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

The Ceann Comhairle has instructed that I attend the Chamber for Topical Issues shortly. I do not know whether I will get through my speech before I have to leave. I presume there will be a short suspension of this sitting while the joint committee waits for me to return.

I thank the Chair and the members of the committee for inviting me to speak in advance of the next ECOFIN Council of Ministers meeting, which will take place in Brussels on Tuesday, 8 December. This is the last ECOFIN Council under the Luxembourg Presidency, with the Netherlands taking over the Presidency from 1 January 2016. While there are indications that the proposed agenda will change, this is a useful opportunity to discuss the issues that will be considered by the finance Ministers at the ECOFIN Council. When the committee invited me to make these remarks, it asked me to provide a brief overview of the proceedings of the ECOFIN Council that took place in Brussels on 10 November last. The November ECOFIN agenda included discussions relating to the Commission action plan on building a capital markets union, the implementation of the banking union, the Single Resolution Mechanism in the context of the rules for bridge financing, economic governance, the follow-up to the five presidents' report, climate finance and the follow-up to the G20 and IMF meetings in Lima in October.

With regard to the Commission action plan on building a capital markets union, CMU, the Council adopted conclusions on the action plan at the meeting. The action plan aims to establish a fully functioning CMU in the EU by the end of 2019. The union will include all 28 member states. One of its main aims is to improve access to finance for European SMEs and start-ups. Stronger capital markets should make the financial system more resilient to shocks as it would broaden the range of available funding sources. Ireland is an enthusiastic supporter of the union and we accept that the EU focus must move beyond crisis management and increasingly turn to how financial markets can best serve the broader policy objectives of jobs and growth, like we are doing in our own economy.

On the implementation of banking union, the focus remains on instruments to deal with the recovery and resolution of failing banks. Participants in the banking union are the 19 countries of the euro area, whilst seven other member states have indicated their intention to join. The primary elements are the transposition of a directive on bank recovery and resolution, BRRD, ratification of an intergovernmental agreement, IGA, on the Single Resolution Fund, SRF, and transposition of a directive on deposit guarantee schemes. Ireland transposed the BRRD last July and the directive on the deposit guarantee schemes in November. As you know, we also ratified the intergovernmental agreement last week in advance of the 30 November deadline.

The other item on the agenda related to banking union, was the Single Resolution Mechanism, SRM, and rules for bridge financing. The SRF is part of the SRM aimed at ensuring the orderly resolution of failing banks. While this will be financed by banks, bridge financing will be needed for the SRF during an initial phase, when the fund's resources have not been fully built up to the estimated €55 billion it will have in eight years. Ministers agreed on an approach to be followed to finalise the bridge financing arrangements, which will consist of national credit lines from the member states and the details of this will be endorsed at the December ECOFIN. Any money will be recovered from the banking sector at a later stage by means of ex-post contributions.

Moving on to the topic of economic governance and the follow-up to the five Presidents’ report, entitled Completing Europe’s Economic and Monetary Union. Ministers participated in a first exchange of views on the Commission’s package of measures, which were published on 21 October, to take forward a number of the short-term measures set out in stage 1 of the report. The package includes proposals for external representation of the euro area at the IMF and the creation of national competitiveness councils. The Commission also announced as part of its package that it had established the advisory European Fiscal Board by Commission decision. Other suggestions include a revamp of the European semester economic and fiscal policy monitoring process, better use of the EU's economic imbalances procedure and a renewed convergence process.

On climate finance, the Council adopted conclusions in advance of the international climate conference, the COP 21, which is currently taking place in Paris. These conclusions focused on the EU’s climate finance contributions towards the $100 billion per year pledged by developed countries by 2020.

Finally, the Council was debriefed by the Commission and the Presidency on the G20 and IMF meetings which took place in Lima between 8 October and 11 October. Ireland is represented at these fora through EU membership and our Canadian constituency at the IMF. The G20 meeting focused on growth strategies, taxation, financial regulation and priorities for 2016, when China will have the G20 presidency. At the IMF meetings, the EU Presidency submitted to the international monetary and financial committee an agreed statement on the world economy, outlook and challenges, and IMF policy issues.

