Oireachtas Joint and Select Committees

Thursday, 7 March 2013

Joint Oireachtas Committee on European Union Affairs

Ireland's Role in the Future of the European Union: Discussion

2:00 pm

Photo of Dominic HanniganDominic Hannigan (Meath East, Labour)
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On behalf of the committee, I welcome the Dublin MEPs, Mr. Gay Mitchell, Ms Emer Costello and Mr. Paul Murphy. Today's meeting is the third in a series dealing with Ireland and the future of the European Union. We are considering issues such as financial, budgetary and economic policy integration in the EU, democratic accountability, legitimacy, political union and the implications for Ireland of the United Kingdom's relationship with the EU. Few people deal with these issues more on a day-to-day basis than our MEPs so we are very interested in hearing their views on how Europe is developing.

I should warn those in attendance that we have been told to expect Dáil votes, the first being at approximately 3.10 p.m., with another at approximately 3.45 p.m., by which time we may be finished. We will try to conclude by then but if there is a vote, I will have to suspend the meeting.

I am delighted also to welcome Ms Phil Prendergast, MEP. I ask for contributions, beginning with Mr. Gay Mitchell, MEP.

Mr. Gay Mitchell, MEP:

I hope our opening comments will contribute to a lively debate. It is good to have this opportunity to be present.

When we speak of the European Union, we should speak of optimism, not pessimism, as we mark our 40 years of EU membership. It is a difficult time for many people in Ireland who are being left behind, but it is not a difficult time for everybody. We need to remind ourselves of that because sometimes we talk ourselves into doom and gloom. The rest of us can do something to assist those who are having difficulty.

In the few minutes I have, I want to speak a little about solidarity within Ireland, the European Union and further afield. In spite of the economic crisis, the European Union has been a great success. After nearly 70 years of peace and when Croatia joins in July, the Union will have 28 members, with a number of other states seeking to join. For some of my fellow MEPs from the former Soviet bloc, this is nothing short of a miracle.

Since 1973, Ireland has always been at the heart of the European project. This January we commenced our seventh Presidency of the European Union in 40 years. Our country, which was once solely dependent on agriculture and the British market, has grown into a diversified economy, with IT and financial services, agriculture and food, pharmaceuticals and manufacturing. We have access to 500 million consumers as part of the Single Market. We have one Commissioner, just like Germany has, and one Minister at the Council of Ministers, as do all the other member states. The Secretary General of the Commission is Irish, as was the Secretary General before her. We need to remind ourselves of what life was like before we joined compared with what it is like now.

At some stage in the future, if we are faced with Britain deciding it wants to have a different relationship with the European Union, I believe we will have decided our die is cast. The day we joined the European Union was the day we became truly sovereign. Until then, the British Chancellor of the Exchequer set the interest rate and value of our currency. We thought our biggest export was agricultural produce but our biggest export was people. When I first became a Deputy and Member of this House, I was given 1,000 signatures from one parish alone of people who had been waiting for up to five years for a telephone.

We need sometimes to reflect on where we have come from and where we are now.

We might also reflect on Europe. Europe has not faced such an economic challenge since the 1930s. The difference this time is that through co-operation between the EU and the eurozone, these challenges are being met and confidence has returned. There are many economic issues to be addressed and the machinery to deal with these is, in the main, in place or about to be put in place. History may speak of the second part of the 20th century and the first decade of the 21st century more approvingly than current commentary. This time may well be spoken of in future years as the golden era. Why then are we not getting this message out? What has happened to us that we do not see the opportunities and the reality of what has taken place?

The Second World War finally ended in 1989-1990 when the Berlin Wall came down. The euro was then introduced so that a united Germany would be integrated into Europe and Europe would not become Germanic. In an extraordinary move, the EU took in ten, soon to be 11, former Soviet dominated countries. The worst crisis since the Great Depression then hit, which we dealt with despite our not having in place the foundations to support a single currency. These foundations are now almost all in place. As the world recovers, in the opinion of many leading figures, Europe will be strongest part of the west in economic terms. Because of these foundations, future economic challenges when they inevitably arise will be easier to meet and recovery will be more sustained.

Currently, Ireland's per capitaincome is three times that of its fellow EU and euro country, Estonia. It is important we remember this when speaking about the need for solidarity. I believe solidarity needs to start at home. Within a generation, the population of the world will increase by 2 billion, from approximately 6 billion to approximately 8 billion. Some 90% of this new population will be born into what is now known as the developing world. The world's population is moving eastward and southwards, bringing with it many opportunities and challenges. I will return to this issue later before concluding my remarks.

The EU is primarily about stability in economic and broader security terms. We have built an inter-dependence in Europe which is and will continue to pay dividends. Europe must take a view on how it ensures stability in a changing world and not only on the continent of Europe. The United States is no longer prepared to be the world's policeman in all circumstances. If France had not intervened in Mali, who would have done so? What is to happen in Syria? Will the Arab spring evolve into a more stable and democratic region and will Europe assist this? At some point in the future, the European Union's agenda will give greater priority to these broader security matters and the issue of common security and defence will again be discussed. Ireland cannot fudge these issues. We may need security defence cover ourselves, particularly as we are not prepared to fund our defence forces to meet all contingencies.

There is much talk in Ireland about defending our sovereignty. Why then have we not made arrangements to defend? Keeping our heads down or patronising the public with politically correct and soothing language is not what a parliament should do in exercising sovereignty. Sovereignty requires decision making and responsibility taking. It is time for Ireland to debate its future defence and security needs and to provide for them one way or another. As a member of the European Union, what is our view of the future of the Union and a common defence? Parliaments in the other 26 member states debate these matters routinely. What is our view? It is time we expressed it from a national perspective.

If a common EU defence evolves, what will be our position? I would like to set out my position. I believe we should join if we get the right terms. In my opinion, this would involve negotiating an opt-in clause on a case-by-case basis. I believe we would get this option if we involve ourselves in negotiations from the beginning and help to form the rules of any EU common defence. Of course, if we were to join, this would require a referendum in Ireland. If we were to put a good case to the people, I believe they would opt for security and defence cover rather than have no cover. To remain aloof would be to allow the rules to be made by others. If we are to join a common defence later, it will be under the rules made by others. I do not believe we are serving the people's best interests by not talking about what a future EU will be like. The building in Strasbourg in terms of design is incomplete and deliberately so because the European Union is a work in progress. This means it has a further journey to go. While we have a right to say what we believe should be its destination, so too have others. We will have to react to what they say in due course.

Every day, 23,000 children in the developing world die. The good news is that previously 36,000 children died every day. The number of children dying per day has been reduced by 13,000. Ireland has assisted in this by way of voluntary contributions and through our NGOs and missionaries. The fatality rate for children is 68 per 1,000. At the end of the Second World War it was 48 per thousand here. We can make countries in the developing world our trading partners. We can prevent massive migration from south to north. However, we can only do so by investing. Another issue for consideration is why we are not meeting our 0.7% of GNP contribution to overseas development aid. It is in our interest to do so, as well as being our humanitarian duty. I accept that our contribution will decrease as our public finances come under pressure but the percentage should also decrease as our GDP decreases. It should not be a case of a percentage decrease plus a decrease in the amount. This is not just an issue of altruism, these are issues of self interest. If we do not something about the festering, horrible situation in the developing world, the result will be massive migration and a terrible inheritance for our children and grandchildren.

In my opinion, the message in regard to the future of Europe should be solidarity at home, in terms of sharing more of what we have with those who are really struggling, which does not include many of us around this table; solidarity within the European Union - it must be remembered that there are members within the European Union who have only one third of our income; and solidarity internationally, which is what will ensure peace and stability. These are the prerequisites for prosperity. I do not believe we should be reacting and trying to protect or prevent. Rather we have ideas which we should be seeking to get out.

Photo of Dominic HanniganDominic Hannigan (Meath East, Labour)
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I thank Mr. Mitchell, MEP for his presentation. While Mr. Murphy was scheduled to contribute next and we are still awaiting his slides, which are difficult for members of our age to read, we will hear next from Ms Costello, MEP.

Ms Emer Costello, MEP:

I thank the Chairman for the invitation to appear before the joint committee. This is my first attendance at this committee. I also thank the Chairman for rescheduling committee meetings for Thursday afternoons to facilitate the participation of MEPs. I hope to be able to attend on a more regular basis.

Photo of Dominic HanniganDominic Hannigan (Meath East, Labour)
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We were hoping that would be the case. This is the first occasion on which MEPs have attended despite that the committee has been meeting on Thursday afternoons for almost two months now.

Ms Emer Costello, MEP:

I understand Ms Phil Prendergast, MEP has attended on several occasions, including last week.

Ms Phil Prendergast, MEP:

We will be unable to attend next week as we will be attending a meeting in Strasbourg.

Photo of Timmy DooleyTimmy Dooley (Clare, Fianna Fail)
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We could perhaps arrange to hold our meeting there.

