Enda Kenny (Mayo, Fine Gael)

I welcome this opportunity to brief the House on what was an important meeting for Europe and for Ireland. Progress was made on two key issues of vital interest to us: the jobs and growth agenda and the new fiscal compact treaty. The outcome represents an important contribution to moving Europe beyond crisis, helping to restore stability and confidence to our economy and putting the urgent need for job-creating growth at the top of the agenda.

As I told the European Council meeting on Monday, since this Government took office our absolute priority has been to secure Ireland's economic recovery and to ensure employment for our people. The meeting highlighted how vital it is that this work is advanced seamlessly at national and European level. There can be no difference in approach. All our priorities must be aligned, our policy approaches must match and they must be driven forward with equal commitment and energy. Our membership of the European Union and playing a full, active and influential part at its heart is an essential part of the work that must be done if Ireland is to get back to where it seeks to be. I assure the House that I have personally ensured every Minister is alive to this vital task and fully engaged in this work. I have put in place new arrangements at official level in my Department to ensure that there is full coherence throughout the system and that every opportunity for Ireland to advance its case and its interests at European level is seized and used to maximum effect.

The outcome from Monday's meeting is a clear demonstration that our approach is working and that it is delivering results. Yesterday's discussion of growth and jobs was lengthy and important. There was a constructive and serious atmosphere in the room and I believe there is now a real appreciation at the highest level of European politics of the urgent need to focus fully on growth-generating policies not only as a counter-balance to discipline and austerity, but as an essential element of any sustainable programme of recovery. As I told the Dáil last week, Ireland, along with several like-minded member states, submitted two papers in advance of the meeting, one identifying measures with real potential to deliver growth and the other focused on the digital Single Market, especially copyright issues.

These represented an important input to the text eventually agreed. To make our discussions as practical and concrete as possible, President Van Rompuy asked us to focus on three key areas: unemployment, especially among young people; the Single Market; and small and medium-sized enterprises, SMEs. In advance of the meeting, he asked several colleagues to prepare presentations on these issues and I was asked to make a presentation on the role of SMEs in driving economic recovery.

We heard from President Barroso, who gave a detailed presentation on the extensive range of policy initiatives being advanced by the European Commission. He considered several possible growth scenarios for the EU and what we might do to improve our situation. His presentation was sobering to say the least, particularly his presentation on the extent of youth unemployment throughout the European Union which has reached levels as high as 50% in Spain. As President Barroso set out in his statement after the summit, the Commission will now establish action teams to work with member states in which above average rates of youth unemployment apply. This includes Ireland and the intention is to improve job opportunities for young people.

Several Prime Ministers were asked to introduce key topics to inform the debate. As the Danish Prime Minister holds the Presidency, she focused on legislative work on priority initiatives and the need for the new budget for the EU, the multi-annual financial framework, to promote growth and employment. The Austrian Chancellor spoke on stimulating employment, the Estonian Prime Minister addressed the Single Market and the Finnish Prime Minister focused in particular on the digital Single Market.

In the course of my contribution I set the scene on SMEs, focusing on what we have been doing in Ireland in this regard. I pointed to two key concerns, ensuring access to finance and reducing red tape, which must be addressed if SMEs, the engines of economic recovery, are to be able to fulfil their potential. I highlighted some of the key steps we are taking in Ireland, including our forthcoming jobs action plan; the partial guarantee scheme and micro-financing loan fund; and the strategic investment fund. All of these will help to supplement bank lending.

I also stressed that in return for the money we put in to the banks to recapitalise them, we insist that they deliver for the real economy. We will ensure this materialises through our monthly monitoring of lending targets and patterns and the establishment of the Credit Review Office. I described how we are taking a highly targeted approach in our initiatives, including the reduction of VAT on tourism services, the cut in PRSI for employers of low earners and the reform of our bankruptcy laws, aiming specifically at measures most likely to contribute to growth and recovery. I also pointed to our encouragement of new and innovative companies. This takes place through ensuring that small and medium-sized enterprises can access research and development funding and providing a sales and marketing tax credit to companies exporting to new markets in emerging economies, including the BRIC countries, Brazil, Russia, India and China. I suggested that we should seek to learn from others about what does and does not work by exchange of best practice and that we should return to the discussion in June. This is reflected in the final paragraph of the statement agreed on Monday evening.

