Dominic Hannigan (Meath East, Labour)
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The first item on the agenda is the future of the European Union and Ireland's role in it. We are joined by representatives of the Irish media. On behalf of the committee I welcome Mr. Dan O'Brien, The Irish Times, Ms Ann Cahill, Irish Examiner, and Mr. Sean Whelan, RTE. Today's meeting is the second in a series of meetings on Ireland and the future of the European Union, and today we are considering issues related to financial, budgetary and economic policy integration in the European Union. We will also discuss democratic accountability, legitimacy and political union, as well as the implications for Ireland of the evolving role of the UK's involvement with the European Union.

The media have an important role to play in informing the public on what are often complex issues of national concern, so we are meeting today with three well respected journalists on EU matters. It is an opportunity for members of the committee to explore how better to connect the European Union with members of the Irish public.

Before we commence, I remind members of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way that he or she is identifiable.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of the evidence they are to give this committee. If they are directed by the committee to cease giving evidence in relation to a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise nor make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

We may have a vote in the Dáil in 20 minutes, in which case we will have to suspend the meeting for ten minutes. I invite Ms Ann Cahill from the Irish Examinerto make her opening remarks.

Ms Ann Cahill:

I thank the Chairman. I will start at the beginning. Ireland held a referendum on whether to join the EU in 1972. I remember it was the first time I had a vote and I voted "No". The world has changed, the facts have changed and I have changed. The EU of farms and fish we joined grew into an amazing experiment and bit off more than its leaders could chew. Now they are out of their depth and desperately trying to manage a creation they do not understand and an electorate that understands less.

The economic crisis removed any semblance of anybody being in charge. They say the Germans are excellent at creating a real situation to test a hypothesis. To an extent, this is the laboratory we have been living in for the past five years.

People remember where they were when JFK was shot. Although I do not, I do recall the moment when Chancellor Merkel announced everyone would look after their own banks. It meant solidarity, as a core principle of the EU, was at an end. All those Structural Funds were fine but now we were all set adrift with our own little share of the euro in our fists. The Germans bailed out their banks and we bailed out ours but we should not think for a moment that Germany has bought our line that we have been hard done by or that the construction of the euro was to blame. They have not. Let us reflect on the realities. They said "No" to retrospective money for the €32 billion we put in our banks, "No" to lengthening of maturities of bailout loans to the 45 years Greece has got, and "No" to OMT or cheap credit lines from the ESM without conditions.

As the eurozone ship shudders, rudderless on the stormy sea, battered by markets and investors with their agendas, the only person with a vision for Europe and capable of implementing it is Angela Merkel. She has had eight years to think about it and it has been forged in the heat of her battles with her parliament, her party, the opposition and her constitutional court. This lady has a habit of doing what she says she will do and she says she will have treaty change after the German elections in September, after the European Parliament elections next May and in the run-up to David Cameron's promised referendum in 2015. Her aim is to save Europe from Germany and Germany from Europe. She knows, as do many of her parliamentarians, that it is not very democratic to have the Bundestag's budget committee deciding every cent that goes to another sovereign eurozone country. Her constitutional court has told her that Ireland having roughly two MEPs for every one for Germany in the European Parliament means it is not a democratic body. She does not want Germany to be the paymaster, or have to make up more rules as she goes along to keep us at bay. There will not be full recapitalisation of banks by the ESM, perhaps for 20 years. There will be a phasing in, but not the break between sovereign and banks courtesy of EU taxpayers' money that many dreamt of. Bank deposit and resolution funds are in danger of being pushed off into the horizons of time. Germany believes that if the EU is not responsible, then the EU should not be liable. For the EU to be liable in the future requires deeper integration, with political and economic union in a federal EU, styled on Germany, the country that was never centralised but, like Europe, is made up of independent states and which will still retain much of that independence.

Ireland will be an increasingly small voice in the new Europe. The Irish have long known that if we are not strong, we must be clever. Up to now that cleverness has been concentrated on big business and big money. Like mercenaries, we hope to take part of the spoils. We are not universally admired for this. We are castigated for allowing companies use our tax system to evade tax while we look for cheap loans from the EU. They wonder why we refuse to adopt the financial transactions tax, FTT, which would extend our tax on share dealings to derivatives. They do not buy the job loss argument.

Now with our economic miracle a thing of the past, our recklessness a given and our scrambling back up the credit rating ladder a wonder, we need to look at how we will exercise power in an EU that is hands-on with our budget. We will be forced to change our business taxation system. Members can read the OECD reports and other reports building the pressure as the IMF shies away from bailing out Cyprus and its money-laundering banks.

As Ireland knows from its UN experience, power can come from having a principled stance on issues. With the fabric of democracy in Europe now becoming an acute issue as a result of the crisis of political economy, as Italy has just illustrated, President Michael D. Higgins said in his recent speech at the Sorbonne that we must turn to critical thought if we are to be free to put our ethical stamp on society, place our economies within a frame of ethical culture and build an inclusive Europe. He pointed out that Europe is facing a social, cultural and political crisis. Politics risks losing its legitimacy among citizens if it diverts responsibility to unaccountable technocracy or the mysterious unaccountable marketplace. In case members think our brilliant politician-academic is dreaming, here is another politician, Abraham Lincoln, in the midst of the war to end slavery:

The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew. We must disenthral ourselves, and then we shall save our country.

