Alice-Mary Higgins (Independent) | Oireachtas source

I thank the Minister. It is good to have him in the House. The idea of a common response and common action in respect of financial and fiscal threat is something everybody supports. The idea of the common backstop and a stability mechanism is, of course, important but there is much to discuss in the detail. Significant mistakes have been made in the past and it is not clear how they have been learned from.

It is important that we be clear that the Eurogroup is separate to our EU institutions and is not one of them. The EU, as a collective, comprises the Commission, the Council and the Parliament. One issue, which is cross-cutting and which we saw play out over the period of austerity, relates to what was perhaps an excessive influence of the Eurogroup, as a separate set of common aligned actors, on our actual collective structures, which were put in place so substantially by our treaty systems, and on the operations of the European Union. I am concerned also about how the ESM is likely to be engaged with, something I will come to presently.

Another concern relates to the criteria attached to the precautionary conditioned credit line. This credit line has never been used and was, effectively, designed in a way that made it unusable because the eligibility criteria for access were not achievable. When I spoke to officials in the Minister's Department, they told me that prior to the Covid crisis, only nine countries in Europe would have been eligible to avail of it. The precautionary credit line is meant to function for the European Union and all European countries to ensure that if there is a crisis in banking, it will not spread. If that tool is applicable to only nine countries, we are not doing a proper job of having a precautionary safety net that will work throughout the Union.

That was the case prior to Covid. When I engaged with the Minister previously on this issue, he pointed out that many of the fiscal criteria had been suspended in regard to the credit line and the credit that had to be provided during Covid. That too, however, points to the fact the precautionary credit line and the tools we had were inadequate and that additional and different approaches needed to be taken in respect of the Covid crisis. What we want are tools that will work in whatever crisis comes. We know a climate crisis is coming - that is one we can anticipate - but there are many others we do not know about, and we want tools that will work.

The concern is that in these new reformed mechanisms for the European Stability Mechanism, the exact same fiscal criteria are proposed to be reintroduced, such as a general government deficit not exceeding 3% of GDP and a government structural budget above the country's specific minimum debt benchmark where the debt-to-GDP ratio is below 60% or with a reduction in the differential in respect of 60% over the previous two years on average. We need not get into them, but those criteria did not simply contribute to the precautionary credit line not working in the past. They overdetermined policy throughout the EU for a period with a devastating effect.

I engaged actively with the European semester process. When the process became about the fiscal criteria and not about, for example, the Europe 2020 vision of smart, sustainable and inclusive growth, a very long, resourced and collective vision of what it might mean to have inclusive and sustainable growth throughout the EU, we lost ground. Europe has failed across the board to meet its targets under the Europe 2020 vision of smart, sustainable and inclusive growth because there was a prioritisation of short-term balancing of the books.

When we discussed this before the summer, the Minister indicated he understood that some of the fiscal measures needed to be adopted and that we were returning to using the tool, although it would be changed. In respect of the budget, however, there was a contribution in the Seanad from a Minister of State who talked about the fiscal rules being exactly as they were, even though they did not apply during this budget and even though we know they led to bad decisions in the past. One such bad decision, which was in the news last week, related to the fact those fiscal rules were invoked and the fact that having to act off the balance sheet was being invoked to explain why we were leasing instead of building for a decade. In this budget, however, when those rules do not apply, we are still leasing. Some 2,600 of the houses that are coming will, apparently, come through leasing schemes. We are still channelling money that is bad value into short-term leasing instead of into long-term assets, even though we have the space. That is the impact of these fiscal criteria.

The Future of Europe process, which is under way, involves the Commission, the Parliament and national parliamentarians, and I am lucky to be one of those parliamentarians who will be involved in that process. I sometimes sense there is an Overton window in this context. There was a moment when we could make different kinds of investment but with the fiscal controls before it and a two-year window where they were suspended, and then they came back.I do not believe it can be an Overton window; it needs to be a reframe.

I have some questions on practical matters. Could the Minister state what the firewalls will be regarding engagement with private investors in terms of the ESM? I would be concerned if, on the one hand, the Minister were seeking to play an active role within the European Commission on its implementation of its policy functions – there is a policy ambition that is concerning in this reframe – if, on the other, there were a plan to segue in respect of private investors. How will we firewall these two parts of the process? How will we be clear on what exactly the Commission is doing by comparison with what the ESM is doing? Could the Minister clarify the position on the precautionary credit line?

On the banking aspect, because ultimately this is also about banking recovery, why on earth are we not imposing a banking levy on Ulster Bank and KBC next year? Why are we rewarding them for leaving the State by telling them they will be exempted from the banking levy?