Brian Cowen (Laois-Offaly, Fianna Fail)

I refer to the activities that have been going on and when the next reporting mechanism is available. It will arise at the June Council in terms of considering a progress report from the Van Rompuy task force deliberations on economic governance, which will be discussed. There will not be a review of the decisions taken at the European Council or by ECOFIN subsequently in the sense that those matters will be reviewed. That is our position. The mechanism is in place and will be available should members states require it. Obviously, everyone is striving to ensure that it does not become operational. The Greek case was a particular issue that had to be dealt with separately, but the turbulence of markets has meant that wider confidence-building measures had to be communicated. These emerged from the meeting of the European Council and, subsequently, ECOFIN. They will remain in place and are not for review in that sense.

Deputy Gilmore asked about the status of the Commission document. The Commission made its proposals on reinforcing economic policy co-ordination in its communication. They form its contribution to the debate now taking place in the task force meeting and this has begun the process of discussion of all of these issues. The communication had been planned for some time but it has heightened importance given the recent emergency commitments given to safeguard financial stability in the euro area in light of the budgetary crisis in Greece. In view of the events of recent months, it is hardly surprising that the Commission would bring forward recommendations in this area. Indeed it is clear that, notwithstanding the current crisis, economic and monetary union will entail both broader and deeper fiscal surveillance than in the past. Exactly how that should be achieved is yet to be determined.

The Commission's document is a starting point for discussion. It will feed into the work of the Van Rompuy task force, which the European Council agreed to set up when it met in March and which has now begun its deliberations. It is important this next stage of work is carried out calmly, rationally and carefully without a rush to premature judgment or over-the-top reaction. Much of the initial comment about the Commission's communication has been ill-informed or inaccurate. Morgan has wrongly treated the communication as if it has already entered into force.

We will participate fully in the discussion of the communication and the wider discussions on the financial stability of the EU and the eurozone, into which this communication now serves as a useful input.

The Commission communication notes that member states need to pay down public debt faster than before, when times were better. Easy credit, it stated, led to underproductive investment and excessive consumption. Public debt has greatly increased since 2008 due, in part, to taking on financial sector liabilities. The competitiveness differences that emerged in the euro area was one cause of the current crisis it identifies. It also refers to the need to consolidate to keep down long-term interest rates to boost growth potential, a point I made earlier to Deputy Kenny.

It proposes a number of elements, including greater effort to reach the 3% deficit and 60% debt Maastricht criteria and, possibly in the case of inadequate fiscal policies, interest bearing deposits that can be redeemed when targets are met and the withholding of Structural and Cohesion Funds for poor performers. It recommends greater emphasis on the correction and avoidance of macroeconomic imbalances in the euro area. This could involve recommendations on competition policy, weight-setting behaviour, private sector credit growth and the European semester starting in 2011, so that budgetary and structural policies are peer reviewed earlier in the year, before rather than after as is currently the case. This could, potentially, mean the recommendation to look at budgetary plans that they consider insufficient and a standing crisis resolution mechanism for the euro area involving strict conditionality, with assistance provided by way of above average interest rates.

This document is a useful input to discussion. It is not an end point in itself. It is important that the next stage of work will proceed through the Van Rompuy task force procedure.

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