Mary Lou McDonald (Dublin Central, Sinn Fein)

I have followed most of the debate and perhaps we should be flattered by the fact the Labour Party is more concerned with attacking us than dealing with the substance of the ESM. However, it is a mistake to guillotine the debate. Had more time been provided, perhaps we would have moved beyond some of that posturing and discussed the substance of the proposition.

Previous speakers welcomed the result of last week's referendum. It is from their point of view a positive expression of our further integration within the European project and lays the foundation for stability. Obviously, that is not a view I share. I believe it sent out precisely the wrong message at this critical time. It is no surprise the German Finance Minister, Mr. Schäuble, interpreted the result as a validation of European policies. That was always going to be the case. A bull-headed decision to stick with the politics and policies of austerity, which have so clearly and manifestly failed, is an even bigger mistake. Following the result, the Government, in the person of no less than the Taoiseach, suggested it opened up a window of opportunity in respect of a deal on our bank debt. Cold water, as I said earlier in the Chamber, has been poured on that but we are faced with the evolving situation in Spain. It is incumbent on the Government and on our public administration at every level to ensure this situation is used, leveraged and seized in every way to work to the advantage of this State. When an interest rate reduction was secured, it was on the coat tails of Greece, and it is not too far fetched to suggest any deal that might be struck with Spain will likely provide similar opportunity, but the Government must be proactive in this. It is not sufficient to be almost the wallflower of the piece and to hope it will come right and Spain will save our bacon.

We, in Sinn Féin, have made clear all along that we absolutely recognise the need for and support the creation of a permanent bailout fund. For this to happen legally, the Article 136 amendment to the European treaties is necessary. Last night, we voted in support of that amendment. For those who ad nauseam lay the charge at the feet of my party that we are against everything and for nothing and we will not support anything emanating from Europe, I point to the fact we have explicitly supported a change to the treaties to make legally possible that permanent fund. We did so even though the method of ratification of that amendment using the simplified revision procedure is not one we favour. We also took that decision mindful of the fact a court challenge taken by Deputy Thomas Pringle will be heard later in the month, but such is the necessity for this fund to be established that we supported the amendment, despite the circumstantial factors and misgivings.

We do not believe the ESM in its current form is fit for purpose. Many outside the Chamber have questioned, for instance, whether the size of the fund, at €500 billion or €700 billion, is sufficient to deal with the impending banking crises. However, leaving that significant issue aside, the main reason we are not prepared to support the ESM is it is posited on policies that have not just been failures but have been deeply damaging to the people and the economy of this State. I refer to the failed policies of austerity coupled with unlimited banking bailouts. Even a cursory glance at the state of the domestic economy, the low level of economic activity, the unemployment rate, forced emigration and the other issues with which we are familiar bears testimony to the fact so far the State and Europe have gotten it wrong. There are flaws in the ESM but a window of opportunity remains to put things right and to secure amendments to the treaty.

The Spanish Government and the Spanish system are asserting themselves proactively. They are not behind the door in stating categorically the needs of their system, economy and people. Our Government should follow suit. We want the Government to table amendments at the forthcoming European Council aimed at improving the design of the fund. I understand that yesterday the Taoiseach, while being evasive, conceded during Leaders' Questions there was the possibility of changes to the ESM treaty and we want the Government, on the people's behalf, to capitalise on that opportunity. We want explicitly stated in the treaty the option of ESM funds being used for investment in jobs and growth. This is very much in line with a broader and parallel debate that has unfolded since the French presidential election campaign, which in some respects was given a high profile by Francois Hollande who, along with others, made clear that austerity is not enough and a credible growth and investment strategy is needed. Everyone seems to have come on board in this regard since the French election. It is logical, not only from the narrow perspective of this State but also taking into account the rhythm at which the European debate has unfolded, that our Government can credibly seek to have this option of using ESM funds for growth and investment in jobs explicitly stated.

There needs to be an option for direct ECB funding of the ESM to provide the necessary firewall to stabilise the euro and, crucially, to limit the liability of taxpayers and individual member states. During the many years of crisis we have been in, a great deal has been said about the ECB and, at times, the bank has had a great deal to say. There is a common understanding the role it has played during the crisis has not only been inadequate but, in some cases, very damaging. We want the Government to address this matter head on and to argue in favour of the funding option from the ECB into the ESM. We also want a clause ensuring the programme countries such as Ireland are not required to contribute to the fund while in a programme. It seems bizarre that states in receipt of funding under a bailout programme or from this fund, when established, should also be asked to be contributors to the fund. By a simple exercise of logic and common sense, one can see that this does not add up. The capital liability of the State to the fund stands at €11 billion, with the expectation that more than €1 billion of this will be front-loaded this year, while we continue in bailout territory. It is something to which the Government of one of the programme countries should never have agreed under any circumstance.

Our fourth proposal is that a requirement for very strict stress tests and a write-down of toxic debt be a precondition for the use of ESM funds for the purposes of recapitalising banks, whether by way of direct recapitalisation or indirectly via loans to governments. Our experience of pumping endless billions of euro into toxic institutions has not only been damaging to the broader economy and society but also has not, after all, solved the problems in the banking system. The issue of toxic debt and the imperative of clearing the balance sheets must be met head on. It is wholly unacceptable to my party that the ESM should be used, either directly or indirectly, to pump hundreds of billions more into clapped out banking institutions.

Our final proposal is that the ESM treaty must provide for greater accountability both at European Union and member state level. We are also calling for the removal of the immunity granted to the fund and its board members.

These five proposals - the five deciding factors for my party - will form the substance of the amendments my colleagues and I intend to bring forward on Committee Stage. At this point we cannot support the treaty or the Bill. However, if these issues were to be resolved, we would revise our position accordingly. The treaty is not a done deal; on the contrary, it is very much open to renegotiation and the Government has a duty to secure a permanent funding mechanism that is fit for purpose. The objective of all of the exercises and efforts on the part of the Government and all of the hardship borne by citizens is, as we are told repeatedly, to balance the books and get the State match fit to return to the sovereign bond markets. We are all aware that there is a strong likelihood that we will be looking to a second bailout in due course and that the source of that bailout funding will the ESM, as and when it comes to pass. In that context, the question we must ask ourselves is whether there is any sense in sleepwalking from one bailout mechanism which keeps us in the doldrums, our bond yields high, our people out of work and so on into a second scenario which is essentially the same. That does not add up.

Every Member of the House and every person in the country wants us to be in a position, as Deputy Kieran O'Donnell said, to reclaim our economic sovereignty and re-enter the bond markets. The question is how that can be done. The evidence of recent years is that aggressive austerity and endless bank bailouts are not the remedy. We need something different. In establishing this permanent bailout mechanism we must be sure we get the diagnosis of our problem right and that the medicine, as contained within the ESM, will actually work. It is Sinn Féin's view that the Bill is deeply flawed. To reiterate, we absolutely support the need for an emergency fund, but we must get it right. Therein lies the challenge for the Government.

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