Mr. Dan O'Brien:

I will look at five trends that seem to be most relevant to the future of Europe. These are the rise of Germany, the marginalisation of Britain, the widening of the north-south gap, the widening of the EU legitimacy gap and the euro crisis. The German question has been at the centre of European politics since Germany was reunified in the 1870s. It went away for a long time in the post-Second World War period and it has now returned. Germany has the largest economy in Europe and, although it has its problems, it is arguably the most fundamentally sound of the big G7 industrialised economies. With the enlargement of the EU, its geographic centrality is more important than ever. As the decades passed, the period of time when Germany did not conduct a normal foreign policy seems to have passed. That is most noticeable in terms of the decline of the Franco-German relationship, which had given France a leveraged position in Europe. The breakdown of the Franco-German relationship, particularly since the change of Government in Paris last year, is indicative of that very big change. Many people are concerned that the rise of a dominant power will upset the balance of power in Europe. It seems a bigger risk is not an over-assertive Germany but an under-assertive Germany and an unwillingness to provide the leadership its economic and political clout gives it. A vacuum, in any situation, can cause or poses risks and dangers.

Anyone who saw the Harris poll last week can see that it looks like the momentum in British public opinion towards moving away from Europe is irresistible. There are deep historical reasons for the scepticism of the British public. All opinion polls over a long time show levels of euroscepticism among the public are among the highest, if not the highest, recorded.

Excluding a eurosceptic media, as someone who lived in Britain for ten years and as someone who has lived in five other European countries, the level of antipathy towards European integration in Britain is much higher and deeper. The Murdoch press does not explain that. It is something that goes much deeper historically.

Many people are of the view that it would be good to have a referendum debate. The few pro-Europeans who are left feel it would be a good idea to have a referendum because it would allow pro-European forces to come out and have the debate and deal with the euroscepticism and misinformation that comes from that side. I am not convinced by that argument. The Conservative Party has almost no pro-Europeans left in it, the Labour Party does not really care about Europe anymore, the trade unions are less relevant and have never been particularly pro-European, the City is ambiguous, particularly in the context of banking union, and business is divided, with many small business people believing that whatever gains there are from trade integration are outweighed by the additional cost of red tape from Brussels. It is not clear to me that elite opinion is in favour and the debate might turn out to push public opinion further down the eurosceptic route.

Mario Monti once said people in Europe have been too polite to each other. That certainly strikes a chord with me, having lived in Brussels for a period. People were afraid of being accused of labelling other people according to national stereotypes. That often led to an unwillingness to be as frank with each other as might have been necessary. That has changed. The manner in which Angela Merkel and Nicolas Sarkozy smirked about Berlusconi when asked about him at a press conference seemed to be a clear indication that sort of politeness was finished and people were speaking more aggressively to each other.

The crisis has thrown up a huge number of problems, such as the difference in political capacity between the north and the south, particularly Greece, but also Italy to an extent. There is a difference in policy priorities, vested interests are taken on differently and market liberalisation and economic performance are viewed differently. One of the things that has not come out into the public domain from the economics profession is the concern that long-term economic growth in the developed world is grinding to a halt. Rates of economic growth per capitain the last 50 years have slowed in most developed economies, to a halt in many cases, such as Portugal and Italy. This opens a division between the north and south of Europe that is both political and economic, which adds further strains.

The legitimacy gap is also widening. The Eurobarometer report asked people in different countries the extent to which they believe the EU is a good thing. Comparing results in 2007 and 2012 for those who say it is good and those who say it is negative, in Ireland and Spain the net change has been -32 points, while in Portugal and Italy it has been -28 points, and in Greece -25 points, with an EU average in 2012 of only 31% of people believing the EU was a good thing. Many observers point to the fact that national political systems have also registered declines in satisfaction among respondents in opinion polls and while that is true to an extent, voters have a chance to vote out their governments but no chance to vote out the European Commission or the ECB, so there is a major difference between the two.

The ECB is the only institution where there is a genuine democratic deficit. Its independence goes so far that it is unaccountable. It is nominally accountable to the European Parliament but the European Parliament cannot do anything in real terms, unlike Westminster and the Bank of England, for example, or Congress and the Federal Reserve. The only way anything can change for the ECB is for an intergovernmental treaty to change its structures. Given the difficulty of achieving that, it is not a realistic stick with which to hold the ECB accountable and that poses a risk in the long-term for the legitimacy of the Union.

The euro crisis has emphatically not gone away. The ECB's outright monetary transactions programme that was announced six months ago has dealt with a serious problem of liquidity but it has not dealt with solvency issues. We see nominal GDP in three of the southern European countries falling and debt levels rising so the debt dynamics are looking dangerous. Italy's public debt is now likely to be around 130% of GDP when the general view is that above 90% affects economic performance and above 120% is dangerous. It is now at 130% and rising, posing a real risk to the country's solvency.

Has enough been done to deal with that? There has been some progress on banking union but no progress on fiscal union and no likelihood of any progress, so it is a matter of time before the crisis blows up again and we are back to square one.

Mr. Seán Whelan:

I thank the committee for the invitation to appear today. As things change at European level, so must things change at the level of national parliaments. We have had a plethora of changes as a result of the economic crisis we have gone through, with measures such as the six pack, the two pack, the fiscal rules, the European semester, budget co-ordination measures, and so on. All of those necessitate a reform of governance of Irish EU affairs and in domestic Irish affairs, which are increasingly intertwined. Countries that successfully adapt a new economic management system are more likely to prosper. At the very least, they are more likely to be off the radar for investors worried about economic mismanagement.

Being off the problem radar alone, however, should in no way be confused with success. During the last decade, we spent most of the time as a blip on its counterpart, the success radar, hitting all EU targets used to measure economic performance in the single currency area in particular. There was outrage here and abroad when the European Commission reprimanded us in a most gentle way for breaching the broad economic policy guidelines about ten years ago. We could do no wrong it seemed, right up until the point where we blew up in the most spectacular fashion. This was because we became victims of what might be called "stealth failure", something that sneaks up because we are not looking out for it and not prepared to deal with its consequences if it breaches our defences. It is like the Germans with mad cow disease. If there is no testing for a problem, it will not be found in the first place.

