Michael McGrath (Cork South Central, Fianna Fail)

I thank the Minister for bringing forward this Bill and his Second Stage contribution. I welcome the publication of the European Financial Stability Facility and Euro Area Loan Facility (Amendment) Bill which, essentially, gives effect to the decisions taken in June at the euro area Ministers for Finance meeting and at the July meeting of the eurozone Heads of State and Government. It is indicative of the extent to which the crisis in the eurozone dominated events over the summer that it was necessary to revisit the decisions taken in June just a few weeks later, with further measures aimed at reassuring markets as to the sustainability of public finances across the eurozone. It underlines the inability of the European Union to get ahead of the ongoing debt crisis. The European institutions and political leadership have singularly failed to get to grips with the crisis which rumbles on before our eyes, with the downgrade today of the rating for Italy by Standard & Poor's.

The collective failure of the European political leadership was underlined by the decision to go on holidays after the 21 July summit. The effect was to immediately create a vacuum. While the decisions were made in principle by the leaders, there was no definitive date as to when they were to be implemented and the procedure for their implementation was somewhat open to question. The decision not to follow through immediately and recall parliaments across the European Union, especially across the eurozone, created a vacuum which was subsequently filled by market turbulence. The fear and uncertainty led to huge turbulence, with billions of euro being written off stock markets. It has crystallised in a sharp way the incapacity of the institutions and the political leadership in Europe to deal with the crisis in a comprehensive way.

In recent days the European Commission published its proposals on eurobonds, but within days the head of the most powerful member state in the eurozone publicly dismissed the idea. It all creates a sense of a European Union that is not acting as a unit, that is not cohesive and that does not have unity of purpose as to how it will set out to resolve the issues involved.

As I said at the time of the eurozone summit in July, I welcome the decision of our EU partners to reduce the interest rate charged to Ireland in respect of the EFSF assistance programme. This is a clear recognition that an essential precondition for Ireland returning to the bond markets is demonstrating that the public finances are on a sustainable path. The saving from the interest rate reduction helps us to achieve this goal. This has been assisted further by the recent announcement of a reduction in the interest rate charged to Ireland on funds drawn down from the separate EFSM. It is particularly welcome that these rate reductions apply to the funds already drawn down from both funds, despite the initial indications to the contrary.

The question that people at home will want to have answered is how will they feel the difference and how will Ireland make the best possible use of the very significant saving achieved. The Minister has confirmed that the saving in 2012 will be €900 million, which provides significant scope in the preparation of budget 2012. The bottom line is that we must achieve a deficit figure of 8.6%. This additional €900 million saving which was not expected a few months ago gives the Government scope to make political choices. Perhaps the Minister might refer to the particular primary balance targets we must achieve, excluding the interest payments we must make next year. While we are committed to achieving the 8.6% target, are we committed to achieving a particular primary balance also, which does not take account of the saving on the interest rate? The Minister has gone on record recently as saying the budget will be about two thirds as difficult as last year's. With the €900 million saving, it need only be less than half as difficult as last year's.

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