Ms Emer Costello, MEP:

I would like to focus my remarks on the European Parliament Committee on Employment and Social Affairs, of which I am a member, and to elaborate on what we are trying to achieve in that forum and how we can work towards increasing solidarity and developing a more social Europe.

The principles and values that underpin the European Union are written into the treaties of the European Union.

The emphasis is on respect for human dignity and solidarity. Article 3 reads: "The Union's aim is to promote peace, its values and the well-being of its peoples." We are also committed to establishing an internal market and the sustainable development of a social market economy, one that enjoys full employment, combats social exclusion and discrimination and promotes social justice and protection. The internal market is not an end in itself, but a means to an end.

Under the Lisbon treaty, the social clause requires the Union to take account of the promotion of high levels of employment, adequate social protection and the fight against social exclusion in all of its policies. However, these values and objectives are nothing unless we can transform them into a political programme. This, in turn, is determined by the balance between political ideologies in the institutions, the European Parliament, the European Council and the European Commission.

We have the basis for a good political programme to give effect to the EU's core values and objectives in the form of the EU 2020 strategy, which sets five headline targets - a 75% employment rate, a reduction in the school drop-out rate to below 10%, a reduction in the number of people at risk of poverty by at least 20 million, a public and private investment of at least 3% of GDP in research and development and innovation, and a reduction in greenhouse gas emissions by 20%, renewable energy production to reach 20% and a 20% increase in energy efficiency.

This strategy is worth striving towards. A recent study indicated that, having reached a 75% employment rate, the EU would not only halve the employment rate, but would also generate up to €1.2 trillion in extra revenue for national budgets, the equivalent of 7% of GDP. The economic crisis is impacting on member states' ability to pursue this strategy and is exacerbating poverty and social exclusion. We are aware of the problems facing people in Ireland.

Across the EU, almost 120 million people, including 25 million children, are at risk of poverty and social exclusion. More than 40 million suffer from what is called severe material deprivation - for example, an inability to pay household utility bills, including heating. Europe's unemployment rate now stands at 10.8%, with 26.2 million people unemployed. Youth unemployment is 23.6%, some 5.7 million people. The number of young people not in education or training is almost 8 million. In Ireland, the youth unemployment rate is unacceptably high at almost 30%. Other countries are facing even more serious challenges. For example, Greece is heading towards a 60% youth unemployment figure and Spain and Portugal are over the 50% mark.

The statistics show that all member states are grappling with the same problems to a greater or lesser extent, but some are doing better than others. For example, Austria's unemployment rate is 5%. The risk of poverty and social exclusion in the Czech Republic, Sweden and the Netherlands is well below the EU average.

President Barroso told the European Parliament in his state of the Union address that it was those European countries with the most effective social protection systems and the most developed social partnerships that were among the most successful and competitive economies in the world. As such, there is a correlation between well designed social spending on the one hand and competitiveness on the other. Therefore, Europe should view sound social spending not as a compensation, but as a positive investment in prosperity and inclusion for the future.

This is the core idea of the social investment package presented by the social affairs Commissioner, László Andor, two weeks ago. The Commission presented this package because it now recognises, as my group in the European Parliament, the Progressive Alliance of Socials and Democrats, S&D, has long argued, that we must shift our focus towards investing in people. For this reason, it is important that the multi-annual financial framework, MFF, be fit for purpose. We want 25% of cohesion funding to go towards the European Social Fund, ESF, and 20% of member states' ESF spending to be on social inclusion and combating poverty during the period in question. Social investment focuses on policies that prepare people for life's challenges rather than waiting to repair the consequences of failing those challenges.

I have limited time today, but I will mention two initiatives in which I am involved, those being the European youth guarantee and the fund for European aid for the most deprived. The youth unemployment statistics are unacceptable. The best way to return people to work is to grow the economy. We must build on the Compact for Growth and Jobs, which was agreed last June. In particular, the €10 billion increase in the European Investment Bank, EIB's capital fund will allow substantial investment in small to medium-sized enterprises, SMEs, an issue that I have raised in the European Parliament.

The youth guarantee can help us to tackle youth unemployment. Under the scheme, young people would be offered quality jobs, job placements, internships, traineeships or further education after four months of being out of education or employment. The €6 billion agreed by the Council of Ministers on 8 February is insufficient, but it is a start. It is also a sign of a commitment to tackling the issue. Further work is necessary.

Second, the feed fund will replace the current food aid programme, which involves the distribution of surplus stocks to those who are most in need. The fund for European aid to the most deprived is worth €2.5 billion and will replace the food aid for most deprived persons, MDP, programme. The money can no longer come from the agriculture budget or intervention stocks. The feed programme's interesting aspect is that it builds on the MDP programme while also incorporating some social inclusion measures. It will come from the social affairs budget. I am the European Parliament's rapporteur in this regard. I have been working with NGOs involved in the issues of food deprivation, child poverty and homelessness in putting the report through the European Parliament.

These two initiatives reflect some of what I mean by social investment. The Seanad discussed the matter last week. We must embed this approach more securely in the EU's architecture. We have agreed new rules for the monitoring and co-ordination of member states' fiscal and economic policies. We have developed policies for growth and employment. Sound public finances are necessary to develop such policies.

Last June, President Van Rompuy presented a paper, entitled "Towards a Genuine Economic and Monetary Union", which emphasised closer integration in four respects, those being, the financial sector, budgetary matters, economic policy and strengthened democratic accountability and legitimacy. These are vital. For example, a banking union is essential and, since we have a common currency, we need to be able to co-ordinate our economic and budgetary policies. The European Parliament must play an important role at each stage of the European semester and must be involved in the functioning of the European Stability Mechanism, ESM, and in monitoring the troika. National parliaments also need to be more involved.

However, the social pillar was missing from the Van Rompuy paper. This was a mistake. The European Parliament's contribution to the debate, adopted last November, sought to redress the imbalance by making concrete proposals on a social Europe as a fifth pillar and as one of the essential building blocks for economic and monetary union, EMU. We are seeking a social pact. According to Commissioner Andor, if member states want to pool more financial, budgetary and economic sovereignty and want the process to have democratic legitimacy in the eyes of the citizen, employment and social problems need to be addressed.

The discussions on how the social dimension of EMU could be strengthened must be the focus of our discussions. The matter was discussed at the Social Affairs Council. I understand that the Irish Presidency is preparing a paper on these discussions. There are difficulties in developing and advancing a more social Europe in the current climate but it is an objective that we must aim for. Otherwise Europe will become synonymous with bailing out banks at the expense of the people. It is in the interests of all of the people that we develop a social Europe.

We are seeking a European social pact which would identify the social investment measures that should be taken by member states with the support of EU funding, particularly the ESF, over a given timeframe in order to meet the EU 2020 strategies. There is a window of opportunity to move towards the objective. The December Summit also made reference for to need to balance productive public investment needs with fiscal discipline objectives.

To conclude, I welcome that serious attention is being given to social Europe at EU level. There is a great challenge facing EU member states on strengthening social Europe but the June summit must aim to make concrete progress towards a binding social pact. That is the important aspect. It must be binding in the same way that economic regulations are binding. We must ensure that the our fiscal objectives are reconciled with social and employment aims and that we can progress to achieve the Europe 2020 strategies which is in all of our interests.

2:20 pm

Photo of Dominic HanniganDominic Hannigan (Meath East, Labour)
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I thank Ms Costello.

Mr. Paul Murphy, MEP:

I thank the committee for the invite and printing my slides. I overestimated the eyesight of the esteemed members of the committee.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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I would not overemphasise that one. We can read and see as well.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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We do not make the same mistakes.

Mr. Paul Murphy, MEP:

The Chairman asked the MEPs to reply to three questions and I shall focus on the first two due to time constraints. The first question was about the financial, budgetary and economic policy integration in the EU. The second was about democratic accountability, legitimacy and political union.

I contend that a profound change is happening in the European Union without enough discussion, debate or awareness taking place. As President Barroso stated:

What is going on is a silent revolution - a silent revolution in terms of strong economic governance by small steps. The member states have accepted - and I hope they understood it exactly - but they have accepted very important powers of the European institutions regarding surveillance, and a much stricter control of public finances.
In my opinion it is revolution or a counter-revolution that is well under way. It has already made significant strides in the direction that it wants to go but a lot further remains to be done. The model it is driving towards can be summed up by the phrase "authoritarian neo-liberalism" which comprises three aspects. First, the technocratisation of economic policy-making. That means that economic policy is no longer a matter for political debate between left and right, between neo-liberals and Keynesian socialists. Instead there is a right and a wrong answer and the right answer happens to be the answer favoured by the Thatcherites and the neo-liberals. It is an ideological assault that takes place with the raising of economists to high priests and cannot be questioned.

