Paul Connaughton (Galway East, Fine Gael) | Oireachtas source

I thank the Ceann Comhairle for giving me the opportunity to speak on this very important Bill. When the electorate went to the polls on 31 May, it endorsed the contents of the fiscal compact treaty and the Bill marks the enactment of its wishes. Since the vote at the end of May, the need for Europe-wide agreement on budgetary rules has become even more apparent. It is only through greater budgetary discipline that the European project will be steered through the current impasse. Passing the Bill is crucial if the country is to meet its obligations under the treaty before the deadline of the end of the year. I am, therefore, heartened by the Government's commitment to enacting the Bill at the earliest possible opportunity.

The Bill imposes a duty on the Government to stay within the budgetary rules and if there is a deviation from any medium-term budgetary objective by more than 0.5% of GDP, the Government will have to introduce corrective mechanisms, as agreed in the common principles adopted by the European Commission. It will be difficult for Ireland to meet all of its budgetary objectives in the coming years, but the upside of the Stability and Growth Pact is stability, the key factor in creating the conditions in which the country's economic fortunes can be turned around.

Unprecedented shocks to the economy prior to the Government taking office created a precarious financial position which eventually led to the institution of a deficit procedure involving the troika of the European Central Bank, the European Commission and the International Monetary Fund. I note that the debt rule provisions of this Fiscal Responsibility Bill will require Ireland to reduce debt in excess of 60% of GDP by one twelfth each year. This will apply for the three years after Ireland has exited the deficit procedure.

The Bill will assign monitoring and assessment functions to the Irish Fiscal Advisory Council. My only regret is that the council was not instituted ten years ago because perhaps then we might not have plummeted to the economic depths experienced in recent years. This independent body will be tasked with assessing the official spring and autumn macro-economic and budgetary forecasts produced by the Department of Finance. It is also welcome that if the Government does not accept the assessments of the Irish Fiscal Advisory Council, it must explain its reasons publicly, a necessary underpinning of the principles involved.

The Fiscal Responsibility Bill represents a growing acknowledgement at European level that the structures in place were inadequate. They allowed the current impasse to develop by permitting some countries, including Ireland, to incur massive debt which now must be addressed if the European Union is to move forward. The coming months will see the debt issue addressed properly. Addressing the debt legacy is the obvious next step in the process, as the European Union acknowledges the mistakes of the past, decides on the structures necessary to ensure there will be no repeat of these mistakes and puts the structures in place.

It turns its attention to the problems already created and comes up with a solution that is both pragmatic and practical.

The Bill marks the completion of a number of phases in dealing with the economic crash and it behoves all of us to leave behind recriminations about the reasons for the mess the Government inherited in order to focus on the task of securing a deal on the banking debt incurred to date. The Minister for Finance has indicated that a statement of intent from the ECB on the Anglo Irish Bank promissory notes would help him to frame December's budget. He has also noted that the political timeline for a deal is from now to March 2013, when the next tranche of promissory notes is due to be paid. Last June the Heads of Government in the eurozone agreed in principle to allow the ESM to recapitalise Irish banks in term of legacy debt. The Government must focus its full attention on supporting the ongoing efforts of the Minister and his officials as he seeks to secure the details of a deal at the earliest opportunity. As we face into what is likely to be one of the most difficult budgets in the history of the State, the Government deserves to be provided with crucial information on the country's finances. A statement of intent from the ECB on the likely parameters of such a deal would greatly assist the Minister in determining the extent of the cuts required. Cuts that prove unnecessary will only damage the economy further, create unnecessary fear among the public and dent economic confidence. Our key task in 2013 will be to restore a measure of confidence in the economy. That is why a statement of intent from the ECB is crucial.

When we passed the fiscal compact treaty, we proved to Europe and the rest of the world that we intended to sort out our own financial problems. We now need the European Union to step up to the plate with a deal on banking debt. With this Bill, we are taking on a level of fiscal responsibility that will go a long way towards ensuring greater equality in the economy of the European Union. I hope the determined efforts of the people to reduce the budget deficit will be supported in every way by our colleagues in Europe, including with a statement of intent on the promissory notes.

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