The move to the single currency was a truly massive change but we responded with a minimal change to our institutional set-up to deal with it. We are now scrambling at national and European level to catch up. We also must undertake a lot of national changes. We should not just implement the European changes. We should be prepared to go well beyond the level of change required at European level. We should be more proactive in adapting our institutions and governance, guided by strategies that are both offensive and defensive in their approach to dealing with the evolution of the European Union and our place in it. I suggest as a philosophical starting point that Europe is something we make ourselves, not something that is done to us. It is also far more important that we make changes in our governance here for our own sake, not just to be seen as the good boys in Europe. We cannot afford another catastrophe like the one we have just experienced.

When I talk about an offensive European policy, I do not mean going around offending people but of having a point of view and advancing it coherently over the long run. We can do this already on narrow sectoral policies such as the Common Agricultural Policy, CAP, or national economic priorities such as corporation tax. Do we have a view to advance, however, on other issues, such as pan-continental macroeconomic policy, world trade policy, modernisation of the European Union itself or other international institutions?

When I talk about defensive European policy, I mean being able to guard against the worst excesses of European policy and against our own internal failures, such as failures to implement or non-implementation - looking out for the stealth failures I mentioned.

What I am referring to is best summed up in Dr. Eddie Molloy's phrase "implementation deficit disorder", which has caused many difficulties down the decades in the management of the State. Defensive strategies are also required to guard against the negative perceptions of European Union membership. The idea that Ireland is being bossed around and forced to do things is corrosive of support for the European Union. Defensive strategies can help ensure that perception is minimised by ensuring we are not in a situation in which we can be bossed around in the first place. However, in cases in which one is being bossed and booted around by other countries, one needs to be able to switch into an offensive strategy and go on the offence against it or even think about getting out altogether.

In terms of legislation, it is relatively easy to appear part of a winning coalition in the Council and in the Parliament but if one ends up through one's own stealth failure becoming a ward of the system then one has no one to blame but one's self. We need to be hard-nosed in Ireland, particularly in our political and parliamentary system, and most especially about money in all its manifestations, protecting the wealth of the nation from all enemies, internal as well as external.

There are a number of strategies that might offer a quick fix in the short term and other medium and longer-term suggestions that might be useful to consider. We should consider using MEPs to greater effect. It is good to see a Member and a former Member of the European Parliament at the committee. They are a great resource to have. We have a small parliamentary and political set-up here. Having elected Members in the European Parliament is a resource on which we should draw in a more integrated way. They have the expertise and day-to-day knowledge of what is happening in the European Parliament. It is good to gain visibility on issues earlier. We also have the Lisbon treaty amendment, under which legislation is supposed to be sent to national parliaments as a first measure. There is the potential to draw national parliaments much more closely into the European process. We need to use those opportunities to get a better handle on what is happening and deal with it though the twin prisms of offensive and defensive strategies. Another ally of the Parliament should be the Fiscal Council in helping to deepen one's understanding of and engagement with fiscal policy. It could be seen as a useful harm reduction mechanism in its most simple form, but most usefully, if it is employed correctly, it can help in the process of hardening up the State when it comes to dealing with financial problems. The idea is to protect the money and the citizens who own that money.

Perhaps a more medium-term suggestion is to make better use of the science and technology options assessment panel, STOA, in the European Parliament. We are becoming increasingly aware of the need to have legislation dealing with fairly complex issues and it is useful to have a sounding board to test out technical issues and aspects. It is quite expensive to build up that expertise, whereas it already exists in the European Parliament. There may be some ways for Ireland to try to subcontract or piggyback on what the STOA group is doing that could be useful for parliamentarians in Ireland. Ultimately, given the changes that have occurred and are continuing to occur and the level of complexity that is now evident, we must change the electoral system in order to give Deputies and Senators sufficient time to deal with the issues in a much deeper way. Members do not have time to do what they need to do and the big impediment is the electoral system. Until we change that we will be engaged in an uphill struggle to get on top of the issues that present themselves.

In summary, I believe offensive and defensive national strategies are needed for dealing with the development of the European Union and our ability to act tactically in support of strategic objectives. One must be constantly vigilant against stealth failures. To quote a great Cork man, "Fail to prepare - prepare to fail".

Dominic Hannigan (Meath East, Labour)
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A number of speakers would like to ask questions. I have a question for each of our guests. Ms Cahill spoke about the likelihood of the Germans' showing additional solidarity and she questioned how much extra solidarity we would get. Will she tell us about the level of awareness in Germany of the London Debt Agreement of 1953-54, when 50% of German debts from the First World War were written off by the British, the Americans, the Swiss and, I think, even the Irish? Does the German population know the detail of that debt write-off?

Mr. O'Brien referred to the feelings of the various political parties in the United Kingdom. Last week the German President, Joachim Gauck, made interesting remarks about the United Kingdom when he referred to the potential for having one European language - the English language - and the need to ensure the UK remained at the heart of Europe. Will he give me his view on what he thought of that speech and what the rest of Europe can do to help convince the eurosceptics in the United Kingdom that the UK should remain in the European Union?

Mr. Whelan spoke of the need for political change in terms of the electoral cycle. Will he spell out what that would involve? Would it involve a list system or extended terms of office? In his view, what could help parliamentarians to do their work?

Colm Burke (Fine Gael)
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I apologise for being late. I will focus on Mr. Whelan's presentation and the need for changes in the system of governance. I served in the European Parliament and am familiar with the system. I have tried to get people more involved in the development of policy and particularly what is happening at European level. I am glad to say we have adopted some new strategies, and four MEPs have addressed the Seanad. Today, Ms Emer Costello, MEP, came to the Seanad, and Ms Phil Prendergast, MEP, Mr. Gay Mitchell, MEP, and Ms Mairead McGuinness, MEP, have all made presentations to the Seanad on what they are doing in Europe. I agree with Mr. Whelan that we need to reform how we conduct business. I have a major issue with regard to directives and regulations coming through without any real scrutiny. This was brought home to me recently at a meeting of the Joint Committee on Health and Children during our discussion about a directive on medical devices. It was about to get the rubber stamp from the committee when I asked if anybody had consulted the medical device companies. It turned out there had been no consultation at national level with these companies, so the committee agreed to write a letter to the medical devices organisation to find out its attitude. From my recollection of working at European level on directives and regulations, I know we have more than 90 permanent representatives who work in Brussels watching regulations and directives, but there is no feedback to local level in Ireland. All of our permanent representatives have good expertise but there is no local input. I agree there is a need for reform, but I am not sure whether this is what Mr. Whelan had in mind in his call for reform.

