Alex White (Labour)

I welcome the opportunity to debate last week's European Council meeting. It was only a matter of time before the emergence of issues regarding the proposal on a mechanism, whether it is called a supervisory mechanism or something else, for budgetary policy across the Union. It took no prescience on the part of any Senator to know that the proposal was being flagged as long as six months ago, certainly during our discussion on the agreement of the stabilisation mechanism in May. The supervision and stabilisation of budgetary policy across the Union were always going to emerge. That proposal has now been made.

Some commentators, including The Economist, seem to believe this all arises from a fear of judges, a fear that can be found in this jurisdiction currently, but particularly the German Government's fear of its constitutional court, what that court might do and what decisions it might make in terms of the constitutionality, pursuant to German law, of the €750 billion temporary rescue fund agreed in early summer. There seems to be a continuing uncertainty regarding the attitude the court is likely to take when the issue is fully open before it. I do not know whether the Minister of State judges the strong position taken by the Germans last week as relating to that Government's apprehension about the court's decision on such funds. The argument is that such funds are ultra vires or even contrary to those provisions of the treaties which stand against bailouts. There is a case to be made for the fund in question not falling foul of the treaties, but there is some residual uncertainty regarding the question.

The question is whether what was agreed last week will be a sufficiently durable halfway house that will introduce a robust mechanism, one which will work and which people can see has some value, or a wholesale revision of the treaties. The latter would have implications, not least of all in this country in terms of the question of reopening and amending the treaties or introducing new treaties. The Government would need to decide how extensive those proposals would be. Last week, the Taoiseach stated that whatever changes would be intendant on these proposals would be relatively minor and would not require an amendment. He could not be definitive, although he seemed to be suggesting that we did not need to view the issue in those terms. We all must remain somewhat sceptical in this regard. It is not that I disbelieve the Taoiseach. Rather, it is not possible to be definitive until we see the precise proposal.

From last week, the bottom line is that there is nothing particularly decisive that the Seanad must debate, other than that an issue which has been opened is potentially difficult for the entirety of the EU. It is the opposite side of the coin as regards being in the euro and the Stability and Growth Pact. We have seen their considerable benefits, not least by way of the significant amounts of credit that flowed into the country over a period of eight to ten years. It is easier to come to the conclusion in retrospect that it was never going to be the case that this situation would continue without any impact on the financial stability of the currency.

Unfortunately from our point of view, recent days and weeks have placed us at the vanguard, although not quite of the defence of the euro. Where there is a challenge or risk to the euro or a questioning of its stability as a currency, Ireland is at the heart of the debate. No one takes any pleasure in this and everyone, the Government in particular, is concentrating on what restorative measures can be taken in the short term.

It is not something that is particular to this country, although matters are especially bad in Ireland. For example, take the excessive deficit procedure. I am not sure how accurate the list before me is, but practically every country in the eurozone is in the excessive deficit procedure. Not a single country is not. I do not say this to minimise our problems, as we are in the most acute situation. Our deficit is huge and the impact of getting to 3% by 2014 will be more severe than in any other country. I understand that three countries have the 2014 deadline, namely Ireland, Greece and the UK. The UK is not in the eurozone, but it appears on this list, so I presume the decision in that respect is that the UK must make its corrections by 2014-15. However, each of the other countries finds itself on the list to a greater or lesser extent.

We were never going to be able to avoid the moment in which the Union would need to debate how to put in place the rest of the package of a unified currency. One could not just have a flow of credit and all of the pursuant bounties without there being some controls at the other end. A considerable challenge for the Government is ensuring that countries like Ireland are treated fairly and in a way that does not require us to take budgetary steps that are so severe as to choke off the possibility of any resumption in real growth. The Government must make this judgment call. The Government side will probably say I am in a position to be able to second-guess that. There is a judgment to be made, even in regard to the budget, as to whether €6 billion is a figure we can withstand in terms of the survival of our economy. It is not an exaggeration to put it in those terms. The proof of the matter, as I reminded the House on the Order of Business, is that only two short weeks ago, on 22 October, it was reported in newspapers that the clear view of the Department of Finance was that €4.5 billion was the correct figure. Some individuals have called for an adjustment of the order of €7 billion. Others have gone even higher. I take it the Government chose the figure of €6 billion because it judged that was as far as it was possible to go without causing long-term damage to the growth prospects of the economy. Some of us differ on that figure and believe it is beyond the level at which we can sustain matters. These are the kinds of debates we must have in this country, as we must realise the terrible impact that cutbacks in services, in particular, will have on ordinary people. I am confident that when these issues are debated at the macro-European level, where the talk is of adjustments for countries and economies, periods of four years and many billions of euro, the politicians at that level will remind themselves what they are really talking about, namely, the lives of individual citizens, the effects of these macro decisions and the often very adverse impact they have on people's lives. That is where the debate must take place.

As to the way what was agreed last week at the European Council will play out, we simply cannot say. It is important we note the meeting took place and this process is in place. I hope the Minister of State, Deputy Roche, will take the opportunity to return to the House when there is more certainty about the direction the process is taking and the kind of impact it is likely to have on us and others and that we can have a more definitive discussion about the position at that stage.