so we are not investing on the one hand and undoing that with investment and with other measures. There has been no reference as to whether Ireland will raise this at the European Council meeting but I ask that we make the case that all the investment from the EU budget and recovery fund is climate-proofed.

The EU's response to the pandemic has made it very clear that its competence in respect of transnational pandemics is too weak and must be strengthened. It is also very clear that the European Centre for Disease Prevention and Control needs to be beefed up. There must be substantial learnings from this pandemic. Is Ireland making the case for greater investment in public health at an EU budgetary level?

The situation in both Hungary and Poland gives cause for concern. One third of Polish municipalities, which include 90 towns and cities, have established so-called LGBT-free zones. There are ongoing attacks on the rights of trans people in Hungary as well as attacks on civil society organisations. Noting the results of the presidential election in Poland and that the country is about to receive some €16 billion from the EU's recovery fund, it is of critical importance that the rule of law, democracy and respect for human rights be explicitly tied into the EU budget and the fund. There is a great deal of ambiguity around that and, therefore, I ask the Taoiseach to press the issue at the European Council. I note there was no confirmation in his comments of an intention to do that. I have raised this issue previously, including in writing, with the Minister for Foreign Affairs and Trade. I would like some meaningful action on it.

Following the election of the Minister for Finance as president of the Eurogroup, it is worth noting that this body started life as essentially a dining club for eurozone finance ministers before morphing into a forum where the fate of nations, including Ireland was, in effect, decided. No minutes were taken at the meetings where the terms of the bailouts during the eurozone crisis were agreed. Irish public services, including healthcare, childcare and housing supports, have been starved of much-needed investment partially as a result of decisions that took place at Eurogroup meetings, which were not minuted. Economists have pointed out that meetings of the Eurogroup are unaccountable and opaque and have no proper legal status. Now that Ireland has a leadership role in the Eurogroup, the Government should insist that transparent legal structures be put in place to underpin the workings of the body.

We should, furthermore, seek policies that will bridge the gap between stronger northern European economies with strong public services and the weaker southern economies. That is necessary to ensure a level playing field, and the Taoiseach's comments in this regard are welcome. He is absolutely right that any weakness in the EU affects all of us in economic and social terms. Doing as much as we can to ensure there is strong economic and social recovery across the Union, at the European Council meeting and through the Eurogroup, is fundamentally in our interests as trading partners and EU members. The stronger every country in the Union is, the stronger Ireland will be. I welcome the Taoiseach's comments to that effect and I urge him to make that case as strongly and forcefully as he can at the Council meeting and through the Eurogroup.

Deputy Richard Boyd Barrett

I am sharing time with Deputies Barry and Paul Murphy.

The advent of Covid-19 has put Europe and the world at an existential crossroads. There have been a lot of woolly words of recognition about the need to move forward to a new normal, something different and better, and to learn the lessons of the Covid pandemic. However, I fear that a lot of that talk is rhetoric that masks an inclination simply to move as quickly as we can back to where we were before the advent of Covid. My fear is that we will fail to learn the lessons we should learn from the pandemic and the existential threat it poses to humanity.

One instance of that failure is the comment by the Taoiseach that he is not convinced about the need for a digital tax on corporations. That he needs convincing on this point gives the game away about the attitude of the Government to the Apple ruling and its commitment to large corporations that are flagrantly involved in aggressive tax avoidance for which the rest of society pays. This is not just an isolated case of trying to defend the particularities of Apple's aggressive tax avoidance because that company provides important jobs. The jobs in Cork are important, but the giveaway is that the Government does not just want to side with Apple over the tax dispute ahead of collecting taxes from the company that could go into funding jobs, infrastructure and services. The giveaway that this is not an isolated instance is the Taoiseach not being convinced about the need for a digital tax.

I do not understand how the Taoiseach can claim to be supportive of tax reform measures on an international level, in recognition that those corporations have grown bigger than states, are enormously profitable and are hoovering up vast amounts of the surplus wealth in the world, but not be in favour of imposing a little bit of tax on them to fund the services and infrastructures throughout Europe on which they depend. It is another example of how Ireland, in particular, is subservient at the feet of enormous multinational companies and does not recognise the need to move forward to a new normal where those corporations pay their fair share of tax.

