Seán Connick (Wexford, Fianna Fail)

Much of the debate has been positive and Senators have touched on many of the key economic and budgetary challenges facing us which, as a member of the euro area, we must work to resolve. The debate captured the range of political views on how we should address these fundamental challenges linked to our participation in economic and monetary union. There is, however, a shared understanding of the nature and gravity of these issues. This collective appreciation has helped to enhance the discussion and wider understanding around these issues.

As an active participant in the various European institutions and as members of the euro area, we have a responsibility to provide support and demonstrate solidarity with our partners. In these challenging times this is particularly the case, as the collective strength of the euro area economic bloc underpins our ability to protect the integrity of both the euro area economy and euro currency.

I also wish to reiterate that the strategy which determines this Bill is designed to safeguard the fundamental financial stability of the single currency area. This is an essential prerequisite to secure our economic recovery, but also to protect the standards of living that we all enjoy.

I welcome the fact that most of the Senators who spoke were broadly supportive of the Bill. This, above all, is a time for unity and shared resolve in the national Parliament, as the impact of the situation in Greece on international bond markets in recent weeks clearly demonstrates that what happens to our euro area partners has a large influence on our domestic economic interests. On behalf of the Minister for Finance, Deputy Brian Lenihan, I thank Senators on all sides of the House who have made such a positive and constructive contribution to the debate on the Bill. It is reassuring in times of necessity that we can forge consensus in the best interests of the country and the European Union.

The legislation will provide a statutory basis for our contribution to the euro area financial support facility for Greece. There are understandable questions about the financial implications of the entire funding facility. However, built into the entire process are strong financial safeguards to ensure Irish and European taxpayers will not be financially disadvantaged through these arrangements. It also has the full reassurance of the European Commission that member states' funding costs will be met in full. Adjustment mechanisms are included to ensure a rebalancing in favour of any member state which might incur higher funding costs than those being charged to Greece. Our overall contribution to the euro area loan facility is anticipated to be about €1.3 billion, subject to a precautionary upper limit of €1.5 billion. This will take the form of loans to be repaid as the Greek economy recovers and will not impact upon our general government deficit position. Our assistance, in the form of repayable loans, will be centrally channelled through the European Commission as part of the agreed euro area package, in conjunction with the International Monetary Fund. The loan facility comes with strong conditionality attached and will require the Greek authorities to address their current fiscal and economic problems.

Looking at the impact of the loan facility programme upon the Greek authorities, they have agreed to introduce a fiscal austerity programme, with the aim of reducing the deficit to below 3% of GDP by 2014. Public spending cuts of €30 billion will be implemented during this period. In order to reduce its debt-to-GDP ratio, Greece will be obliged to maintain a primary surplus on its budget of at least 5% for the next decade. It will be subject to strict monitoring and continuous assessment by multilateral agencies as part of the conditions attached to the loans. These are, by any measure, very strict and demanding conditions and Senators can be assured that they will be subject to ongoing monitoring and assessment.

Looking beyond our immediate difficulties, ECOFIN Ministers have decided to establish a European financial stabilisation mechanism, with a total value of up to €500 billion, to be funded by the European Union and the euro area member states. It will be supplemented by extra funding from the IMF. The mechanism was devised in the context of a perceived background risk of contagion from Greece to other member states. It provides for financial support for member states in response to difficulties caused by exceptional circumstances such as those being experienced by Greece. In the context of providing for this wider European financial stabilisation mechanism, it is our understanding that enabling legislation may be required.

In conjunction with the development of the mechanism, EU finance Ministers have committed to ensuring fiscal sustainability and enhanced economic growth across all member states. Linked with this objective, the European Commission has presented various reform proposals to reinforce economic co-ordination, including ones to ensure the budgetary policies of member states are consistent with the economic and financial stability of the euro area. As stated, these will form the basis for further discussion in conjunction with the task force being chaired by EU President Van Rompuy. Ireland will be actively engaging with this group. I allay the concerns to which some Senators have alluded, either explicitly or implicitly, in relation to the proposed budgetary reforms. The proposals mark the beginning of discussions on these issues. They are designed to help member states to be better prepared for future crises and as such, should be welcomed. In common with proposals from the European Commission, the process has been designed to float ideas and stimulate debate. The proposed enhanced budgetary surveillance provision has been designed to improve dialogue in the Eurogroup on such issues and is, of course, subject to the treaty provisions. Any policy proposals arising from this process will have to be ultimately agreed by member states and in this context, should not be misunderstood as a loss of Irish sovereignty.

Other initiatives upon which the Council has decided include regulatory and supervisory reform of financial markets and examining the job of ratings agencies. This is in addition to other proposals will ensure the financial sector will pay its share should there be another financial sector crisis.

As our relations with our eurozone and EU partners have grown ever closer, our prospects as a nation have become more economically, politically and socially interlinked with those of our partners. Essentially, the Bill is about European governments safeguarding the stability of the eurozone. In Ireland we have taken credible steps to address our economic and budgetary problems. We are implementing our own fiscal consolidation measures and sending a clear signal of intent to the international investment community that we will not shirk taking the difficult but necessary decisions to correct the budgetary position. In implementing the decisive expenditure control measures contained in the budget, we are firmly demonstrating our resolve to continue along the path of restoring sustainability to the public finances. Already there are mounting indications that we are beginning to turn the corner and that a hard won economic recovery may be emerging.