Éamon Ó Cuív (Galway West, Fianna Fail)

I am delighted to have an opportunity to address this Bill. I strongly support this matter being put to the Irish people. I am glad the Government eventually came to the conclusion that the Irish people should be asked their opinion. However, my view is that since there are three interlocking treaties, and this is not the first but the third of them, the Government should have put the three treaties as a package to the Irish people. I understand a case is being lodged in the courts on that basis. This is fundamental because, as I will point out later, the fiscal compact will become a reality only if all countries ratify the initial treaty and then the European Stability Mechanism, ESM is set up.

No one can argue against the principle of a backstop of cash or of fiscal rule. I do not know anyone who is against fiscal discipline. The question is, does this treaty provide fiscal discipline or simply rules that will become a straitjacket and are unenforceable. Furthermore, will anyone know what are the rules? This is like asking someone to play in a football match where there is no set of rules that anyone can read and understand. We know what would happen in such a case. People would argue with the referee.

I welcome this debate, but I am disappointed with it because it seems to be a series of pre-prepared statements for backbenchers and Ministers who do not analyse the issue. When we hold referendums we should remember the safe cross code. We should look right, look left, look right again and then cross the road. We know that in previous referendums that did not happen and difficulties arose. We know what happened when people made up their minds before examining all the issues and things suddenly jumped out of the small print. In some cases, referendums were passed and we then had to undo the damage caused. In other cases, the people examined the small print and decided they were being sold a pig in a poke. A good example is the referendum that followed the Good Friday Agreement which was passed with a great fanfare. There were difficulties within the small print of that amendment to our Constitution. We had to have a second referendum on the question of the Irish born child because of the flawed wording we had passed in the Good Friday referendum. We had a rushed referendum last autumn where eight former Attorneys General pointed out that what was being proposed was deeply flawed and the Irish people, rightly in my view, decided to vote against the amendment.

Those who dismiss all argument, analysis and inquiry into what we are doing at present are letting themselves down and, furthermore, are reneging on every promise they made that this Legislature would be a place of debate and inquiry and not of pre-prepared speeches. When the Government came to office, there was much talk about the Legislature taking the initiative and holding to account the Executive, but we are back to the same old, "Don't question anything, get the backbenchers to read the same old pre-prepared speeches, don't ask the awkward questions and hope no one else asks them either". It is important to examine the small print of what we are doing, and I will come to that later. However, we must also look at the wider picture of what we sign up for and the context in which we do so. This is particularly important as we are writing something into our Constitution and are being asked to pass a law that will be permanent. That is why I am looking at this issue from all angles.

Can we dismiss the rubbish from the Government that this has anything to do with our membership of the eurozone or of the European Union or that there are pro-EU and anti-EU parties involved? I know of no one who is proposing that we leave either the eurozone or the European Union. Sloganising on that basis is a nonsense.

The second argument is that this will keep us at the heart of Europe and will make it clear that Ireland is open for business. We hear the argument that if we vote against this treaty we may be thrown out of the euro. That is a veiled threat and one that has no substance in law. People who argue on that basis are abdicating their responsibility to get the best deal for Ireland, and for Europe in this case. They argue that we must keep ourselves at the heart of Europe and that is why we must vote "Yes". If one were to accept that argument one would have to vote for every EU referendum put forward, and all proposals from Europe would be waved through without question. I have a question for the Minister of State. If corporation tax is next on the agenda, will we automatically support that approach as well? Will a day come when a Government, or the Legislature, will say we do not agree with what is being proposed? We are keen on being at the heart of Europe but does this mean we agree with everything proposed, any more than saying we must agree with everything the Government proposes if we are to be at the heart of Ireland? How would rejecting a proposal put forward by Europe mean we would not be at the heart of Europe? That is a nonsense argument and has no validity.

I am in favour of fiscal discipline. Does this give us fiscal discipline or merely an impossible straitjacket? Before I come to that issue, we should look at the wider context of this proposal. Time and again we are asked where we would get the money if we do not pass the fiscal compact? The reality is that we are passing three treaties. The first is an amendment of the definition of the treaties governing the European communities to include reference to the treaty establishing the European Stability Mechanism. We cannot have the other two treaties without that one. It has not been ratified. The Government has, rightly, agreed not to ratify it until the fiscal treaty has been ratified. Second, there is a treaty to set up the European Stability Mechanism and, third, there is the fiscal compact treaty.

It is fair to say the second and third treaties can go ahead without Ireland's ratification. However, if Ireland refuses to ratify the first treaty, the second and third cannot happen. I presume the Government's reason for postponing ratification of the third treaty until after the referendum is that in the event of Ireland not ratifying the fiscal compact we can hold up the whole ship until we get a proper package that deals with Europe's problems. What European leaders have decided is not the best package for Europe. Fiscal stability is only part of the package. The main cause of the problem in this country was not fiscal instability. I will come to the detail of that, and Davy Stockbrokers are worth reading on this issue. The main cause of the problem in this country was the behaviour of the banks. Nowhere in all of this do we see a rolling in of bank behaviour or international finance across Europe.