This is important and relevant to the lessons of Covid because we have learned that if we do not fund our health services to the level where they are capable of dealing with surges of the sort we saw during the pandemic, the entire economy shuts down. That is what the famous curve is about. The level of healthcare capacity was too low to deal with surges. In the case of Ireland, it was too low even before Covid, when we were already operating at 100% capacity. If we do not address that capacity problem by taxing large and very profitable corporations to fund health services, childcare, education, water infrastructure and all of the areas that are deficient in investment, our economy will shut down at the first crisis it faces, as we have seen with Covid. If we do not recognise the need for a fundamental shift away from neoliberalism in the aftermath of Covid-19, we are heading for another disaster sooner or later, whether as a result of Covid, the next pandemic or another crisis. There needs to be a fundamental recognition of that, even in the July stimulus. It is not just about stimulating small and medium enterprises, which we have to do to sustain the jobs they provide. Unless we finance massive investment in key public services and infrastructure, we have an accident waiting to happen in this country and across Europe. I hope the European leaders and our new Taoiseach recognise the need for that change.

Deputy Mick Barry

I live in Blackpool on the north side of Cork city. The Apple headquarters in Hollyhill are a 30 minute walk from my front door. If I take a walk there, I am high up above the city and can see schools that are underfunded, where parents have to organise fundraising drives at Christmas time to keep the schools patched up. I can see hospitals that are underfunded, with patient waiting lists and increasing numbers, once again, in their emergency departments.

In other words, from that vantage point one can see with one's own eyes the need for serious taxes to be levied on those who can afford it, on the super-wealthy and the big corporations in Irish society, like Apple, which make super profits. They are meant to pay a 12.5% tax rate on those super profits. The European General Court in Luxembourg found today that the Republic of Ireland did not give Apple illegal state aid but it also found that Ireland charged Apple tax at the rate of 1% in 2003 and 0.005% in 2014. All it has said is that that was legal. It says a lot about the law in this country if fabulously wealthy multinationals can be charged tax at that rate. While the court found that it was legal, it put it a slightly different way by saying that it could not say with certainty that it was illegal. The Commission should appeal that ruling and everyone who wants to see better hospitals and schools and less inequality in Irish society will support that sentiment.

Deputy Paul Murphy

The headlines read "Ireland wins appeal in €13 billion Apple tax case". It is some victory when one of the richest corporations in the world gets to hang on to €14.1 billion and add it to a cash pile of over $100 billion. That money is not available to tackle the problems that exist here, where one in four people is unemployed, 10,000 people are homeless and we need urgently to invest to avoid climate catastrophe. It raises the question of which Ireland has won. Who does the Government represent? This brings to mind an article by James Connolly from 1899, called "Let Us Free Ireland!", where he writes: "Let us free Ireland! Never mind such base, carnal thoughts as concern work and wages, healthy homes, or lives unclouded by poverty". He goes on to talk about the rack-renting landlord and the profit-grinding capitalist. It is their Ireland that has won this court case and the profit-grinding capitalists in this case are Apple and the other multinationals that use Ireland as a tax haven. This is a victory for the political establishment that wants to continue to use Ireland as a tax haven regime. It is utterly immoral due to the robbery of some of the poorest countries in the world and those who live in them and it is utterly unsustainable because one cannot win a race to the bottom. The only winners are the corporations that do not have to pay any tax.

As Deputy Barry pointed out, the judgment does not say that Ireland is not a tax haven or that it was not crazy that Apple could benefit from a tax rate of 0.005%. It just says that that treatment was available to all multinationals. The Minister for Finance has stated that what we have is equality of treatment for all taxpayers. I am sure many workers will be knocking on Revenue's door tomorrow asking if they can please have a tax rate of 0.005% too. It proves Connolly's point that "governments in capitalist society are but committees [for] the rich". We need to clear them out and fight for a socialist green new deal and a Government that acts in the interests of working-class people, ends this race to the bottom, ends our tax haven status and develops a socialist industrial policy based on democratic public ownership and control.

