Joe Costello (Dublin Central, Labour)

Thank you, Acting Chairman, and I thank all Senators who contributed to the debate yesterday and today. It was the equivalent of two Second Stage speeches all round. The rhetoric and eloquence of the Seanad remains as impressive as ever. I thank everyone for a wide ranging debate. Everything that could possibly be covered was touched on, from both sides of the argument. I welcome that.

I will not refer to everything that has been said. If I did we would be here for a very long time. I will make a few general comments and then refer to some specific areas for clarification.

It is important that we look at the treaty in its broad context. This did not happen by chance. We are in a situation none of us would have liked to be in. The treaty is not a panacea for all our ills. No one is arguing that it is. We are, however, in a serious economic situation. We are very close to being in an economic recession and this has been the case for the last four years. It is not of our choosing. A situation arose. We can cast blame in whichever way we wish, in terms of political economic or banking decisions or the manner in which regulation or lack of regulation contributed. We have an enormous debt. While the Government changed last year, the debt remained. It must be dealt with and we cannot turn our backs on it.

Our debt arises from various decisions that were made, particularly the decision to take the banking debt, as well as the sovereign debt, on board. That made the situation more complex. We have a serious sovereign debt as well as the banking debt. The previous Government entered into an arrangement through a memorandum of understanding with the IMF, the EU and the ECB to plot a pathway through the difficulties. The Government took on that responsibility and decided to deal with the situation through the memorandum of understanding and to seek to negotiate it where that was practical and possible. Steps have already been taken along that course.

Is this proposal before us, the Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union, in Ireland's interest? The Government thinks it is. It will give stability to the markets and we see daily how easily instability can be created in the marketplace. Today, alone, we see what has happened in the Netherlands. A Government fell when one eurosceptic partner in the Government withdrew because it was not prepared to face up to the forthcoming budget. How easily the markets can become negative in such a situation.

We cannot take decisions in isolation. We must recognise that we are a small country that exports 85% of everything it produces. We depend on trade to survive. We also depend on foreign direct investment to provide so much of our manufacturing industry. We are more open to the winds of the markets than, perhaps, any other country in the world. If we do not take this into consideration we are not in the land of reality. Stability is crucial for us.

The treaty proposes to provide stability and to put in place what we already have as guidelines. The Maastricht treaty included the Stability and Growth Pact requiring the maximum budget deficit of 3% and the 60% debt to GDP ratio. The structural deficit deals with the long-term cycle of a country's economy. The treaty is not a straitjacket. It exists in a broad context. It is not a straitjacket and was never presented as such. On top of those provisions we have the insurance mechanism of the ESM. That is an integral part of the treaty.

Ireland is already in a precarious situation. We need stability for markets to survive and to get back into those markets. We also need to be sure that if things go wrong, as is happening in the Netherlands, if further winds of negativity are abroad in the marketplace and if our timescale for returning to the markets in two years time is not possible, there is an available market in the European Union, which is the ESM.

We would be very foolish not to ensure that we can avail of that mechanism. By saying "No" to the treaty we would be making a statement that we will not avail of the mechanism, because it is tied in to the treaty. If we said "No" to the treaty we can only imagine how volatile the markets would become. I believe we will reach our targets and fulfil our obligations to the troika and within the terms of the memorandum of understanding, but we may very well not. We are not fully in charge of the marketplace. The global marketplace is so volatile that instead of improving, the market situation could disimprove. There could be a global deterioration in the marketplace. If we have to address that situation we will need to have access to funding.

There is nothing in the treaty provisions that is damaging to the pathway we have laid out to get ourselves out of the mire we are in and regain our sovereignty. I say to Sinn Féin Senators, in particular, that when we commemorate the events that brought about the foundation of the State and the freedom of the country we should have regained our economic sovereignty. We must focus on the steps that are necessary to do that. We should not pick holes in the steps we are taking if they are leading towards the conclusion we have mapped out. The treaty fits into that plan. It does not take from the pathway that is planned by the Government through the memorandum of understanding and our own activities.

The key issues are those of growth and jobs. The treaty is not, ostensibly, about those issues. However, by creating stability we say to the markets that we will have tighter discipline. This was already in the guidelines which were breached by some of the bigger countries, giving bad example. By accepting this discipline we make it clear that we are now in control of our housekeeping and that we expect every other European country to adhere to the same housekeeping rules. That is what the treaty is about. This is solidarity as well. There are 25 other European countries party to it. It would be great to have the Czech Republic and the United Kingdom party to it as well, but they are not. There are 25 other European countries party to this intergovernmental treaty. That is a bond and there is solidarity. From that point of view, it will give stability and will help the markets. That will also help Irish jobs and investment.

