Michael Noonan (Limerick City, Fine Gael)

I thank all of the Deputies who contributed to what has been a very constructive debate on the importance of this legislation and Ireland's ratification of the European Stability Mechanism treaty. The treaty is essential not only to facilitate in the public interest the financial stability of the European Union by establishing the ESM but also to ensure Ireland will have access to a credible funding backdrop should it ever be needed. That will be very important in terms of Ireland's re-entering the markets and leaving the EU-IMF programme of support. However, this is most definitely not to say, as some Deputies suggested, that the Government is effectively accepting that Ireland is heading towards a second bailout. Ensuring we have access to emergency funding as a safety net, were it to be required, is simply prudent management of the country's economy and aimed at creating stability in it.

The debate has raised a number of issues, proposals and queries to which I will attempt to respond, beginning with Deputy Pearse Doherty's comments on the negotiations of the ESM treaty. As I pointed out, the treaty set out in the Schedule to the Bill was signed by euro area member states on 2 February. The original version of the treaty was signed on 11 July 2011 but was subsequently modified to incorporate decisions taken by the euro area Heads of State and Government on 21 July and 9 December 2011. These changes are aimed at improving the effectiveness of the mechanism. Ireland actively participated in the negotiations on the treaty at Euro Group, senior official and technical level right up to the time of the treaty's signature. Moreover, we are actively participating in discussions on the guidelines for implementation of the treaty's provisions in order to ensure Ireland's best interests are represented and protected, as well as those of the euro area in its entirety.

Several Deputies raised the question of direct recapitalisation of the banks. We support proposals to allow European funds to recapitalise banks directly and will ensure that any such proposal advanced at EU level is in the best interests of the taxpayer. It is too early to make an assessment as to what mechanism will ultimately be arrived at in regard to the potential recapitalisation of the Spanish banking sector or to speculate on how such mechanisms could, if implemented, be retrospectively utilised in Ireland. It should be borne in mind that the recent concerns in the eurozone underpin the fact that the solutions to address the Spanish situation, as with the Irish situation, should be seen as part of an overall eurozone solution. We will continue to review the proposals that emerge in regard to the recapitalisation of the Spanish banks in order to ascertain whether any of the proposed measures would be favourable for Ireland. This would include potential alleviation of the cost to date of the recapitalisation of the Irish banks. However, the ESM treaty does not provide for the direct recapitalisation of banks, rather it provides for sovereigns to acquire loans which may be used for that purpose.

Ireland's share of the €80 billion of paid-in capital based on the contribution key will be just above €1.27 billion which we will pay in five equal instalments of €253 million. Unlike the European financial stability facility, there is no stepping-out facility under the ESM when members enter a programme of support and there is no question of such being introduced at this stage. Every member must, therefore, contribute its paid-in capital and there is no provision for exemptions. A number of Deputies suggested that programme countries should be allowed to step out but this is a demand which needs to be examined very carefully because if one steps out, one loses voting rights on any decision to use the facility. If one stays in as a full contributor, one has a full say on any use of funds used in Spain or elsewhere.

In regard to the capital structure, I wish to state the following which should be clear to all. The capital structure of the ESM has been put in place to support the borrowing and lending activities. If or when the ESM engages in programme funding, it will borrow money on the international financial markets and lend it to the beneficiary ESM member state. This is how the EFSF operates currently. The capital of the ESM will not be paid out directly to programme countries but will only fall to be called upon in the event that member states borrowing from the ESM default or that the ESM incurs losses in ESM operations.

I would like to pick up a number of other points, one of which was a kind of general demand by many Deputies in respect of growth and jobs. The House is aware that since coming into office, the Government has been working on a range of measures to boost employment and help stimulate economic growth. The first such measure announced by the Government was the jobs initiative launched in May 2011 which comprised a range of taxation and expenditure measures designed to help get people back to work. Most recently, my colleague, the Minister for Jobs, Enterprise and Innovation, launched the action plan for jobs 2012, a plan to rebuild the economy and create jobs through improving supports for job creation and businesses and removing barriers to employment creation across the economy. Further work to stimulate economic growth and create employment is ongoing. I would be happy to receive any proposals Deputies wish to submit in this regard.

It should be noted that public infrastructure is funded primarily in two ways - Exchequer financing, which is the bulk of the funding and which will amount to approximately €17 billion over the next four years, and public private partnership funding for particular projects which are suited to the public private partnership approach and which provide value for money for the State.

I am very keen that we look at how private sector funding to supplement our Exchequer investment could be attracted. PPPs have been used in Ireland for more than a decade, mostly in schools and roads projects where they give value for money and are affordable. The global credit crunch has had a significant impact on the PPP funding market which has, in turn, had significant negative consequences for the delivery of PPPs. The Department of Public Expenditure and Reform is actively exploring the potential to unlock additional moneys to supplement bank funding. That Department under the Minister, Deputy Howlin, is also examining, in conjunction with other Departments, how new financial instruments and other EU support mechanisms could help us to access private funding to support investment, growth and job creation.

A number of points have been made about the accountability of the ESM. The ESM will have a board of governors consisting of the Finance Ministers of euro area member states with the Commissioner for Economic and Monetary Affairs and the ECB president as observers. The ESM will also have a board of directors. Each euro area country will appoint one director and one alternate director. The board of governors will appoint a managing director responsible for the day-to-day management of the ESM. The managing director will chair the board of directors. The treaty includes provisions in Articles 28, 29 and 30 on internal-external audit and for a board of auditors which will also ensure accountability of the ESM.

A number of Deputies, including Deputies Michael McGrath and Pearse Doherty, spoke against the immunity provisions in the ESM treaty. The privilege and immunities contained in the ESM treaty are similar to those in, for example, the treaties underpinning the United Nations and the IMF. The purpose of diplomatic privileges and immunities is not to benefit individuals or, indeed, in this case the ESM but to ensure the effective performance of the functions of the ESM. In the case of the ESM, we believe the immunities are justified in the same way they are justified in the IMF or the UN.

I reiterate my earlier words that it is now time for unity among euro area countries to ensure financial stability within the euro area. Ireland must play its part and stand in solidarity with its fellow euro member states in the interests of this country and the stability of the euro area as a whole. I thank Deputy Michael McGrath for indicating his party's support for the Bill and for Ireland's ratification of the ESM treaty. The Government equally shares Deputy McGrath's hope that we will not have to avail of the ESM but it is important that we have that safety net or insurance policy in place to give certainty to the markets if required. I would like Deputies to support the Bill.

Sinn Féin's position is not logical. Several Deputies, including Deputy Mary Lou McDonald, assured the House that they are very much in favour of a bailout fund and that they would like to see such a fund put in place but said they are not happy with some of the provisions in the Bill and that they will seek to amend them on Committee Stage. They support the principle of the Bill, which is about establishing a bailout fund and which we have discussed on Second Stage but they will vote against it on Second Stage. If one was to follow the logic of their position, they should support the Bill on Second Stage and seek to amend it on Committee Stage and call votes then.

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