Second, making neo-liberalism law. That is what I have seen so far and I shall explain. It imbeds neo-liberalism in law in the European Union and its member states in national legislation. At the same time, and in the words of Mr. Martin Callanan, MEP, and leader of the British Conservatives in the European Parliament, it is "making socialism illegal". In reality it makes Keynesianism illegal. It makes significant State expenditure, running deficits, etc., illegal under the rules of the European Union and the process of economic governance. Third, it involves a significant transfer of power which is real and cannot be disputed. It is a transfer of power from elected governments to unelected bodies, in particular the European Commission and the European Central Bank.

One wonders why this is happening. Is it in response to the crisis? Is it taking advantage of the crisis? In my opinion it is both. It is partly in response to the crisis in the neo-liberalism framework that the political establishments across Europe know. It is also an example of what Naomi Klein calls a shock doctrine. That means one uses a shock, in this case it was clearly created by neo-liberal capitalism, to further imbed the policies. That is what happening. My slides show two quotes by the two largest business lobbying organisations in Europe, the European Round Table of Industrialists and BUSINESSEUROPE. In 2002 the European Round Table of Industrialists stated, "[A]t the drafting state, the implications of national budgets and of major national fiscal policy measures [should be] reviewed at the level of the Union". That is what has been agreed over the past two years. This agenda has been pushed by big business in Europe over an extended period. Given the opportunity of the crisis they have been able to go ahead, push it and have their agenda successfully implemented. I shall quote BUSINESSEUROPE from spring 2010 which states: "[Eurogroup] will ... have to assume greater responsibility in improving economic governance in the euro area, and put greater emphasis on domestic and competitiveness imbalances, which have proved in most recent developments to be a major source of fiscal instability". That is precisely what has been done through the "six pack", "the two pack" and the fiscal treaty. They are the changes that are being implemented and they were wished for in advance of the crisis.

With regard to what has happened so far, one can refer to non-legislative measures. That is a nice term for what has been happening. On the other hand, there are legislative measures.

In terms of non-legislative measures, we have seen, largely without a peep from the established media, the removal of elected governments in Greece and Italy. We have also had the replacement of governments by bankers for bankers whose mandate does not come from the people of those countries but the markets. European Central Bank ransom notes have been sent. For example, Sylvio Berlusconi received one on 5 August 2011 that sought a series of measures that had to be implemented and finished with the ominous line, "We trust that the government will take all the appropriate actions". The Italians needed the ECB to buy the bonds on the Monday morning. If they did not it would result in a collapse and bond prices going through the roof. The ECB, an unelected and unaccountable institution, held a sword over the Italian Government. Obviously I completely disagree with the policies of that Italian Government. We know, even though we do not know the details because we have not seen the letters, that letters were sent to the Irish Government at the end of 2010. There is also the experience of the troika's supervision. The troika primarily dictates, even though there is a certain amount of discussion, economic policies to the governments of Greece, Portugal and Ireland. I have listed the non-legislative measures so far.

There has been a series of three legislative measures. First, the six-pack, which we only heard about in Ireland during the course of the fiscal treaty debate even though it had already happened at that stage. Second, the fiscal treaty. Third, the two-pack that will come before the European Parliament next week. I shall oppose the latter but unfortunately it is likely to be passed overwhelmingly. The legislative measures have made the Stability and Growth Pact targets binding. Therefore, the 3% deficit ratio and the 60% debt-to-GDP ratio have been made binding and subject to fines if countries do not meet or head towards those targets. They have imposed rules in national law of binding force and permanent character about a structural deficit which is new and was not contained in the Stability and Growth Pact of 0.5%, as well as the Stability and Growth Pact targets. It has introduced a procedure called the excessive deficit procedure, in which 20 countries in the EU are currently involved, which subjects them to a large degree of supervision by the European Commission in particular. There has been an introduction of a system which has not been discussed at all called the scoreboard system. This is new and goes beyond the Stability and Growth Pact. It contains ten other indicators that the Commission now uses to monitor the economies of EU countries. If countries exceed their scoreboard targets they can be put in what is called an "excessive unbalanced procedure". Again, the EU countries can be subject to fines if they do not implement the correct corrective measures which are always Thatcherite and neo-liberal.

The voting rules in the Council have been changed with breathtaking cynicism whereby qualified majority voting has been turned on its head.

Now, when voting on sanctions such as fines for countries where, in the view of the Commission, sufficiently rigorous austerity has not been implemented, it is almost impossible to stop those fines being passed. The fine is presumed to pass unless one can get a qualified majority against it. Also, countries that are subject to fines, miscreant countries, lose their vote on subsequent votes that will take place about fining other countries. It is an attack on democracy at the level of the European Council. There is also the introduction of the European Semester.

I will outline some of the details of the two-pack, because we only hear that the budget will be announced in October and we tend to think that is the only difference it will make. It is as if there is something completely innocuous about the two-pack. A common budgetary timeline is introduced, and it is not just about every member state doing it at the same time. It is there for a purpose. The purpose is that the Commission can apply political pressure on governments to ensure that budgets are changed if necessary so that enough austerity, in its view, is implemented. The Commission now has the power to request a revised draft budgetary plan in accordance with the provisions of this regulation. There is also the introduction of economic partnership programmes, which detail the policy measures and structural reforms needed to ensure an effectively durable correction of the excessive deficit. It is really an agreement between the member state and the European Commission. The enhanced surveillance element will put a number of countries, not just countries in so-called bailout programmes but also others, in the same position whereby they are subject to extensive surveillance. I believe there is a great deal more to come.

Emer Costello, MEP, referred to the "Towards a Genuine Economic and Monetary Union" paper. Everybody should read it. There are different drafts of it; it has different iterations as the discussions proceed. People should read them all because even where material has been taken out of the latest drafts it does not mean it is still not there in terms of a plan that the elites within Europe, including José Manuel Barroso, have in mind. Some quotes will give the committee an indication of this. The first is: "The reforms introduced ... through the creation of the European Semester ... are a step in the right direction. But there is a need to go further...". This is the start, not the end, of the process. For them it ends in a political and fiscal union with an absence of real democracy and real control by people over economic affairs and with austerity being institutionalised.

The next quote is: "A fully-fledged integrated budgetary framework would require the establishment of a Treasury function with clearly defined fiscal responsibilities". What they are talking about is a European Minister for Finance or a European finance ministry. That is the direction they want to go with this process. Again, it is not necessarily subject to democratic check or accountability. The next quote shows where they are at present. What we will see is a real emphasis on "arrangements of a contractual nature between Member States and EU institutions...". They want to have contracts for austerity between the member states and the European Commission. It is a way of subverting democracy, because the contracts will not bind the governments but the states. If a government is kicked out because people do not like austerity and vote against it, in law the contract will bind the incoming government.

In conclusion, what is so bad about all of this? Does it not make sense and is it not the only way to save the euro and our economies? First, it is a fundamentally undemocratic process. It is taking power to decide on economic policy away from people. It is taking economic policy out of the sphere of political debate. Second, institutionalised austerity, which is what this means, will result in deeper crisis. It will not solve the economic crisis. Austerity is being implemented across Europe and has resulted in a 0.6% contraction in GDP in the last quarter of last year. The eurozone has gone back into recession. It has caused disaster for many people. There are 26 million people unemployed and there is social devastation in Greece in particular. One can see the consequences for people.

Why is this policy being pursued? Austerity is working for those for whom it is meant to work. Austerity was never envisaged as a plan to save the economy and improve people's lives. It is a plan by which the very rich in our society, the 1%, can strengthen their position at the expense of the rest. The bondholders have been protected and profits are up across the European Union. Privatisation is being promoted and wages have generally been pushed down. There is €750 billion in excess cash holdings in listed EU companies. Profits are increasing but investment by the private sector continues to decline. The result is large amounts of cash sitting on the balance sheets of big business. In my opinion, the way out of this crisis is through public investment and socialist policies, but they are precisely the policies that there is an attempt to outlaw through this process of authoritarian neo-liberalism.

What is to be done? We need massive protests across Europe. Most people here probably will not agree with me-----

2:30 pm

Photo of Eric ByrneEric Byrne (Dublin South Central, Labour)
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We have them every week.

Mr. Paul Murphy MEP:

The picture on the slide is of a protest in Spain on 14 November last, when there was a general strike in Spain, Italy, Greece, Portugal, Malta and Cyprus. We need a Europe-wide struggle by working people against austerity and against this undemocratic process of authoritarian neo-liberalism.

Photo of Dominic HanniganDominic Hannigan (Meath East, Labour)
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We are under pressure for time so I ask members to limit their contributions to a maximum of three minutes. I will tell them when their time has concluded. That will give us a chance to hear replies from our guests.

Photo of Timmy DooleyTimmy Dooley (Clare, Fianna Fail)
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I will be brief. I thank the three MEPs for attending this meeting and sharing their perspective on the current position in Europe, our engagement with Europe and their views in general.

