Michael McNamara (Clare, Labour)

As this is my first opportunity to speak in the House, I take the opportunity to express my gratitude to the electors of County Clare who have bestowed upon me such an honour. I do so cognisant of those who have represented County Clare before me, both within the Labour Party and without, since the foundation of the State and before.

This is not the time to hold a referendum, as proposed in the motion. It is tempting to imagine that in one heroic act we could fly clear of the entrapment that is the hugely onerous debt burden which the blanket bank guarantee and the resultant bailout deal have imposed on the State. However, the blanket bank guarantee, which it must be stressed was exactly such a unilateral action as that proposed in the Technical Group's motion, was not the act of a despotic foreign political institution, rather it was the act of the democratically elected Government of this sovereign state. The Government which I support is now tasked with dealing with the resultant fiscal and economic crisis in conjunction with our European partners. I support the proposed amendment to the motion.

Were a referendum to be held and were the people to reject the bank bailout, which I do not accept they would, it would change nothing. The difference between what the State takes in and what we spend on day-to-day expenditure items is €21 billion. We cannot as yet raise these funds in the markets, although the indicators are good for the future. As such, how do the proposers of the motion suggest we continue to pay gardaí, teachers and nurses? How do they propose that we raise the funds to maintain the weakest in our society in the dignity their humanity demands? They cannot say. As the banking system is reliant on short-term funding to the tune of €120 billion from the ECB to continue to function, how do they propose to ensure ATMs across the State will continue to function? They cannot answer. The reality of what is envisaged in the motion is a morning when ATMs will not function and social welfare hatches remain closed, a morning when chaos will reign and the weakest and most vulnerable become collateral damage in the proposers' ideological parlour game. The reality is that the State's debts will persist unless and until they are dealt with multilaterally. It is for this reason that the Tánaiste announced a diplomatic offensive last week . To the members of the Technical Group who proposed the motion I say they will have a referendum, one which will profoundly impact on the course not only of the State but of the entire European Union. However, such a referendum will take place only when there is something meaningful to refer to the people.

The current European bailout mechanisms are built on makeshift legal foundations. The Irish bailout deal, which we all found repugnant but which those of us on this side of the House regard as unavoidable for the present in the circumstances of our inheritance from 14 years of misgovernment by Fianna Fáil, requires taxpayers to pay interest and capital on a huge loan to enable us to fund the State. This loan comes from European taxpayers who will carry the can if we default.

A domestic legal challenge to German participation in the European Financial Stability Mechanism and the European Financial Stability Fund was brought on the basis that the bailout mechanism had no legal basis in the EU treaties and, in fac, contravened treaty provisions. The Treaty on the Functioning of the European Union excludes the Community and any member state from liability for and assumption of the commitments of bodies governed by public law or public undertakings of another member state. The only basis for the current mechanism is that financial assistance may be granted, under certain conditions, to a member state in difficulties or seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control. A decision has yet to be handed down on that challenge.

Concern that the German Federal Constitutional Court could rule against German participation in the bailout mechanisms in the absence of some guarantee against future moral hazard led to Chancellor Merkel's demand at the EU summit at the end of October last year that future bailout mechanisms, to replace the current one, force bondholders to accept an extension of debt maturities, suspension of interest payments and even a write-down of that debt. On 11 November last she reiterated her call for private investors to share the burden of adjustments in bailouts, piling pressure on Ireland as investors sold Irish bonds on fears of default. The French Finance Minister, Christine Lagarde, supported Chancellor Merkel's position, saying investors must share the cost of sovereign debt restructurings. By then Ireland's already precarious fate had been sealed, leading to the announcement of a loan of €85 billion on 21 November.

It has been suggested in European quarters that the permanent bailout mechanism and its form, in particular whether it incorporates burden sharing, may require only minor changes to the European Union treaties, which could be approved through an expedited process that would avoid a full constitutional convention. It is undeniable that a bailout mechanism widens the scope of Union powers beyond the general framework created by the provisions of the treaties as a whole and, in particular, those that define the tasks and the activities of the Union. Therefore, it will require a constitutional convention and subsequent ratification by each member state according to its national legal framework, which in Ireland means a referendum. The form of the permanent bailout mechanism will determine whether the taxpayers of member states - whether this state or another - will be required to guarantee the gambling debts of renegade banks, with taxpayers throughout the European Union the ultimate guarantors of these debts.

We must ensure such a profound change to the European Union mechanism is not made. I am confident we will find ready allies in this task across the European Union. That is the diplomatic battle with which the State must now engage and we must prevail. To do so we must demonstrate that this is the sovereign, independent state, the accession of which to the European Union was negotiated by a previous representative of County Clare in this House, not merely a bunch of bed-sit revolutionaries as the proposers of the motion would have us portrayed. I remind Members that it was another representative of County Clare, Daniel O'Connell, MP, who said "all ameliorations and improvements in political institutions can be obtained by persevering in a perfectly peaceable and legal course."

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