Paschal Donohoe (Dublin Central, Fine Gael)

With the agreement of the House, I will share time with Deputies Robert Dowds, Terence Flanagan, Colm Keaveney and Aodhán Ó Ríordáin.

Today in the run-up to this weekend's EU summit, the German Chancellor, Angela Merkel, made a statement of her Government's stance on these negotiations, which is shared by some of the larger member states. She said, "We are still in talks with Ireland and the principle of quid pro quo must always be included". What does quo look like? In the negotiations that are taking place, what has Ireland already done and what are we being asked to do?

What has already happened and what changes have already been implemented in our country? We must put those changes in the context of other changes taking place across the eurozone. Between the summer of 2008 and December 2010, combined changes of nearly €14.6 billion were implemented within this State. This represents approximately 9% of our gross domestic product. A recent study by the IMF on the scale of fiscal changes that can take place indicated that a change of that magnitude is the largest by a developed country in the last 30 years. This does not include the further changes that are required, and that we are seeking to make, to ensure that we have enough money to employ people in our public services and provide our public services. By the time those are complete, changes of nearly 20% of our national income will have been made. The largest change ever made by a sovereign state in the eurozone was made by Greece between 1989 and 1994. Greece made a change of 11 percentage points of its national income. Ireland has already implemented changes of just under ten percentage points and is committed to implementing more. When people ask us what we have done to ensure that our State can play its part in exiting the arrangements that are in place - what does quo look like - the answer is very clear. It lies in the actions that have already been borne by the Irish people to ensure that our State can again be secure and sovereign at a point in the future.

This brings me to the issue of the corporation tax rates and the deal being sought by some of our colleagues in the European Union. The question is not simply what we think, or what I think, about whether this change should be made. We must also consider what the markets indicate as well as simple mathematics.

Currently, we must find a way to pay back approximately €45 billion to the European institutions in the next number of years. We already have an annual budget deficit of €9 billion, which we are seeking to close. Even if we were to secure a reduction of 1% in the interest rate on the deal we would save only €450 million. This is a huge amount of money, but not as much as we need. Given the pressure we are under and the commitment we have made to ensure our economy can remain secure and deliver the deficit reduction figures, why would we reduce the incentives and supports to the one sector of our economy that is making a huge contribution to ensuring that our tax revenues remain stable and grow in the future and to keeping the jobs we have and creating more jobs in the future? Why would we be asked to make a decision that would make it more difficult for our State to meet our funding commitments?

Yesterday, the blueprint for the European Stabilisation Mechanism, ESM, was published. This is the fund that will replace the fund we are in currently. The rate of interest in this new mechanism for a 7.5 year deal will be 260 basis points. If our State is currently paying a rate of interest greater than that, why should we not be able to access the lower rate of interest that will be available from the fund that will replace the one we are in at present?

What is the reaction of the markets to the negotiations of the last number of days? Yesterday, the rate of interest on two year bonds in our State exceeded 10%. This is the first time this has ever happened in the history of the eurozone. The rate of interest on the debt we might have to pay back in the next number of years is higher than the debt we will have to pay back in ten years time. The people we need to invest in our State look at the moves that are afoot and ask how, if such a huge change is to be made, we can retain, not to mention grow, international investment in manufacturing, pharmaceutical and international companies to ensure our State can exit from the current arrangements.

I asked what quo looks like. The Irish people have already paid this. A Government is in place that wants to find a fair way of ensuring our budgetary commitments are met.

What do solidarity and success look like? Success looks like our State exiting the arrangement we are in at present. It looks like Ireland being economically sovereign and borrowing at rates we can afford from the financial markets. That is what success looks like. A move that cuts off our ability to do that is one that must be fiercely resisted, which is what our Government is doing.

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