Joe Higgins (Dublin West, Socialist Party)

The treaty on stability, coordination and government, otherwise known as the fiscal treaty, will do nothing to address the appalling effects of the current crisis in capitalism, whether that is in Ireland or throughout the European Union. On the contrary, if the further savage cuts and austerity that would inevitably follow adherence to this treaty's fiscal diktats were implemented across Europe as a whole it would result in a disastrous deepening of the economic crisis against a background where unfortunately 25 million citizens of the European Union are already unemployed. This treaty does nothing but dictate a straitjacket of austerity for the working class and the poor of Europe when what is needed is the opposite, namely, a massive public investment programme to regenerate the EU economies and create millions of jobs throughout Europe. The fiscal treaty is a treaty of despair whereas the unemployed of Europe, the working class, the poor, the pensioners, the hard put upon people of Greece, Spain, Portugal and Ireland need hope. It is an austerity treaty and that is how we on the left will refer to it from now on.

Article 1 of the fiscal treaty sets out the EU's objectives as "sustainable growth, employment competitiveness and social cohesion". The second paragraph of the preamble to the treaty states "DESIRING to promote conditions for stronger economic growth in the European Union". The preamble states that achieving these objectives "requires the introduction of specific rules to address this need, including a balanced budget rule and an automatic mechanism to take corrective action". Article 3 as we know concretises these requirements by demanding structural deficits of 0.5% or 1% of gross domestic product, it demands rapid convergence and a correction mechanism that shall be triggered automatically and it demands that member states enshrine in national law provisions of binding force in this regard in permanent character, preferably constitutional, to be adhered to throughout the national budgetary process. That is Article 3 of the treaty. Article 4 demands an automatic reduction of general government debt by 5% per year of the amount over 6% of gross domestic product. Our contention on the left is that three of the four objectives in Article 1, sustainable growth, employment and social cohesion, far from being progressed through the fiscal measures proposed in Articles 3 and 4, will be irretrievably damaged across swathes of the European Union, with dreadful consequences for ordinary citizens if the treaty is implemented.

I draw attention to an article that appeared in yesterday's edition of The Irish Times, written by Paul Krugman, not a socialist for sure but an internationally renowned economist and professor at Princeton and Nobel laureate for economy theory. His article was headed "European leaders seem determined to ruin their economy". He stated that what we are seeing from the leaders of the European Union is complete inflexibility.

In March, European leaders signed a fiscal pact that, in effect, locks in fiscal austerity as a response to any and all problems [...]

So it's hard to avoid a sense of despair. Rather than admit they have been wrong, European leaders seem determined to drive their economy - and their society - off a cliff.

And the whole world will pay the price.

Many other economists and commentators have made similar points. Even right wing economists in this country, like Professor McCarthy and Dr. Karl Whelan, have severely criticised this treaty as offering nothing positive with regard to bringing about recovery in the European Union.

Other commentators go on to suggest that even this being the case, because of the possibility of Ireland being locked out of the European Stability Mechanism fund, there is no choice but to vote for the treaty, vindicating the blackmail clause we have spoken about, the clause that was first explained as blackmail by my colleague and Member of the European Parliament, Paul Murphy. The diktat that member states that do not ratify the austerity treaty would not be able to access the European Stability Mechanism is outrageous blackmail, and it is disingenuous of the Tánaiste in his introduction to repeat this blackmail clause as a given reality. It is not. The Irish Government could still block the introduction of this blackmail clause. The treaty establishing the European Stability Mechanism had the blackmail clause inserted in February of this year and it is shameful the Irish Government supported that very quietly at the time. Article 136 of the Treaty on the Functioning of the European Union must be amended to give legal standing to the treaty establishing the European Stability Mechanism and the Government could veto this amendment unless the blackmail clause is removed. Dáil Éireann must vote on these issues so the situation can be reversed.

The budgetary strictures in the fiscal treaty, the automatic correction mechanism and the powers given to the European Commission would mean savage cuts and further austerity in this State and across the European Union. The Department of Finance estimates that the structural budget deficit in the State could be 3.7% in 2015. That would require €5.7 billion in extra cuts that year or spread over a number of years and it would be similar with the cuts under the automatic debt reduction diktat.

Across the European Union, 18 countries out of 25 that want to ratify the fiscal compact have structural deficits greater than the targets. If the treaty were to be put in place this year, in 2013, it would mean €166 billion of cuts across the European Union. This would have devastating effects, adding to the crisis and suffering in so many countries across the EU at present. The IMF itself has related in a report how, when austerity is applied simultaneously in trading partners, its effects are enhanced hugely. This is just a treaty for the financial markets and bondholders to make sure they get back even more than their pound of flesh. It is a disaster for the real economies across Europe.

The treaty will involve further austerity cuts and tax hikes to rescue casino capitalism and allow it to continue. People who oppose austerity, therefore, must oppose this treaty. The significance of the fact that 50% of households in this country are boycotting registration for the household tax is not properly understood. That is a massive revolt, not just against this new intolerable burden of taxation but against austerity. People who oppose that, including those who were coerced into registering, see the baleful effects of austerity. If those people correctly make the link between that austerity and the further austerity measures in this treaty, they will vote against it and they will be right to do so. These commentators who say people should not vote on other measures the Government is implementing know that the household tax, the water tax and all the other taxes are involved in this further austerity. They will be and should be included in people's reasoning for how they vote and why they should vote against it.

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