Joan Burton (Dublin West, Labour)
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Question 3: To ask the Taoiseach the preparations his Department has undertaken in preparation for the implementation of Ireland's National Reform Programme in the context of the Europe 2020 agenda; and if he will make a statement on the matter. [41649/10]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Europe 2020 Strategy has been adopted as a successor to the Lisbon Strategy for Jobs and Growth. Its goal is to enable Europe to emerge stronger from the current economic crisis as a smart, sustainable and inclusive economy. The strategy addresses the major challenges facing Europe today, including the economic crisis, climate change, globalisation and an ageing population. The June European Council confirmed the five headline targets which will guide member states in preparing and implementing national reform programmes, along with integrated guidelines for economic and employment policies.

An initial draft of Ireland's national reform programme is expected to be submitted to the Commission shortly, with the final version due next spring. Clearly the national reform programme will be strongly informed by the four year plan, which the Government published last week. There have been recent discussions between Irish officials and relevant officials from the European Commission on the draft national reform programme and these discussions will continue concerning the national targets and finalisation of the national reform programme next year. Arrangements for the implementation of the national reform programme will be established following its publication in the new year.

Joan Burton (Dublin West, Labour)
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I understand that the first draft of the national reform programme was due to be sent to the European Commission by 12 November 2010. Will the Taoiseach confirm to the House whether or not such a plan has been submitted? Will the Taoiseach elaborate on the interaction and overlap between the national reform programme and the four year plan? Is the latter plan, in effect, the same as the national reform programme?

There is a reference in the national reform programme to stakeholders - including parliamentary oppositions and civil society - being consulted. Will the Taoiseach comment on whether he proposes to do so?

Brian Cowen (Laois-Offaly, Fianna Fail)
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It was agreed that we would hold back the draft programme until the four year plan was agreed because that was the priority as far as the European Union was concerned. Arising from that work, we can now turn to the draft reform programme, which will incorporate the four year plan.

The five headline targets that have been set out are for employment, research and development, climate change and energy, education and social inclusion. Work is ongoing on the formulation of Ireland's national targets. Targets in some areas are close to finalisation but work remains to be done in other areas. Initial considerations of the national targets will be submitted to the European Commission as part of the draft plan. The final one, to be submitted in the spring, will contain definitive targets for Ireland.

It is clear that some of the targets in the Europe 2020 process will be challenging for us. We are working closely with the European Commission to ensure that national targets are meaningful, achievable and sufficiently ambitious. It is not a requirement that the targets for Ireland should match EU targets. Instead, each member state, including Ireland, is expected to set national targets based on its own particular circumstances. We will continue to engage positively in the process. The targets are not legally binding. However, they are focussed on areas the Government has prioritised and, as such, they are complementary to existing policy. The reform programme will contain an introductory section, a section on the macroeconomic scenario and surveillance and a section on horizontal and methodological issues. National targets will form the centrepiece of the programme and work is ongoing. The reform programme should be seen as complementary to the wider economic strategy.

Joan Burton (Dublin West, Labour)
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In the context of the national reform programme and targets, does the Taoiseach accept the view of the European Commission, given yesterday, that the most Ireland can hope for growth in 2011 is 0.9%, as opposed to the Government's forecast in the four year plan of 1.75%? The Commission's view yesterday is significantly lower than what the Government set out in its four year plan. Does the Government accept the European Commission's view as stated by Commissioner Olli Rehn on the likely growth forecast?

With regard to the Stability and Growth Pact, will the national reform programme have to be in agreement with it? I asked the Taoiseach about the role of stakeholders specifically referred to in the plan, including national parliaments, Opposition parties and stakeholders in civil society. The reform programme strongly suggests all of these should be consulted. Where stands the reform programme and the four year plan in respect of the European Commission's revised estimate for Irish growth at 0.9% if the four year plan has priority?

Brian Cowen (Laois-Offaly, Fianna Fail)
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Various targets and scenarios are set out by various organisations, including the European Commission, the OECD, the IMF, the ESRI and the Department of Finance. One can consider a range of growth scenarios. The assumptions we made in respect of our plans reflect a knowledge of the flexibility of the Irish economy, its resilience and its broad base. In many cases, the models used in continental Europe, which has a different demographic profile, do not take into account the flexibility of the labour market in this country compared to some continental countries. That has always been a difference in the modelling that takes place.

Regarding engagement with various stakeholders, the process represents a framework at EU level, which allows for a structured approach to measures and initiatives likely to be needed over coming years. In this context, engagement with the social partners is desirable and worthwhile. Initial contacts began before the summer break, when meetings took place at official level. These were an opportunity for social partners to express the views of their sector on the strategy as was emerging at that time. A number of them have recently made written submissions in respect of the preparation of Ireland's draft national reform programme. As the Government continues to prepare that programme for submission next April, I anticipate further engagement with social partners and other stakeholders.

With regard to engagement with the Oireachtas, a cross-departmental delegation of officials discussed the Europe 2020 strategy with the Oireachtas Joint Committee on European Affairs on 3 June. I expect further engagement with that committee early in the new year. Regarding engagement with regional government, officials from the Department of the Taoiseach and the Department of Finance attended the joint meeting of Ireland's representatives on the Committee of the Regions and the Association of Irish Regions last Friday. Officials briefed delegations on the process and invited written submissions. We anticipate further consultation with regional interests in the new year.

