Terence Flanagan (Dublin North East, Fine Gael) | Oireachtas source

On 31 May people all over Ireland voted in favour of the stability treaty, with a considerable majority of 60.3%. There was support for the treaty across all sectors of society, including retail, agriculture and business, because they recognised its importance to ensuring continued investment, stability, recovery and growth. The treaty is one of a number of measures aimed at helping the economy to recover and avoid future economic crises. The vote was a positive step on our road to recovery because it ensured not only that we could access the European Stability Mechanism but also that future Governments would not have the power to be as reckless with taxpayers' money as they were in the past.

Formal ratification of the treaty will only take place once the Fiscal Responsibility Bill 2012 is enacted. The Bill provides for the implementation in Irish law of Articles 3 and 4 of the fiscal compact treaty to strengthen rules on the management of the public finances. Article 3 sets out the budgetary rules to which future Governments will have to adhere, while Article 4 sets out debt rules. The Bill provides a statutory basis for a range of fiscal policy and expenditure management reforms in Ireland. The fact that the budget rules will be implemented across 25 EU member states will also give Ireland and the eurozone security. The strength of other economies in the eurozone is vital to the survival of the euro and a return to growth in the economy.

The Bill establishes the Irish Fiscal Advisory Council on a statutory basis to monitor Ireland's fiscal policy. I welcome the establishment of the council which will comprise five experts from various backgrounds who will independently review the Government's budgetary targets and objectives. The fact that the council will comment publicly on actions taken by the Government in respect of fiscal policy can only serve to introduce greater transparency to the process. We already know the council's position on the economy from the reports it has issued.

Article 3 of the treaty provides for a number of fiscal rules, including a commitment by governments that the general government budgetary position shall be balanced or in surplus. There is also provision for an automatic correction mechanism which will be triggered in the event that there are significant deviations from budgetary targets or the adjustment paths towards it. Allowance will be made for deviations from objectives in exceptional circumstances. Article 4 provides for a reduction of 5% per annum in the difference between the actual debt-to-GDP ratio and the 60% threshold where a member state's debt is in excess of this threshold figure. It is important that these fiscal rules are implemented in Irish law in order to increase governmental accountability and transparency. Implementation of the budget rules will also increase investor confidence in the economy and have a positive impact on our ability to attract foreign direct investment which has improved greatly since the Government entered office. Foreign investors will be confident that the Government is controlling the country's finances and that we are able to fund the country into the future. This will lead to further investment in job creation and growth measures.

The Government has thus far met its targets and fiscal commitments under the EU-IMF programme. We have strictly adhered to the plans set out by the troika, which is appreciated by all concerned. The Bill will make a valuable contribution to the reform of Ireland's budgetary framework and help us to get our finances back on track.

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