Deputy Mattie McGrath

I am sharing with four of my colleagues, le dhá nóiméad an duine.

I am glad the Taoiseach has had his first meeting, but it is time we asserted ourselves in Europe. We must insist we get the loans, bonds and supports that will assist all the different communities throughout the country, and the SMEs especially. I do not often agree with the Deputies on the left, but I agree that the big corporations and conglomerates are fine. They are all right, Jack. It is the ordinary people, such as small businesses, pubs, undertakers, shopkeepers, hackneys, small contractors, delivery men with vans and so on, who need the supports. They need to be able to get them. I am not a big advocate of borrowing but we should get the money. It should not be like the last EU bailout, or the clean-out as I called it, when we paid almost 6% interest to our EU masters. We have been exemplary Europeans. We have done everything they wanted and have been the good boys of Europe. Now it is payback time. All of Europe is in the same situation, which makes it even more difficult for our young people and our workforce who may have to or want to emigrate. They will not be able to get work in many places because of this pandemic.

I question this pandemic and if it is really serious. The former Taoiseach wanted us to be good Europeans and I often questioned him about closing the airports and ports to non-essential people, especially tourists. Our people have taken the punishment and pain and we did not mind doing it for the sake of our country, our people and our front-line workers. Now, we see the tourists flooding in. They are wanted most of the time but at the moment, while it is still Ireland of the thousand welcomes, táimid dúnta. We are closed because having people come in from Covid hot spots is just madness. We must seal our borders. Hungary can do it. Many of the parties here might attack the President of Hungary but I admire him. He did it, he kept Covid out and he has looked after his people.

Deputy Michael Collins

I congratulate the Minister on his appointment and wish him the best going forward. The European Council meeting of 17 and 18 July will have to tackle many issues that are of huge concern to the Irish economy. We need clarity on where Irish fishermen stand regarding Brexit and the serious fallout from Irish and European trawlers being asked to vacate British waters, as it looks like will happen. That is a two-tier worry for Irish fishermen, first because they are being forced to vacate British waters and second, if Irish and European trawlers are forced out, they may all turn to the already overfished Irish Sea. This needs clarity and I hope the Minister will bring some back from that meeting.

Ireland currently produces more than 50% of our electricity from gas and we import gas via interconnectors from the UK. We have no existing gas storage on the island of Ireland. The Corrib gas field will be gone within ten years and we are now fully reliant on the UK for gas imports. The UK is also reliant on gas imports and has experienced its own decline in gas production in the North Sea. The UK is exiting the EU, meaning new risks to our economy. While the UK and Ireland are good friends now, the same cannot exactly be said for the EU and the UK, which are going through what looks like a messy divorce at the moment. If trade talks between the EU and the UK were to take a turn, there is not much preventing the British national grid operator from increasing tariffs on the interconnectors between the EU and the UK, which will in turn directly hurt the Irish economy. I urge the Minister to work on a solution when he is in Europe and if a solution is not forthcoming, I ask him to improve our security of supply for natural gas. At the minimum, he should consider a floating liquified natural gas, LNG, import terminal, which can guarantee our security of supply while developing offshore wind power and renewable energy sources.

Deputy Michael Healy-Rae

I again condemn the dropping of the Shannon LNG project, which will come back to bite this Government and future Governments because of the security we would have had from that vital infrastructure. It has been thrown out the window quite simply because it was demanded by the Green Party upon entering into government. A very high price will be paid by the Irish people with regard to that issue in the future.

Over the next few months, we have to ensure proper funding is secured and put in place, now more than ever before. Providing a proper rural environmental protection scheme, REPS, and a proper retirement scheme are in the programme for Government, and funding for them will be part of the next few months of negotiations as we deal with our counterparts in Europe. Funding is in place at present to be allocated to fishermen, and that has to be dealt with. There are fishermen operating out of Kenmare Bay, the Cromane harbour and bay, Tralee Bay and Dingle Bay.

