Michael Noonan (Limerick City, Fine Gael)
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I thank the Vice Chairman and the committee members for inviting me to speak here today in advance of the ECOFIN meeting early next week. I would like to open by giving an overview of the European and international dimension to the work of the council. As we are now in the fifth month of our Presidency, I would like to take the opportunity to brief members on some of our key dossiers and achievements, while discussing the agenda for next Tuesday’s meeting, after which I will be happy to take questions and observations from committee members.

In terms of the process, I am sure members are aware that the focus of ECOFIN is heavily influenced by the economic and fiscal backdrop, the work of the European Commission and the guidance of Heads of State or Government, who meet regularly in European Council Summits in Brussels. Into the mix, it is the job of the six-month rotating Presidency to guide and steer the debate. Our priorities are clear and have been shaped by the need to bring stability to a fragile and somewhat volatile economic and financial situation, as well as to pursue policies that will underpin growth and jobs.

As President of ECOFIN I have chaired three council meetings so far in Brussels, as well as representing the council at various bilateral and multilateral meetings with the EU Commission, European Parliament, G-20 Finance Ministers and social partners. We have made significant progress at these meetings and I will say a little more about that later. In addition, in April 2013, I hosted a very successful informal meeting of ECOFIN in Dublin, where political agreement by EU Finance Ministers was reached on extending the average maturities of EFSF and EFSM loans by seven years for Portugal and Ireland. In addition, we had a good discussion on enhancing long-term growth prospects as well as how we might enhance long-term financing, including in the context of SME funding. We also had a good discussion about some taxation matters. As I am in the Chair representing the Presidency, the Minister of State at my Department, Deputy Brian Hayes, takes the Irish seat at these meetings for the six months.

Turning now to the ECOFIN meeting next Tuesday, I understood that this committee has already received the draft agenda. Members will see that it is a very full agenda. I now propose to outline the key issues that are likely to arise, while taking into account that some of these may change on foot of ongoing work at official level in the meantime. Indeed, the draft agenda members have in front of them has already changed since the one circulated late last week.

The ECOFIN meeting will begin on Tuesday with an informal breakfast meeting during which Mr. Herman Van Rompuy will meet with the Finance Ministers to tell us more about what he is planning for the next European Council meeting. The formal ECOFIN meeting will start with a discussion on current legislative proposals including the draft banking resolution and recovery directive.

The Irish Presidency set out an ambitious programme in financial services. The priorities on the financial services files for the first half of the Irish Presidency were based on the priorities set out in the December European Council conclusions, including agreement on a single supervisory mechanism, the capital requirements directive and on banking recovery and resolution. We also undertook to progress work on the markets in financial instruments directive. Our strategy has been to pursue a strict prioritisation agenda and to focus resources on the most significant dossiers. This has been a successful strategy and we have made considerable progress to date with agreement on two of the key banking union files, namely the single supervisory mechanism and capital requirements directive. On the consumer side, the mortgage credit directive has also been concluded. We plan to continue our efforts to advance discussions on the banking resolution and markets in financial instruments directive files. We are making progress on these and hope that we can advance matters on banking resolution during this month.

The discussions on Tuesday will then move to tax issues, including the savings tax directive and savings tax agreements. We undertook to progress all of the above tax dossiers in our Presidency programme and there have been a number of significant developments to date on them. The January ECOFIN meeting saw agreement that the financial transaction tax could be introduced in the 11 member states which have signalled they wish to enact the measure. A formal Commission proposal for a directive implementing enhanced co-operation in the area of financial transaction tax was published in February 2013. Ireland, as members know, is not one of the participating countries but we are committed, in our role as President, to act as an honest and impartial broker in the discussions. Council working party meetings on this issue are ongoing.

At the informal ECOFIN meeting in April, there was a useful discussion on recent developments in the international tax area on tax fraud and tax evasion, including the pilot initiative announced by a number of member states under which they will work more closely together and automatically exchange tax information. I expect that this issue will be also addressed by President Van Rompuy at the breakfast session before the formal meeting begins and I expect that there may be a short discussion around that. Work has been ongoing at council working party level by officials on measures to prevent VAT fraud and these are due to be discussed further at the next ECOFIN meeting. My expectation for the May ECOFIN meeting is that there will be agreement on the negotiating mandate to allow the Commission to initiate discussions with third countries on the savings tax directive. It is intended that tax anti-fraud issues will be discussed at European Council level at its next meeting later this month.

Our Presidency programme also sought to ensure the effective implementation of the European Semester process which included agreement on the “two pack” of economic surveillance measures and to work towards a more effective Economic Monetary Union through supporting the development of a time-bound road map for further economic and fiscal governance measures and some of these items feature on Tuesday’s agenda.

Some of these items feature on Tuesday's agenda.

This European semester began during the Cyprus Presidency, with the publication of the annual growth survey in November 2012. The bulk of the work, however, fell to Ireland to take forward and complete by the June 2013 European Council. Our key objective is to ensure all relevant Council formations continue to work in a co-ordinated and consistent manner towards a thorough preparation for the May and June European Council meetings. The publication by the Commission of its in-depth reviews into the existence of macroeconomic imbalances in some member states marks the beginning of the second, more country-specific phase. At the ECOFIN meeting next Tuesday, the Commission will present the results of its analysis into the macroeconomic imbalances procedure to identify countries where economic risks may exist and the Council is expected to agree conclusions on that process.