I have a very strong view on the effective use of the Seanad. This week only one Bill was discussed in the Seanad, while there is a significant body of regulations and directives coming from Europe. I have made a proposal that we set aside two days per month to deal with EU regulation. I know that among Members there is no great level of agreement on that suggestion. Will Mr. Whelan comment on how he thinks the Dáil and Seanad could work more effectively in dealing with EU directives and regulations?

The second issue I wish to raise is the delay in implementing directives when they are passed. Let me give the example of the cross-border health care directive, which was passed on 9 March 2011, following which we had 30 months in which to implement it. Now, in 2013, we have only six months remaining in which to implement it. Why do we always wait until the last minute to implement a directive and then find we are not prepared when we do try to implement it?

The third issue is the lack of regulation that existed when we set up the monetary union. There was also a degree of trust at European level with regard to how Ireland did its business. The best example I can give is that of a German building company that came to Ireland on a €10 million contract. When €1 million of work was done without anything being signed, I was asked in a private capacity to come in and sort out the mess. I sorted out the mess by getting the €1 million collected and getting all the contract documentation signed. When I asked those involved why they had acted in this manner, they said they were told when they came to Ireland on the €10 million contract that they should take everyone at their word. That is an example of the degree of trust at European level towards Ireland. There is an attitude that there was a lack of regulation, of supervision and of checks and balances in Ireland with regard to how we did our business. Those things were also lacking at European level. The European attitude was that everyone in Ireland should be taken at his or her word. We are now paying the price for all of that.

Timmy Dooley (Clare, Fianna Fail)
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I thank the witnesses for their thoughtful presentation. Our ongoing dialogue with people in their profession will help us in our work. We often lose sight of the insight they can bring as we get tied up in the politics of these issues. Are we expecting too much from Europe in the absence of deeper political integration? I do not know whether that is necessarily a question the witnesses can answer directly. I think the vision that existed at the start of the Union has been lost to some extent. As this crisis has developed, individual member states have started to look to a more national platform. I do not think the current architecture makes it possible for Europe to serve the limited role it has. During this crisis, it has not been clear who is in charge. When Germany and France have got together for their various meetings and presentations, it has undermined the Commission in a real way. While the role of President Van Rompuy is defined, it is not really a leadership role or that of a pioneer who drives ahead. In the absence of deeper political integration, perhaps we should consider what Mr. Whelan said about whether we need to examine our own system. I hope he will expand a little on that.

Ms Phil Prendergast, MEP:

I thank Ms Cahill, Mr. O'Brien and Mr. Whelan for their presentations. Like Senator Burke, I have served as a Member of the Oireachtas and in Europe and have seen how things are done differently. I would say the European model is extremely efficient. In Europe, we do not have an Opposition that wants to screech down every proposal made by the Government. We have a sort of consensus in terms of how we work in each group. Our group is the second biggest group in the Parliament. The group that Fine Gael belongs to is the biggest group. We operate on the basis of proposals, amendments, consensus, agreement and legislation. There is terrific oversight.

I recently had an opportunity to address the Seanad as an MEP. Every MEP has committees in Europe that are their main committees. My main committees are the Agriculture and Rural Development Committee and the Internal Market and Consumer Affairs Committee, of which I am the only Irish member. When I addressed the Seanad, I got some feedback on the committees I am on. It would make terrific sense for upcoming legislation to be brought to the Seanad for additional oversight. This use of the Seanad would enhance its reputation. It would be good for the Seanad to have an opportunity to be addressed by somebody working in another parliament on an issue of relevance to Ireland. Equally, it would be good to give those who will be affected by European legislation an opportunity to address this House or another house. We need a process of joined-up thinking whereby the outcomes have a determination and there is agreement through the different parliamentary groups. We work on something similar on a smaller scale in the European Parliament system, which works well.

I would like to comment on how the UK is behaving. My view, which is based on what I have been told, is that UK MEPs do not work on the committees or do the job of MEPs. They are masters at exploiting any opportunity to take the microphone in the hemicycle during the plenary week, on which all of our work is focused. They make their political statements and avail of the opportunity to get wide coverage. The grunt work is done in the background by other MEPs. There is always a subliminal level on which people perceive things. One can be a sceptical person and have validity for being a sceptic, or one can be a person who works to contribute in a real way to what goes on in the Parliament. To put it differently, one can do the grunt work or one can focus on the opportunity for media exposure or even media exploitation. We need to have a balanced view of this. I think England is very important to us and I think we have a very good relationship, but that is just me.

We will vote on the multi-annual financial framework next month. Forty years on, Ireland is still a net recipient of the budget. I think we will contribute €10 billion and receive €12 billion. The renegotiation of the Common Agricultural Policy is hugely important, of course. I absolutely agree with Mr. Whelan's point that MEPs are under-used as a resource. I welcome the opportunity that has been presented to us by the decision to hold these meetings on Thursdays once more. Our week in Europe is heavily focused on Mondays, Tuesdays and Wednesdays. It makes sense, from an MEP's perspective, for the committee to meet on Thursdays. I appreciate that Friday sittings do not suit everybody. I know we are in straitened times. Perhaps the decision to allow MEPs to address the Seanad will start something that leads to our having an important and useful role in the Oireachtas. That should be evaluated and we should know what the outcome is. I am delighted to have been here today to hear the delegates' presentations. I thank the committee for giving me an opportunity to contribute.

