Lucinda Creighton (Dublin South East, Fine Gael)

I thank the House for the opportunity to brief it on the European summit that took place on Monday. I appreciate the opportunity for a good exchange, and to date the exchanges have been robust, interesting and constructive in this House. I specifically want to brief Senators on the new treaty on stability, coordination and governance in the economic and monetary union.

I previously briefed this House following December's European Council meeting and I hope to continue this practice as time goes on. I am strongly of the view that the Houses of the Oireachtas have a critical role in ensuring that EU issues are properly communicated to the people and properly scrutinised and debated in the Houses. Such communication is really important as we deal with complex and difficult issues. In the programme for Government, drawn up 11 months ago, the Government recognised that there is a need for a marked step-up in engagement with the Oireachtas on key issues arising at EU level. Senators will be aware that this commitment is being taken very seriously by the Government and we are delivering on those words. My presence in this House is an element of delivering on that.

Understandably, there has been a great deal of interest, including here in the Oireachtas, in the contents and indeed in the form of the intergovernmental treaty agreed by leaders last week. There has, however, been considerable misrepresentation of what is contained in this treaty so, at the outset, I will set out as clearly as possible for the House the main elements contained in the new treaty. They include the introduction of a "deficit brake" at national level, which will require member states to have an automatic correction mechanism in their national laws, preferably at constitutional level, which ensures they abide by the requirement for countries with debt in excess of 60% of GDP to maintain budgets in balance or in surplus. There is also a restatement of the pre-existing obligation in EU law to have a "debt brake". This requires countries with debt in excess of 60% of GDP to reduce it at an average rate of 1/20 per year.

There is a requirement for countries in the excessive deficit procedure, as set out in the EU treaties, to have a "budgetary and economic partnership programme", the content and format of which is to be defined in EU law. There is an agreement among the countries signing the new treaty to support Commission recommendations in regard to a country's deficit under the EU excessive deficit procedure unless a qualified majority is opposed. This undertaking effectively reverses the voting rule under the treaties and is sometimes called reverse QMV.

It will be possible for a signatory of the new treaty to be brought to the European Court of Justice if its national law is regarded as not complying with the requirements of the new treaty regarding the establishment of the national deficit brake. The court has an ability to impose fines if a signatory ignores its judgment in this regard.

There is a commitment among the signatory countries to work towards an economic policy that fosters the smooth functioning of the economic and monetary union and a statement that they stand ready to make active use of enhanced co-operation, as provided for under the EU treaties, whenever appropriate and necessary. New arrangements are set out for the governance of the eurozone, including provision for at least two euro summit meetings per year, at the level of Head of State or Government, at which the Taoiseach will represent Ireland.

Particularly important for the Houses of the Oireachtas is the fact that the new treaty provides for a conference of representatives of the relevant committees of the European Parliament and national parliaments of countries participating in the treaty to discuss budgetary policies and other issues covered by the treaty. There are arrangements for the treaty to enter into force on 1 January 2013, once 12 euro area signatories have ratified it according to their national requirements. Countries will then have a year in which to transpose measures into national law.

The new treaty concludes with a provision that, within five years at most, following entry into force, the necessary steps will be taken with the aim of incorporating the substance of the EU treaty into the EU's legal framework.

Very significantly for Ireland and other countries currently in stabilisation programmes, it is made clear in the preamble to the new treaty that none of its provisions is to be interpreted as altering in any way the requirements of a stabilisation programme such as Ireland's EU-IMF programme. The preamble also contains a statement that access to the European Stability Mechanism is linked to ratification and implementation of the treaty's provisions. This is done on the not unreasonable basis that if a country is to have access to Europe's permanent support programme, the ESM, partners will have a reasonable expectation that the country will be committed to a measured and responsible approach to deficits and government debt.

Throughout this intensive and quite rapid negotiation process, Ireland negotiated to secure its priorities an outcome that reflected Ireland's particular position as a programme country; an outcome that ensured that the measurement of structural deficit would make sense for all member states, including small open economies such as that of Ireland; and an outcome tied as closely as possible to the existing EU treaties and law. On each of these points, our interests were addressed. I pay tribute to our team of senior officials, drawn from a range of Departments, on their sterling work on defending Ireland's interests throughout the negotiations, which stretched right across the Christmas and new year holiday period. These officials have, in the very best tradition of the public service, promoted and defended Ireland's interest throughout. It is appropriate to reflect on this and acknowledge it in the Chamber.

I have outlined the main elements of the new treaty. I now want to touch briefly on what is not encompassed by it. It is not an austerity treaty, as some voices in these Houses and beyond have claimed spuriously. The treaty states nothing at all about how tax should be raised or about how much tax each member state should raise, nor does it state anything about how or how much each member state should spend. All it calls for is an equilibrium between income and expenditure to be moved towards and maintained. That is already a stated objective of the Government. Any other approach is, regrettably, unsustainable. Each member state needs to pay its way in the world. Everybody, no matter how big or small his budget, knows the basic tenet that, over the medium term, one's income should cover one's outgoings. Anything else is simply a recipe for compounding the spiralling of debt, which is not something we should or could aspire to.

Very regrettably, today's debt cannot be magicked away by some sort of financial wizardry. If we keep adding to our debt in ever-increasing volumes to maintain unsustainable Government deficits, we will simply be borrowing from tomorrow and placing an added burden on generations to come in paying down our debts. If we keep adding to our debt in ever-increasing volumes in order to maintain unsustainable Government deficits, we are simply borrowing from tomorrow and placing an added burden on the generations to come in paying down our debts. That is not the basis for intergenerational solidarity and our children and grandchildren will certainly not thank us for it. We have a responsibility to sort this out now.

