Joan Burton (Dublin West, Labour)

At a time of crisis, the pact has been found to be a completely inappropriate framework. The reality is that if we are serious about making a success of monetary union, we must go back to the drawing board.

The discussion document published last week was a useful contribution in this regard, but it puts forward only one point of view. Its core aim seems to be to make Europe more German, when what may be needed is also to make Germany more European. Aristotle, the most renowned of all Greek philosophers, is famous for his conception of the golden mean, the desirable middle of two extremes between excess and deficiency. This was a founding principle of the European project, that one's affairs could be managed so that one could, with caution and carefulness, enjoy the fruits of growth. The European Union needs to find its golden mean between a German Europe and a European Germany. Facing the deepest recession since the European project was constructed amid the devastating aftermath of the Second World War, member states have responded with appropriate fiscal stimuli and unprecedented bank bailouts. What began as a financial crisis has become a broad-based economic crisis and latterly a sovereign debt crisis. Those countries in a weaker financial state before the crisis have been left most exposed. Ireland's saving grace has been its relatively low stock of national debt, although when NAMA and so on are priced into the balance sheet, that situation will change. We have only a window of opportunity in this particular game and the headroom on our national debt is one of the few factors separating us from the Greeks.

Advanced economies, in Europe and worldwide, may well be on the verge of an age of austerity as they attempt to get their deficits and national debt under control, but there are two sides to the equation of long-term debt sustainability. Deficits must come down and the size of the national debt must be brought significantly below the size of the economy which supports it. However, we also need growth and investment in innovation. One of the issues in regard to the European Union which causes me to weep is that it has proved to be so long on talk and so short on delivery. The purpose of the Lisbon Agenda was to make Europe a competitive and humane society with good public services, including health and education systems, and active, private markets. It was in achieving this golden balance between the public and private that Europe would secure the best and most optimistic outturn. I am afraid this outturn was not delivered.

I worry that with centre-right governments in power in most European countries Europe will veer towards excessive fiscal rectitude, resulting in more unemployment and job losses and a failure to engage with the innovation and growth that would enable the Continent to become competitive in the world market. Europe's economies must grow if they are to reduce the burden of debt. Every time someone is put back to work, the State no longer has to pay €10,000 per annum in social welfare benefits. After a period of employment, the person also starts to pay PRSI and income tax. This is how one reduces the deficit.

As consumers buy more, increased VAT receipts replenish the Government's coffers. If all European countries were to try to deflate their economies in search of the Holy Grail of an export-led recovery, we would embark on a disastrous downward deflationary spiral with a beggar my neighbour outcome. What makes sense for an individual country may not make sense for Europe as a whole. Put another way, if all of Europe were to try to emulate Germany by having limited consumer spending, we could all end up like Greece, with a collapsed economy coupled with a massive debt overhang. Such a scenario is clearly not in anyone's interest.

When we go back to the drawing board on the Stability and Growth Pact, whether through a European monetary fund or an alternative mechanism, we need to place at centre stage the need for greater innovation, growth in investment and employment and new opportunities for young graduates and apprentices who are the future of European economies. I have spoken to the Minister previously about the Labour Party's proposals to establish a strategic investment bank to invest in innovation and public infrastructure and to introduce a graduate internship system. Under this system, rather than being offered slightly less than €200 per week on the dole, graduates would be taken on in the public and private sectors, including by professional firms, local projects or non-governmental organisations, and their employer would be exempt from employer's PRSI. In return, employers would augment the dole money paid to the graduates they employ. This would get people into work and doing something useful. It is essential that the Minister and his fellow Finance Ministers do not decide to engage in a collective form of depression economics that focuses entirely on making cutbacks and reducing deficits. While these types of measures are necessary, they must be balanced by opportunities for growth.

The Irish contribution to the pooled bilateral loans to Greece to be provided as part of a lenders' club, as it were, overseen by the European Central Bank will be 1.64% or €1.3 billion, while Germany will contribute 28% to the fund. This is a large amount of money for both countries but should be seen in the context of an historical analogy. After the Second World War, when Germany lay in ruins following the disastrous regime of Hitler, the country was boosted by the Marshall Plan and the American dollar. The Marshall Plan had an impact all over Europe, including to a small degree in Ireland. One of the tragedies of this country, however, was that we did not benefit significantly from the Marshall Plan. The money loaned to Europe under the plan was ultimately paid back. Much of what one sees in modern Europe, particularly in Germany, the country that was defeated in the Second World War, was built using the funds provided under the plan. These moneys were used to rebuild the country, to invest in its technology and to create the modern consumer products on which the German economic miracle was built.

Europe has, therefore, experience of structural assistance that worked. We are also long time members of the International Monetary Fund, another club of countries which contributes to countries experiencing economic difficulties, especially in the developing world, albeit not always in a manner of which I approve. Living in Tanzania in the 1980s when the IMF arrived to impose a structural adjustment programme, I saw the men from the IMF, with their shiny briefcases and gold tipped fountain pens, write their reports as they lounged at the side of swimming pools. These reports required the country to cut primary education - African girls dropped out of education in every country the IMF introduced a structural programme - and eliminate primary health care, with the result that increasingly large numbers of children died from preventable and curable diseases such as malaria.

As a country involved in a pooling of interests with the International Monetary Fund, we must think long and hard and keep a tight grip on the fund. While I am aware that the current managing director, Mr. Strauss-Kahn, has changed many IMF policies, we must ensure that what is being done to people in Greece and Ireland is translated into income and employment.

Thinking about the position in Greece brought to mind the contribution of its theatre and authors to our literature and consciousness. In Greek myth, Icarus flew too close to the sun because he believed himself to be invincible. Modern finance capital also flies too close to the sun because it believes the mere human beings who look to those who play the markets like ants on the ground are of no significance. This issue must be addressed globally.

Greece also gave us the legend of King Midas. I hope the Minister is not offended when I say the legend appears to apply to the Fianna Fáil Party. While King Midas worshipped gold, the Fianna Fáil Party worshipped bankers and developers. I will leave the Minister to catch up on what happened to the king during his bedtime reading.

See this speech in context