Paul Gavan (Sinn Fein) | Oireachtas source

The Minister is very welcome. I welcome the opportunity to speak on behalf of my party on the Finance (European Stability Mechanism and Single Resolution Fund) Bill 2021. This follows the agreement reached by the Eurogroup in November 2020 in respect of the ESM reform package and the signing of amending agreements to the treaty establishing the European Stability Mechanism and the Single Resolution Fund inter-governmental agreement in January 2021. The primary purpose of this Bill is to ratify these amending agreements in order to implement the Eurogroup's agreement on ESM treaty reform and to provide for the coming into force of the common backstop to the Single Resolution Fund by 2022. The European Stability Mechanism was set up in 2012 with the superficial objective of providing loans to financially distressed eurozone countries in order to safeguard the financial stability of the eurozone member in question and of the broader eurozone. As we all know, the assistance provided by the ESM was subject to strict conditionality. During the financial crash and subsequent crisis, it was often extended with strict conditions of austerity and structural reform, recipes for societal pain and hardship that are now recognised by many not only to have harmed citizens but also to have hampered economic recovery and deepened recession. It is no surprise, therefore, that the ESM remains toxic and feared in many member states. At present, €1.27 billion of contributions has been paid into the ESM, with a capital subscription of €11.1 billion. The ESM can provide to members in instances such as loans within a macroeconomic adjustment programme with austerity conditions.

I will not revisit our European Financial Stability Facility programme, which began in December 2010 and concluded in December 2013. Instead, my focus is on the provisions of the Bill. The Bill responds to reform proposals arising from the Eurogroup agreement in November 2020, that is, addressing a gap in the banking union by allowing the ESM to act as the common backstop to the Single Resolution Fund amending the ESM's precautionary financial assistance instruments and measures aimed at changing the operations of the institution itself.

On the first, under the changes the ESM will become a common backstop to the Single Resolution Fund, the agency responsible for resolving failing banks in the event the fund does not have sufficient funds. The stated purpose of this is to prevent governments from having to rescue large banks at the expense of taxpayers, with any money lent by the ESM being repaid by the banking sector. On the second, there are proposed changes to the preventive and precautionary features of the ESM, with the stated objective of making it easier for members to access credit lines. Finally, on the third, there are proposals to strengthen co-operation between the Commission and the ESM.

Sinn Féin is on record in respect of our opposition to the structure and operation of the ESM, which has in the past placed strict conditions of austerity and hardship on member states, with serious harm inflicted on workers, families and households during the period following the financial crash. This legislation is wide in its scope and proposals, with significant implications for the operation of the ESM and the SRF. We will listen carefully to the contribution of the Minister with regard to its provisions and look forward to further scrutiny of the Bill in the Seanad and the Dáil. There are open questions as to whether these changes will require a referendum before being given effect, and I ask the Minister to respond to that point. In addition, are there plans to end the austerity conditionality of the ESM's credit lines which, as we now know, are a failed experiment that policy elites now regret?

We will not oppose the passage of the Bill to Committee Stage but look forward to further scrutiny of its provisions.