Jillian van Turnhout (Independent)

In common with my colleagues, I welcome the opportunity to have this debate in this forum. I also take the opportunity to acknowledge the presence in the Visitors Gallery of Dr. Stephen Kinsella, a leading economist from the University of Limerick, who will provide a report on the debate. Consequently, I will be careful about what I say about economics. I also thank the Library and Research Service for the briefing on the compact treaty it provided for Members last Thursday. However, I will do my best to avoid giving a Cliffs Notes version of the briefing and try to express my current thoughts and feelings on the treaty.

In common with many others, I must make up my mind as to which way I will vote in the referendum. I believe that to a degree such a pronouncement would be premature as one does not yet have all the information required. For instance, neither the timeframe in which the European Commission proposes that member states shall "ensure rapid convergence towards their respective medium-term objective" nor the format of the automatic correction mechanism the Government is examining is known. Consequently, while I look forward to examining the proposed constitutional amendment being drafted by the Government and what exactly will be the question put before the people, without full information one can only look at the compact treaty in the macro sense.

The treaty is not about making new rules, rather it is about enforcing existing rules for the conduct of budget policy already laid out in the Stability and Growth Pact and the six-pack reforms by cementing them into national constitutions or primary legislation. Thus, for the most part, this involves the strengthening of the current framework. The principal twist for Ireland will be one that will disqualify countries that have not signed up from receiving aid from the permanent EU rescue mechanism, the European Stability Mechanism, ESM, from March next year. The key novelty of the agreement is that each country in the eurozone ought to agree that its annual structural deficit shall not exceed 0.5% of GDP and this rule shall be introduced into its legal system at constitutional or equivalent level. However, the specific detail of how the Government plans to introduce these measures at the constitutional or equivalent level is not known. Consequently, it is a matter of striking a delicate balance for us between the compact treaty and the legislation. Perhaps I could send a message to our friends in Europe. While preparing for this debate, I was reminded of a quote from Jean Monnet, the chief architect of European unity and a political economist. He once stated that if one changed the context, one changed the problem. Perhaps our European friends might take note.

In the meantime, however, one must state honestly to the people that a "Yes" vote will not necessarily deliver for us an immediate return to prosperity, any more than a "No" vote will instantaneously bring austerity to an end. I am the first to admit the compact treaty has flaws and is abstract, but, equally, the alternative to its adoption is hardly preferable. One should not sugar-coat the position, as we face the least-worst scenario. The people are sufficiently engaged and have enough savvy to appreciate the reality in which we live. Even were we to reject the treaty, we still would remain legally bound to most of the fiscal discipline measures proposed in the compact treaty under the Stability and Growth Pact and the six-pack reform measures. In essence, the treaty is merely a restatement of our commitments, but from henceforth, other countries also will be expected to fulfil these commitments. However, as was evident in the case of Spain only yesterday, these targets are unlikely to be enforced without a degree of flexibility on the part of the Commission as long as the Government behaves proactively.

I do not believe the treaty will protect us against a repeat of the mistakes of the past. It is a testament to how much money was squandered by the boom years Governments that Ireland's structural deficit only would have run foul of the compact treaty twice between 2000 and 2007. As Michael Taft of Unite has noted "had the Fiscal Treaty been in situ ... it would have made no difference whatsoever to Irish budgetary policy." Rather than being revolutionary, the measures contained within it effectively would mean economic business as usual, if the current times were not so unusual. Rightly or wrongly, we find ourselves in a position in which we no longer have either the opportunity or the resources to institute a Keynesian economics approach. Like Chancellor Merkel's, Swabian housewife, thriftiness is the only tool we have left in our arsenal. The question now relates to whether the terms of the compact are ones we can realistically meet.

By the Government's own estimate, the 2015 structural deficit will be 3.7% of GDP. This amounts to a shortfall of more than €5 billion. That money will have to be made up through at least another two or three more years of very tough budgets after 2015. Thus, to say the commitments in the compact will not lead to further austerity is wishful thinking at best and semantics at worst. The compact will not address the economic needs of the country. What Ireland requires is growth. I am not stating that the compact should address our economic needs but it certainly does not do so. As the Minister of State with responsibility for European affairs, Deputy Creighton, pointed out in this House during a previous debate, recovery is "not simply a question of cutting and cutting, rather by achieving growth over an extended period we automatically reduce the debt-to-GDP ratio". In my opinion, the compact and the provisions connected to it do not relate to growth. The latter is an issue we must debate. I wonder if the compact will achieve anything beyond reassuring the markets and ensuring our continued access to funding from the ESM. Perhaps that is not a bad thing. However, we should accept that this is what it is. Let us be forthright with the people and clearly state this treaty is not a panacea for the Irish economy. Nor is it a death sentence. It is a choice between maintaining the ESM safety net or facing the deficit crisis alone.

I concur with what Senator Darragh O'Brien said in respect of the need for an information and awareness campaign. There are many matters on which the people would like to have an opportunity to vote. What we will be voting on is the fiscal compact, however, and not the future of Europe or many of the other issues on which we would like to have a say. Let us be honest, therefore, with the people. It must be remembered that this is not just a compact for Ireland, it is a compact for all the countries which sign up to its terms. Some 25 states, including Ireland, have indicated that they wish to be part of the compact. The rules that will apply to Ireland will apply equally to the other 24 countries.

Let us see how the debate progresses. I look forward to seeing how the Government proposes to deal with the compact, either in the context of the Constitution or through primary legislation. I am also interested in discovering what will be the nature of the question put to the people in the referendum. When I see that, I will decide whether to advocate a "Yes" or a "No" vote in the forthcoming referendum campaign.