Mairead Farrell (Galway West, Sinn Fein) | Oireachtas source

I want to discuss two issues. The first is the upcoming review of the EU's fiscal rules and the second is the reforms Ireland was requested to make as a requirement of accessing the Recovery and Resilience Facility. In March last year, the European Commission suspended the fiscal rules by activating the general escape clause. Those rules place limitations on member states' deficit and debt levels and, as such, have a significant impact on the economic performance of member states and the EU as a whole. There was some irony in the timing of the suspension, as it occurred just as the long-awaited review of the fiscal governance framework was to begin. The speed at which the rules were suspended gives a clear indication of their procyclical nature. There was widespread recognition that, following the previous financial crisis, they served to stymie recovery, acted as a rationale for austerity and meant the eurozone spent a decade teetering on the brink. Fortunately, last year's suspension of the rules allowed member states to engage in the kind of countercyclical deficit spending that was necessary to prevent the worst from happening. The President of the Commission, Ms Ursula von der Leyen, said at the time that "national governments can pump [money] into the economy as much as they need". It goes without saying that this was a far cry from the response to the previous crisis.

The review of the fiscal rules is scheduled to recommence later this summer. The Commission is widely expected to put forward proposals for simplifying the rules, thereby providing greater incentives for productive investment and changes to debt levels. The question is whether the changes will go far enough. The European Parliament has just produced its draft report containing proposals for reform and I was very disappointed to see they do not go nearly far enough. The Commission will soon seek submissions from members states and interested parties and it is essential that this State has its say. I hope the Government will outline what its position will be in this regard. The rules are now nearly 30 years old and, as long as they have been with us, so, too, have been the calls for their reform.

Reforms proposed have included exempting public investment, cyclically adjusting the 3% ceiling, shifting from a deficit ceiling to a public debt ceiling, swapping the system of fiscal rules for fiscal standards, and so on.

At a bare minimum, we need to introduce a golden rule that would exempt member state investment in green and social capital infrastructure from debt and deficit considerations. I cannot see how a new European green deal and just transition will be possible without such a measure. The report of the European Parliament considers a golden rule, but it is so restrictive that it is unlikely that most member states will qualify. In the absence of this, I cannot see how we will reach our climate targets. Yet, I already detect the obsession with fiscal discipline being prioritised above all other concerns. That is creeping back in. It is exemplified in the article by former German Finance Minister, Wolfgang Schäuble, published recently in The Financial Times, which called for a hasty return to fiscal contraction. Thankfully, a response was written and signed by almost 150 economists, stating that the exact opposite of that is what is now required. Not only does Europe need expansionary fiscal policies, we need fiscal rules that support public investment and do not straight-jacket policymakers from engaging in the kind of expenditure required to meet the needs of the moment. We need more economic sovereignty to make decisions based on our conditions and needs.

Lastly, I wish to address the issue of the conditionality that was attached to the access of states to the Recovery and Resilience Facility and the concerning request by the Government for confidentiality. The European Council examined the recovery plans for the EU. The Government has now submitted its plans. It has been confirmed that Ireland requested the Commission to redact certain sensitive information from its recovery and resilience plan as officially submitted on 28 May 2021. It is deeply concerning that such a large amount of public money is subject to privacy conditions. We need confirmation of when the entire plan will be published. We need a full list, without any redactions, of the reforms that the State has committed to implementing. As the Minister of State will be aware, the EU's so-called country-specific recommendations made specific demands on Ireland to reform certain tax rules and schemes. A full account must be given of how the Government intends to meet these recommendations in its national plan through changes to tax law over the coming years. The fund is significant and it is a welcome aid to our recovery, but the people must know what agreements were reached in return for it.

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