Joan Burton (Dublin West, Labour)
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When he met the Opposition parties some ten days ago, Commissioner Olli Rehn indicated that he accepted the Government's growth forecast of 1.75%. Yesterday, very shortly after he made that statement, he said he had changed his mind and his view of Irish growth is that it will be 0.9%. Given that the Commission is the one who appears to be acting very toughly in terms of the bailout for the banks and the cost to this country, can the Taoiseach just brush aside Commissioner Rehn's view that growth next year will be only 0.9%? Can he simply put that down to differences in calculating growth between the mainland of Europe and the island of Ireland? When Commissioner Rehn came to Dublin, he met the Opposition parties. He met the Government as well. He said he was standing by the Government's growth forecasts but yesterday he repudiated those forecasts and cut them in half. Is it sufficient simply to say that he counts in a different way? It seems very odd to me. It also seems quite damaging.

Séamus Kirk (Louth, Ceann Comhairle)
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I urge the Deputy to ask a short supplementary question, as promised.

Joan Burton (Dublin West, Labour)
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How does one square that circle? What growth forecast will the Government use for the national reform programme? Does the Government take the Commission's view on the Stability and Growth Pact or does it pick whatever it feels like picking?

Brian Cowen (Laois-Offaly, Fianna Fail)
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It is not a question of picking what one feel's like picking but of looking at the various assumptions that are made in various forecasts. As the Deputy is aware, forecasts are based on various assumptions. Whether one agrees with them all or not depends on what one's experience of the economy has been. Prior to this crisis, in the previous ten or 15 years the Department of Finance on annual averages has been as close to actual outcomes as anyone else. By definition, forecasts are forecasts. The four year plan has been adopted by the Government. It has been agreed as the basis for the reforms that must take place and the fiscal policies that have to be implemented. We have signed up to the targets of €6 billion by 2011 and €15 billion by 2014 that have been outlined in it. The issue that arises from the programme, as the Deputy is aware, is that while doing that, if at the end of that process - these programmes are subject to annual review so this clearly will be a matter-----

Joan Burton (Dublin West, Labour)
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Quarterly review.

Brian Cowen (Laois-Offaly, Fianna Fail)
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There is an annual review in the programme itself and surveillance and monitoring on a quarterly basis.

Joan Burton (Dublin West, Labour)
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Very detailed monitoring.

Brian Cowen (Laois-Offaly, Fianna Fail)
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Yes, of course.

Joan Burton (Dublin West, Labour)
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A policeman riding shotgun.

Brian Cowen (Laois-Offaly, Fianna Fail)
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It will be a matter for Governments between now and the end of the programme to decide if they wish to take up the funding based on the terms and conditions that apply. That is the issue. One cannot predict too far into the future given the volatility of bond markets at the moment but one would hope at some stage that some degree of normality would return and we could go back into the markets at a time when rates will better than are now available from any source. These are issues that must be considered and dealt with in the appropriate way as we go forward, but on the basis of providing a security of funding for the country in order to find the time and space in which to deal with the reforms that must be implemented for the purpose of bringing financial stability and obtaining a way forward that will provide us with sustainable growth. There is no doubt that based on market conditions at present that this is the best option for the country. The forecasts that we have set out are based on the Department of Finance's proposals having listened to all and looked at all of the issues. We must proceed along those lines. There have been times when the forecasts from the Commission have proven to be correct or incorrect. It depends on market conditions and many other factors. We have seen very fast moving issues in the past 12 months which confounded all of the best forecasters.

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Three of the Europe 2020 goals are reducing the number of Europeans living below the poverty line by 25%, in other words by 20 million people, of the 80 million currently in poverty across the European Union, raising the employment rate and reducing the number of early school leavers. How can the Taoiseach square these goals with his Government's intention of cutting social welfare payments and the minimum wage? It is hardly going to assist people getting out of poverty. How can the number of early school leavers be reduced when capitation grants to primary and secondary schools are to be reduced and third level student registration fees are to be increased? How can an IMF-EU deal and a four year plan with no job strategy or stimulus for growth raise the numbers in employment? Everything the Government is about runs contrary to the stated objectives of the Europe 2020 strategy.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I do not agree with the contention made by the Deputy. The policy framework that we are setting out is about stabilising the economy and then moving forward to growth for the economy, albeit recognising that very serious adjustments must be made. A precondition for growth, investment and increased resources for the State is the establishment of a growing economy, which cannot be established if there is a failure by Government to put to rights the financial stability of the State. No one could suggest that an investment profile would be positive if we are not prepared as a country to bring our finances into order.

If one considers our successive budgets, even in difficult times, the redistributive effects of much of what we have done has shown that, up until recent times at any rate, we have been able to provide standards of social transfer that far exceed European averages. If one looks at the progressivity of our tax system, where the top 8% pays 64% of income tax and 40% on working wages do not pay tax at all, it has been the result of a considerable effort made to improve the situation. Regarding the question-----

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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It is the effect of reducing supply. The austerity cuts-----

Brendan Howlin (Wexford, Labour)
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Please, allow the Taoiseach to respond.

Brian Cowen (Laois-Offaly, Fianna Fail)
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The issue is what is sustainable for this country in the present circumstances and how do we ensure that we are in a position to promote policies of social inclusion. That last can only be done on the basis of sustainable finances. If one does not have sustainable finances, what one is really saying to people is that we will maintain the present level of provision for as long as we can but, as soon as we run out of funds, we will have to cut that by 40% or 50%. It is a far better proposition to get a sustainable level going forward and an adjustment over a period of years that would be sustainable and that would still compare quite favourably with our European counterparts.

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