Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Question 35: To ask the Minister for Finance the position regarding the pact for the Euro agreed at the recent meeting of EU heads of State; the implications for member States in terms of their ability to decide their own economic policy; and if he will make a statement on the matter. [6645/11]

Michael Noonan (Limerick City, Fine Gael)
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On 25 March the European Council adopted a package of measures to respond to the crisis, preserve financial stability and lay the ground for sustainable job creating growth. The euro area Heads of State or Government also adopted the euro plus pact to complement these measures to further strengthen the economic pillar of EMU and achieve a new quality of economic policy co-ordination, with the objective of improving competitiveness and thereby leading to a higher degree of convergence. Bulgaria, Denmark, Latvia, Lithuania, Poland and Romania joined all of the euro area member states in adopting the pact.

The primary focus of the euro plus pact is on areas that fall under national competence and which are of key importance in increasing competitiveness and avoiding harmful imbalances. As pointed out by the European Council, competitiveness is essential to help the European Union grow faster and more sustainably to produce higher levels of income for its citizens and preserve member states' social models. The pact rests on four guiding rules. First, it will be in line with and strengthen the existing economic governance in the Union, while providing added value. Second, it will be focused and action oriented and will cover priority policy areas that are essential for fostering competitiveness and convergence and concentrate on actions where the competence lies with the member states. Third, each year concrete national commitments will be undertaken by each Head of State or Government and progress will be monitored on a yearly basis. Fourth, the pact will fully respect the integrity of the Single Market.

In practical terms, the central element of the pact is that every year each member state will be responsible for choosing the specific policy actions that it considers are necessary to achieve the goals of fostering competitiveness, fostering employment, contributing further to the sustainability of public finances and reinforcing financial stability.

The euro plus pact is a positive development for the European Union and Ireland. We are a member of the European Union, particularly the euro area, and benefit significantly from such membership in many ways. The Union and Ireland will benefit further from co-ordinated efforts to improve competitiveness and sustainable economic and employment growth. While encouraging best practice and benchmarking, the pact is predicated on each member state taking ownership of and responsibility for its commitments and presenting the specific measures it will take to achieve the goals I have outlined. That is a sensible way to proceed and will benefit us all in the future.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The Government has rightly and justifiably criticised the previous Government for its policy failures and actions which contributed to the property bubble and crash, the banking crisis and so on. However, while the Government may be able to excuse itself from what the previous Government did, it is signing up to a pact which will be as destructive of our democratic right to control our economic policy as the IMF-EU package. The pact, essentially, hands over control of economic policy in this and every country in the European Union to the European Commission and gives it power to decide on an annual basis what it calls "country specific" policies through which it will set out in key areas of economic policy what we must do. We will have to do what is proposed and the Commission will impose penalties on us if we do not. Is this not a handing over on a permanent - not just a temporary - basis of control of key economic issues? Is it not amazing that we are doing this in a situation where the general outline of the economic priorities set out in the euro pact perpetuates the same failed economic doctrine that led to the financial crisis in Europe - a constant obsession with what Mr. Nyberg rightly called in his report the "naive belief in the efficiency of markets"? It is still all about us being forced to accept the efficiency of markets model to dictate what happens to the economy, which means austerity, cutbacks and privatisation.

Michael Noonan (Limerick City, Fine Gael)
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I do not think the Deputy and I will have a fruitful interchange because our philosophic positions are diametrically opposed. The European Union is good. In general I agree with the policies being pursued and believe the future of our citizens lies in being at the heart of the European Union. I am not alone in thinking this. The Deputy will have noticed that when the socialist experiment failed in eastern Europe, everybody there queued quickly to join the European Union. They have now all joined. The same is happening in North Africa where we have the Arab Spring and democracy is breaking out at long last in Arab states. The secondary objective is to have democratic governments and join the European Union or have trade relationships with it as quickly as possible.

I do not agree with the premise that underpins the Deputy's question. The objectives I set out are ones to which we should subscribe because they are the route back to full employment, economic growth and a good lifestyle for the people.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I supported the revolution that led to the overthrow of the dictatorships in eastern Europe and support the democratic revolutions in the Arab world. It is precisely because of my commitment to democracy that I am worried about the pact for the euro, on which the Minister has not responded. This is not about his view of my ideological position but about whether there is a recognition on his part or on that of the European Union of the key responsibility for a particular economic philosophy that let the banks to run riot and cause the economic crisis. It is not me who is saying this but Mr. Nyberg who said the financial crisis resulted substantially from the naive belief in the efficiency of markets. Why are we signing up to a pact that will lock in and copperfasten the naive belief in the efficiency of markets to the economic perspective of the European Union and which will force us, regardless of what the Government or the people think, to subscribe to that doctrine, particularly given its role in causing the financial crisis?

Pearse Doherty (Donegal South West, Sinn Fein)
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The Minister has said the Government supports the pact for the euro. Does he support wholeheartedly the pact which states the European Commission will impose financial sanctions on member states which cannot meet the debt to GDP ratio? Has he asked his Department to carry out any risk assessment of the cost to the State if we cannot meet the targets set under the pact? Under the pact debt sustainability will be monitored and if it is recognised that a country is not on the pathway to debt sustainability, creditors will be engaged with. Twelve days ago the Minister rightly was bullish when Irish sovereign debt yields - the Irish sovereign debt ten year bonds - were starting to decrease. However, he must acknowledge that the percentage figure is now at 10.4% or 10.5%. It is higher than it ever was. The markets are telling us that we are on a collision course with debt unsustainability. Should we not look at the pact and seek to have our debt renegotiated now, instead of waiting to post the date set down in the pact? Has the Minister carried out that assessment of the financial sections?

Michael Noonan (Limerick City, Fine Gael)
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The Deputy has introduced a different set of issues. The pact has four objectives. It wants to foster competitiveness; I see nothing wrong with that from a citizen's point of view or from the economy's point of view. As its second objective it wants to foster employment; I do not see any problem with that. Does anyone in the House see a problem with that?

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Was competitiveness not responsible for the banking crisis?

Michael Kitt (Galway East, Fianna Fail)
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An tAire without interruption.

Michael Noonan (Limerick City, Fine Gael)
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The third objective is that the pact will contribute further to the sustainability of the public finances. Every time Deputy Doherty gets up to speak he lectures me on sustainability so I cannot see how he could have any problem with that objective of the pact.

The fourth objective of the pact is to reinforce financial stability. I cannot see why everyone in this House cannot sign up to the four objectives of the pact because they seem to be very reasonable objectives.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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People's wages.

Michael Noonan (Limerick City, Fine Gael)
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Achieving them might be a harder day's work but as objectives they should be fine by all of us.