Paul Connaughton (Galway East, Fine Gael)

I welcome the opportunity to speak on the Euro Area Loan Facility (Amendment) Bill 2012. The legislation aims to ensure the financial stability of the European Union and safeguard the stability of the euro. It is required to give effect in law to amendments and measures agreed by EU Heads of State and Government last July. In recent years, we have had unprecedented volatility in the financial markets in Europe and every country has struggled to ascertain the implications of these developments for its citizens. During this time, debate on the European project has ground to a halt, as every country seeks to ameliorate the extent to which it is affected by the Europe-wide volatility. We must not lose sight of the tremendous benefits the European project has brought to Ireland and Europe, namely, peace and political stability, mechanisms for agreeing a way forward in the interests of all European citizens, the Single Market and the common currency.

The Euro Area Loan Facility Bill is a common sense measure. We must learn from the mistakes that led to the current financial impasse and plan ahead to ensure such mistakes are not repeated. Excessive lending and budget deficits were at the heart of the creation of the current crisis. The Bill seeks to establish protocols to avoid repeating the mistakes of yesteryear and create a financial environment that is safer for citizens across Europe.

There is a price to be paid for the Bill and the stability it aims to create. Essentially, the interest Greece is required to pay to Ireland will be reduced by €5.2 million. This is only a small part of the burden faced by our Greek partners. It should be noted that Ireland has benefited from a €9 billion reduction in the interest to be paid on our loans from EU sources. Some 400 years ago, the logic behind the euro area loan facility was recognised when the Bard of Avon stated succinctly:

Neither a borrower nor a lender be, For loan oft loses both itself and friend, And borrowing dulls the edge of husbandry.

We must look to the future, one in which neither excessive borrowing nor lending are features of our economic policy. To do otherwise would undoubtedly result in losses for Ireland and our friends in Europe and beyond. The Shakespeare maxim I cited is used in household budgets across the land. The same logic must be applied to the nation's finances as we seek to keep borrowing and spending to a minimum to ensure essential services are maintained while constantly reducing the budget deficit.

The Minister for Finance has faced up to a number of difficult budget decisions and more will surely follow in the period ahead as he seeks to rectify the mistakes of the past when excessive borrowing dulled the edge of our economic husbandry. Ireland will clearly need to access finance in 2013. Thus, it is in the interests of all citizens that the groundwork be done now to reduce market volatility and plan a way forward. This would ease the current crisis and reduce the possibility of a repeat of the calamitous events of recent years. The Bill before us goes some way towards achieving this objective. While people's fears and worries must be taken on board, it is fundamental to the future of the country that this legislation is enacted here and elsewhere in Europe in order that the Continent proceeds in a cohesive manner in terms of the parameters for the new loan facility.

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