If the following issues were dealt with, would it not be better for Europe and for Ireland? Should we not have proper regulation of the financial and banking sector at a central European level to ensure the banking crises and the problems of the past ten years do not recur? Let us get that into the package. There should be no further attempts by the EU to impose non-elected technocratic governments in the European Union. The EU is founded on a bedrock of democracy and yet Europe, centrally, is either imposing or trying to impose technocratic non-elected governments. We need a commitment from the European Union that the right of initiative remains with the Commission and that two strong member states, that is, France and Germany, will not be allowed, by stealth or by practice, to lay out policy for Europe. It must remain the role of the Commission to propose policy and the role of the intergovernmental meetings to roll it out.

We hear about preserving investment in the country. The biggest challenge to investment in this country at the moment is the uncertainty being raised by President Sarkozy about our corporation tax. Let us start again, and this time get a commitment that corporation tax and common consolidated corporate tax base, CCCTB, will not be imposed on this country and that the promises that were given to us in the Lisbon treaty, on which some of us canvassed, will be adhered to. As a member of the Labour Party I would have thought the Minister of State, Deputy Costello, would have insisted that an employment and growth strategy would be part of the package. Let us go back and get that first. As a Labour Party member I would have also thought that the Minister of State would like to see the ECB reformed as a normal central bank with the normal powers of a central bank and that in particular it would have the power to buy sovereign bonds at 1% instead of selling them to the banks at 1% and selling them on at one remove at 5%, leaving huge profits for private institutions.

An issue that goes to the core of implementing the fiscal compact is that the European banks that lent to the Irish banks or their sovereign governments would assume their fair share of the losses caused by their shared reckless behaviour instead of trying to saddle the whole debt on the Irish people. If one leaves the debt as it is and we assume all of the bank debt, when one applies the fiscal compact rules it is tantamount to slow strangulation. One might argue that if we say "No", we will go over the cliff, but that is not the case because we can hold up the whole show and go back and renegotiate in the interests of the ordinary, plain people of Europe who do not seem to count for much among European leaders. It is also true to say that we need to ensure a good deal for this country as well. My experience of Europe is that every country looks after its own interests.

When one looks at the fiscal compact itself, one of the interesting things is that nobody knows what it means. In other words, we are buying a pig in a poke. A document was published by Davy stockbrokers, who would not be considered revolutionaries, which indicates that "[The] structural budget deficit target of 0.5% is a poor choice." The report states:

The structural deficit is an abstract economic concept that cannot be observed with certainty. For example, the IMF estimates that Ireland ran a structural budget deficit of 5.4% of GDP in 2006, whereas the EU Commission estimates that Ireland ran a surplus of 2.2% the same year. Markets are unlikely to derive confidence in fiscal policy from budgetary targets they cannot observe.

The report continues: "[The] treaty does not go far enough; IMF proposals that could have preserved Ireland's creditworthiness are not included." The report also states, rightly, that "The fiscal compact would have had no bearing on the collapse in Ireland's public finances had it been adopted at the inception of the euro ... However, the IMF has proposed mutual insurance mechanisms for the euro area that would have preserved Ireland's creditworthiness."

In the context of budgets, Davy stockbrokers state:

The key innovation in the new treaty is to enshrine the rules in national law. The immediate case for reinforcing fiscal discipline in Europe is illustrated by the problems in Greece. But some argue that enshrining the rules in Irish law will imply a sea-change in the discussion of budgetary policy – by framing the debate around abstract economic concepts such as the output gap, structural budget balance and automatic stabilisers, perhaps our politicians might better manage the public finances. However, our view is that this approach ignores the key risks to the public finances from financial spillovers within the euro area and the banking sector.

The reports indicates that the "Structural budget deficit target is a poor choice as official estimates differ starkly and are prone to revision over time."

We have been given examples of where we are buying into the treaty yet nobody knows what the treaty is about or how to measure it. Even the briefing from the Library and Research Service states that there is no accurate measure of structural deficit and that this is a matter of opinion. We are buying into a treaty but nobody knows what it is about and what effect it will have. I will set a challenge for those who claim to know. If the Government is so sure about the impact of the fiscal compact on our deficit and budget and how it will pan out, I suggest it does two things. First, it must get the Fiscal Advisory Council to prepare a ten-year budget on the basis of what the Government proposes. It would also prepare a second budget based on the presumption that a fair share of the bank debt is assumed by the countries who caused it. In other words we would divide the bank debt of the sovereign by two and then we would run a second budget and see how it works out. Perhaps neither would work out to be possible or perhaps the second one, which would be preferable if we had the full package I outlined earlier available, would work out far better than the one the Government is offering. If one puts the figures on the table for the people, I am sure they would make a mature choice.

I stand to be corrected but my view is that when one is forced to do the budgetary arithmetic based on the treaty that is proposed, one will find that one will not be within the terms of the fiscal compact with the current level of debt which the Taoiseach insists is going to be paid to the last cent, and that he is not going to look for the recklessness to be spread among the people who were reckless or do what the Labour Party wants to do. I do not have the resources to do those calculations but the Fiscal Advisory Council does. I believe that if we work out the figures, they will prove conclusively that this is a straitjacket into which we cannot fit.

The Government's problem is that it cannot see a way out. I have provided the way out. If the first treaty did not exist there would not be such a handy way out, but because it exists one can hold up the whole train until a proper package is put together that deals with the banking issue. I am flabbergasted that the Labour Party in celebrating the 100th year of its foundation by James Connolly-----

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