Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

Usually exceptional circumstances are difficult to foresee. If one takes a recent exceptional circumstance, who would have foreseen that an earthquake in Japan would have led to a tsunami which led to a nuclear accident? Exceptional circumstances, by their nature, are hard to foresee. If they were foreseeable they might not happen because one would take preventative measures.

As outlined in the interpretative section of the Bill, "exceptional circumstances" refers to a period where there occurs an unusual event which is outside the control of the State and which has a major impact on the financial position of the general Government. The phrase can also refer to any unusual economic circumstances such as those in which we currently find ourselves. It is further specified that "exceptional circumstances" must be defined within the meaning of the Stability and Growth Pact to ensure we are complying with the essence of the pact.

In the event of a situation occurring which we believe is exceptional circumstances, we will set out our case to the Commission in our stability programme update. Our case will take full account of the assessment of the fiscal council under section 8(3)(a) as to whether exceptional circumstances exist. The process that follows is that the Commission, in its assessment of our special SPU, decides whether or not exceptional circumstances exist and ultimately includes a recommendation to ECOFIN, which is the final arbiter of whether the situation comes within the definition of exceptional circumstances.

It is very difficult to provide a clear and unambiguous definition of this phrase. Rather than creating a definition which would be inconsistent with the treaty definition, the best course of action was to follow closely the definition provided by the treaty.

The treaty and the legislation, and the other fiscal measures which have now been adopted in Europe, do not put the country on automatic pilot. The country must still be run by the Government and by the administration. Exceptional circumstances will be open to interpretation at the time but there is a methodology for working out and agreeing with, finally, ECOFIN whether exceptional circumstances exist or not.