Mark Daly (Fianna Fail)

Perhaps the Senator might receive a prize. I have serious concerns about some of the information given to us by the Department of Finance in regard to proposed elements of this treaty. There was a phrase in the Northern peace process that nothing is agreed until everything is agreed. There is talk of a growth path and a debt writedown but no concrete proposals. We have no guarantee on our corporation tax, despite a guarantee having been received in light of the first Lisbon referendum. As we know, the French are gunning for that and hoping to ensure that Ireland's competitive advantage in regard to corporation tax is negated in the very near future, and there are proposals currently before the Commission that a common consolidated corporate tax base be put in place.

I have serious concerns in regard to the ongoing democratic deficit in this process and statements by German Cabinet members do not help my concerns. When the German Minister for Finance proposes that the Greeks should delay their election by two years and that a eurocratic Cabinet should be put in place to run Greece, the home of democracy, it must concern all citizens of Europe. When another Minister from the German Cabinet proposes that the Greeks be given an offer they cannot refuse to leave the euro, again, this must raise concerns with any legislator or citizen of Europe.

What is happening in Greece, Spain and Ireland as a result of the austerity being put upon them by our alleged EU partners is a long way from the original aims of the European Community. Not only is it not humane but we are fixing the wrong problem, as Senator Barrett has pointed out. We had a banking crisis and now we have a solution being proposed by the same people who designed the euro in the first place.

Some of my concerns, which I would like to read into the record, have been highlighted by the Department of Finance and the Oireachtas Library and Research Service. There has been criticism of the fiscal compact's focus on measurement issues and its appropriateness for a small, open economy. The Department of Finance in 2001, in a report discussed by McArdle in 2012, stated there is a large degree of uncertainty regarding trend growth estimates generally, which are fundamental to this treaty. The measurement of output gaps and inflation in Ireland, given the importance of external factors in determining price development, is also an area of concern for the Department of Finance. It is also stated that the current account balance, CAB, indicators are a backward looking rather than forward looking indicator of budgetary position.

The Department of Finance is warning us that many of the elements of the fiscal compact are worrying from an Irish perspective because there is not a one-size-fits-all solution, even though that is what is being put upon us. In 2011 the stability programme update from the Department of Finance stated that using the Commission's methodology would suggest that in 2015 the economy would be overheated, with resulting inflation, which the Department of Finance describes as implausible. This is worrying, given this is also the Oireachtas Library and Research Service's take on the fiscal compact.

In late 2008 the EU believed the Irish economy was roughly in equilibrium, with an output gap of just 0.2%. Now, it has revised this to minus 4%. It is also noteworthy that the European Commission estimates that the output gap was negative all through the bubble era until 2008 and that its revision does not radically alter the picture. This is equally implausible. I take this information from McArdle and a report prepared by the Department of Finance.

The Oireachtas Library and Research Service is raising serious concerns in regard to the methodology and structure of the fiscal compact and the Department of Finance had outlined a number of areas in 2001 alone whereby many of the structural issues proposed in the fiscal compact do not make a huge amount of sense for Ireland. The noteworthiness of this is that the people who designed the euro are now designing the solution. We would not give a builder the same contract if he made a bad job of it on the first day. Senator Thomas Byrne attended a meeting in Europe with 27 member states represented around the table. When he asked how the structural deficit was calculated, he was told by the Commission that the Commission will decide that after the member states approve the treaty. That is a concern for any citizen of Europe.