Brian Lenihan Jnr (Dublin West, Fianna Fail)

Much of the debate on this Bill has been constructive and has touched on many of the key economic and budgetary challenges confronting us at both a European and domestic level. The contributions by the various Deputies reflect the broad spectrum of political opinion on how we should address these very fundamental challenges linked to our participation in economic and monetary union. There is, however, a shared appreciation in this House of the nature and gravity of these issues. This collective appreciation has helped to enhance the quality of the debate, especially in regard to some of the analysis of the difficulties currently facing the eurozone. I found much of the debate relating to the difficulties facing the eurozone, which I followed with great interest, illuminating and constructive.

As an active participant in the various European institutions and members of the euro area, we must provide support and demonstrate solidarity with our partners. This is especially the case in these challenging times, as the collective strength of the euro area countries underpins our resolve to undertake the necessary measures to protect the integrity of both the euro area economy and euro currency, as well as our own economy.

I also want to reiterate the point I made in my opening address that the strategy which underpins this Bill is designed to safeguard the fundamental financial stability of the single currency area. This is an essential prerequisite to our own economic recovery and by extension to the protection of the standards of living we all enjoy. I welcome the fact that most of those who spoke from the Opposition benches support this Bill. During yesterday's debate a number of technical queries were raised by Deputies. Most of these can be addressed on Committee Stage but I will deal now with some of the substantive issues that were referred to during the debate.

I will first deal with the basic question of the financial implications of the measure. I explained yesterday that there are strong financial safeguards built into the entire process to ensure the Irish and European taxpayer are not financially disadvantaged by these arrangements. We have the full reassurance of the European Commission that member states' funding costs will be met in full. Adjustment mechanisms are included to ensure a rebalancing in favour of any member state that might incur higher funding costs than those being charged to Greece for the loan facility. Our overall contribution to the euro area loan facility is anticipated to be approximately €1.3 billion, subject to a precautionary upper limit of €1.5 billion. This will take the form of loans to be repaid as the Greek economy recovers and will not impact upon our general Government deficit position.

The legislation we have been debating will provide the statutory basis for our contribution to the agreed euro area financial support to Greece. Our assistance in the form of repayable loans will be centrally channelled through the European Commission as part of the agreed euro area package in conjunction with the International Monetary Fund, IMF. This loan facility comes with strong conditions attached and will require the Greek authorities to address their current fiscal and economic problems.

The Greek authorities have agreed to introduce a fiscal austerity programme with the aim of reducing the deficit to below 3% of GDP by 2014. Public expenditure reductions of €30 billion will be implemented over this period and, to reduce its debt-to-GDP ratio, Greece will need to maintain a primary surplus on its budget of at least 5% for the next decade. It will be subject to strict monitoring and continuous assessment by multilateral agencies as part of the conditions for the loans. By any measure, these are strict and demanding conditions and will be subject to ongoing monitoring and assessment.

Looking beyond our immediate difficulties, ECOFIN Ministers have decided to establish a European financial stabilisation mechanism with a total value of up to €500 billion funded by the EU and the euro area member states. This will be supplemented by extra funding from the IMF. The mechanism was devised in the context of the risk of contagion from Greece to other member states. It provides for financial support to member states in response to difficulties caused by exceptional circumstances, such as those being experienced by Greece. This will require separate domestic enabling legislation, giving the House an opportunity to discuss these issues in concrete form. The finalisation of all of the details of the stabilisation measure will occur on Friday at a meeting of the finance Ministers.

Together with this development, EU Finance Ministers have committed to ensuring fiscal sustainability and enhanced economic growth across all member states. Linked to this objective, the European Commission has presented various reform proposals to reinforce economic co-ordination, including ones to ensure that the budgetary policies of member states are consistent with the economic and financial stability of the euro area. These will form the basis for further discussion in conjunction with the task force being chaired by EU President Herman Van Rompuy. I will be attending the first meeting of the group this Friday.

I want to allay the stated fears of some Deputies. These proposals mark the beginning of discussions on these issues. They are designed to assist the member states to be better prepared for any future crises and, as such, should be welcomed. In common with proposals emanating from the European Commission, they are designed to develop ideas and stimulate debate. The proposed enhanced budgetary surveillance is designed to enhance dialogue in the euro group on such issues and is, of course, subject to the treaty provisions. Any proposals arising from this process will need to be agreed by the member states and, in this context, cannot be misconstrued as a loss or diminution of Irish sovereignty.

I profited very much from listening to the contributions of Deputies Bruton and Burton on this subject. I intend to study again their remarks in this context prior to my participation at Friday's meeting. A number of valid points were raised by both Deputies in respect of the general orientation of the eurozone and the question of the precise balance to be struck between the various competing interests in the formulation of monetary and economic policy at European level.

Deputy Bruton will appreciate that I do not want to underwrite the entirety of his contribution. Some views I agreed with, some views I am not permitted to agree with in public and some views I disagreed with, but I found it a stimulating contribution. I do not believe Deputy Burton heard my intervention in respect of Icarus. I was commending her on making a contribution on financial matters without referring to Anglo Irish Bank. In case she feels guilty for not referring to the subject in the course of her contribution, she could construe her reference to Icarus as a reference to Anglo Irish Bank. I would agree with her that that particular entity appeared to sail a little bit too close to the sun.

Friday's meeting is the beginning of a process. The points made by the principal spokespersons for the Opposition parties were correct, in that we must reflect carefully on our position in respect of these matters. It is clear that the existing mechanism did not prevent serious problems from emerging within the euro group. I am referring to the Stability and Growth Pact. Ireland is an interesting test case, as we complied with the pact and only entered into a deviation in the course of 2008. For the first decade of our membership of the eurozone, we were at all times in compliance with the limitations imposed by the Stability and Growth Pact. However, the pact of itself did not guarantee the stability of the eurozone where Ireland was concerned and did not prevent serious problems from emerging in Ireland. This will be my starting point in any position on which I elaborate in Europe. If the existing system was an inadequate system of surveillance in the context of the types of problem that emerged, we clearly need a more sustainable system.

The great difficulty with a more sustainable system relates to the House, which has a primary role under the Constitution in approving the Estimates and devising taxation policy. Nothing we agree with in a European context can dilute this position. It is a question of striking a balance between the need for a more intensive surveillance, one that will examine overall national policy in respect of the balance to be struck between borrowing, taxation and expenditure, and the precise discretion that must remain in this House. I am not referring to just a margin of appreciation, but a real power that must remain in the House and must form the basis of legitimate debate within it on how we order our priorities for expenditure and taxation and our general line of policy in terms of borrowing, subject to a necessary and indispensable European interest on the borrowing side.

These matters will be discussed at the conference, to which I am looking forward. As Deputies can see from my observations on it so far in the House, I am not showing a big hand at this stage. In the case of a smaller member state, it is unwise to anticipate a debate too much, but I will play an active part in those discussions and ensure that our interests are safeguarded and that the general European interest is promoted. As we can see from the Greek experience, a fiscal shock in one country can have severe and serious implications for other countries.

There is a unique feature here. Some Deputies drew contrasts between Greece and Ireland and other countries inside and outside the eurozone. In the Greek case, a crucial distinction was the falsification of raw data. This puts Greece in a unique position as against the other member states. Deputy Burton's point on the structural imbalances within particular European states is apt in terms of the discussion to be held at the conference. While Ireland does not necessarily suffer from structural imbalances in this context, other countries do and the Union will need a policy on the reconciliation of structural problems with the ambitious fiscal targets that seem to form such a part of the current discussion on the euro.

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