Sean Barrett (Independent)

I welcome the Tánaiste to the Chamber. This is yet another historic day when Her Majesty, the Queen of England is visiting County Fermanagh, another part of our island. That is a tribute, as I said during our last discussion on foreign affairs, to the Tánaiste and Minister for Foreign Affairs and Trade and his Department. It was not that long ago that officials had to live under dangerous conditions in Maryfield, Belfast and now we have better relations between Ireland and the UK and between North and South than ever before. I note the Tánaiste got Mr. Peter Robinson to give the Edward Carson lecture in his Department. I think we will welcome members of the Orange Order to the Seanad next week. That is an area of our foreign policy where matters are in superb hands. Our relationship with the United States has never been better and that is also a tribute to the Tánaiste and his officials.

I will now deal with the part of our foreign policy in which we are experiencing difficulties. I support this legislative measure but there are difficulties. The creation of a single currency, the euro, was a leap in the dark and nobody ever though we would end up with 50% youth unemployment in both Spain and Greece and 25% unemployment overall in those two countries, and that the adjustment mechanism for Ireland would increase our rate of unemployment from 4% to 14.5%. I commend the Tánaiste on addressing these issues because public faith and belief, perhaps naive in the past, in the omniscience and omnipotence of the EU institutions has been seriously weakened. We need reforms, not least in the design flaws of the currency and the problems to which this has led to for all.

It is reassuring that the Ambassador for Croatia is here and her country wants to join the EU. That shows there is a future. There are eight other countries which joined the EU but have not yet adopted the euro. The caution would be to stay with their own currencies until we sort out these design problems in the currency because it has had a consequence for all of us that we never planned for and did not foresee. I do not draw fault on that, as I did not see the faults either. Obviously we need a banking regulation system to stop tsunamis of credit coming into small countries, as happened in Ireland, and destroying the banking system and those states being stuck with that debt. Reforms must proceed to try to make Europe work. It did work for a very long period - five decades - as a free trade area. Perhaps the currency has been one step too far, particularly the concerns in German public opinion that the single currency is not working from their point of view.

In considering some of the points made by the Tánaiste in his speech, I wonder if at the beginning a bicameral European Parliament would have been a good idea. I think the former Taoiseach, Mr. John Bruton, has asked if there should be an European Senate in which each of the member countries would have representation. There is a feeling in Ireland of being overwhelmed by the large countries. That was not what the founders of the European Union intended, as the Tánaiste knows, but it seems that Germany and France have taken a very strong role and the Union has lost sight of the opinions of the smaller countries such as Ireland and, perhaps, Croatia. It is probably too late at this stage to propose a different structure for the European Parliament which would incorporate a structure similar to the United States, with a Senate with equal representation from the member states and a structure based more broadly on a population basis which would take the place of the current European Parliament. I support the Tánaiste's adjustment concerning the Parliament. I support also his point on the Lisbon agenda, the Treaty of Lisbon and the other measures in the Bill. I think he will find that it has support throughout the House.

Where do we go at this stage? I think the debt mountain must be addressed. We have spoken about it at the Committee on Finance, Public Expenditure and Reform with the Minister for Finance, Deputy Noonan. The difficulty with Keynesian economics in the current situation is that there is an inheritance of debt because property prices rose so rapidly. The debts of government and the debts of households have to be considered. It is not a traditional Keynesian economics starting point, where one is trying to solve a recession and there is capacity to do that. We have a financial system with personal and government finances in fairly dire straits. Thought must be given, and I know the Tánaiste has expressed his concerns in the referendum, to the kind of growth agenda we require, and much more in-depth economic analysis has to take place in determining it.

There was a lot of kick and hope elements about making Europe the most advanced technological economy in the world. We spent a great deal of money and it is very difficult to see the return on it. I know the Minister of State, Deputy Sean Sherlock, is working on that but we did engage in substantial outlays. I served on the Culliton committee in the 1990s and we were concerned at the time that, in many places, instead of growth promotion as one would wish, there was the so-called free money from Brussels syndrome, where that money was taken and wasted on projects. As the Minister of State at the Department of Finance, Deputy Brian Hayes, pointed out previously, about one quarter or so of our debt is due to the banking situation but the remainder is due to projects that accumulated debt mountains and did not increase the GDP afterwards, hence the debt to GDP ratio increases. Were we unduly generous with Structural Funds towards the construction industry, which accounted subsequently for so much of our difficulties?

I would tend to disagree with my colleague, Senator Mooney, on metro north. I would want to see the studies on projects like that to see if they are worthwhile. There is no point in saying again that it is free money from Brussels and let us go ahead with the project. It has to yield a constant stream of benefits that more than cover the cost of carrying it out, even if one gets assistance from friends. One of the bodies that was criticised for its spending of the free money from Brussels was FÁS, where we spent €1 billion a year in an economy with full employment. What were the actual results of that spending? There were two kinds of money, one from Brussels and the other that was raised from the domestic taxpayers, and there were no proper standards of expenditure appraisal or cost-benefit analysis. It was a kind of misguided Keynesianism.

The Tánaiste has our support for his efforts to build a growth agenda, but we must do better than previously because our previous efforts have contributed to the position in which we now find ourselves. The European Union needs reform, but it will be difficult. Given the presence of people from Croatia, it is important to indicate to the Tánaiste the support of the House for measures to reform the European Union because it has not been at its best for the past four or five years.