Ms Ann Cahill:

It is interesting that the Chairman mentioned debts. Two or three days ago, I received a document of 18 or 20 pages from the largest trade union federation in Germany. I thought it was interesting that it was called "A Marshall Plan for Europe". The people of Germany may or may not remember that loan, but that is beside the point. We think things work on the basis of "I am good to you, so therefore you owe me one". They do not think like that. They think very much along the lines of "Right is right and wrong is wrong". They think that a person who incurred a silly debt should pay it - that a person who does something wrong should suffer - and that is it. They are quite unsentimental about this and do not offer any apologies for it. Why would they?

It was interesting to hear Senator Burke speaking about the way certain things are treated. They think we are all grown up and they expect us to behave as though we are all grown up. We sometimes think we are grown up and we sometimes think we are not. We have to get our act together. It is all very nice to be the little pet in the class - to think the crumbs are just fine - but that is no longer where it is at. The EU has outgrown its incarnation as a lovely thing that encouraged us all to dance in the meadows under the summer sun. It has got serious now. It is a big animal. What we do affects it and what it does affects us. We are all "us". We need to stop thinking about it as we used to. It is here, it is now and it is our reality. In the future, we will look back on this as our history.

Senator Burke spoke about legislation. It was well signalled in the run-up to the Lisbon treaty that it would all be very fine for member states to get their wish and have everything referred to them, as long as they had an idea of the amount of work that would be involved and the number of people who would be required to do it.

I remember reading a figure estimating the number of additional staff the Oireachtas would need to deal with European legislation and it is clear that these additional staff have not been provided. They find it very difficult to do much of this work in Brussels, not to speak of national parliaments. One must secure additional resources before proceeding with this suggestion. Mr. Whelan spoke of changing systems. Without more resources, the Oireachtas would end up making amendments to legislation on the basis of information provided by lobby groups.

We do not expect too much. On the contrary, we do not expect enough of ourselves. We are used to being the cute hoor in the pack and that position does not wash as it is not culturally interchangeable. When tourists take a bus and a fellow on the bus makes jokes, they do not understand his accent much of the time, which is lucky. This may seem grand but it is not grand in the real world where 50% of the country's young people are unemployed and the unemployment figure is being kept at an artificial level through a greater number of retirements and emigration by young people. Someone needs to get serious about this issue. Other countries are as serious about their economies as we are about our economy.

On the question of whether no one is in charge, that is simply not the case. The markets have been in charge for some time. Nobody was prepared for this because everybody cheated when the euro was being created. We heard about the independence of the European Central Bank. That was what the Germans, who were giving up the Deutsche mark, wanted at the time and that was what they got. It was left open and, as the market system developed, it has hijacked our systems. This is what we are looking at today and it is the reason I am saying we do not have power. The only thing we can have is some sort of moral power, but we do not have any reason to claim that. We must find and build on such a moral power.

The European Parliament works well. Members should watch the changes that take place in future because there will be a treaty change which will give rise to a new European Union. It will not be the experimental model we have had thus far but one that is fixed. We must be heavily involved in drawing it up.

Mr. Dan O'Brien:

On the question as to what could be done to convince British eurosceptics, the short answer is "Nothing". As to whether we expect too much, this is one of the things that has been very surprising over the course of the crisis. Despite being in an integrated Europe for half a century, the incapacity of people to put themselves in the position of others has been striking. The Germans blame the Greeks and vice versa. This willingness to blame others and downplay one's own culpability has been a marked feature of the crisis. To give an example from the Irish case, the dogs in the street know the banking crisis has cost the State €65 billion. How many times has anybody asked how much of this sum was imposed by European institutions? This is a crucial question in terms of how much we would be entitled to recover. If one believes a large part of this cost was imposed on us, one should put a number on it. From everything I understand about the chronology of events leading to Ireland's assuming these debts, the vast majority of this was done as a result of decisions taken in this country by a democratically elected Government on the basis of what it considered to be the interests of Irish citizens. We are not asking that question, however, and there is a general view that others in Europe imposed this debt on us, which is simply not the case.

On the issue of national parliaments having a role in legislation, let me strike a slightly contrarian note. I agree with Phil Prendergast, MEP, that the European Parliament is a reasonably good parliament. It is well designed and functions well, and its committee system in particular is very impressive. Given that there are 27 member states, if it came to a point at which every national parliament had a role in the legislation that the principle of subsidiarity dictates should be enacted by the European Parliament, this would significantly increase complexity in the system. With what problem are we dealing? Senator Colm Burke raised this issue in respect of medical devices. How much EU-level legislation has turned out to be damaging for this country? I do not believe it has been a significant amount, which suggests that the way the European Parliament works and the system whereby permanent representations in Brussels maintain oversight of the legislative process have worked well in protecting national interests. What would be the effect of giving national parliaments a greater role? Given that we do not have a major problem, bringing national parliaments into the legislative process to any significant extent would increase complexity in the system and slow down the law-making process at European level. This could create more problems than it solves.

Mr. Seán Whelan:

With regard to the question of institutional change, I will first address the points raised by Deputy Dooley about who is in charge of the European Union and the growing tendency of people to look to national leaderships and setups. This trend was inevitable because the system has designed it in that way - it is the default position. The treaties, which were agreed and in some member states approved in referendums established the primacy of national governments in all matters. This means that when the system comes under stress, people will look to their national leaders, given that national leaders have assigned to themselves the key role in driving the European Union. The leaders are the members of the European Council and the national systems that back them up. Until that system changes, we will be stuck with it. Given that constraint or reality, we need to do what is best for us within that system. That is the reason I spoke of having a defensive outlook, hardening up the State and getting tougher across every aspect of dealing with the State.