Mr. Gay Mitchell, MEP, talked a great deal about solidarity. That is what the Irish people would have seen in the early stages of our engagement with Europe. However, during this crisis people have seen perhaps a lack of that solidarity, which might be perceived more than real. That has grown out of the Franco-German alliance that developed during the worst days of the crisis. That alliance might have been due to the architecture that currently exists and the fact that there was no crisis response mechanism. It was therefore left to the two larger states to hold the various summits and to try to show leadership in terms of solving the crisis, particularly the banking crisis. That disenchanted many Irish people. Even though Ireland was subject much of the time to the outcome of those various summits, it did not appear to be part of the decision making process, notwithstanding its roles both in the background and to the forefront as identified by Mr. Mitchell. Will Mr. Mitchell discuss how Europe might repair that broken relationship with the people? Ultimately, if there is a perceived disconnect, there is a disconnect. I believe it is something we must address. I am a committed European and have seen the phenomenal benefits we have gained from Europe, so it is disappointing to see that gulf in terms of public opinion.

Paul Murphy, MEP, and I will always differ in our views on Europe. That is fine. As always, he articulates his views and his dislike for what he perceives as a big, bad Europe in a very coherent way. He succeeded in addressing that clearly. However, notwithstanding all its faults and frailties, where does he see a better system of administration? He would have a different viewpoint from probably the majority of people on how Ireland is and has been governed in recent years and on the current agenda. Will he discuss his perception of the ideal model? It would give us an opportunity to work on something concrete or a direction which we might consider taking.

Photo of Kathryn ReillyKathryn Reilly (Sinn Fein)
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The theme of these discussions is Ireland and the future of the EU. It is important that we have a real debate about the future of the EU and that we start engaging more with the public about it, rather than just talking to each other, whether it is Members of the Oireachtas or Members of the European Parliament. We need to engage with the community where we live. Do the MEPs have any engagement with people on the issue of integration in the EU? What feedback do they get on the EU and its institutions from ordinary people? When they tell people they are MEPs what does that mean to them?

Public confidence in the EU and its institutions is at an all-time low. Mr. Gay Mitchell said we need to talk about optimism, not pessimism.

Last December's Eurobarometer survey makes for grim reading. Irish public confidence in EU institutions was seen to be at an all-time low, which should not surprise us. While the majority of people want to remain in the euro they have lost confidence in politicians and EU institutions and there is a democratic deficit. Earlier this week Mr. Martin Schulz, MEP, said that the EU's current institutional set-up resembled a Frankenstein's monster because there is no democratic separation of powers. He said people could not trust the EU, and that the division of labour and the legal basis were not clear. I would like to get the MEPs' opinion on the Frankenstein's Europe he mentioned.

Is the time now right for greater European integration given that there are such high levels of public concern with how the EU is currently governed? How can this growing discontent be addressed, in terms of changing the direction of EU policy-making particularly in the economic sphere and in terms of how the EU institutions do their business? Mr. Martin Schulz, MEP, said he wants to see a government at EU level legitimised by the European Parliament. While we would not agree with that, it is his way of trying to address that deficiency. In his speech earlier this week, speaking about the debate in Britain over its membership, he said he was in favour of repatriating powers that have not proven to add value at an EU level. What powers should be repatriated back to member states?

2:40 pm

Photo of Eric ByrneEric Byrne (Dublin South Central, Labour)
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Mr. Mitchell, MEP, called for optimism and I agree. Then we heard Mr. Murphy, MEP, advocate the kinds of demonstrations we see throughout Europe, the aim of which is unclear to me. As he is a member of the international trade committee, I was hoping he might have addressed an issue of concern to me, which is the proposed trade agreement between the EU and the US. Perhaps he might come back to me on that one.

We should certainly debate the delicate issue of common defence and security policy. I am delighted Ireland is supporting the training of the Malian army. We are very proud of the work our soldiers and gardaí do in the international arena. Rather than concentrate on the common defence and security policy perhaps we should look more closely at home. While I do not know how it operates throughout Europe, is this the democratic forum that MEPs have to relate back to the constituents? There seems to be an incredible gap between the work they do in Europe and their relationship with the people on the ground who elect them. Is this the only step from Europe, down to the national Parliament and down to the people? Are other formulae in operation elsewhere in Europe that create this democratic legitimacy and accountability we are trying to address?

In asking us to concentrate on Europe as it is today, there is an argument that there is considerable picking and choosing as things stand today in Europe. While my statistics might not be correct, if there are 28 states, perhaps 15 are in the eurozone. I believe Estonia might have applied.

Photo of Dominic HanniganDominic Hannigan (Meath East, Labour)
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Latvia.

Photo of Eric ByrneEric Byrne (Dublin South Central, Labour)
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Latvia - I was not too far away. Latvia is applying. There are 11 countries signing up to the financial transactions tax, which means that many of them are not. The EU has decided its budget, which is lower than anticipated. The Euro sceptics in Britain are applauding this as a victory to have reduced spending. We are talking about optimism and solidarity, which go hand in hand. Does Britain's decision to have an in-or-out referendum on the EU build the optimism and solidarity that Europe needs at this time? Do Britain's worrying demands to take more power back from Europe to the national Parliament constitute optimism or solidarity from a British perspective? Also on the issue of solidarity, Bulgaria and Romania are arguing they should be within the Schengen region and particular partners in Europe will not support them. Comedians have been elected in Italy. Some people would suggest that Ireland was the first to elect comedians in the last election. Regardless of whether that is true, it indicates that people are very sceptical of politicians and political structures. Again in the context of optimism and solidarity, Catalonia, which is the economic engine of Spain, is considering breaking away - it does not want to have solidarity with the rest of Spain. We see the economic crisis affecting many countries in Europe - particularly the three countries in bailouts, Portugal Greece and Ireland.

Is Europe ready to expand if we cannot resolve these existing contradictions within the Union? Can we agree to expand to include Albania and - the key issue for Europe - Turkey? We are supposed to be talking about the future of Europe and these are the issues within Europe that we may not be addressing fully.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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I thank our colleagues from the European Parliament and you, Chairman, for organising this discussion. I particularly compliment Ms Costello, MEP, and Mr. Mitchell, MEP, on addressing the issues that affect Europe at present - not just one country or one part of the social strata, but all of the people of Europe collectively. That is critical from the point of view of responsible representation among politicians throughout Europe. At the level of the European Parliament, at national level and at local authority level it is vital to have people who accept representation with responsibility.

I have not heard a dissertation in a long time with which I disagreed more profoundly than what I heard from Mr. Murphy, MEP. That is not a reflection on him but is a reflection on the extent to which he has been misled by misleading propaganda and the extent to which he in turn misled the public throughout this country and continent with particular reference to the European Union. There have been a number of references to Keynesianism. I read a little bit about Keynesianism as well. As I have mentioned previously, my mother lived in the United States in the 1930s and we learned much about its failures and the numerous attempts to revive flagging economies at a particularly difficult time. It is amazing how some elements in that equation have disappeared over the period and only the most acceptable elements are now being transmitted. It is unfair to select quotations from people such as President Barroso as a means of emphasising and advancing a political agenda.

I accept that Europe has many faults at present and we have all been critical of Europe. Europe's fault has been the inability of member states to move in the one direction at the same time, to act in unison, to support each other in solidarity, and to be helpful and supportive of each other socially, politically and economically. Europe needs to redefine its vision - something we have discussed many times. In an economic crisis it is difficult to tell the people the truth. It is very easy to opt out and to take the easy options.

It is much easier to avail of the àla cartemenu and promulgate it as a resolution. It is not a resolution but a disaster. An iconic message that could emanate from what Mr. Murphy has said to the young, middle aged and older people across the country is the image of anarchy that is on the screen. It is utterly appalling. Whether one likes it or not a great number of people in the country resile from the ongoing message of hardship and misery, the promotion of the notion that Big Brother is out to get them and that somebody somewhere intends to do them down. It is wrong, misleading and does Mr. Murphy a great disservice. He is a young Member of the European Parliament who will face an election in the not too distant future when all of his theories shall be tested. Generations of past Europeans have been misled at different times and junctures by different people with different ambitions and ideals. I appeal to him to desist from going down that road because it is not in the best interest of the Irish people, the people of Europe or society. It is definitely not in the best interest of Keynesianism.

2:50 pm

Photo of Joe O'ReillyJoe O'Reilly (Cavan-Monaghan, Fine Gael)
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I join in welcoming the three guests and thank them for attending. It is important to have this dialogue with them and it is good that the new schedule of meeting times will facilitate this further.

I wish to pose straightforward questions that I asked the last day. The Chairman helpfully suggested that I might pose the same questions to the delegation today. Will the multi-annual financial framework be passed by the European Parliament? How sizeable is the opposition to the MFF? I believe it will be passed. It is great, I am delighted about it and we need it.

