Gerald Nash (Louth, Labour) | Oireachtas source

Sadly, like the Minister of State, I am familiar with all of the terms and acronyms in the glossary of the Bill. It is complex and technical legislation but an extremely important Bill nonetheless. The Labour Party will support its passage on Second Stage on a qualified basis. We look forward to going into the legislation in more detail when it comes before the committee.

The Minister of State and the Ceann Comhairle will be pleased to learn that I do not intend to use all my time. Similar to the Minister of State, I view the time provided as a ceiling rather than a target, especially on a Bill like this. While it is mechanical and technical, it is nevertheless an extremely important Bill. It is important from a number of different perspectives, not least insofar as it will give us a sense of how far the EU has evolved since the financial crisis and the way in which the EU deals with anticipated financial crises that impact on the eurozone and the EU more generally.

All of us who lived through the financial and eurozone crisis of the late 2000s and early 2010s, especially those of us who were charged, as legislators and in some cases as Ministers, to clean up the mess, will have a particular perspective on this Bill. We also have a particular viewpoint on the role of the European Union, the European Central Bank and the International Money Fund in providing resources to the State at a time when the reality was that nobody else would do so. The conditions attached to those resources were extremely onerous.

This was new territory for Ireland and the European Union. It was a far from perfect package of support, coming as it did with strict conditionality to which the Government in the period from 2007 to 2011 signed up. The response of the EU and the European Central Bank to the Covid-19 crisis and the implications of that could not be more different. That is a point worth it making.

The Bill before us asks us to effectively ratify the major reforms the European Stability Mechanism treaty, which was signed late last year. The reforms show us, at least to some degree, that many of the lessons of the financial crash and the way in which the EU managed the response have been learned and, to a degree, applied. That being said, there are, as colleagues on this side of the House enunciated earlier, still levels of conditionality attached to certain types of supports that are concerning and require further scrutiny.

The ESM was established in 2012 as the permanent crisis management mechanism for the euro area in response to the crash and financial crisis. The EU more generally, the ECB and the mechanisms available to the ESM board swung into action rapidly in May 2020 to approve, for example, the pandemic crisis support credit line to help address the financial and health implications of the Covid-19 crisis across the European Union. In that instance, the EU acted together with great solidarity and care. That reflected the idea of the social Europe, an idea in which I believe and which should be the driving force of our connection with and loyalty to the European Union as a State that has pooled its resources with that combination of states.

The steps taken by the EU and the firepower available to member states through the ESM financial assistance are all substantial. It is worth reflecting on that. The ESM can provide members with loans to cover financing needs, loans on direct equity, injections to recapitalise banks, primary and secondary debt market purchases of member states national bonds, and credit lines to be used as precautionary financial assistance.

The new reforms we are debating were undoubtedly made more urgent by the challenge of the pandemic and the way in which the economic shock could have impacted on the stability of the eurozone and confidence in the EU's ability to act swiftly and intervene collectively to avert any ensuing banking, financial or social crisis. The reforms are a welcome evolution. They show me that the idea of solidarity is alive and well in the EU, although it can always be improved.

The EU is a work in progress, as is democracy itself. Klaus Regling of the ESM put it well when he said that the reforms "fortify the euro area against future shocks" and the agreement "broadens the EU’s mandate to safeguard the common currency". However, it is about much than a common backstop for the Single Resolution Fund, SRF. It also provides for a more rapid and collective response to extreme financial shocks that might befall an ESM member state in the future. That is reassuring given our experience in this country.

The reforms will undoubtedly make it somewhat easier for a country to access lines of credit more quickly and to a degree less onerously than Ireland did just 11 years ago this month. We are approaching the 11th anniversary of the troika bailout. This element of the reform package can only be a good thing given our experience in the past.

We have discussed in this Chamber, with the Minister of State, the Minister for Finance, Deputy Paschal Donohoe, and others, the fact that all of the indicators are that the EU is preparing for the swift reintroduction of the fiscal treaty rules when it determines that the circumstances, as it would see them, allow. I have said before that the fiscal treaty rules were reflective of an orthodoxy that existed ten or 11 years ago. They bear little relationship to the conditions on the ground today and what is needed across the European Union and in this country. The pandemic has exposed this fact.

I hope there is the collective insight and humility among EU member states and at European Commission level to accept and understand that a thriving post-pandemic Europe needs to see these rules changed to allow for greater levels of public investment in order to make Europe more resilient to future shocks we say we are concerned about avoiding or mitigating. The fiscal rules, as they stand, will still require a general government deficit not exceeding 3% of GDP and a debt-to-GDP ratio below 60%. This especially hampers Ireland, due to our skewed GDP figures and other circumstances. We believe the fiscal rules have to be reformed to take account of the need for countries like Ireland, with low levels of general government expenditure, to catch up on housing, transport, health and education and to invest in climate adaptation and mitigation over the next ten to 20 years.

The sensible option - indeed, the only option - available to us in 2012 when we were considering the fiscal treaty bears little relationship to the needs and demands of 2021, 2022 and beyond.

I would welcome the Minister of State’s views at the conclusion of this debate on where the Government stands on the review of the fiscal treaty rules and whether he believes they should be reformed to allow Ireland to do the things we all say this country needs to do in the future.

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