Senator Colm Burke's suggestion regarding the role of the Seanad in dealing with European affairs appears to be a good use of the resource that the Seanad represents. In Britain, the House of Lords committee dealing with European Union affairs does excellent work and is one of the best resources available for those who want to find out about developments in the European Union. One can read many of its reports to find out about the EU. I presume upper houses in other parliaments are also doing good work in this area.

It is good that Members of the European Parliament are addressing the Seanad. There is significant scope for the Upper House to develop as a type of European Union clearing house. This would not necessarily add additional complexity to the system, as Mr. O'Brien pointed out, if it acted as an early warning radar - I am obsessed with radars - picking up issues quickly before they became problems. While most of the legislation is not a problem, occasionally something may slip through. The Oireachtas must try to feed into its offensive system to try to get things done when this occurs. The faster and more efficiently we do this, the better. I recall, however, that it is Fine Gael policy and possibly Government policy to abolish the Seanad as part of its institutional reform programme. The only element of the reform of which I am aware is the proposal to abolish the Seanad.

This leads us to the issue of electoral change, which is a vast area. Members will be familiar with the background and history of the issue. The use of single transferable votes in multi-member constituencies is a perverse system. It is nuts, and it wastes too much time. However, when one suggests abolishing it one is immediately accused of seeking to abolish proportional representation. That is not the case. As members are aware, the system in place here is a very strange and curious version of proportional representation, one that is used only in national elections in Ireland, Malta and the Australian Senate.

Members are all painfully aware that it wastes too much time. Members of the Oireachtas spend far too much time campaigning for elections and not enough time in the House dealing with the kinds of issue they were elected to deal with. I was going to say it is a luxury we cannot afford, but it is not a luxury. Members suffer under this so-called luxury.

Timmy Dooley (Clare, Fianna Fail)
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Bring it on, please.

Mr. Seán Whelan:

The committee understands what I am driving at. It is something that has become an enormous cost to the country and we cannot afford to bear that cost for much longer. We need to change the system to one that gives Members time. I will not be prescriptive about what that system ought to be. For many decades, there has been discussion about a variation on the German system in which the House is split into two halves as a possible way of getting at least a cadre of people who would have a bit more time away from the constituencies, but that is something Members can sort out among themselves fairly quickly and easily. I appeal to them to do it quickly because it is the key problem and will become a catalyst for addressing a whole lot of other structural changes that need to be done in this State but will only be done if the political system has the time to devote to them. That is one aspect of the structural change that should be driven by the crisis we are in now. From that electoral change, the Oireachtas would have the various mechanisms for addressing all of the issues that have come our way as a result of the crisis, not least fiscal management.

Bernard Durkan (Kildare North, Fine Gael)
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I thank the Chairman and commend him on inviting our guests. Their contributions have been most stimulating and thought-provoking. I do not know where to start, but I will finish as quickly as I can. I compliment each of our guests on their generally constructive approach to reporting over the years and on their comments, which, unlike those of many other commentators, do not adopt the approach of misery, deprivation and destruction.

Ms Cahill mentioned the word "vision" several times. Vision is hugely important. As we have discussed on many occasions, the vision for Europe must be reaffirmed. However, we are not doing that either individually or collectively. She mentioned she did not remember when JFK was shot, but I do, and I also remember ration books and the stand-off at Dien Bien Phu. At that time, there were pressing issues that helped concentrate the minds of the people, politicians and the voting public in a way they have not been concentrated since. That is the reason the founding fathers of Europe looked at the map before them and from the ashes that lay around them found the need to do something. I remember when I was a young Member I visited the European institutions and met people such as Pierre Pflimlin, Simone Veil, Egon Klepsch and many others who were totally committed to the vision of keeping Europe together and worked for a Europe that would bring the people together under one umbrella.

Over the years, things have changed and various national parliaments have decided to be selective in how they support the European concept. We, because we were a neutral country, stood aloof in the area of defence and security, for example. There were compelling reasons for that. However, people ask questions when one does something like that. They ask whether we want the support of the security, but not the responsibility. That question arose, but our view was accepted and we managed to get by. An interesting reference can be made to Abraham Lincoln and Michael D. Higgins, both of whom come to the same conclusion.

Interestingly enough, though, the American Civil War was not about abolishing slavery. It was a war to stop the union from breaking up and to halt various economic tendencies that were emerging at that time. The war was going against Abraham Lincoln. He was being beaten, and he played the trump card of the abolition of slavery. It was a great move, a political move that worked. It reintroduced a vision and gave people something to fight for and something to die for. It was an appalling war, with massive bloodshed and loss of life, similar to the Second World War in Europe. That vision is what prompted the founding fathers of the European Union, in my opinion.

Let us examine the concept of each member state having its own commissioner, with which I never agreed. It individualised the extent to which the commissioners would operate in the future and it also reflected the thinking in the parliaments of the member states. I felt, in the context of the original vision, that it would be more appropriate to presume that each commissioner, wherever he or she was from, would be recognised as a commissioner representing all of the people of Europe, but that vision was set to one side. It was set to one side not because the commissioners did anything wrong but because people thought there was a better way.

We need a reaffirmation of the vision. I also believe that the European Union, in fiscal, monetary and economic terms, is doomed until such time as the single currency is adopted by all. It will not work until that happens. I do not accept the notion that the euro was responsible for our problems. If there was a multiplicity of currencies in the United States in the last ten years, would that country have worked? It certainly would not have worked. What always happens in such situations is that the currencies on the fringe take advantage of the main currency and plan their economies accordingly. It does not work. My mother was in the United States in the 1920s and the 1930s, which was a very thought-provoking time. The events that have taken place in recent years in Europe are very similar to what happened then in the US.

On the issue of electoral reform and democracy, when things go wrong, we invariably find someone to blame. After the roaring twenties came the hungry thirties in Europe and every politician looked around for somebody or something to blame. On the back of that, electoral reform was introduced, and what a reform that was. One of the first reforms that took place was in Germany, where the electoral system was manicured to accommodate the needs of the people at the time, notwithstanding the fact that there were very compelling economic reasons for deciding to do something different. It was a disaster, as we now know, and I await convincing that it was anything other than a disaster.