These people deserve to be treated properly. They deserve to know whether the funding is there, when it can be distributed and how it is going to be distributed. We are hearing much about this issue, but the people who need this money, and need it now, are not getting it. Regardless of whether a person is a fisherman, a farmer or a small businessperson, the decisions and the speed of these decisions in the coming days, weeks and months will be of paramount importance. I urge the Minister of State to take this role very seriously because many people are relying on what happens in the next couple of months and they are relying on us as politicians to come up here and demand answers from the Minister of State and his Government, and I thank him very much for answering these questions.

Deputy Richard O'Donoghue

It is great to see €500 million being used for environmentally friendly projects. I note, however, that nothing has gone to agriculture, which is always being wrongly blamed as the cause of emissions in Ireland. Some €8.5 million is being provided for a gas project; €15 million is going to Irish Rail to reduce the number of diesel engines; €20 million is going to Dublin City Council for green heating systems; €4.5 million being provided for Tallaght district heating systems; €17.5 million is going to council street lighting; and €1.4 million is going for fuel efficiencies in heavy goods vehicles. Again, there is nothing for the farming sector, which is working very hard to bring down emissions and has embraced several simple measures. The replacement of a fertiliser like calcium ammonium nitrate with stabilised urea formulations, for example, reduces emissions but costs the farmer €40 per tonne. This is under the Teagasc marginal abatement cost curve guidelines. Farmers are also using low-emissions slurry spreading to reduce emissions, but there is no funding. All of this is Dublin top-heavy. Let us think of the rest of rural Ireland. Let us think of where we are getting our food every week in the shops. Let us think of Ireland as a green area and let us start with farming. Let us invest in farming and give something to farmers to help them to bring us a greener environment. The Government must stop always coming down on farmers with all the legislation and regulations. Would it not be better to improvise and give them something to go forward?

Deputy Danny Healy-Rae

I am glad to get a short time to talk on behalf of the people we are representing, including small business people, farmers and fishermen. We know the talks that are coming up are critical for all our constituents. I want the Government to spell out a clear message to the people it is dealing with in Europe. The myth is out there that farmers are getting gift cheques in the post. We want to make people realise that these cheques in the post are not gifts at all. The cheques in the post are supposed to compensate farmers for not being properly paid for their produce and to ensure the consumers of Europe get cheaper food. That is what has been happening. Many farmers are at a crossroads, especially the small suckler cowmen, the men who produce good-quality beef and the people who are up in the middle of the night calving cows and trying to keep them alive. I know what it is like. There is just a bare fraction between keeping a calf alive or it being dead at a certain time if the farmer is not there to do everything right.

I appeal to the Government to see after the small farmers because they are at a crossroads. I wish the Minister of State well. He is from the same type of county and terrain as ourselves. I wish him well in whatever talks he is involved in. We need these talks to go well for the small farmers, the fishermen and the small businessmen. There is a chance to borrow money cheaply for infrastructural projects, such as sewerage schemes. There are people out there, even this morning on the radio, saying that no one should build out in the countryside and that people should be building in towns or villages. I remind the Minister of State that there is hardly a sewerage scheme in any part of Kerry. All of the existing schemes are gone beyond what they can process or deal with. There is a need for extensions and new schemes. Many villages are without any sewerage scheme at all. I refer to places such as Currow and Scartaglin. Castleisland has been waiting for an extension for 40 years.

Acting Chairman (Deputy John Lahart)

I thank Deputy Danny Healy-Rae. I call Deputy Harkin.

Deputy Marian Harkin

I congratulate the Minister of State, Deputy McConalogue, on his appointment. I wish him and the Taoiseach well at the important meeting on Friday. It is the Taoiseach's first meeting and there will be many intricate negotiations ahead on the MFF, Brexit and all of that in the shadow of the Covid-19 pandemic. I hope the Minister of State will be part of a good outcome for Europe and for Ireland.