Reaching agreement on the new treaty at Monday's meeting was another important milestone. However, as a result of the considerable work that was put into negotiating and preparing the text ahead of Monday's meeting the political discussion on this element was a good deal shorter than our discussion of growth. While much, if not most, of the treaty is already provided for in the EU treaties and existing EU law, including the provisions of the Stability and Growth Pact as strengthened by the six legislative measures adopted last year, setting out the measures in a new treaty takes the process to a new level by ensuring that everyone will play by the rules and will be held to account if they do not. As a small member state of the union, this is in Ireland's interests. There have been occasions in the past when it has been easier for large member states in particular to evade their responsibilities. Under the new treaty this will no longer be possible.

Now that we have a final text it might be helpful for me to set out some of its main features to the House. The new treaty entitled the Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union opens with a long set of preambles. I highlight the 20th preamble, which makes it clear that "none of the provisions of this Treaty is to be interpreted as altering in any way the economic policy conditions under which financial assistance has been granted to a Contracting Party in a stabilisation programme...". This is an important provision which ensures that for Ireland and other programme countries, the terms of our EU IMF programme will prevail and that the new agreement will only apply once we have exited from the programme.

Among the articles of the treaty, I highlight Article 2 which aims to ensure full consistency with EU treaties. The statement that the treaty is to be applied and interpreted "in conformity with the Treaties on which the European Union is founded" is welcome and something Ireland actively sought, as is the assertion that "They shall not encroach on the competences of the Union to act in the area of economic union".

Another feature worth noting is the carefully balanced language on measurement of structural deficits in Article 3.1, one of the priority issues for Ireland that I have identified previously in the House. The final language in this regard reflects Irish concerns that the approach should take into account an overall assessment with the structural balance as a reference and that it should reflect country-specific aspects. This is important to a small, open economy like ours. Similarly, the language of Article 3.2, which sets out what is required to enact the new deficit brake at national level, reflects Irish input.

We need to ensure that member states fully adhere to and respect the new rules in deciding on and implementing their budgets. Equally, however, it is important that the text recognises that law making processes and traditions - including at a constitutional level - vary from country to country and must be accommodated when we agree to act together. This has always been the case in the conduct of European business. The final text is a balanced one that Ireland can accept.

Article 13 provides an important new role for national parliaments, who will, together with the European Parliament, organise and promote a conference of representatives of their relevant committees to discuss budgetary policies and other issues covered by the treaty. I know this will be welcomed by the House. The arrangements for entry into force are set out in Article 14. This provides that the treaty will enter into force on 1 January 2013, providing that 12 euro area member states have ratified it. Member states will then have a further year to transpose its contents into their national law.

I appreciate the great interest that there is in what will be required to enable Ireland to ratify the new treaty. At our meeting yesterday, the Government agreed that the Tánaiste, as Minister for Foreign Affairs, should write to the Attorney General seeking her formal views in the matter. This is the norm when we are looking at an international treaty. There is no formal deadline. The Attorney General must be given the time she needs to undertake this detailed and important work. As I have said before, the Government will not shirk its duties. It will take whatever steps are necessary to ensure that Ireland is in a position to ratify the treaty, including a referendum if necessary. I will keep the House fully briefed and involved in this important work.

I reiterate my welcome for this new treaty. Its shared currency rules, and the ability to enforce them, are of vital importance. The arrangements make it possible to hold all member states, including the largest, to account in a way that has not previously been possible. I would equally acknowledge that it cannot be seen in any way as a sufficient response to the crisis currently facing Europe, nor was it intended to. In order to get beyond our current difficulties, we also need an urgent focus on growth-enhancing policies. Monday's statement on this and the recognition that growth issues must feature on all future agendas for meetings of the European Council is an important and significant step forward.

It is also clear that the situation in Greece remains fragile. At our meeting, we heard from Prime Minister Papademos on progress in the negotiations on private sector involvement, PSI, and on a new programme. The troika's assessment is that Greece is making real efforts, but that more remains to be done.

For as long as member states remain exposed to extreme pressure in the markets, we will need to ensure that we have strong and credible firewalls in place. I am, therefore, very pleased that Monday's meeting reiterated our agreement to come back to reassess the adequacy of the resources available under the EFSF and the ESM when we meet again at the beginning of March. This will be an important discussion, including for Ireland. While we are making progress in our recovery, we remain vulnerable to negative developments elsewhere. In this regard, I welcome the fact that colleagues reiterated their view that positive progress is being made by Ireland and that they will continue to provide support to countries under a programme until they have regained market access. This is an important reassurance as we work towards that important goal. This statement was included in the conclusions of the meeting and in the communication thereafter.

The road ahead for Ireland and Europe is long and difficult. Recovery will not be built in a day or at a single meeting. However, on Monday we took important steps in the right direction and I will be ensure that my colleagues deliver on what they have agreed and that our undertakings are turned into concrete actions in the period ahead.

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