Enda Kenny (Mayo, Fine Gael)

On 31 May next, the people of Ireland can allow the country to take another important step on the road towards economic recovery, stability and increased investment. The decision we will take collectively on the referendum on the European stability treaty will have serious and real consequences for this country and its people. There is a responsibility on all Members of this House, as elected representatives, to ensure that when people come to cast their votes, they will do so while in possession of all the information the require. It is very important that the people should be properly informed on all the relevant issues. The Government will certainly play its full part. It will do so in measured and honest terms and I hope that everyone else involved, irrespective of what might be their views, will do the same.

Ireland is on a very difficult journey to recovery. The adjustments we have been obliged to make in recent years have had an impact on every man, woman and child in the country. These adjustments have been painful but we are making headway. Our international reputation is being restored and our competitiveness is improving. The most recent official European Commission competitiveness statistics show that Ireland is now ahead of the EU average on almost every measurement. In recent months alone, numerous multinational companies have shown their confidence in Ireland by committing to new investments here. I want to continue and grow this strong flow of inward investment in the future and for our future. We are all working together with one aim in mind, namely, recovery and regaining control of our affairs. Each decision we make must be weighted against this vital goal. We must evaluate whether particular decisions will move us forward or set us back and whether our position will be more secure or more uncertain as a result of such decisions being taken. These are the questions we must ask ourselves. The Bill we are discussing is short, with two sections and short schedule. It proposes simply that the Constitution be amended to allow Ireland ratify the treaty on stability, co-ordination and governance, and that constitutional cover be extended over Acts adopted under it. This treaty is neither too long nor too complex, with 16 articles in total and a few pages of recitals. The Government would like the people to read it for themselves, which is why we have sent a copy to every household in the country. Everybody needs to know what is involved.

The debate must be about more than words on a page. To reach an informed view, people must also see the new treaty in the context of the very difficult circumstances that have prevailed in the European Union and beyond in recent years. The euro is approximately 20 years old and was built on a set of rules and consequences set out in the Maastricht treaty and enshrined in the stability and growth pact. These rules were never perfect, although they were the best that could have been achieved at the time. They were designed to support a single currency that had yet to be created.

Experience has shown that although much was right - the euro was established and became a strong and credible currency - the necessary frameworks put in place were not strong enough to ensure sound budgetary policies across the Union, and they were not sufficiently robust to deal with the turbulence of recent times. The interaction between a serious sovereign debt problem in a number of member states and a wider crisis in Europe's banking sector has resulted in a draining of market confidence in Europe and the euro. As this House knows only too well, confidence is essential to functioning markets and healthy economies.

Since the crisis broke, much has been done at the European level to set matters right. The rules of the stability and growth pact have been strengthened through the six pieces of EU legislation adopted through a fast-track process last year. Two more instruments aimed at guarding against future crises are making progress. We have put in place stability mechanisms; the first was the temporary European Financial Stability Facility, EFSF, and we will soon have the permanent European Stability Mechanism, ESM. Ireland has been among those which have benefitted from these facilities, and we have had experience of how those mechanisms worked. We have also learned the necessary lessons. There are now lower interest rates and more flexible instruments available than was the case when the EFSF was first set up. This has been and is of direct benefit to our country.

There is also an acceptance of the need for an equal focus on the drive for the generation of growth and the creation of jobs. This is something I personally advocated since taking office and I look forward to working with colleagues on the European Council in the period ahead to see that this is kept central to every European Council agenda. In all of this work we have been operating within the legal framework of the existing EU treaties. At the meeting of the European Council on 9 December last year, it was clear there was a wish for treaty provisions to provide for a new order to underpin confidence in the shared currency, and members were prepared to enter into an explicit commitment to run responsible budgetary policies and be held to account for doing so. The new treaty, formally known as the treaty on stability, co-ordination and governance in the economic and monetary Union, was negotiated with impressive speed and signed by 25 EU members on 2 March this year, and each signatory is proceeding with a process of ratification.

This is the context in which the new treaty must be seen. It is part of an ongoing effort to restore confidence and stability to the euro, the currency we all share. In drafting the treaty, we did not begin with a blank page and we built on the existing framework of EU treaties and law which already contain most of what is included in the new text. That is true of the obligation to run a balanced budget, set out in article 3, or the agreement to keep government debt to sustainable levels, as set out in article 4. Some aspects tighten existing provisions but the main innovation is the requirement to set these rules out in a binding way at national level and ensure there is a correction mechanism that kicks in automatically if there is a danger of breach.

Is this a recipe for permanent austerity, as some have asserted? It is not. It is simply an agreement among all concerned to ensure a balance between money raised and spent in the shared interest of the stability of a common currency. It will have consequences for Ireland but these are positive, meaning no future Government will be able to bring us back to the brink through reckless spending of the people's money. Ireland's current economic position is certainly very challenging, although we are turning it around bit by bit, but it is not without precedent. Many people in this country will recall the serious mess our country was in during the 1980s, when our debts threatened to drag us under. On that occasion, we managed to adjust our course before it was too late. The reckless boom-bust approach to economic policy making, as practised by some in the House on more than one occasion, cannot be allowed to happen again.

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