I am pleased to see President Michel's proposals on the new negotiating box. It shows that if leaders from small member states come together, perhaps they can achieve positive outcomes. I support his proposal on the 2:1 balance of direct funding versus loan funding. I have real concerns, however, about the formula being used by the European Commission to calculate the amounts that will go from the recovery funds to different member states.

As we know, Ireland is coming off badly in this respect. Using GDP as a measure skews the situation in Ireland's case, of course. GDP has always been a double-edged sword for Ireland. Like other Deputies, I would like the Minister of State to give the Government's perspective on the European Commission's proposal and the way in which it intends to divvy out the recovery funds. The €5 billion Brexit reserve is welcome. However, is it included as a sweetener for Ireland getting less from the recovery fund? I know this is the negotiating phase, but I would like to see if we could nail down those two issues because they are going to be hugely important here.

Taxation will be high on the agenda and in many ways Ireland is skating on thin ice in this regard. I agree with the decision of the General Court of the European Union in the Apple tax case. I will return to that issue at another time. I was concerned at the time, however, and this has been confirmed by the General Court of the European Union, that the Commission's decision that Ireland had breached state aid rules was an overreach and an example of what is called "competence creep" on the part of the Commission. State aid rules are the sole competence of the Commission. Taxation is the sole competence of member states. We had a referendum on that issue here.

Ireland has a major responsibility concerning tax justice and in ensuring multinationals pay their fair share, but that is a separate issue. We need to be careful sometimes about what we wish for. I do not want the European Commission to have the power to dictate our tax policy, but I do want Ireland, as a nation, to play a strong role in ensuring European and global tax justice. We can do that through the OECD and the base erosion and profit shifting programme, and by engaging proactively with our European colleagues in pursuing a digital tax strategy which, crucially, does not disadvantage Ireland's tax take.

I spent 15 years in the European Parliament and time after time I saw one proposal after another coming forward on a common consolidated corporation tax base, which would disadvantage Ireland's tax take compared to other member states. We have to work with our partners, but we also have to ensure any new digital tax is balanced and fair. It must deliver for our citizens, but we must not be left between a rock and a hard place.

Finally, given that taxation will be high on the European agenda, there is much talk about the Commission looking at Article 116. That would allow it to make decisions on tax policy based on qualified majority voting and it would allow the European Commission to get rid of the veto. As I stated, that is the thin ice on which Ireland is skating. In the response from the Minister of State, I would like him to give me his perspective on that matter.

Acting Chairman (Deputy John Lahart)

The Minister of State will respond now.

Deputy Joan Collins

I am coming in now. Deputy Thomas Pringle was supposed to speak but I am stepping in for him.

I wish to focus on our health services because that topic is high on the agenda given the pandemic we have been facing in recent months. A report published last month found that the European Commission made 63 individual demands of member states to cut spending on healthcare provision or privatise or outsource healthcare services between 2011 and 2018. The reason was to meet the arbitrary debt and deficit targets enshrined in the Stability and Growth Pact. These demands affected the peripheral economies of Greece, Spain, Italy, Portugal and ourselves that were hit by the sovereign debt crisis with particular harshness.

The Stability and Growth Pact has proven to be one of the most contested and controversial features of economic and monetary union and the broader EU. The pact imposed two numerical ceilings on government expenditure. The first was the debt-to-GDP ratio, over which there is a major question mark now. The ratio must be below 60%. The second is that the annual deficit of member states must be limited to 3% of GDP or less. The power of the European Commission to surveil and control the national budgets of member states was significantly strengthened in 2011 by the adoption of the six-pack and in 2013 by the adoption of the two-pack. These policies have driven nation states to outsource more healthcare rather than invest in our public elder care, mental health services and other services on which there is continued serious pressure.

From the introduction of the European semester running from 2011 to 2018, the Commission made 105 separate demands of individual member states to raise the statutory retirement age and reduce public spending on pensions and aged care. It made 63 demands that governments cut spending on healthcare and outsource or privatise health services. This is why we are in the situation we are facing now in a pandemic. There has been a conscious ideological front in the EU to privatise rather than pump money into our public services. This is the reason many countries throughout Europe had to go into lockdown as nursing homes were badly affected by Covid-19. They were trying to get older people out of the hospitals and into nursing homes. Our nursing homes were unable to deal with this surge in many cases. All of that will come out in due course.