I do not think we spend too much time on electioneering. We need to be in contact with our public. Ironically, all of these systems have been in operation in other European countries for the last 25 or 30 years. There are non-political experts serving as ministers in the governments of several member states, yet still the problems exist. We need to reaffirm our vision. The member state parliamentarians must take ownership of the European project. We had a strong delegation from the European affairs committee of the Swedish Parliament here last week. They have a veto over the decisions of their ministers at European Council meetings. When asked whom they represent when they instruct their ministers to take decisions at the European Council, they all looked at each other. I would have liked to think that they instruct their ministers to take decisions in the interests of the European Union as a whole, but I am not convinced. Each member state must decide to take ownership of the European project. We need to understand our German, Italian and French colleagues and they need to understand us.

Seán Kyne (Galway West, Fine Gael)
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I welcome the witnesses and apologise for my late arrival, which meant I missed Ms Cahill's contribution. Mr. O'Brien made reference to the percentage of people who believe the EU is good for us. If I have heard the question once, I have heard it a thousand times: who is running the country, ourselves or Europe? As a Government Deputy I hear that a lot, and at times no amount of explaining can convince people. In many people's eyes, the EEC was originally about money transfers, structural funds, CAP payments and so forth. Now too many people wrongly see the EU as being about enforced austerity and regulations. I come across that viewpoint a lot in my constituency, which is a rural one. The water directive, for example, was issued in 1975 but was only enacted here in 2012. There are many regulations in place that have not been implemented yet and when matters come to a head, people feel the regulations are unfair.

Mr. O'Brien made some very sobering comments about the eurozone crisis coming back to haunt us, and I ask for the views of Mr. Whelan and Ms Cahill on that point. Mr. O'Brien also made reference to the UK's membership of the EU and spoke about small businesses in Britain complaining about the issue of red tape. Have surveys been conducted in this regard? Businesses will always cite red tape as an issue. Is the issue red tape at a European level or is it British red tape? Has the issue been delved into deeply? People will often blame the EU without being able to specify the exact problem. Mr. O'Brien also mentioned that the City of London would be, at best, ambiguous regarding any future proposals on EU membership. The Mayor of London, Boris Johnson, and the UK Prime Minister, David Cameron, both commented on the possibility of Britains challenging the recent EU agreement to slash bankers' bonuses. Mr. Johnson called it a "deluded" measure and Mr. Cameron called for flexible arrangements because the deal as it stood could be a "hammer blow" to the City of London. There is a general perception in Europe that we need to do something about bankers' bonuses, but the City of London is also hugely important. How will that play out in terms of a referendum?

Dominic Hannigan (Meath East, Labour)
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We have limited time remaining. Mr. Whelan must leave by 3.30 p.m., so I will call him first. I ask the witnesses to limit their contributions to approximately four minutes and that should see us through.

Mr. Seán Whelan:

With regard to the eurozone crisis coming back to haunt us, the effects of that crisis will remain with us for many decades because of the cost of bailing out the banks. How it affects the politics of the country depends on how we, and particularly politicians, react to the aftermath of the crisis and our approach to dealing with that aftermath. We could have a situation in which the country becomes rapidly eurosceptic, with the perception that Europe is something that is done to people, not something they invent as part of their daily lives. If that gains traction here, we will see a growing negative attitude towards the European Union. On the other hand, we could treat the crisis as an opportunity and a chance to get things done here and change the way we deal with the European Union and with our own internal issues. We could try to look for a benign outcome whereby people come to see the crisis as a useful turning point, albeit an expensive and painful one, out of which came something useful and beneficial to the country in terms of governance and the way things are run, not just at national political level but at all levels of society here, including in private businesses.

Undoubtedly, there will be a residue from this eurozone crisis and it will continue to exist for many decades, in the same way that the 1930s economic crisis has left a long-lasting residue, one that exists to this day in terms of policies and policymaking in society.

Deputy Durkan made a point about the crisis affecting all states and that it was not only us and our electoral system that might have been a problem. That is true, it affected all states. What has become known as the euro crisis has, to a greater or lesser extent, affected the 17 countries that use the euro. The recession that followed from the credit crisis of 2007 has affected virtually every country in the western world. However, I challenge the committee members to look around and find me another country that has had a bank bust which cost 40% of GDP. They will not find one because such a country does not exist anywhere outside of Ireland. That was a problem that was allowed to blow up here because credit growth was running at 30% a year in an economy growing at 8%. That was a red light flashing that should have been picked up within our system but it was not, and that is our problem.

Bernard Durkan (Kildare North, Fine Gael)
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It should have been picked up at ECB level as well.

Mr. Seán Whelan:

Yes, but we have our own bank, financial regulator, finance committee and financial journalists.

Bernard Durkan (Kildare North, Fine Gael)
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We had representation at ECB level as well.

Mr. Seán Whelan:

Yes, we did, but in the first instance we had and we still have control over our own economic affairs and the behaviour of our own banks and we must take responsibility for our own affairs. We should co-operate with those in Europe by all means and blame them when they get things wrong but by all means let us do what we can to control our own affairs. Wherever we have control we should exert control. We should be vigilant against these issues. Such a level of vigilance and control requires more parliamentary time and that is why I have broached the issue of the electoral system intruding on the time of Deputies and Senators which, I suggest, would be more properly spent addressing national rather than electoral issues, which I regard as an imposition on their time. I realise Members have to be close to the public but I am merely saying there must be a better way than the system we have been labouring under since 1922.

Bernard Durkan (Kildare North, Fine Gael)
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I would like to discuss that another time.

Dominic Hannigan (Meath East, Labour)
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I think we would need a full day to discuss that issue.

