Sean Barrett (Independent)

I also welcome the Minister of State and thank him for his address. We must consider the small print in the legislation. I look forward to the debate, but it is important to start by stating those who may vote "No" are just as patriotic as those who think we should vote "Yes". One should not impugn the motives of those who may be in the "No" camp.

There are many problems with this proposal. I will quote Professor Karl Whelan, who stated:

Ideally, debate about this treaty in all European countries should move beyond misleading analogies about the prudence of households balancing their books to focus on its actual long-run implications. Once passed into treaty form, it will be extremely difficult for European citizens to change these rules. Hopefully, it is not too late to prevent the golden rule from becoming a golden straitjacket.

We are attempting to use fiscal controls to solve a monetary problem which should have been tackled by proper control over the banks once we had created the single currency. Trying to correct all the damage done by that failed monetary policy by imposing fiscal austerity is addressing the wrong problem. First, Ireland should have read the small print before joining the euro; and second, the problem Europe faces is the instability of its currency which was badly designed from the beginning, as Mr. Delors, one of its early advocates, has pointed out. It imposed a one-size-fits-all interest rate when we needed higher interest rates and Germany needed lower ones, causing inflation here. Small countries must be protected from tsunamis of credit flowing from rich countries such as Germany which destabilised our banking system. In addition, there should be an exit mechanism from the euro currency. As I have said in the House before, I cannot see how Greece can ever make progress. How can a country get its goods on shelves when it is locked into an overvalued exchange rate?

I know there is strong opposition in Germany to transfers - Germans prefer the austerity route - but transfers are part of fiscal federalism and Germany has gained a huge amount from the creation of the euro. To impose austerity to this degree on the southern countries and now on their neighbours in places such as the Netherlands is pushing the single currency concept too far, to the detriment of so many citizens. Before the advent of the euro, currency devaluation was quick; it worked and allowed access to export markets.

Making a currency status symbol can be a mistake. The European Union works extremely well as a free trade area, from which we have gained hugely, but we must ask whether the single currency was a step too far. Why is it that the United Kingdom and Ireland have never had relations as good as in the recent past, despite having different currencies? Does it matter to people in Dundalk or Clones that the currencies are different? We are friendlier now. I thank the Minister and the officials in his Department for their role in engendering this friendship. Never have Ireland-UK relations been better; happily, never have North-South relations been better and the fact that we operate with different currencies has not interfered with this. We should not, therefore, elevate the single currency to a status it may not deserve when it may, in fact, be imposing misery on so many of our fellow citizens in Europe.

The definitions of "structural" and "cyclical" will be a problem. There is much divergence in the economic literature in this regard and it is not as easy as it seems. I have no particular problem with the 3% rule, but when a country has serious difficulties such as we have had, it may be necessary to go above that figure. We always adhered to the 60% rule for debt-to-GDP ratio; in fact, I think it was down to around 25% before the banking tsunami hit us. The Government which lost office last year made mistakes, but were it not for the 40% of GDP we required to bail out the banks, Ireland would have a debt-to-GDP ratio lower than that of Germany. We were adhering to the rules as best we could. People as Mr. Karl Whelan and Mr. Colm McCarthy have pointed out that reducing the debt-to-GDP ratio to the desired 60% over 20 years, at the rate of one twentieth per year, could lead to a debt-to-GDP ratio of 17% or 25%. This could, in turn, create problems for pension funds and might lead to asset bubbles. I speak as an economist rather than as a political figure. There are genuine technical concerns about the way the treaty was designed and the small print. I am especially keen to hear the Minister's reply to these points. Last time around we signed up to have a single currency without working through the ramifications which have been horrendous. I am keen to ensure we do not make the same mistakes again.

What is Ireland's role as a small country in the European Union? It is to engage in these discussions and when there is political pressure from the centre to do certain things, it may be necessary for us to point out that, having researched the issues, we have found that the results will not serve properly the interests of most member countries and that following such courses of action will cause unemployment. The phrases "wearing the green jersey" and "wearing the European jersey" have been used. However, exercising the European brain is also a function of small countries such as Ireland and Houses of Parliament.

Serious concerns arise in the economics literature to the effect that what we did last time around caused serious problems. In Europe there was an era of profligacy in terms of credit which caused all of the problems. Using fiscal austerity to correct such a regime may not be the best way to proceed. Why not tackle the banking system and the associated currency crisis directly? The job of a non-partisan House such as the Seanad is to question whether the economics stand up and make sense.

I am pleased that we are discussing these issues over a period of two days. That is very important. We should have engaged in more consultation in Parliament before we got into some of these relationships. One criticism has been that at European summits too many decisions are taken at 4 a.m. when everyone is exhausted. Do they always have the expert advice they need to ensure decisions work to the benefit of all citizens? That is what the Minister of State and I wish to ensure as a result of the debate. I look forward to his reply and the further discussions tomorrow.