Catherine Murphy (Kildare North, Independent)

According to its own institutions, the values and objectives of the European Union are to advance sustainable development based on balanced economic growth and price stability, provide for a highly competitive social market economy aimed at full employment, social progress and a high level of protection of the quality of the environment, and promote economic, social and territorial cohesion and solidarity among member states. These objectives are underpinned by values such as respect for human dignity, democracy, liberty, the rule of law and equality.

This is not a European Union treaty, however, it is an intergovernmental treaty, and we have been told that was why the Attorney General stated that we require a referendum. The treaty has been generated using a different set of values from those of the European Union. I do not what the values of this intergovernmental entity are but I know they are nothing to do with democracy and solidarity. The values seem to be completely at odds with those of the European Union and undermine those shared values, which is very dangerous. The former Minister for Justice in Germany is currently challenging the treaty in the courts, saying it has crossed a line because it cedes fiscal powers to an entity, granting decision-making power to political elites rather than devolving democracy to the people of Europe.

The Bill's explanatory memorandum states that with a view to securing economic recovery and sustainable growth, the key provisions of the stability treaty relate to the strengthening of rules underpinning the Stability and Growth Pact agreed by EU member states for the euro. At face value, the document is relatively simple and a purely literal interpretation shows that several provisions will certainly achieve increased co-ordination in governance, although I am uncertain as to the level of stability it can create in the absence of debt write-down. Not all countries are starting from the same point in this regard. Some countries are starting from a very unequal position. Having considered the background to how this treaty came about and particularly the adoption of the intergovernmental approach, I believe it is about putting an insurance policy in place for the core euro states for loans provided mainly to the peripheral states. There was plenty of cheap money put about to secure a return on it and the states are now putting an insurance policy in place to guarantee that it happens.

If this treaty is passed it will have profound implications for everybody in this country, but those on low to middle incomes and those most dependent on the State will feel its impact the most. It reduces the prospect of a debt write-down and will be a stick with which to beat us. It imposes a set of rules which include financial penalties for not adhering to the formula. Essentially, it puts a gun to the head of a state that might need to borrow from the ESM because that mechanism will not be available to a state if it does not ratify the treaty. Germany, in particular, wanted these rules applied at constitutional level to ensure they were copperfastened and could not be watered down. One market analyst has said on several occasions that the markets have already dismissed this as a political sop to Germany. However, if we make the treaty part of our Constitution, all future legislation will have to be in conformity with it. One cannot adopt legislation that is repugnant to the Constitution. The Minister for Finance, therefore, will frame future budgets with this treaty as the core. The other issue is that there is no time limit on this treaty; it is open ended.

With that in mind, I wish to refer to some legal issues that concern me. I have concerns about the wording in that it elevates this intergovernmental treaty to a level equal to European treaties. These treaties have been inserted differently into the Constitution. The treaties ceded power from the State, whereby we shared our sovereignty with an entity that had a judicial and democratic elements. The current treaty contains no democratic oversight. This is particularly worrying given that the treaty seeks to impose direct financial and fiscal obligations on the State. The 1972 accession treaty had the same wording. The Maastricht treaty, which was a consolidating treaty and dealt with governance issues, also contained that wording, as did the Lisbon treaty. The Amsterdam treaty did not contain that wording. The referendum on this treaty, by using the same wording, is putting this treaty on the same level as the accession treaty to the European Union. That is incredibly dangerous. This is not a democratic entity, but an intergovernmental one. I have proposed an amendment to delete much of the proposed wording, and this will be dealt with on Friday. What would be sufficient to achieve what the Government is seeking would be to insert something on a par with what was contained in the case of the Amsterdam treaty.

I oppose the treaty and will vote against it. Nevertheless, I query why the wording in this amendment contains such an explicit clause to elevate this treaty to a level that is superior to all other sections of the Constitution. Our Constitution is meant to be harmonious but if one elevates certain treaties, how can they be harmonious when they are in conflict with each other? I believe this intergovernmental treaty is potentially in conflict with the European treaties.

Let us consider what the treaty means in practical terms. The current Government deficit is close to 10% of GDP and we must get it to 3% by 2015. The Government has decided to achieve that through a roughly two thirds to one third ratio of spending cuts to new taxation. The Tánaiste, Deputy Eamon Gilmore, told the Labour Party conference at the weekend that there are two tough budgets ahead. If there were only two tough budgets ahead, we would have some hope. However, if we adopt this treaty and interpret it literally, we will take away all hope because we will be in a very difficult financial bind in the medium to long term.

Over the next three or four budgets we must reduce our current budget deficit by €13 billion. If we exit the programme, we must reduce the deficit to 0.5% of GDP. One can see the implications for the country of being so constrained financially. Indeed, jobs were to be at the heart of this Government's policies, but the jobs budget was watered down to a jobs initiative because there was no capacity to invest in job creating measures in the economy. While exports obviously remain a natural means of growing the economy, and I acknowledge the efforts being made in that respect, we cannot rely on them exclusively. International markets remain weak. Spain's Finance Minister indicated a few days ago that Spain has gone back into recession. An export-led recovery, therefore, will not happen quickly and will not deliver the number of jobs we need.

While undoubtedly trade should be an important element in Ireland's return to solvency, it should not be the only element of the strategy.Currently, we are locked into a fiscal adjustment plan that strips the Government of any means of stimulating the domestic economy, and ratifying this treaty will continue that. If we are to reach the 3% deficit target and we do not have the capacity to grow the domestic economy, there will be only two options - cuts in services, which we have already seen, and new and increased taxes, which we have also seen. On the overall level of Government debt, under the terms of this treaty we will be signing up to reducing our debt to GDP ratio to below 60% by making debt service payments of one-twentieth of the excess each year. Ireland's debt to GDP ratio will be 120% by the end of next year, so at a conservative estimate we will be obliged to pay back between €3 billion and €4.5 billion per annum for the next 20 years. There is also the prospect of incurring fines.

This treaty is primarily an insurance policy for the core euro states to ensure they are repaid what they loaned. There was a great deal of reckless lending just as there was reckless borrowing. It appears that the member states have become hostages to the money markets. They have lost sight of the purpose and vision that underpinned the European Union. There has been an absence of a common vision, an absence of leadership and an absence of a common, workable solution.

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