On deeper integration of economic and monetary union, European Council President Herman Van Rompuy was mandated by the Heads of State and Government at the European Council in December 2012 to present a time-bound roadmap to the June European Council addressing a number of issues on deeper integration of the EMU, including ex antepolicy co-ordination of major economic reforms, proposed contractual arrangements for competitiveness and growth and a solidarity mechanism to fund the reforms undertaken pursuant to those contracts. Further to his request that the Council provide input into the debate on EMU, the Irish Presidency is working closely with President Van Rompuy in co-ordinating discussion on EMU at the various Council formations and providing feedback to him after each discussion.

A discussion on the issues to be considered in the roadmap took place at the ECOFIN Council on 5 March. Views appeared to converge more on the issue of ex anteco-ordination, while more uncertainty and diverging views were evident on the issue of mutually agreed contracts and even more so on solidarity mechanisms. The Commission is currently engaging with the Council formations on its latest contribution to the discourse. It has recently published communications focusing on its short-term objectives of ex anteco-ordination of major reforms and a convergence and competitiveness instrument. The ECOFIN Council at its meeting on 14 May will discuss the latest Commission communications. The Irish Presidency will continue to work closely with President Van Rompuy and I look forward to his report to the June European Council.

The ECOFIN Council on 14 May will also have a short report and discussion on the ongoing work of the G20 and the IMF and World Bank, including the recent meetings last month in Washington. Finally, we will have a short discussion and adopt conclusions on climate finance.

The final item on the agenda is an issue that relates to the annual EU budgets. The draft amending budget will be before the Council to seek political agreement on a supplementary budget for 2013. This is not an easy process and is linked to the wider seven-year budget negotiations taking place with the European Parliament which the Tánaiste is leading. The Taoiseach and the Tánaiste had a good meeting on Monday with the Presidents of the Commission and the European Parliament, which will hopefully help to advance that process further during our Presidency. At that meeting it was agreed that the negotiations on the MFF and the draft amending budget will proceed in parallel and that nothing is agreed until everything is agreed.

On the budget for 2013, the Commission has brought forward a proposal for an increase in this year's budget of €11.2 billion in payment appropriations. The Commission's reasons for the amending budget are twofold. First, there is a need for additional appropriations to finance payment claims carried over from 2012 which must be honoured in 2013 and, second, there is a need to cover all expected legal obligations in 2013 and so avoid an abnormal carry-over of payment needs into 2014. Negotiations within Council on the amending budget have taken place under the Irish Presidency. The initial Commission proposal was considered unacceptable and the Irish Presidency has put forward a compromise that would see a two-stage process to commit to an amount and then agree to return to the matter later in the year for payment of outstanding amounts. The issue is due to be further discussed at ECOFIN next Tuesday.

My objective at ECOFIN will be to obtain political agreement on this matter, notwithstanding the budgetary difficulties facing member states, in a way that ensures the continued smooth functioning of the EU budgetary system. This will be challenging on this occasion.

The theme of the Irish Presidency is stability, jobs and growth, and in that context we set ambitious targets for the ECOFIN Council on financial services, the EU budget and economic governance and taxation. There are still two months remaining in our Presidency and we will continue to work on the various dossiers before we hand over to the Lithuanian Presidency. In the last two months of the Presidency, in respect of the financial services agenda, we will continue to work towards a Council general approach on MiFID and bank resolution and recovery, as well as related work on the deposit guarantee scheme. We will also seek to finalise agreement with Parliament on the market abuse regulations. We also intend to engage on regulations related to central securities depositories and packaged retail investment products and the transparency directive, as well as commencing work on the anti-money-laundering directive and the bank accounts package.

There has been agreement at Council on a mandate for the Presidency to negotiate the multi-annual financial framework budget for the next seven years and we are working towards an agreement with the European Parliament during our Presidency. In agreement with the European Parliament, this work is being taken forward in parallel with the negotiations on a draft amending budget for 2013 in the ECOFIN Council formation. We have achieved agreement on the two-pack of economic surveillance measures and are successfully progressing the European semester process to the European Council in June of 2013.

With regard to taxation, we achieved agreement at the January ECOFIN to allow those member states who so desired to go ahead with the financial transaction tax. There is a significant anti-fraud and anti-evasion tax agenda for the May ECOFIN. We have been building towards this in our negotiations in the Council working party at official level. This agenda will feed into the May European Council discussions on tax evasion and tax fraud.

In our Presidency, we must be realistic about how quickly we can advance the European agenda. That said, both at ECOFIN and in the various official groups that meet under the level of Ministers, we have been very active in ensuring the debate and policy activities move beyond the crisis. While I believe we have been successful, we must acknowledge that the issues are complex and will not be settled in our six months.

I thank the committee for its attention and for this opportunity to set out the policy work at European level, particularly what is planned for the next ECOFIN meeting. At this point I will be happy to respond to any questions or observations members may have.