I will turn to the draft agenda for next week’s ECOFIN and provide an outline of the key issues that are likely to arise. As this will be the last Council under the Luxembourg Presidency, I would like to acknowledge the success of the Luxembourg Presidency to date and the progress it is making. The Netherlands will take over the Presidency role on 1 January, and I wish those involved every success in moving the agenda on. Let me also remind the committee at this stage that this is still a draft agenda - there may well be changes between now and the meeting, in terms of content and the order of the discussion. Ambassadors are meeting tomorrow to consider the draft agenda.

The agenda is busy in content as it stands, but some items will change and I will draw the committee’s attention to these as I work through them. The Council will begin by considering legislative deliberations, and this takes place in public session. Based on the draft of the agenda before us, six items are scheduled for discussion: the approval of the list of A items, which are items to be taken without discussion; securitisation; completion of banking union; financial transaction tax, FTT; and the common consolidated corporate tax base, CCCTB.

Securitisation is marked as a possible agenda item. The initiative on harmonising securitisation in the EU is part of the CMU action plan adopted by the CION on 30 September. The context is that the traditional dominance of EU banks in financing the economy is seen as imbalanced in contrast to the US. This leads to an EU policy focus on the potential to source additional financing for the economy from capital markets. The proposal for an EU framework of EU securitisation aims at two main objectives: first, to remove the regulatory disadvantages for simple and transparent securitisation products, and, second, to reduce or eliminate unduly high operational costs for issuers and investors. This framework should provide confidence to investors and a high standard for the EU, and also help parties evaluate the risks relating to securitisation both within and across products. On completion of banking union, the discussion is expected to focus on two items: the proposed European deposit insurance scheme, EDIS, and backstop to the SRM. The EDIS, which was published recently, will seek to allow a gradual move between now and 2024 to a fully mutualised EU deposit guarantee arrangement. This is the final pillar of banking union and is necessary to ensure savings are equally protected in all member states and to further weaken the link between banks and the sovereign. The backstop to the SRM is necessary to provide certainty on the issue of where money would come from in the event that the SRF had insufficient resources or that it exhausts its resources. In those circumstances, it is important that there is an alternative source of financing available to it. Every effort will be made to have this backstop in place well in advance of the completion of the transition period to full mutualisation of the SRM by 2024.

The next item on the agenda involves a state-of-play discussion on the FTT. Ireland is not be among the participating countries but we will not stand in the way of those who want to introduce such a tax. We will continue to monitor discussions on the FTT to ensure the compatibility of any proposed measure with the internal market and with existing taxes on financial transactions, including our stamp duty and with a view to protecting our existing financial services business.

On the common consolidated corporate tax base, Ministers will be provided with an update by the Luxembourg Presidency on the current state of play of this dossier. We have yet to see the exact details of the re-launched CCCTB proposal. During the Luxembourg Presidency, the EU working party meetings focussed on identifying outcomes of the OECD’s work base erosion and profit shifting where there could be overlap with some of the international aspects of the proposed CCCTB.

Ireland is engaging constructively in these matters while holding a firm line that matters of direct taxation remain a member state competence and that unanimity in tax matters is maintained.

The second part of the agenda deals with non-legislative activities. Based on the draft agenda, there are 12 items scheduled for discussion. These comprise the approval of the list of A items, items to be taken without discussion; the ECOFIN report to the European Council on tax issues; the report by finance Ministers on tax issues in the framework of the Euro Plus Pact; the code of conduct; the future of the code of conduct; base erosion and profit shifting, BEPS; implementation of the banking union; the European semester; flexibility in the Stability and Growth Pact; statistics; annual report of the European Court of Auditors on the implementation of the budget for the financial year 2014; and the fight against terrorist financing.