To look at it from the other side, the first thing the Government did when it came into office was to create a jobs initiative, having stated that within the first 100 days it would provide a stimulus package to create jobs. We followed that up with an action plan, the Pathways to Work scheme and a range of other measures to deal with long-term unemployment. It is difficult to do so when we do not have funding. We do not have a stimulus package and we had to impose the pension levy to get the funds together. There is not a large amount of money of which we can avail. There is a very small amount of money left in the pension fund, and we have used what we can. There is a €2.2 billion schools capital project, which has been announced by the Minister for Education and Skills, Deputy Quinn, and which will create 1,600 jobs. That is quite a substantial capital project in which we are engaging. We have got agreement from the troika that if there are sales of assets - we will not engage in any fire sale or the sale of any core asset - a proportion of the proceeds can be used for a stimulus package. That would be funding that would become available for us to use, and no doubt we would embark on that.

We have not been idle over the past while with our friends in Europe. The Taoiseach and the Tánaiste have emphasised repeatedly at all Council of Ministers and all European Council of Heads of State and Government meetings that growth and employment are key areas that have been neglected for some time by the European institutions. The Taoiseach and Tánaiste have succeeded in getting the European Council to have jobs and growth as a central core item at every meeting. It is now on every agenda of every Council meeting. That was done by the Irish Government, not any other Government. We always saw that jobs and growth were the key to success.

I recall when I was first elected to this House in 1989 that Ireland had a debt-GDP ratio of 137%. We got out of our predicament because there was partnership and strict discipline and we created enough jobs and growth. Unfortunately, we left government in 1997, just at the time when we were creating 1,000 jobs every week, and we were not in a position to make decisions on what became the Celtic tiger and on the surplus funds that became available. That will remain the priority for the Government.

In the context of further stimulus, which has been mentioned quite a few times, we will hold the Presidency of the European Union next year. Ireland will be country which will be in charge, as Chair and as holder of the Presidency of the European Union, when most of the decisions will be made on the multi-annual financial framework which will determine the spend of €1.075 trillion within the European Union between 2014 and 2020. That will deal with the Common Agricultural Policy, and one may bet one's life that the farmers are well aware of that because Europe has been very good to the farming community. Almost certainly, the new CAP will be finalised during our Presidency. In fisheries policy, Cohesion Funds and Structural Funds, all of the key decisions on the next six years of investment by the European Union will come under our Presidency in the first half of 2013. A great deal of funding for stimulus is available for Ireland and other European countries which should stimulate the European Union market. Neighbourhood policy is built into that for all countries not in pre-accession to the European Union and a significant levels of neighbourhood policy funding goes to surrounding countries. That is another area where there will be quite a lot of stimulus.

I do not consider this an austerity treaty. One cannot describe this as such under any circumstances. Taking it within its own context, it gives stability, opens us up to investment, steadies the markets and gets us back to the bond markets in a shorter space of time. In the broader context, however, the Government has the issues of jobs and growth running in parallel with all that we are doing here, and they all fit together. One does not pass legislation dealing with jobs and growth, rather it is a question of making the policies and getting the injection of stimulus. That is what we are engaged in as well. This is a good treaty and it is good for the Irish people.

There are issues that people might call scaremongering, such as that the treaty ensures money is kept in people's pockets by providing us with a source from which to borrow. Our sovereign deficit is more than €16 billion. That must be bridged, and we can borrow that money at 1% from the ECB. We cannot borrow it from the markets where the rates are between 7% to 8%, although that is down enormously from 14%, which it was not long ago. We must have access to funding. There is no good stating we can default. Anybody who says that is not facing reality. There are many public servants who must be paid weekly and monthly and there must be access to funding for that. There must be insurance that if we do not reach our targets within the terms we have negotiated, there is a further source of cheap funding available to us until we are able to go back to the markets. This is crucial to the decision.

A number of Members mentioned the issues of clarity and simplicity, which are crucial. It is not so much the length of time we have, as some Members mentioned, but the clarity of the information that is issued. It is good that, for the first time, the Government is doing what has not been done before and would have been difficult to do in the case of the Lisbon treaty. I was involved, as director of elections for the Labour Party, in the second Lisbon treaty referendum. It was difficult to get such a treaty out to the people because it was a huge document and merely referred to other treaties. The Lisbon treaty did not have a meaningful text of its own and it was almost impossible to get to the members of the public a meaningful text they could read. It would have been virtually impossible to have provided an explanatory memorandum.

This is a simply treaty and a simple matter on which people will vote. It looks like legal text, however, and we need the memorandum. The treaty itself will be given to everybody by the Government, along with an explanatory memorandum and a further leaflet. These will be for the purposes of information and explanation. That is what people were crying out for during the Lisbon treaty referenda. They want to see neutral information explaining what is before them, and once they have that, they will be satisfied rather than frustrated or angry, and they will make up their minds. Irish citizens are well capable of making a decision as they see fit. Our job is to facilitate them in doing so.