For all the attention it is receiving in Ireland and elsewhere, this new treaty is not a major departure from the EU treaties and existing EU law. Most of what is contained in the treaty, including the need for balanced budgets and sustainable debt already exists within the EU. What this treaty does is bring these approaches into sharper focus and tighten up some of the rules. What is genuinely new is the need for national legislation to implement the deficit brake. Of course, this was envisaged already in the programme for Government and the legislative programme and in that sense it is nothing new for us.

None of the provisions in this treaty, new or pre-existing, should cause any concern for a country like Ireland. The requirements placed on us by the EU-IMF programme go considerably further than what is envisaged in this treaty. What this treaty will do is level the playing field so that all member states, no matter how big or powerful, will in future be held to account just like everybody else. Every Member in this House should be aware at this stage that this is not what was happening under the pre-existing arrangement. Essentially, rules were there to be broken, and the first offenders were the larger member states, not the smaller ones. The automaticity that now applies under the terms of the new treaty will benefit small member states and ensure that all countries, big and small, must play by the rules. This is a really important development and, I reiterate, it is good news for Ireland. We are already delivering on our commitments, on time and in full. That is now acknowledged internationally, including by euro area leaders last week. What is good for Ireland is an arrangement whereby all member states play by the rules and are seen to do so. That will bring credibility to our common currency and stability to the financial markets. It is on this basis that I believe this treaty will be good both for Ireland and for Europe.

However, nobody has suggested, even for a moment, that this new treaty is the whole story. Clearly, it is not. It is a piece of a puzzle. Europe's response to the current crisis has been multifaceted. In addition to this treaty, we have established the EFSF, from which Ireland currently draws its funding. Its permanent successor, the ESM, has now been put in place and is due to enter into force in the middle of this year, a year ahead of schedule and without a reference to private sector involvement, PSI, which would have hindered our efforts to return to the financial markets. At the same time we have put in place the European semester which is overseeing the implementation of structural reforms set out in the national reform programmes provided by each member state.

Europe has also been conscious of the need to put in place robust and convincing firewalls in order to prevent detrimental spillover effects from one member state to another. This crisis has underlined for all that in a currency union what happens in one member state can have very serious repercussions on all the others. The level of interconnectedness is now extremely pronounced. It is very welcome that leaders reaffirmed last week they would return to reassess the adequacy of the overall ceiling of €500 billion of the EFSF and ESM when they next meet in three weeks' time. The Government has been consistent in advocating that firewalls in the euro area be as strong and as credible as possible.

The other element which is now being acknowledged as mission-critical among Europe's leaders is the need for a very sharp focus on sustainable growth and job creation. The credibility of all these efforts to get through the crisis will rest, rightly, in the minds of our people, on our ability to deliver a return to economic and job-creating growth. To this end, it was very welcome that the main thrust of the discussions among leaders last Monday was on stimulating employment, especially among young people, completing the Single Market and boosting the financing of small and medium-sized enterprises. The Taoiseach was invited by the European Council President, Herman Van Rompuy, to introduce the discussion on support to the SME sector. His intervention was extremely well received by his European colleagues and set out the extensive range of measures the Government is taking to try to improve the life of SMEs in Ireland, including through the forthcoming jobs action plan, the partial guarantee scheme, the micro financing loan fund and the strategic investment fund. The SME sector is the very lifeblood of our economy and of the economies of our European partners.

Across Europe, they number more than 23 million companies, which is staggering. Their potential to drive sustainable job creating growth is unmatched and the Government is strongly committed to supporting and facilitating that engine of enterprise.

The Taoiseach also highlighted the steps being taken to ensure the economy gets a return for the vast sums committed to recapitalise our banking sector, including through monthly monitoring of lending targets. The Government is pursuing this issue rigorously and we are determined to achieve results.

Ahead of last week's informal European Council meeting, Ireland joined a number of like-minded member states to submit two papers - one which identified steps with potential to deliver growth and the other on the digital Single Market. These papers formed important inputs into the outcome statement leaders eventually agreed.

The Government has been completely committed to proactively pushing the jobs and growth agenda at home and also in Europe. Steps being taken both nationally and at European level must support and complement each other. There is an appreciation among European leaders that this needs to be done and this issue is firmly fixed on the agenda of future European Council meetings.

Before concluding, I want to address one issue which has been generating a great deal of heat, whatever about light, since last week's meeting of European leaders, namely, the issue of how Ireland will ratify the new intergovernmental treaty. I confirm to the House that the Government has sought the formal advice of the Attorney General on what will be required for Ireland to ratify this new treaty. The Attorney General is giving the legal implications of the treaty careful consideration and she will advise the Government in due course.

As regards the question of the holding of a referendum on this treaty, the Government has been completely clear. If the treaty is not compatible with our Constitution, a referendum will be held. This House can be assured that whatever path towards ratification is required, the Oireachtas will be fully involved in the process. There is nothing undemocratic in proceeding to ratify this treaty through the Oireachtas, should that prove to be what is required. Our system is a parliamentary democracy, which is clearly enshrined in Bunreacht na hÉireann. In the vast majority of cases, international treaties are ratified without recourse to a referendum. Our tradition and practice in this State has been to have referenda only when it is necessary to amend Bunreacht na hÉireann and we have no intention of deviating from that.

It is regrettable in the extreme that Opposition parties, groupings and individuals are tripping over themselves to call for a referendum, even before advice is received by the Government on this point. It is most unfortunate that, on an issue on which Ireland has a vital national interest, many of those in opposition are attempting to score cheap and populist political points. It is sad that for many of those Opposition voices, Ireland's interests seem to take a back seat to their own narrow domestic political agendas. The Government will not adopt such an approach.