Sean Barrett (Independent)

I welcome the Minister of State, whom I always admire when she comes in to address these sessions. We are honoured by her presence.

I looked up the word "compact" in the dictionary to see what it is and one of the definitions was "a miniature flat vanity case or a refill for it". There are elements of that to this compact, because the miniature flat vanity case or refill is needed because of the design faults in the euro to which we have referred. I hope these design faults are not carried forward into this particular package. It is for that reason I particularly welcome the presence of the Minister of State, because we must get this right. There is no doubt that the faults in the euro on the monetary policy side are what caused the collapse of Ireland on the fiscal policy side and the difficulties which the Minister of State must face. I agree strongly with what she had to say on page six of her speech that 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 generation to come to pay 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. The Seanad has broadly endorsed this approach and as the Minister of State will see, No. 20 on our Order Paper is the Fiscal Responsibility (Statement) Bill 2011, which was discussed here before Christmas.

The problems relate to trying to have legally binding macro-economic rules when the macro-economists themselves are not sure how we adequately define a structural or cyclical deficit. The wisdom of trying to implement the compact in that situation creates a problem of clarity for the Seanad and for the Minister of State and the Government. There are great doubts among economists as to whether what we are doing is possible in either law or economics and as to whether we may end up with an unsatisfactory combination of the two, as we had with problems like the lack of an escape route out of the euro and the one-size-fits-all approach to how to deal with the massive transfers of funds. We have designed economic policies at European level which have had dire impacts on countries because they were not carefully thought out.

The view of Karl Whelan, who has been mentioned, is that this compact could give us a debt-to-GDP ratio of 25% which is a bit theoretical in our case given that we are heading towards a ratio of 125%, but which is felt is too low. Colm McCarthy estimates it could go down to as low as 10%. We could be engaging in unnecessary austerity and stringency. We do not really have an economic consensus on either the deficit brake, the debt brake or measurement issues. We certainly do not want to damage the economy, as happened on previous occasions.

It is important to mention that the flaws in the euro are not recognised and addressed. I can appreciate how this happens. The gestures are that the powers that be are in favour of small and medium enterprises but we should remember that the last time out, we destroyed the banks, which is pretty bad for small and medium enterprises. To correct the faults, we are destroying people's purchasing power, which is also pretty bad for small and medium enterprises. The Minister of State and her ministerial colleagues should stop the clichés and have policies that help small and medium enterprises rather than giving out consolation prizes after we have destroyed the resources of finance and purchasing power of customers.

I welcome the Minister of State's presence in the Chamber and the process that she started, which we began in the Seanad with our fiscal responsibility Bill. It will be a long road and we have quite the journey to travel before we get this right. I assure the Minister of State of our support and assistance to ensure that this can eventually work to correct the problems we inherited from 2008, with the bankruptcy of Irish banks, and two years after when we sought rescue. This is very much a work in progress, as the Minister of State has indicated.