Senator Sean D. Barrett referred to the references to the European Stability Mechanism, ESM, in the treaty. To clarify, the preamble to the treaty which makes reference to the ESM is part of the text. It should be read together with the main body of the treaty, its purpose being to show how the treaty is to be interpreted and applied. It is an integral part of the treaty. Article 2 deals with the relationship between the treaty and EU law and is not relevant to the functioning of the ESM which will operate under an intergovernmental treaty. These are completely separate issues which should not be connected. The ESM and access to it are stand-alone issues. If we cannot return to the markets to raise money at low interest rates, we must have a backstop. That is simple and straightforward. It makes no difference whether these provisions are set out in the preamble to the treaty or in one of the articles. I hope that clarifies the point raised by the Senator.

I accept Senator Katherine Zappone's point that this is a complicated text. I recall that when the former Tánaiste and Minister for Justice, Equality and Law Reform, Michael McDowell, undertook a consolidation of the criminal justice legislation, we encountered legislation from the 18th and 19th centuries which was totally unintelligible. That is not to say, however, that modern legislation is always easily intelligible. In fact, we are always provided with explanatory memorandums. Having said that, the amendment is set out as a standard text, similar to that brought forward in respect of the Lisbon treaty. It is not something new but merely what is required, as determined by the Attorney General. The second sentence of the amendment is intended simply to facilitate the introduction of legislation in accordance with the treaty, namely, the laws we will design such as the fiscal responsibility Bill. Its purpose is simply to facilitate us to produce the required legislation in keeping with our long tradition of honouring our international obligations. It is important to note that there is no ceding of sovereignty, rather it is about the honouring of obligations. The legislation will be presented in the normal fashion to the two Houses of the Oireachtas and will be debated therein. It is we who will make the decision on the substance of the legislation in the context of the treaty.

Senator Fiach Mac Conghail asked when the treaty would begin to impact. We are on a path to correct our excessive deficit up to 2015 and would, therefore, expect to become subject to the so-called preventive arm from 2016 onwards. The Senator is almost correct - we will have a three year transition period, but it will be from 2016 to 2019 rather than from 2018.

Senators David Cullinane and Senator Trevor Ó Clochartaigh made several points on behalf of the Sinn Féin Party. If the treaty is not ratified, Ireland will clearly still be a member of the European Union, about which there is no question. However, a failure to ratify will, of course, raise doubts in the market and undermine investor confidence. The question is whether we want to stay at the heart of the eurozone, on which the Government's view is that it is extremely important that we do so. We have always said this and I am confident everybody in the House agrees with it. The treaty enables us to do so. To clarify, it is not an EU treaty but an intergovernmental treaty signed by 25 of the member states. We should be careful not to confuse voters in this regard.

On the question of bringing a legal action to the European Court of Justice, the Commission is not permitted under the treaty to do so. Article 8 provides that the Commission will make a report on how each contracting party implements the debt brake provision of the treaty. If it finds that a contracting party has not implemented the provisions properly, another contracting party, that is, another member of the European Union but not the Commission, may bring legal proceedings. The Commission has an oversight role, as it has in every matter dealing with treaties, but it is only individual member states that may take an action to the European Court of Justice. If the court finds that the member state in respect of which the complaint is made has not properly implemented the debt brake, it will be given the chance to set its house in order. It is only where it fails to do so that a second set of proceedings may be brought seeking the imposition of a fine. What is envisaged is a democratic process involving the member states of the European Union. It is a careful process in which nothing takes place in an emergency or a high-handed fashion.

On the status of the European Central Bank, we have long argued for a more robust role for it. In this context, we welcome the recent moves to make additional liquidity available. However, there is a great deal more the bank could do. For example, we have called on it to review how it can support efforts at recovery, an area in which Ireland will continue to engage.

Senator Paschal Mooney spoke eloquently about confidence in the markets, including investor confidence. I am delighted that Fianna Fáil is supporting the treaty and that its Members have spoken strongly to that effect in both Houses. It is all about restoring the stability required in respect of the euro in order that the economy can continue to grow and provide more employment for citizens. On the other side, the uncertainty that would arise following a rejection of the treaty in the referendum would completely undermine the prospects for stability and the progress of efforts to create jobs and so on.

The measure before us does not seek to solve all of our problems, but it does represent a step along the road to recovery. That is as much as we can say. It is in line with what is required, namely, a level of internal discipline within the European Union. A great deal has been done in terms of the regulation of the financial sector and the rules in that regard are in place. The six pack, the forerunner to the treaty, has been presented. The treaty tightens these arrangements by providing for a statutory provision. Side by side with this, we are focused on the job creation mechanisms required. We have succeeded in encouraging the European Union to make this the first priority and we must now exert pressure to ensure that this remains the case. There will also be a need for the ECB, the European Commission and other institutions within the Union to ensure that the necessary requirements , including a focus on borrowing and stimulus packages, will be placed at the heart of what is done as the member states move forward.

The first step we must take is to vote in the referendum at the end of next month. We must, therefore, ensure that the people understand exactly what is involved. Those of us who believe that the treaty represents the right way forward must knock on doors and convince people that it is good for Ireland and its citizens and is a step forward in the context of recovering the economic sovereignty we have lost. We would like everybody to assist us in achieving this.