I want Ms Costello to comment on how she thinks the youth guarantee scheme will work in practice. Does she think it will alleviate the unemployment problem? It has been very helpful in Finland. I am optimistic about it but I am interested to hear her opinion. Does she think that we will get a significant part of the €6 billion fund to assist us in the process?

I shall now turn to the remarks made by Mr. Murphy. Does he see his analysis of Europe as being consistent with one getting a youth guarantee scheme and €6 billion devoted to the scheme? The scheme will give young people opportunities. Ireland also got a deal on the promissory notes, which is very realistic in an Irish context and alleviates any immediate cashflow problems. The European Stability Mechanism will also arrange a rebalancing of finances throughout Europe. The entire European project has meant a significant transfer of resources from within Europe to poorer regions and countries. Ireland has benefited from a significant transfer of resources, as eastern European countries are benefiting at present. How does Mr. Murphy reconcile his last thesis suggesting anarchy and disturbances here? I agree with Deputy Durkan's comments on his thesis. How does Mr. Murphy reconcile it with the fact that Greece has suffered greatly from the position that it adopted? Relative to our position, Greece is in a much worse way and the restraint and common sense of the Irish people have kept us in a much better position.

It is easy to use glib terminology like austerity and neo-liberalism and have a student union-type debate on the matter. How does Mr. Murphy think that we can seek a level of forbearance from German taxpayers? They have paid the piper whether we want to accept the fact or not. How much forbearance can we expect from them? The man or woman who works in a factory in Hamburg in Germany can examine his or her payslip to see the deductions that are being made. How long will they tolerate the deductions being made without accountability, evidence of proven spending or some return?

Austerity was not readily an option. Does Mr. Murphy accept that there has been a shift in thinking? Does he concede that there is an acceptance within Europe that austerity on its own has not worked and there is a movement towards stimulus? While as an individual he is properly motivated, with great respect his analysis is simplistic, trifling nonsense and it is dangerous for young people to hear it.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I do not know how I shall follow the last two interventions.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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The Deputy can have a go.

Photo of Joe O'ReillyJoe O'Reilly (Cavan-Monaghan, Fine Gael)
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The Deputy is a gentleman and is well fit for it.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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It might be better if the Chairman left me until the next lot of questions.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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The Deputy should have a go.

Photo of Timmy DooleyTimmy Dooley (Clare, Fianna Fail)
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He can leave it to Fianna Fáil again.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I welcome all of our guests. I missed the presentation made by Mr. Mitchell because I had to attend another committee and I apologise for that. I welcome my former constituency colleague, Ms Costello, whom I used to meet on a daily basis for many years. Even though I no longer do so, I am still aware of her presence. I thank the MEPs for their presentations and I have a question for each one.

Given that I missed the presentation by Mr. Mitchell I shall ask him a general question. Has the British statement on its renegotiation of, or potential exit from the European Union, had an impact on its influence and weight in European institutions? I am particularly interested in the British decision on banking bonuses. Has the British statement helped or hindered its ability to progress its national interest within the European Parliament?

I was struck by the conclusions made by Ms Costello on the need to better progress the social dimension with regard to the social compact. During her work has she found institutional restraint in doing so?

I shall pick up on a point made by Mr. Murphy. What is behind the lack of progress given the speed of change in other areas of policy, such as economic policy, for example?

I disagree with my colleague, Deputy Joe O'Reilly. Even though I disagree with Mr. Murphy's analysis, as he well knows, it is a sophisticated analysis. He examined what is going on and tried to frame it. I have probably ruined my reputation within the Fine Gael Party with my comments.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Not entirely but the Deputy is working on it.

Photo of Joe O'ReillyJoe O'Reilly (Cavan-Monaghan, Fine Gael)
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The last frame by Mr. Murphy is not particularly sophisticated.

Photo of Timmy DooleyTimmy Dooley (Clare, Fianna Fail)
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A rap sheet.

Photo of Joe O'ReillyJoe O'Reilly (Cavan-Monaghan, Fine Gael)
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There is nothing sophisticated about it, with respect.

Photo of Timmy DooleyTimmy Dooley (Clare, Fianna Fail)
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He had some sophisticated and well-designed flags.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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That is misery.

Photo of Joe O'ReillyJoe O'Reilly (Cavan-Monaghan, Fine Gael)
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The outcome is not sophisticated.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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No. On the other hand, it is peaceful protest.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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It started off that way.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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My comments do not take away from the fact that I completely disagree with Mr. Murphy.

Photo of Joe O'ReillyJoe O'Reilly (Cavan-Monaghan, Fine Gael)
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The Deputy is a gentleman when compared with Deputy Durkan and me.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I thank the Deputy.

Photo of Eric ByrneEric Byrne (Dublin South Central, Labour)
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What about the story of the pregnant woman in the bank in Greece? Is there a problem acknowledging the case?

Photo of Dominic HanniganDominic Hannigan (Meath East, Labour)
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Let us get back on track.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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It would sound the death knell of democratic politics if we ended up with a lack of differing views and policies. I completely disagree with Mr. Murphy but I find myself having to defend him. That is a unique position to be in but that is what debate is about.

Photo of Eric ByrneEric Byrne (Dublin South Central, Labour)
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That is the Christian in the Deputy coming out.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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The principle of democracy.

(Interruptions).

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I have been heckled more than the guests, which is unusual. I would like Mr. Murphy to respond to my next point. Is there a contradiction at the heart of his argument? He wants more Keynesianism and investment but is against the financial markets which supply that investment. He wants more investment, and I assume that he also wants borrowing at times, but he views the very forces that will supply that as being authoritarian, capable of shock therapy and so on. There is a fatal contradiction in his argument. He is fundamentally against the people who can supply what he seeks. He is against global capitalism and he is against capitalism itself as it is currently organised. However, it is capital that supplies what he seeks, such as investment. In the face of his inability to resolve the contradiction, he has taken his argument to a different space by saying that these institutions are to blame and we must fight against them.

In my view the institutions are trying to ensure we do not get to a point where we fall foul of the very forces they are against.

3:00 pm

Photo of Joe O'ReillyJoe O'Reilly (Cavan-Monaghan, Fine Gael)
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May I intervene to say that I think Deputy Durkan will have the whip restored.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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He has sought counselling already.

Photo of Joe O'ReillyJoe O'Reilly (Cavan-Monaghan, Fine Gael)
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The latter remarks saved the day.

Photo of Seán KyneSeán Kyne (Galway West, Fine Gael)
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I welcome the Dublin MEPs to the committee. Some very interesting and thought-provoking comments have been made. The issue of the common EU defence policy should be debated. I agree with Gay Mitchell's comments on the developing world. With the election of a new Pope, there may be a change in the church teaching on contraception and with reduced family size, the economic problems resulting from over population may be curtailed in the Third World, which is Catholic. Ms Costello also mentioned solidarity. Considering that we are spending 83% on health, social welfare and education and borrowing the money to do so, how much more can we do in terms of solidarity with the poorest in society?

Notwithstanding that Paul Murphy is an MEP, does he believe in the European Union and does he agree that Ireland as well as Europe have benefited from the EC and EU since its inception vis-à-vis the relative positions of Ireland and Europe prior to our joining it?

Photo of Dominic HanniganDominic Hannigan (Meath East, Labour)
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Before I ask our guests to respond, although the three MEPs present are from Dublin they are the leaders of their various groups. We invited Pat the Cope Gallagher, MEP, on behalf of Fianna Fáil and Ms Marian Harkin, MEP, who could not attend today but they will be coming before the committee on a different day. We will hear from MEPs from across the country.

Mr. Gay Mitchell, MEP:

Let me comment on Deputy Kyne's contribution. I think he is wrong about the Catholic Church. I think the Catholic Church gets too much of this type of comment.

People have big families because they believe they have greater security by having big families. The lowest rates of HIV and the lowest rate of AIDS in the developing world are in countries in which Catholic support is in place. It has nothing to do with Catholicism. In fact the Catholic Church is one of the major voluntary supporters of development aid, which I know from my role as leader of the EPP on the development committee. We try to find practical ways to assist people.

Deputy Dooley asked a number of questions and I think they came up with others as well.

Let us consider the issue of solidarity. We were getting up to €160 billion at 1% and now the rate is less than 1% and approximately €100 billion was made available in liquidity funds for our banks from the European Central Bank. We pay one third of the market rate on our borrowings. Because of our ability to get support from the troika, our sovereign bond yields have come down dramatically. We talk about austerity. Our debt to GDP ratio is supposed to be in the region of the height of the Customs House. It is already higher than Liberty Hall and we are adding a couple of floors every year. We are left with the choice to either saddle our children and their children with this debt to sort out the problem now. If we do not sort out the problem now, they will have plenty of jobs in Boston and Cricklewood, however we are trying to create jobs in Ireland.