Ms Ann Cahill:

Many of the points being made amount more or less to the same point. Democratic accountability was referred to. This is something politicians invented to try to explain to themselves what the hell was going wrong because they did not understand. I suspect they did not understand representative democracy either. How far down the line does one go? The Taoiseach is not directly elected by the people but he is still considered to be democratically elected. He is elected by the people we elect but it is much the same in Europe. The Commission is highly politicised and one cannot do anything about that. Whether there are six or 26 members, it is highly politicised and unless one invents a whole new system, which is not going to happen, that is the way the cookie crumbles. That is why we need some other form of leverage. We will never have the leverage of a big country. If one wants to have such leverage one should go to live in Germany and then one would have it.

Reference was made to vision. I am pleased the committee picked up on that because no one ever picks up on it, but I believe it is food and drink to Irish people. For some reason, perhaps because there is only 14% of women representing us, this gets lost. People think it is some type of sissy thing that we cannot afford but that is so stupid. It is what we are, it is our identity. We cannot go back to the vision for Europe after the war. These are different times and no one remembers it. In the winter one cannot recall what the sun feels like and in peacetime one cannot remember what war feels like.

This has to do with identity as well. We have lost our identity, partly because politicians have forgotten what they are and who they are. They need to make up their minds. Are they here to service the princes of capitalism or the citizens? There is no point in telling me that a rising tide lifts all ships. That is rubbish and we know that it does not. Politicians need to make up their minds about that. They have made up their mind in London. Britain has decided to serve the square mile around the city of London and no one else seems to be paid any attention. That is the position.

Is the EU crisis deepening? Yes, of course. It will not get any better. Poverty levels are going up no matter which way one looks at them. One need only look across the board to see how one country compares to another to see that it makes no sense. If one is in a downward spiral then one is in a downward spiral and what is bad now will get worse. However, this is understood by Angela Merkel, for example, who realises that the only way out of this is to get in deeper. This means deeper integration, deeper economic integration and above all deeper political integration. We cannot resolve our economic difficulties within the eurozone without deeper political integration. For the Germans and many other northerners it is about trusting and understanding us. Senator Burke referred to the fact that they take us at our word. They do not any more but they did once. It is about us developing a new persona.

I am unsure what it was about but I remember something happening at the UN when I was a child. The committee members may remember it as well. An Irish person stood up at the UN and the whole world went mad and thought we were wonderful. Guess what? We thought we were wonderful. We found an identity by being the honest broker and by not being afraid to be the party on the margins taking an ethical stand and insisting on it. This is where we must go back to.

Mr. Dan O'Brien:

Deputy Byrne remarked that there are many uncertainties with regard to the United Kingdom issue and I agree with that fully. One thing that might happen is that the UK Labour Party could be forced to commit to a referendum as well before the next election. If that occurs then almost certainly a referendum will go ahead.

Reference was made to hard survey data on businesses and what they believe but none come to mind. Necessarily I can only discuss this impressionistically but let us consider an organisation such as the UK Institute of Directors. It tends to be more eurosceptic than the CBI, which is more akin to IBEC here. There are many individual business people who fund the United Kingdom Independence Party, UKIP, and who are vociferous in the view that Europe is the source of red tape.

One way of measuring that red tape is to look around Europe. We all have the same Single Market legislation but if we examine indices of competitiveness or economic freedom, there is considerable variety. If some countries are more competitive than others with the same legislation, then surely that legislation is not so terrible that it erodes competitiveness. Much has to do with how EU level legislation is put into force domestically and the domestic regulation and frameworks that have nothing to do with Europe. The notion that Europe causes a vast amount of anti-competitiveness does not stack up because some of the most competitive countries in the world are in Europe.

The issue of referendums was raised and in particular the question of whether we are better informed than the average citizen because we have had so many referendums. There is a biannual poll, the Eurobaromter, which asks people throughout Europe how much they know about Europe. We do not come out of it any better than others and this suggests that despite all the referendums, we generate more heat than light in referendums on EU matters.

Mr. Dan O'Brien:

It was 11 pages long but how many people read it? The issue of vision was raised as well. Deputy Durkan mentioned that the euro is not the cause of our problems and I fully agree. It strikes me that the euro was like a building in an earthquake zone, but the earthquake caused the problems not the building itself. However, the building is damaged and if we are inside that building when it comes down, then we are in big trouble. The building is going to come down unless we do a great deal more to change it and I fully agree that we need a vision for that. That vision is a federal Europe and I am comfortable with it but I am unsure whether the people of Europe would vote for it.

Bernard Durkan (Kildare North, Fine Gael)
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The leaders, the people and individual member states need to be, at the least, facing in the same general direction before we succeed to the extent that we go in that direction. I do not necessarily agree with a federal Europe but a good deal of movement must take place between then and now which could be greatly beneficial to the European concept.

Ms Ann Cahill:

On the federal Europe issue, what is in mind is not anything like the idea we have. I believe it will be a new construct and that there will be new institutions and many other new things. That is why we need to start thinking about these things now.

Mr. Dan O'Brien:

We are rich, but we have stopped growing. The poor part of the world is growing fast and catching up. There is a shift in the sense of where there is growth, but are we getting poorer because it is getting richer? The answer is "No". We have got opportunities to boost our growth. The Deputy referred to the BRIC countries. We have opportunities to boost our growth by plugging into those new markets. It is potentially a win-win for everybody.

Bernard Durkan (Kildare North, Fine Gael)
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Before concluding, Chairman, I suggest that you invite our guests to appear before the committee again in the not too distant future. It would be hugely thought provoking and inspiring for the committee.

Dominic Hannigan (Meath East, Labour)
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Yes. On behalf of the committee, I wish to express our appreciation to our guests. It is very thought provoking. This is the second in a series of 12 or 13 meetings we will have over the next few months. Your thoughts and comments today will help to inform our views. Thank you for appearing before the committee today.