Dáil debates

Tuesday, 19 January 2016

Ceisteanna - Questions (Resumed)

Economic Management Council

5:20 pm

Photo of Micheál MartinMicheál Martin (Cork South Central, Fianna Fail)
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4. To ask the Taoiseach if the Economic Management Council has the responsibility of preparing Ireland's plans for a possible British exit from the European Union; and if he will make a statement on the matter. [40015/15]

Photo of Gerry AdamsGerry Adams (Louth, Sinn Fein)
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25. To ask the Taoiseach the role of the Economic Management Council in preparing the Government’s response to the plans of the British Prime Minister, Mr David Cameron, for a referendum on British membership of the European Union; and if he will make a statement on the matter. [44677/15]

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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I propose to take Questions Nos. 4 and 25 together.

The Economic Management Council has been established with the status of a Cabinet committee and has four members: the Taoiseach, the Tánaiste, the Minister for Finance and the Minister for Public Expenditure and Reform. The Council's role is to manage the Government's programme and the statement of Government priorities in respect of economic planning and budgetary matters and the integration of the work of Departments and agencies in these matters. It is not appropriate to answer questions about proceedings because it is a Cabinet committee and is protected by the Constitution, although we have had discussions.

Work has been under way across Departments for some time to ensure we best understand the various issues at stake in the EU-UK issue. The Department of the Taoiseach has a leading role given the whole-of-Government dimension of the issue.

In this context, a small unit was established in the Department in May 2015 to deal specifically with British, Irish and Northern Ireland affairs. The Cabinet sub-committee on European Union affairs has oversight of the EU-UK issue and continues to examine it closely. Obviously, these matters are discussed, but there is an oversight responsibility and the Cabinet makes the decision at the end of the day.

5:30 pm

Photo of Micheál MartinMicheál Martin (Cork South Central, Fianna Fail)
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I thank the Taoiseach for his reply. My question is related to Brexit, whether the Economic Management Council has a responsibility for preparing Ireland's plans for a possible British exit from the European Union and asks whether the Taoiseach will make a statement on the matter. I take it that he is aware that the Economic and Social Research Institute, ESRI, has confirmed that the potential loss to Ireland could be as much as €4 billion in exports and that this could have an extremely serious impact on the market here. There have already been reports that some companies are becoming risk averse and taking less business risk. Despite Members' earlier conversations on the visit by the Prime Minister of India, the bottom line is that the United Kingdom is still our most important market, particularly for the agrifood industry. In 2013, for example, it bought 50% of Ireland's beef and there were 95 IDA Ireland-backed UK companies based in Ireland. The United Kingdom is also our most important tourism market and the effect of the current favourable exchange rate between sterling and the euro can be seen in certain parts of the country that are benefiting.

When the Taoiseach met the Prime Minister, Mr. Cameron, on Brexit, he asked for Ireland's support. The backdrop to that meeting was the horrific bombings and terrorism in Paris and negotiations on Brexit rightly appear to have been put aside temporarily. Moreover, the migration crisis is also becoming difficult to resolve. However, given the significance of this issue and the potential implications for Ireland of Britain leaving the European Union, will the Taoiseach outline to Members how the Government intends to plan for it? Will he indicate whether scenario planning has been done by the Government on the referendum that will be held in Britain? The ESRI has indicated that there is a possibility of net migration of approximately 60,000 people from the United Kingdom in the event that there is a Brexit and suggests there could be an impact on wages. While the Taoiseach has indicated that a Government sub-committee is overseeing it, has an interdepartmental group been formed with overall responsibility or accountability for this issue? I ask because I get the sense there is not a strong awareness among the public about the potential implications for the economy of Britain leaving the European Union. I would appreciate it if the Taoiseach were to indicate the Government's structured response and the work that has been done to date on it.

Photo of Seán BarrettSeán Barrett (Dún Laoghaire, Ceann Comhairle)
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As time is short, I ask Deputy Gerry Adams to put his questions now.

Photo of Gerry AdamsGerry Adams (Louth, Sinn Fein)
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I understand the Taoiseach may be restricted in the details he can outline, but are there plans to minimise economic disruption in the event that a referendum in Britain results in a vote to leave? Obviously, because our two islands are in close proximity, a decision by Britain to leave the European Union is of considerable interest to us, a point the Taoiseach has outlined in the past. However, given that the exit also may include the Northern state, this is a matter of considerable concern for everyone. As more than €1 billion per week is traded in goods and services between the State and Britain, the consequences of a UK exit for us in this part of the country would be enormous. However, one should also be mindful that for 80 years the physical Border and partition, with its economic, cultural and political outworkings, were a source of enormous dislocation and conflict at times. The Good Friday Agreement has seen a transformation and, as I am sure the Taoiseach has experienced many times, the physical Border is now all but invisible. There is much work to be done to remove economic and political barriers and all of the other legacy issues, but I am sure the Taoiseach will agree that the return of Border controls would be a serious retrograde step. The impact on both sides, along the entire Border corridor, would be detrimental. I also believe there would be an adverse effect on all-Ireland bodies that are part of the Good Friday Agreement. As the Taoiseach is aware, I come from there and it should not be accepted that a decision taken on the island of Britain would have such import for those of us who live in the North. Has the Government sought or will it seek an assurance from the British Government that a referendum vote in the North alone will determine the relationship between that part of the island and the European Union?

