Oireachtas Joint and Select Committees

Wednesday, 13 March 2019

Committee on Budgetary Oversight

Scrutiny of European Commission Country Report Ireland 2019 and European Semester

Mr. Carlos Martínez Mongay:

I thank the Deputy. On Brexit, I could go to the long list of measures and decisions the Commission has taken but they are public. We can provide them to the Deputy. In terms of the framework of the preparedness, the Commission has identified a number of sectors and issues, including air transport, electricity and financial markets, in which contingency plans should be implemented. The Commission has distributed a series of documents at the sectoral and country levels to raise awareness among Governments but also the private sector in order to prepare for this possibility. I saw the statement from the Minister the day before yesterday precisely enumerating the number of preparedness measures the Irish Government is taking. It is clear that the private sector must also get ready for this possibility.

I would not try to discuss now the kind of measures that could be taken within the treaties while preserving the essence of the treaties and doing what the treaties allow us to do even, as mentioned by the Minister for Finance, Deputy Donohoe, in respect of state aid. In particular, the agrifood sector was mentioned but I do not believe this is the moment to determine or explain what measures could be taken. Let us see exactly what is going on, the magnitude of the shock and then decide the kind of measures are needed, within the treaties because the treaties also envisage derogations while preserving the principles of the treaties and, in particular, the functioning of the Single Market. It is possible to do many things within this framework.

Few institutions are more aware of the importance of the Irish Border. Since the beginning, the chief negotiator has established as a priority the need to prevent a hard border in Ireland. That is the reason we have the backstop as one of the principles, together with the guarantees of preserving the rights of the citizens. The Commission will do as much as it can do. In terms of the governments of the other member states, there would be collective action but I am sure the Commission will do and is doing all it can to avoid a hard border.

It is difficult for me to agree with the Deputy that the current situation in Ireland is due to the demands of the troika during the time of the programme. I will give my reasons for saying that. First, the housing bubble burst, the housing market collapsed, the construction sector collapsed and access to markets in Ireland was cut. As the Deputy said, the troika then came lending money to Ireland, incidentally at interest rates that were not particularly high. As I said, it would be premature to say what the member states would be ready to do in the future in terms of the situation of Brexit. I do not believe that the current situation of Ireland, which is not very bad - that is clearly spelled out in the report - is because of the requirements of the troika. The requirements of the troika have nothing to do with the undersupply of childcare or other issues which simply reflect choices to be made within the budget and which must be made in every country when preparing the budget.

Concerning the skills shortages, what we are saying, and I tried to explain this in my introduction, is that we see those in a number of sectors and in particular sectors that require higher skill levels. In addition, we have said there are labour shortages in sectors such as construction, which also require certain skills. At the same time, we see that wages are increasing and therefore, we conclude on the basis of our calculations, which are made within the framework of the commonly agreed methodology - the same methodology that applies to every member state - that Ireland is in the positive phase of the cycle. At the same time, the report acknowledged something the Deputy mentioned. What we observe is that on one hand, the participation of certain groups of the population is low and we therefore should eliminate the barriers while on the other, the report refers to the fact that the number of people in Ireland who are working part-time on an involuntary basis is also high, which would suggest that perhaps there is still some labour underutilisation. That is the analysis we make of the cyclical position of the country.

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