When did this happen before? From 1981 to 1987 we could not get agreement or control in the public finances. I was elected three times to Dáil Eireann during 1981-82 and a minority Fianna Fáil Government was formed in 1987 and we in Fine Gael supported it to make the necessary cuts. We left the vicious circle to become part of the virtuous circle, confidence was created and investment returned and jobs were created. That is what is happening here. We did not get a 30% increase in foreign direct investment in Ireland in 2011 because people simply liked the colour of our eyes. They look at our country and see that we are prepared to make sacrifices, not just the Government and politicians but people voted for a pact which was difficult for them to do. The sacrifices are paying dividends and will pay dividends. There will be jobs. We can talk ourselves into pessimism but we must be realistic about the opportunities ahead.

We have just concluded our discussion on the MFF, and Deputy O'Reilly questioned whether it would go through Parliament. I think it will go through Parliament but not in the format that has been agreed by the European Council. We will not rubber-stamp anything that has been decided by another institution. We are Parliament and are a separate institution and I would be quite happy that Parliament will make changes.

We have been a member of the European Union for 40 years. We are not net contributors to the budget yet, in spite of the Celtic tiger years nor are we forecast to become a contributor during the period of the MFF.

We eulogise the United Nations. Did we ever have such solidarity from the United Nations? When did we ever hold the post of Secretary General of the United Nations? When did we ever have a commissioner or a Minister with such a role in the UN, in the way we play our role in the European Union? We criticise the body that has done most for this country and eulogise the body that is dominated by the super powers.

The issue of returning power to individual states was raised. I do not want to give powers back because the powers that go back will go back to the Bundestag, the House of Commons and the French National Assembly. We will get some powers, but what is best for Ireland is when we can pool power and exercise them together and the Commission acts as the independent proposer of laws under those powers. We are in the Union and are treated in the same way as everybody else. That suits the smaller member states. Does one want to return to national domination as that does not suit smaller countries. I am not in favour of it.

In some countries, MEPs can address their parliament on EU issues in plenary session. That helps to close the gap. The members present know that few people ask them about their work on this committee or other committees. Nobody puts a value on this work, however they value the work members do in their clinics and on the ground. People may say that they only see you at election time, no matter how much they see you. I do not think we should be bound by that. We would live in a jungle if it was not for the fact that there are 140 odd judges. The only judges the public hear about are those dealing with murder and rape but the other judges are doing their job every single day as part of the judicial wing of government. It is our job as public representatives, whether we are Senators, TDs or MEPs to do the same. It does not count when one is in the media. What counts is whether one does a job. That is what really counts. It is very hard to get across to people, when one is involved in serious work what that work is about. Europe will have 6% of the world's population in a very short period. It was projected that the figure would be reached in 2050, but they are now saying we will reach that figure in 2030. Countries such as Brazil, China, the United States, Russia and countries that we do not yet see in that way could be powerful. The more we do together to play a role in the world, the better it will be for us. It will lead to jobs.

Deputy Donohoe raised the British situation. I quite understand the situation in Britain. We import more from Britain than from Latin America and Japan added together. We are important to it as well as its being important to us. The British people and Parliament must make a decision on the European Union in time. I think more and more that if it comes to a decision of remaining in or leaving the EU, people will start to hear the counter arguments that they are not hearing at present. Should the Prime Minister decide they want to be part of the Single Market, they must comply with the rules, but the rules are made by MEPs and Ministers and commissioners and the central bank and the courts have a role. If Britain leaves the EU it will have no presence on any of those bodies and yet would have to comply with the rules. I think we have only heard one part of the argument.

I want to tell Deputy Durkan that we can all be impressed by terms, but what works in practice is important. We in the Christian Democrats want to put "social" back in the social market economy. For far too long, we gave a free hand to the market and there is no such thing as the market. I recommend that members read a book entitled Finance and the Good Society by Professor Robert Shiller and learn what he says about the markets. Markets should be opened up to profit and loss and should be properly regulated. Business people should behave in an ethical manner. I am a businessman, my business is politics. I think politicians have been getting it right and it is time business people got it right as well. I make no apologies for people who have been doing things the wrong way round.

I had better allow other speakers to contribute, but may I make one last point? It concerns bank supervision which will happen. This is necessary and it is good that it should happen because with that will come a recapitalisation of the banks. If our debt-to-GDP ratio is eventually to decline to 60% it has to be measured the same way here as it is in every other country. Therefore, I believe it is inevitable that recapitalisation will be also made available to Ireland. We probably will not have to draw it down at that stage because the markets may say they will give it to us at a cheaper rate, but it is likely it will be available in future. There are many reasons to be optimistic and I am hopeful about the future. Solidarity among ourselves as a people, however, is missing. We should have that debate here in Ireland. We should be talking more about solidarity to help people who cannot get through this.

3:10 pm

Photo of Dominic HanniganDominic Hannigan (Meath East, Labour)
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I will now ask Deputy Donohoe to take over as Chairman for the remainder of the meeting.

Ms Emer Costello, MEP:

A number of the joint committee's members touched on the democratic deficit issue and the disengagement of people from European affairs. That is why I tried to focus my remarks on re-engaging with citizens. The best way we can do that is through the development of a truly European social model. That is where the future of Europe has to go if it is to remain engaged with citizens. Otherwise, citizens will feel - as my colleague, Paul Murphy MEP, said - that they are only servicing banks and that Europe is not interested in working for people. I still believe in the original founding values and principles of the European Union, which are enshrined in the treaty. They are also in the 2020 strategy, but we need to work towards them.

As to why it has taken so long to make progress on a social compact and why we have not been examining social investment, we have very much fallen down in that area. Many observers have been struck by the fact that the IMF can come in and talk about the multiplier effect of austerity, yet one still has to get the EU to react to that. We are trying to address the issue in the European Parliament. For every euro we take out of the economy, the multiplier effect of that on nations is much worse. The IMF has pointed out this and there is a growing realisation of it within the European institutions.

Part of the democratic deficit is the Franco-German alliance that was built up during the early years of the crisis. That created huge problems, not just for Europe generally but also for the European institutions. The European Council was being by-passed in many ways because the Franco-German alliance met in advance of Council meetings. France and Germany were deciding the agenda and determining how decisions would be made at Council meetings. The European Parliament was also being ignored despite the fact that it has enhanced powers since the Lisbon treaty. It is important to acknowledge the parliament's legitimate and democratic powers.

On a number of occasions, Deputy O'Reilly quoted Martin Schulz, who is the former leader of our group and now President of the European Parliament. Mr. Schulz put it well in saying that we need a return to the community method. We need to ensure that all the institutions, including the European Parliament, are playing a participative role.

Deputy O'Reilly asked if the multiannual financial framework or MFF will get through. I agree with my colleague, Mr. Gay Mitchell MEP, that it will not get through in its current format. The European Parliament is deeply unhappy with many aspects of the MFF as it is currently presented, including the levels of funding. As I said in my introduction, the European budget must be a mechanism to deliver growth. The MFF must be fit for purpose and not just seen as an item of expenditure but also as able to invest in growth and development across the EU. Much negotiation remains to be done with the European Parliament. We will have a resolution on this matter at the parliament's plenary session in Strasbourg next week. We will give a mandate to our negotiators and will demand serious changes to the MFF.

The youth guarantee measure will follow the individual in trying to develop a career path. It is not about slotting young people into existing programmes and courses, but about determining a career path. The sum of €6 billion is a start and is welcome. Countries and regions with youth unemployment exceeding 25% will be targeted, which is to be welcomed. I have met with a number of community organisations and groups that are examining practical aspects of implementing the youth guarantee. A number of questions have arisen and I look forward to discussing these issues with the Minister for Social Protection, Deputy Burton, in future.

The Ballymun jobs centre has done amazing work with young unemployed people. The centre has applied for a pilot scheme and it is hoped it will be able to pilot the youth guarantee later this year. That might provide a template and model for future youth guarantee projects.

Deputy Kyne mentioned the 83% social spend in education. We cannot afford to look at spending on education or social welfare as just another item of public expenditure. We must look at it as a social investment. We must also monitor how we are using our social budgets to ensure the most vulnerable are protected at all times. That is the whole principle behind the social investment strategy that was launched last week by Commissioner László Andor. If refers to breaking the cycle of disadvantage concerning child poverty. We have high rates of child poverty in this country and must therefore address those issues.

I thank the joint committee for the opportunity to attend the meeting.

Mr. Paul Murphy, MEP:

Thank you, Chairman, for the vigorous debate. I came in here expecting to be disagreed with, but it is better to engage with someone's arguments than dismiss them as an advocation of anarchy or propaganda. Some people tried to engage with the arguments and I will try to answer as many of the questions as I can.

The idea that I was advocating anarchy by having a picture of a disciplined general strike in Spain on 14 November, which was part of a Europe-wide general strike, is ridiculous.

It is both preposterous and a sign of how low the Labour Party or at least members of it are sinking that Deputy Eric Byrne should join in this ridiculing of protest.