This is about taxation and big corporates being able to pay their way to society rather than getting off with low tax on profits. While the Apple tax ruling today probably justifies the behaviour of multinationals and the Government in that they operated within their remit, it is immoral that a multinational with billions of euro paid only 0.005% in tax. The ordinary man and woman on the street cannot believe it. They cannot face that such a thing can happen when we are all under the cosh of the Revenue and the State to pay our taxes. Most people do not mind ordinarily, but they do when we see the contradictions and how the neoliberal ideological idea allows these things to happen. It is morally wrong wherever an outcome like the ruling today arises.

This has to change, as does the idea of private being good and public being bad. That has been the future of the EU in recent decades but it has to change. I support the idea that we need a socialist outlook to society that meets the needs of everyone and not only the few. That has to be done through progressive taxation across the board and up to and including multinationals. That should be brought to the European Council this week.

Minister of State at the Department of Justice and Equality (Deputy Charlie McConalogue)

I thank the Deputies for their statements and contributions to this important debate. As the Taoiseach outlined, discussion on the MFF and the next generation EU recovery package will form the focus of this week's European Council. The goal of the Council President, Mr. Charles Michel, is to bring to a conclusion the process that began with the Commission's presentation of its proposals for the MFF in May 2018. Since then, discussions have taken place at the General Affairs Council and at successive meetings of the European Council. The last time the European Council met physically to discuss the MFF was in Brussels on 20 February. In the weeks and months since then, the EU has been faced with the extraordinary circumstances of the global pandemic and the associated unparalleled economic impacts. It quickly became obvious that the MFF proposals would not be sufficient to meet this exceptional challenge and that additional measures were required to support Europe's recovery.

On 23 April, EU leaders agreed to ask the EU Commission to make a proposal for an ambitious recovery fund that would be commensurate to the scale of the challenge as well as a revised proposal for the MFF. The European Commission subsequently published a package in response on 27 May. Leaders had a first opportunity to discuss these proposals at the European Council meeting on 19 June. Further discussions have taken place since then at the General Affairs Council, which has held detailed discussions on the MFF from the outset.

Today, the Minister of State with responsibility for European affairs, Deputy Thomas Byrne, is attending a meeting of the General Affairs Council by videoconference with the main aim of preparing for the leaders' meeting this Friday.

As the Taoiseach said, Ireland's strongly supports an ambitious MFF and recovery fund. We recognise that the unprecedented challenge we face demands an unprecedented and collective response. Ireland will approach these discussions in a constructive manner with the aim of reaching agreement. However, the final package must be fair and balanced and must reflect Ireland's needs. The Taoiseach has set out Ireland's priorities in these discussions. We will seek to maintain the CAP budget and ensure that other priorities such as climate action and programmes, including Horizon Europe, Erasmus and PEACE PLUS, are properly funded. The CAP continues to be vital to Ireland. The collapse of exports and prices as a result of the Covid-19 crisis has created considerable difficulties for farmers. Farmers also face further disruption by the prospect of Brexit.

Our strong economic performance in recent years means that Ireland is now a net contributor to the EU budget. That strong economic performance has been facilitated by our EU membership. It is appropriate, therefore, that we should contribute more. However, we should not take our economic strength for granted. In addition to the impact of Covid-19, Brexit will affect Ireland disproportionately in the period ahead. I join the Taoiseach in welcoming the proposals of the Council President, Mr. Michel, for a new Brexit adjustment reserve as part of the overall package that leaders will discuss this week.

I reiterate our hope that it will be possible to make positive progress at this week's European Council meeting in order that the EU and all member states will have the tools and supports necessary to meet the significant challenges ahead.

Sitting suspended at 4.10 p.m. and resumed at 5.10 p.m.