Professor John McHale:

It certainly is a challenging situation that needs to be managed well. I do not believe it is quite as grim as the Deputy describes.

One argument we made in our report is that we see the new fiscal framework being put in place, with European and certain national elements including the increased role for the Oireachtas, as a positive legacy of the crisis. We know from our own past, and from that of other countries, that fiscal policy is often badly managed, excessively pro-cyclical and contributed to boom-and-busts cycles which have done so much damage to the economy in the past. It is not the only element of good management to avoid these kinds of damaging cycles.

Much more must be done on the financial and credit side and so on but it is an important component.

The big advantage to having a strong fiscal framework is that it will allow us to guide the debt level down to safer levels. Part of the risks described by the Deputy really reflect the fragility of the situation we are in when we have these incredibly high debt levels. We really cannot stay there unless we want to remain in this highly risky situation where domestic or international shocks could knock us off course.

The third reason, which could be most relevant, is that if one has a strong fiscal framework in place, it gives credibility and actually gives one more room for fiscal manoeuvre. One can point to these rules and say they are placing terrible constraints on Irish fiscal policy but the debt markets could impose much greater constraints on fiscal policy and force much greater levels of austerity. It goes back to the point I made earlier about austerity avoidance. It is a mistake to view the fiscal framework in purely negative terms as something that is being imposed on us, particularly by Europe. I see it as something that is in the national interest, not because we like-----