3:20 pm

Photo of Eric ByrneEric Byrne (Dublin South Central, Labour)
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It looked like a Greek demonstration or something that happened in Dublin last weekend.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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It is true it shows despair.

Photo of Joe O'ReillyJoe O'Reilly (Cavan-Monaghan, Fine Gael)
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With respect, that is the last thing this country needs at the moment. We need solidarity, rather than advocating a breakdown of solidarity.

Mr. Paul Murphy, MEP:

Sometimes one would wonder whether people know where the word "solidarity" came from. It is a word that is used primarily by the workers' movement and that has been appropriated recently by-----

Photo of Joe O'ReillyJoe O'Reilly (Cavan-Monaghan, Fine Gael)
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No, I am talking about a society working together.

Mr. Paul Murphy, MEP:

-----nonsensical talk of solidarity to the effect that we all take the pain. However, that means no, it is the working people who take the pain.

Photo of Joe O'ReillyJoe O'Reilly (Cavan-Monaghan, Fine Gael)
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We can all solve the problem together.

Mr. Paul Murphy, MEP:

The bondholders get paid, profits rise and this is what is happening across Europe and in this country. It is not anarchy for people to engage in protest. It is not anarchy for people to engage in strike action. In my opinion, for which I make no apologies, that is what is necessary. The European Commission is determined to go on a line of driving neo-liberalism, in which democratic rights are quickly pushed aside. The only way this can be resisted is by a struggle-----

Photo of Joe O'ReillyJoe O'Reilly (Cavan-Monaghan, Fine Gael)
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The trade union movement used the social partnership model with great effect.

Mr. Paul Murphy, MEP:

It has worked fantastically for them has it not?

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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We will let everyone come in again if they wish but please let everyone finish off their points first.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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We will, yes.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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However, please allow him to finish.

Mr. Paul Murphy, MEP:

I thank the Vice Chairman. In my opinion, that is what is needed. The best possible struggles are needed, which includes militant struggles against austerity in each country across Europe. However, that alone is not enough because working people face a co-ordinated attack and therefore need to link up. I consider 14 November 2012 to have been an extremely important potential turning point with regard to the potential for a united struggle across Europe. It is what must be built upon and is the reason I chose to show that picture, not to encourage anarchy or anything of the like.

Second, on propaganda I would welcome clarification from Deputy Durkan to explain what I stated that was not accurate. I was not in any sense attempting to misquote those people. They were accurate quotations and they obviously said it. I am not saying the Deputy is suggesting that I made up these quotes.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Mr. Murphy twisted them.

Mr. Paul Murphy, MEP:

No, I did not.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Propaganda involves twists.

Mr. Paul Murphy, MEP:

No, I did not. That is incorrect but it is okay.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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Deputy Durkan may come back again if he wishes.

Mr. Paul Murphy, MEP:

I look forward to Deputy Durkan so doing. If one asks President Barroso whether a silent revolution is happening within the European Union, he will say "Yes". Moreover, that is not the only time he said it, as he has done so repeatedly because it reflects a process that actually is happening. However, he is in favour of it. Consequently, one should engage in respect of the silent revolution that is happening and should make arguments in its favour instead of pretending it is not happening. Similarly, all the points I made in respect of the six-pack and the two-pack are facts with which one must engage. I presume members' parties consider these to be good things, which is fine, but members should defend them. Let us have an argument but one should not try to pretend this is not what is happening, because power is being transferred from elected governments to the European Commission. Rules are being imposed that comprise the imposition of neo-liberal policies. This is what is happening at present and we should be discussing whether that is a good or bad thing.

As for the point about Greece, I have heard a highly irritating point being made a number of times, which is that Greece is in this disastrous situation because the people protested. The left is not in power in Greece and the genuine left has not been in power in Greece. The people who have been in power in Greece over the past number of decades have been PASOK, which is the sister party of the Labour Party here, and New Democracy, which presumably sits in the same group as does Fine Gael in the European Parliament. These are the only groups which ever have been in power. In the last elections, Syriza almost came to power but did not. Consequently, one cannot place the disaster the Greek people face as being the responsibility of the left because the left has not had a chance to govern yet in Greece. When Syriza is elected- as I believe it will be- let us see whether it is up to the challenge.

In addition, one cannot blame the fact that people are protesting. There is mass homelessness in Greece. I raised the point at a previous meeting of this joint committee, with a Greek ambassador present, about the increase in prostitution in Greece. People were outraged and members were appalled that I was slandering the name of Greece. However, it is a fact. I stand in solidarity with the people of Greece and visited Greece five times last year. I have seen what austerity is doing to people-----

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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The Greek ambassador did not agree with Mr. Murphy.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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Deputy Durkan, please let him finish.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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I apologise.

Mr. Paul Murphy, MEP:

People's lives are being destroyed in Greece. The economy is being destroyed, society is being torn up and there is a failed state within Europe. Moreover, in my opinion, if we continue with the same austerity policies Greece offers a certain picture of where we are heading. It is where we will be or contains elements of where we will be in one or two years' time and so on.

Fourth, members have asked whether German taxpayers should continue to pay for the crisis. German taxpayers are not paying for people in Greece, Portugal, Ireland or Spain but are paying for German banks. It is a trick by the German establishment. It precisely is propaganda by the German establishment to state Germany is bailing out the lazy Greeks and lazy Spanish, as well as the not so lazy Irish, who are doing a good job, are good pupils, etc. While there is opposition within Germany to the idea of bailing out German banks, it is a trick to try to ensure there is not more opposition. I do not believe the German taxpayers should pay for it either. One reason we are in this crisis and for the fundamental imbalance in the European Union between northern Europe, primarily represented by Germany, and southern Europe, that is, the so-called PIGS economies, is because wages were suppressed in Germany from the time of the Schröder Government. That SPD Government suppressed wages in Germany with the likes of the Hartz IV reforms and the Agenda 2010 initiative. Such suppressed wages meant that Germany won the race to the bottom with regard to who would be most competitive within the eurozone, because all were trapped together with no opportunity for internal devaluation. This is one reason for the imbalance within the eurozone and I am in favour of a struggle by German workers to refuse to pay for those debts and to fight for higher wages and better conditions.

As for whether the debate on austerity has moved on in the European Union, the answer is "No". I acknowledge the debate at the level of the international thinkers for capitalism, the economists, has moved on. People are recognising that even within the framework of capitalism, austerity at all times might not be the best possible solution, as evidenced by the IMF in the debate on the multipliers. However, members should read the response to the IMF, written last week by Commissioner Rehn, on the question of the multipliers. It was a personal response that simply dismisses everything the IMF has stated about the multipliers and states we must continue on and on. The vast majority of the Commissioners are real ideological neo-liberals who are committed to this. They think it will work and it is working for the people who they actually represent. As to whether I believe in the European Union, I believe it exists.

Photo of Joe O'ReillyJoe O'Reilly (Cavan-Monaghan, Fine Gael)
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Does Mr. Murphy perceive the youth guarantee and all that represents as being progressive?

Mr. Paul Murphy, MEP:

I will take the question. While I believe it exists, I do not consider the European Union as currently constituted to be something that is good for working people in Ireland, Germany, Spain, Portugal or wherever. A fundamentally different type of Europe is needed, namely, a socialist Europe.

As for whether measures such as the youth guarantee, the promissory notes and the other things contradict my analysis, they do not. On the question of promissory notes, Ireland got relatively little. As we still will be paying bonds that simply will get burned by the Irish Central Bank, it is not a fundamental deal. It does not change fundamentally the fact that Ireland's debt is unsustainable. We will not be able to pay it and in my opinion, at a certain stage we will not pay it. I consider the youth guarantee scheme to be welcome but inadequate, as more is needed. The current Government in Ireland is a neo-liberal Government. I acknowledge it raised the minimum wage and did away with Fianna Fáil's cutting of the minimum wage. Sometimes Governments, Commissions or whatever pursue policies that are not in line with the main thrust of events because they are under pressure from below. There is a crisis of youth unemployment with almost 6 million young people who are unemployed across the European Union and consequently, Governments and Commissioners must be seen to be doing something. Consequently, they engage in activities such as launching youth guarantee schemes to much fanfare etc.

Finally, on the alternative, although this may not answer to the Vice Chairman's satisfaction, it is my answer to his question about the contradiction in my position. I refer to the point about where I would get the funds, given I am in favour of more public investment. The point is - I did say this to Deputy Durkan the last time I was here - I am not a Keynesian.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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We remember.

Mr. Paul Murphy, MEP:

I do not think Keynesianism got the world out of the economic crisis between the two world wars. I believe that what happened was that World War II started and there was massive investment.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Wrong.

Mr. Paul Murphy, MEP:

We had a case of that at a later stage.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Wrong again.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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Mr. Murphy has answered it.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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I apologise to the Vice Chairman, as I keep interrupting.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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That is fine.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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I will forgo my intervention.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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Thank you. Does Deputy Eric Byrne wish to come in?