Another big issue arises in this regard, in so far as the British Prime Minister has indicated he may introduce legislation to make it clear that the British Parliament is sovereign and that British courts are not bound by the Charter of Fundamental Rights of the European Union. This will have profound implications for citizens in the North and, in particular, our ability to use the Charter of Fundamental Rights of the European Union as a defence against punitive British legislation. All of this is playing out on the Taoiseach's watch. I am aware that another European Council meeting has been set for 18 and 19 February. The meeting last December set the explicit objective of securing an agreement or mutually satisfactory solutions. In the light of this and the timetable set by the European Council and the British Government, will the Taoiseach outline the Government's view on these matters? In addition, does the Government have in place a contingency plan if a Brexit goes ahead?

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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This is a serious matter in the context of challenges facing the country. Obviously, while we must hold a general election in Ireland, Europe faces a number of challenges that will be of highly significant import, of which this is one. Issues such as migration, oil, energy costs, climate change, the impact of the great powers and the situation in the Middle East are not within our control, but they have an impact on this country and its economy. The important point to make to the Deputies who are as interested as everybody else is the detail of the proposals has yet to be tabled in this case. Everyone is cognisant of the potential impact of what might happen when the question is asked of the British electorate whose decision it is to stay in. Britain is our largest and nearest trading partner and the fact that trade to the value of €1 billion takes place across the Irish Sea every week speaks for itself. Obviously, currency fluctuations can have an impact on trade either way in tourism, the hospitality sector, production, manufacturing and exports. While a paper is to be circulated by President Tusk in the near future, I do not know what it will entail and nor do I wish to commit to presuming to know what will be the outcome of the British people's decision. Suffice it to say the Government is sufficiently interested in this matter to be highly public in its support for Britain remaining a strong and central part of the European Union. Ireland has made its decision on the fiscal stability treaty, our entrance to the European Union and commitment to the euro, the eurozone and the Union.

As the Deputies are aware, four clusters or baskets of issues were set out. One cluster pertained to economic governance, which includes moves to prevent non-eurozone countries such as the United Kingdom from being disadvantaged by decisions taken solely in the eurozone. That is a good basis for discussion. I believe the euro area must have the capacity to do what is necessary to ensure financial stability and economic growth. It must also, however, act with full respect for the Single Market which comprises the entire European Union, as well as for the integrity of the Union as a whole, without prejudice to any interest of member states. I consider this to be an achievable goal. The Government appreciates the concerns of the United Kingdom and other non-euro countries in this regard and while this is an issue that obviously requires some serious analysis, it can be dealt with.

A second basket of issues concerns making the European Union more competitive. This includes the completion of the Single Market, better regulation and expediting international trade agreements. Ireland shares quite a number of Britain's priorities in this area and welcomes steps that will give impetus to growth, competitiveness and employment.

The third one concerns steps to enhance national sovereignty. Those steps relate to strengthening the role of national parliaments in the EU as well as addressing the concept of an ever-closer union. We always have had a constructive approach to this proposition and believe that a solution can be found to that particular issue.

The question of migration and welfare is one that is of great concern to people. It is clear what happened in Cologne is appalling. I saw the response from Syrian men and women who said this is not what their country represents. It is a very sensitive issue and something which cannot be condoned in any circumstance but discussions at the December Council showed broad agreement that abuses of free movement should be targeted without calling the principle of free movement into question. I think this is acceptable to everyone and we are supportive of action to achieve it. In addition, we agree that welfare systems should not, in themselves, be a pull factor in encouraging migrant workers to come to any country but any reform would have to have full respect for equality and non-discrimination. At the meeting, President Juncker said the Commission would like to look at a number of options in respect of this category, which is where the real difficulty was being experienced following the Prime Minister's tabling of these issues.

No one here would want to see the common travel area coming under pressure and border controls between here and Britain or Northern Ireland, as rightly pointed out by Deputy Adams. The issue, in so far as Northern Ireland is concerned, is of great importance to us. Deputy Martin referred to the ESRI report which was commissioned by the Department of Finance and published on 5 November. It considered the impact of a British exit on Ireland across trade, foreign direct investment, energy and migration and found that, aside from the UK, Ireland would be the most adversely affected European member state. We should not assume, therefore, that we do not have an interest in this issue.

None of the findings in the report made an Irish case for a British withdrawal from the European Union. We have been very public about our support for the British Prime Minister and Britain's continued membership. A number of other studies are also available which point out the economic, political and social implications of a potential British exit from the EU for Ireland, Europe and Britain. The Institute of International and European Affairs published a study in March of last year which identified key areas that would be impacted. These included trade, energy and foreign direct investment. It concluded that the precise impacts would depend on the trade arrangements that would be put in place to manage bilateral economic relations in the event of a British exit. The key issue is that Britain is our number one trading partner and we are its fifth most important market. The trade is valued at approximately €1 billion per week.

Deputy Adams raised the question in Northern Ireland. As I stated when I spoke to the Confederation of British Industry, the ESRI found that Northern Ireland could be the most adversely affected region of the UK in the event of a British exit. This is extremely worrying on a number of levels. The EU has been an important if, perhaps, underestimated enabler of peace in Northern Ireland. It provided €2.4 billion in funds over the period 2007 to 2013 to help Northern Ireland overcome the challenges faced by a peripheral region emerging from conflict. Common membership of the EU project is part of the glue that holds that transition process together and now is not the time to weaken a cohesive, stabilising influence and outward focus that shared EU membership brings to Northern Ireland.

While we are conscious of these things, our best opportunity at the moment is to work with British industry and British needs in this country to explain the importance and the potential implications of a decision that might be made by the British people. I must focus on an outcome from the February meeting of the European Council and then the British Prime Minister's making his case to the British people. In the meantime, we must continue to work on the clear opportunities for trade in all of these areas in the future.

Written Answers follow Adjournment.