Michael Noonan (Limerick City, Fine Gael)
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I will continue with my introductory remarks. The first three items, namely, the ECOFIN report to the European Council on tax issues, the report by Finance Ministers on tax issues in the framework of the Euro Plus Pact and the code of conduct, are expected to be taken as “A” items, that is, items agreed without debate. The ECOFIN report to the European Council on tax issues and the Euro Plus Pact provide an update on discussions of legislative proposals on tax issues at Council at the end of every Presidency. The code of conduct group on business taxation also issued a report outlining its work during the Luxembourg Presidency.

Ireland supports the work on the future of the code of conduct, which has been effective in eliminating harmful tax practices in member states since it was established in 1999. It is an important forum for member states to discuss, review and monitor preferential and harmful tax regimes across the European Union. It is appropriate to review the role of the code in the light of the changed international landscape on tax and the conclusion of the OECD's work on BEPS. Some member states want to extend the mandate of the code but Ireland believes that much has been achieved using the existing mandate and that the work of the code should continue to focus on preferential regimes. There has also been some discussion about introducing minimum effective tax rates as a way of addressing concerns about base erosion and profit shifting. However, Ireland believes these issues are best addressed through the implementation of the OECD BEPS reports, which contain internationally agreed standards to reform the global taxation environment. These discussions will continue under the Dutch Presidency of the EU next year.

The draft Council conclusions address the international tax environment in which the EU operates in light of the OECD’s publication of the BEPS reports. Ireland has been a strong supporter of BEPS since the action plan was published in July 2013 and we believe it is the best approach for dealing with aggressive tax planning and to better align the right to tax with real economic substance and activity. The aim of the measures contained in the final reports is to give countries the tools they need to ensure that profits are taxed where economic activities are performed and where value is created, while giving business greater certainty by reducing disputes over the application of international tax rules. Ireland will play an active part in the work to implement the BEPS recommendations domestically, at EU level and globally.

The discussion on the implementation of the banking union will inform Ministers where member states stand in terms of the implementation of the banking union, particularly in the context of the transposition of the bank recovery and resolution directive, BRRD, the deposit guarantee scheme directive and the ratification of the intergovernmental agreement to the Single Resolution Mechanism and I have already updated the committee on these in my remarks about the November ECOFIN. The European Commission has confirmed that sufficient member states have ratified the intergovernmental agreement to enable the Single Resolution Mechanism commence from 1 January 2016. It is also likely that a statement on the bridge financing arrangements to the Single Resolution Fund will be adopted at the meeting. The background to this is the political commitment made by ECOFIN Ministers that participating member states should put in place a system by which bridge financing would be available as a last resort to ensure that the Single Resolution Fund has adequate funding during the transition period to full mutualisation. It has been agreed that each member state will enter into a loan facility agreement with the Single Resolution Board to provide it with a credit line in circumstances where one of its banks got into financial trouble and there were still losses to be absorbed after the bail-in and resolution fund processes have been exhausted. Ireland’s credit line will be an amount up to €1.815 billion and represents 3.3% of the overall credit lines of participating member states. Obviously, enabling legislation will have to be brought through the Houses of the Oireachtas.

The next main item is the European semester discussion which will focus on three different elements, namely, the annual growth survey for 2016, the alert mechanism report for 2016 and the broad economic policy guidelines for member states whose currency is the euro, all of which were published on 26 November. The three reform pillars identified by the Juncker Commission in the 2015 annual growth survey have been largely restated. These are relaunching investment, a renewed commitment to structural reforms and pursuing fiscal responsibility. Given the moderate pace of recovery across the euro area, these remain appropriate. The alert mechanism report identifies the member states for which further analysis in the form of an in-depth review is necessary in order to decide whether an imbalance in need of policy action exists. Based on indicator readings in the scoreboard that accompanies the review, the Commission has decided that in-depth reviews are warranted for 18 member states, including Ireland. In general, the readings for Ireland reflect imbalances accumulated during the boom which are in the process of unwinding. As a result, the in-depth review to be undertaken in the new year is unlikely to be problematic.

The broad economic policy guidelines call on member states to pursue policies which support the recovery and facilitate the correction of macroeconomic imbalances, implement labour reforms where required, maintain the broadly neutral fiscal stance and to facilitate the gradual reduction of non-performing loans. We welcome the proposals and the opportunity to focus on common challenges.

There will be a state-of-play discussion on flexibility in the Stability and Growth Pact and it is expected that a commonly agreed position will be endorsed at the ECOFIN meeting, following the agreement reached at technical level. This will provide guidance on optimising the flexibility already built into the existing rules of the Stability and Growth Pact. It will not change or replace the existing rules or legislation. This newly clarified common position is intended to serve as the basis for codification in an updated code of conduct. The code of conduct is the harmonised framework formalising how the Stability and Growth Pact is applied. This commonly agreed position will clarify how three specific policy dimensions will be taken into account when applying the rules.

These relate to cyclical economic conditions, structural reforms, and government investments aiming at, ancillary to and economically equivalent to structural reforms.

The ECOFIN conclusions on EU statistics and the annual report of the European Statistical Governance Advisory Board, EGSAB, on the implementation of a code of practice are expected to be taken without discussion. The Council has reviewed and welcomed the progress made by the European statistical system in the areas of quality assurance of key statistical output, the 2015 Economic and Financial Committee, EFC, Status Report on Information Requirements in EMU, statistics for the macroeconomic imbalances procedure, and the modernisation of the European statistical system. The Council will also welcome the seventh annual report on the implementation of a code of practice and notes the recommendations as regards the preparedness of the European statistical system to respond to the challenges stemming from data revolution and regionalisation.

The annual report of the European Court of Auditors, ECA, on the implementation of the budget for the financial year 2014 was published on 10 November and will be presented to ECOFIN. The ECA's opinion is that the 2014 annual accounts present a "true and fair view" of the financial position of the European Union. There are several relatively minor references to Ireland in the report. We will implement the action plan developed by the Department of Agriculture, Food and the Marine to rectify weaknesses that exist.

Finally, under any other business, the fight against terrorist financing will be raised. The recent terrorist attacks in Paris were heinous and deplorable and my sympathies go to the French people. In the wake of those attacks, the European Commission is due to bring forward a number of proposals at ECOFIN regarding terrorist financing. This follows an extraordinary Justice and Home Affairs Council which took place on 20 November. The conclusions of that meeting indicate the Commission may outline initiatives to strengthen the way member states' financial intelligence units, FIUs, work with each other to exchange information on suspected terrorist financing, to strengthen controls over non-banking payment mechanisms which may favour anonymity, and to find ways for the EU to curb illicit trade in cultural goods which could be used by terrorist groupings selling such goods for funding. I look forward to receiving the details of the proposals from the Commission. Ireland is ready to play its part in supporting practical measures to further counter the financing of terrorism.

I hope the committee has found my summary of last month's ECOFIN meeting and the outline of this month's agenda informative. I thank members for their attention and will be happy to respond to any questions or observations they have.