Mr. Paul Murphy, MEP:

May I finish the point?

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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Yes.

Mr. Paul Murphy, MEP:

The point pertains to what I am not in favour of. I accept the logic of the markets. If one accepts the markets rule and they are in private hands, the logic then is one must compete on a world scale as to who can have the lowest corporation tax rate, the lowest wages, etc. There is a certain logic to that position but I am in favour of rejecting the rule of the markets. The way to do this is to act in respect of the markets, as in Goldman Sachs, the major banks, the hedge funds and the financial institutions.

They should be nationalised. They should be taken into public ownership and we should use their resources and plan in the interests of people, as opposed to them being run for private profit.

3:30 pm

Photo of Eric ByrneEric Byrne (Dublin South Central, Labour)
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Could I ask Mr. Murphy about the role of the Committee on International Trade? Perhaps he does not have a view on it. I thank him for allowing me to understand a little more about what constitutes "the genuine left", which is himself. I do not know how many more are included in the category. I recognise for the first time his ultra-leftist position and his contempt for the trade union movement. I am sure trade unionists and the trade union movement in this country and internationally would be offended by his contempt for them. I question his suggestion that the solution to our problems is an international general strike. Trotsky is dead. Will Mr. Murphy not bury him and the politics he espoused once and for all?

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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I wish to correct one or two points. The first relates to the silent revolution.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I will allow Deputy Durkan to correct one point.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Unfortunately, we on this side have a short time to respond.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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We do. I am beginning to understand why the Chairman, Deputy Hannigan, left.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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I wish to reinforce my point. The silent revolution was an attempt by the President to indicate the lack of adequate cohesion among our European colleagues, the need for everybody to move together in the one direction, and to ensure that one country out of a group was not moving in a direction that would undermine the whole concept of what Europe means. The analysis is totally incorrect.

The last point I wish to make relates to the suggestion that I have heard on many previous occasions that the war solved the world’s problems. No, it did not. What happened was that at the end of the war there was a recognition by humanity worldwide that humanity was about to obliterate itself, and that is what brought the change. What brought the change in Europe is when the European people found themselves at the centre of an appalling crisis with massive loss of life. Louis XIV is supposed to have said that he found France in its ashes. The founders of modern Europe found Europe in its ashes and with repercussions worldwide. That is what focused people then. That is what focused the vision of modern Europe and that is what we must keep going back to again and again. When we do that we will succeed.

Mr. Gay Mitchell, MEP:

We must remind ourselves that 60 million Europeans died in the first half of the previous century because we did not have an integrated, interdependent Europe. The biggest number of those died because of state socialism. That is one of the problems we have. If one asked the ten countries – soon to be 11 – that were dominated up until 1989 by the Soviet system whether they would like to go back to it, none of them would want to go back. Some of them have an income that is only a portion of ours. They want to grow with Europe. The European Union is a work in progress. It is imperfect, but the reality is that from Malta to Finland and from Ireland to Poland we have developed institutions and a new way of doing our business. Not only are we deepening and broadening the Union, we are also planning for our role in the world beyond the 2030s, as I mentioned previously, when Europe will be such a smaller place. I hope we will still produce something like 20% of the world’s GDP. We produce approximately 25% of it currently.

It has been a good exercise for this country in general. It has not been all positive but if we are to look to the future it is our role in Europe which is creating confidence. We have no doubt about where we stand in terms of the euro and our membership of the European Union. When people are looking at an English-speaking, common law system in which to invest, more and more they are picking Ireland. What we must do it build on that. This country needs two things; cashflow and confidence. As we get cashflow under control, confidence returns. As it does, we can get more in terms of income and we can undo some of the measures we have had to introduce but with which we must live currently.

People say austerity does not work. It is as if one plants a seed and one looks out in the morning and says that the rose bush has not grown. It does not work like that. We did it in the 1980s and we can do it again, only the next time because of the foundations we have built in recent times it will be more sustained. That is the good news. We must build on that good news. Any amount of state control of people’s lives will not change that. People do not want state control. Sometimes the best thing we can do as politicians is get out of the way and let people get on with their lives. We should only regulate properly the things we need to regulate and that are best regulated. We are a work in progress. We have a long way to go to have something with which we will all be satisfied but, by and large, if we stock-take we can see that much progress has been made and there is more ahead. We will see much more beneficial news for Ireland in the next three to four years.

Ms Emer Costello, MEP:

The issue around the perceived democratic deficit is hugely important. We must do a lot of work on that, both in terms of strengthening the roles of national parliaments on European affairs but also in acknowledging the role of the European Parliament. For example, one of the issues I raised when we met with various representatives of the troika was the fact that it must be democratically accountable, which is not the case. The European Parliament has now passed a resolution to the effect that the Commission representative on the troika should report back to the European Parliament. What we need to address the democratic deficit is, in part, accountability and we need to be able to reinforce the democratic structures. The European Parliament is the only one of the European institutions that is directly elected. It has a major role to play in the post-Lisbon situation in the development of the MFF and the EU budget, which is of great importance. Those are the areas we must address. I would like to see the European Parliament use the opportunity to address and push for a more social Europe.

Mr. Paul Murphy, MEP:

I am sorry that I forgot to deal with the EU-US trade agreement. In my opinion there is a big question over whether an agreement will be reached. There will be much negotiation. There are many potential sticking points, which means it might not reach agreement. I am opposed to the likely agreement that could emerge.

Photo of Eric ByrneEric Byrne (Dublin South Central, Labour)
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How could Mr. Murphy oppose an agreement that has not been concluded?

Mr. Paul Murphy, MEP:

I will explain. I said that I am likely to oppose what appears to be the outline of an agreement. There are question marks over the entry of GM foods into Europe. That is a major issue for big farmers within the US. Other issues arise in terms of food practice processes such as the way that chickens and livestock are washed in chlorine. More fundamentally, it is likely that such a free trade agreement would be used like the North American Free Trade Agreement, NAFTA, which was used in the US, Canada and Mexico to undermine pre-existing environmental and labour legislation. At the moment a case is being taken by a US corporation against Canada for imposing restrictions on fracking because it maintains it denies its right as an investor to set up investor-state dispute settlement mechanisms which give investors – big business primarily – special access to justice beyond normal courts. There are likely to be many problems associated with such an agreement and it is likely to be used to try to set workers in the US and Europe against each other in a certain race to the bottom. If members are interested I will give a presentation to the Seanad on the issue in a couple of months. At that stage my approach will be more thorough.

I wish to clarify the point about the trade union movement. I do not know where Deputy Byrne got the idea that I was contemptuous of the trade union movement.

Photo of Eric ByrneEric Byrne (Dublin South Central, Labour)
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It was because Mr. Murphy demanded a general strike and the trade union movement does not support a general strike. The implication is that everyone who does not support a general strike is stupid.

Mr. Paul Murphy, MEP:

Right.

Photo of Eric ByrneEric Byrne (Dublin South Central, Labour)
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It is contempt because the trade union movement does not abide by his demands for a general strike.

Mr. Paul Murphy, MEP:

So if one is in favour of something and other people are not then one holds them in contempt. I did not understand that was the meaning of contempt. I am sorry. I have absolute respect for ordinary trade unionists who have suffered hugely as a result of the crisis but also have the power to resist austerity. I do not have respect for a number of the trade union leaders that are on huge salaries, who are members of Deputy Byrne’s party, and who have betrayed the interests of their members.

It is a question for these trade union members to struggle----

3:40 pm

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I would allow the use of such language if the individuals in question were present and able to respond.

Mr. Paul Murphy, MEP:

That is fine. The Vice Chairman can consider the word "betrayed" withdrawn.

The key point is that this is an issue for the trade union movement. There will be a battle in the movement between those who oppose and those who favour the Croke Park II agreement. The former are primarily sections of the trade union leadership. I am on the side of those in that debate who are against the Croke Park agreement and view it as another attack on the wages of public sector workers. I have enjoyed the debate and will leave it at that.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I will conclude with a point on the European Parliament, on which the joint committee had a discussion. I am not sure if members read an article in yesterday's edition of the Financial Times, which states:


Thanks to the 2009 Lisbon treaty, which dramatically expanded its powers - and the guile of some enterprising members - the European parliament now ranks as one of the most influential bodies in the EU. It has recently imposed its will on everything from fisheries to financial reform and the bloc's €1tn budget.
This highlights a growing recognition of the increasing weight of the European Parliament, which has been demonstrated in a host of decisions, notably a recent agreement on banking bonuses. This emphasises the importance of holding meetings such as this on a more regular basis. I appreciate the attendance of Mr. Paul Murphy, MEP, Mr. Gay Mitchell, MEP, and Ms Emer Costello, MEP, and thank all members for their contributions. As there is no other business, I propose to adjourn the meeting.

The joint committee adjourned at 3.50 p.m. until 2 p.m. on Thursday, 14 March 2013.