Tom Hayes (Tipperary South, Fine Gael)

I am pleased to have the opportunity to contribute to the debate on the Bill, particularly in the wake of the referendum last week on the stability treaty. One of the most frequently debated aspects of the treaty was the question of Ireland having access to the European Stability Mechanism. I congratulate the people, including those in my constituency, on their endorsement of the treaty. Their resounding endorsement shows that voters took heed of the arguments in favour of a "Yes" vote.

The ESM will act as a permanent rescue fund for the euro area and soon replace the temporary fund, the European financial stability facility. Establishing a permanent rescue fund for eurozone members is seen as key to safeguarding the future of the currency, with the ESM designed to act as a lender of last resort should members find themselves cut off from market-based financing. The ability to access this fund which is essentially an insurance policy could prove crucial to many countries and will allow them to fund public services such as pensions, social welfare payments, and health and education services, even in times of financial distress. It will also protect participating countries against interest rate hikes in the private markets, as investors become more confident in the financial stability of the eurozone.

This initiative is an example of eurozone members working together to secure and protect the future of the European project. However, of itself it will be insufficient for that purpose. We must have more examples of such co-operation from and proactive rather than reactive efforts by our colleagues in Europe. In this regard, I welcome the increased focus on the growth agenda, particularly in the wake of the French presidential election and the Irish referendum. For too long Brussels has been trying to catch up with this crisis instead of taking the lead, but there is now an opportunity to change this. Member states cannot and should not be forced to carry the burden of crippling bank debts - that approach is no longer sustainable. Ireland knows only too well that the current method of recapitalising financial institutions through state lending is not the way forward.

Instead bank debts should be dealt with directly at a European level, and I support the Government in this approach. Allowing the ESM to recapitalise banks directly would help break the link between sovereign debt and banking debt. The current agreement on Ireland's banking debt must be revisited. Our colleagues in Berlin, Paris, Brussels and elsewhere cannot continue to turn a blind eye to this issue simply because Ireland is not on the brink of collapse. Again, we need to take a proactive approach rather than a reactive one.

There is also a strong case to be made for a Europe-wide stimulus package to be implemented. This is not a new idea but one Europe has failed to consider properly in reaction to this crisis. One of the strongest cases that can be made for the benefits of a growth orientated approach rather than simply spending cuts is the United States. Since the initial stimulus package was introduced in the United States at the end of 2008-beginning of 2009, the American economy has returned to positive growth. Since the end of 2009, the American economy has remained in positive growth with the latest figures showing a 1.9% growth rate in the first quarter of 2012. Contrast that to Europe where the eurozone area is expected to fall back into negative growth this year.

Obviously, the Government has been talking about the need for a stimulus package for some time and has been successful in renegotiating with the troika to allow us to use funds from the sale of State assets for this very purpose. However, the sale of these assets cannot be rushed and as such our hands are tied in the short term.

Ultimately, we need a European response to what is a European problem. I wish the Taoiseach, the Minister for Finance and the Government the best of luck in pursuing these issues with their European partners. The importance of fostering a more proactive approach to this European crisis cannot be overstated. Establishing the ESM fund is only a small step on that road to recovery and I can only hope that other European leaders will see sense in some of the proposals mentioned today.

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