Lucinda Creighton (Dublin South East, Fine Gael)

I thank Senator Walsh and Senator Mooney for their comments. I also thank the Cathaoirleach and the House for affording me the opportunity to come here to conclude this element of the Bill's passage through the Houses.

I shall begin by responding to Senator Walsh's point on the role of governments in job creation. I could not agree more with his comments. Sadly, there has been a lot of rhetoric, particularly in the past two to three months, that has almost misled the public in Ireland and across the European Union. There has been a great white hope that governments can step in with money they do not have and create millions of jobs that will result in a rise in everybody's standard of living. The crisis we face is a lot more complex. I have never believed that increased government spending either by increasing budget deficits or, more crucially, increasing national debt levels is a solution. Ireland learned that lesson in the late 1970s and in the 1980s when governments did precisely that. All parties in the House participated in those governments. They pandered to populism and went into government by making unsustainable promises and spending taxpayers' money. All they did was mount debt upon the shoulders of Irish taxpayers without it doing anything to improve the employment situation. It was not until 1987, when the then Government and Opposition collaborated, that public finances were brought under control and the positive conditions for growth and job creation began to be created. It was done by restructuring the economy and that is why I support the European agenda of restructuring. Some call it austerity but I disagree.

We have a long way to go to reform the public sectors in all the European member states. I value and treasure the European social model. Our democratic, economic and social models in Europe are the best in the world, bar none. Notwithstanding the current crisis, it is the best in the world but it is unaffordable. Europe spends more on social welfare and social protection than the rest of the world combined. We can continue to pretend it is sustainable but it is not. People, across the board, must work longer for less pay and until an older stage in life and probably with fewer holidays. We must face that difficult reality. It is unpalatable politically but it is reality.

How do we drive innovation and creativity in Europe? How do we help Europe to compete with the rest of the world to maintain the standard of living we have come to expect? We have to do the things to which we have already signed up. The best drivers of growth in the European economy are not fantastical stimulus projects with governments spending on roads to nowhere. The best thing that we can do is honour the commitments we have made such as implementing the services directive and the Single Market, that is, sadly, lagging behind where it should be or what we have committed to doing. We must end the tiresome debate on the seat of the European patent and get on with implementing the European patent. Ireland is the most creative country in the European Union because there are more entrepreneurs here than in any other European member state per capita.

More than any other country, Ireland can benefit from implementation of these measures which have the potential to add significant capacity and wealth to the nation and the European Union collectively. I am very supportive of the EIB model of investment because it is a commercial investment and not a case of governments spending money they do not have. It is a viable economic banking authority which will invest in the provision of viable strategic infrastructure, which is well worth doing.

I am sorry if I dismissed the Senator's view on the ESM previously. I do recall that happening, but I take his word for it. Perhaps, it was misconstrued in some way. When it was said previously that the ESM was not adequate, my firm view was that it would be better to have an ESM with €700 billion than no ESM and no fund. Many Members in this and the other House advocated that we vote against it, which would have meant we would have no emergency backstop. That was irresponsible. The other point I have made is that the ESM fund has already grown. It started as a fund of €500 billion, but it has grown to €700 billion and has capacity to grow in the future.

I have repeatedly stated the ESM should receive a banking licence, that we should change the terms in order that it can effectively act as a bank and raise money in the markets and potentially increase its capacity to approximately to €2 trillion, although I do not have a precise costing, but to significantly more than €700 billion. The ESM should be enabled to recapitalise banks in member states directly rather than through the sovereign. We have learned that lesson here. We have learned the hard way that lumping private banking debt on the shoulders of ordinary taxpayers is the wrong approach. That is my position and that of the Government. It has been the position of the Minister for Finance, Deputy Michael Noonan, at ECOFIN, but there was no agreement on the issue, which is not to say it is not possible. The wonderful thing about the European Union is that it is evolving all the time. We should never throw in the towel and say the debate is over because it is constantly evolving. Even when one looks at the crisis, where people were two years ago is a different place from where they are today. Positions have changed and people have moved on. We should constantly strive to build consensus.

That brings me to the Senator's point about Croatia and its significance as a like-minded member state of similar size. I believe passionately in the role of small and medium-sized countries in the European Union. We have to start working together much more effectively. Last week I visited Bratislava, the capital of Slovakia, and we have almost an identical approach to EU policy at this time, especially to the crisis. There is huge potential to forge common positions from everything from tax to European integration, likewise with many of the other small member states. The accession of Croatia is significant for more reasons than this: it marks the beginning of the process of reunifying the Balkans with the rest of Europe. Next week I am visiting Croatia, Bosnia and Montenegro and in the autumn I hope to visit Serbia and Macedonia. My commitment, as we approach the Irish Presidency of the European Union, is to the Balkans and enlargement of the European Union, of which traditionally we have been supportive. That commitment and passion will not diminish but strengthen while I have responsibility for that issue.