Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I thank the Acting Chairperson and I thank the Senators for their contributions.

I wish to emphasise the two overriding objectives of this legislation in my concluding comments. The first one is the priority of trying to ensure that if there is a further banking difficulty, the taxpayer is protected from that, and the money that the banking sector contributes into what will eventually become a mutual fund is the source of support and intervention for European banks as opposed to what happened in the past where it was the taxpayer who had to make the first intervention and, indeed, in most cases, all of the interventions to prevent even greater financial and banking difficulties. So that is the first priority in all of this. It is to protect the Irish taxpayer and the European taxpayer in the event of us having to confront further acute banking difficulties in the future.

The second objective is the changes that have been made to the operation of the ESM to provide support to countries in the event that they encounter further very high levels of economic difficulty. While this legislation is, and Senator Burke made the fair point, very dense and full of schedules, actually the two key features in it are simply how can we handle banking difficulties better in the future, and what would we be able to do differently, and better, if a member of the European Union found itself in the situation where it was facing really exceptional financial difficulty.

I heard many of the different points that Senators made and thank Senators Maria Byrne, Casey, Gavan, Higgins, Buttimer and Burke. In most of the contributions that were made, and the vast majority of them, there was an acceptance of the role that Europe has played in our economic prosperity and our current level of development. There was also an acknowledgement from everybody, and from me, that during the last crisis there were clearly things that could have been done differently. That has influenced the development of this legislation. It is looking to find a new way of dealing with banking and financial difficulty that countries could face. I believe it is a significant step forward in how we can strengthen the governance and the strength of the euro area. Very simply, the euro area is that group of 19 countries with whom we share a currency. Anything that can strengthen the resilience and the strength of the euro in the long run is to the benefit of Ireland because we are a small country and because we are such an open economy inside the euro area.

I shall deal with some of the particular questions that have been put to me. Senator Gavan made a point about the austerity of the past. What I would say about that is however one could describe the budget that I and the Minister, Deputy Michael McGrath, announced on Tuesday, one could not describe it as an austerity budget. This goes back to some of the points that Senator Higgins made. This is despite the fact that we have incurred an additional €34 billion worth of debt. At any other point in our economic history if we, either on our own or with other countries, incurred that level of debt it would have had an immediate and total effect on the next budget brought forward. While many in the Opposition will say we should have done more and, indeed, there were some in the Government who will sometimes argue that we should do more as well, any fair-minded person would not look at a €4.7 billion budget and say it was an austerity budget. It tried to make progress on things that are really important in our society and in our economy. That did not happen on its own. It happened because during the height of the Covid pandemic the European Central Bank and the European Commission made decisions that were completely different from where we were a decade ago to help us in the funding and financing of that debt. Of course, what was also different was that all countries were confronting that crisis at the same time with the crisis being a health crisis.

In the debate that is to come regarding the fiscal rules, and Senators Higgins and Gavan again made their views clear on that, I think we should begin that debate by acknowledging that however one could describe the current budgetary policies that are being brought in, after a surge in Government debt, one could not describe them as being policies of austerity. That points to the fundamental change that is already happening regarding how we are trying to lead out of the terrible health crisis that we are trying to put behind us.

As to the specific points that Senator Higgins put to me regarding the role of the Eurogroup, she is correct that the Eurogroup is not an institution in the same way as the European Central Bank or the European Commission. On the other hand, it is the only grouping within the economic policy-making architecture of the European Union in which elected governments are directly represented. They are not represented in the Parliament. They are not represented in the Commission and they are not represented in the ECB. The point has been made that the Eurogroup is an informal group. It may well not have the official status, as the Senator correctly said, of the other institutions but it is the only group within which the ministers, who are elected directly or appointed directly by national parliaments, have a direct say and that is another form of legitimacy that I believe is incredibly important.

A further charge that is sometimes made about the work of the Eurogroup is that when we are dealing with issues like this it excludes non-euro area countries. That overlooks the fact that when the Eurogroup is dealing with banking union we sit in inclusive format. In other words, the non-euro countries are in those meetings as they were in the meetings that led to this agreement.

As to the point that Senator Higgins made about the fiscal rules, and they are referenced here within legislation, we will, I suspect, be having a broader debate with Senators regarding the role of conditionality and how conditionality is designed. The overall point I would make about conditionality is, the Irish taxpayer is now a contributor to, for example, the budget of the European Union in a way we never have been before. On a per capitabasis we are now one of the highest contributors to the European Union.

Regarding the people who look to this Oireachtas - the people who elect us both directly and indirectly - one of the things that they will always ask us to do is ensure that the money they pay in their taxes is efficiently and fairly used. Yes, there is conditionality in the different funds that we discuss here but that conditionality is directly driven by the taxpayers who pay into funds wanting their governments to be able to tell them what that money is used for. I think in the debate around the design of conditionality there is a principle beyond that and that is worth acknowledging.

Regarding the points made about the design of conditionality and what it could be in the future, it does to a degree feed into the fiscal rule debate that is approaching. When I engaged in this discussion with Senators a year ago I am sure that I did say that the general activation clause of the fiscal rules would be triggered for 2022, and that has happened.During that period, we will have a discussion regarding the nature and design of the fiscal rules across the European Union. There is, as Senators know, a variety of views about fiscal rules and their future. However, I expect that the Commission, later in October, will relaunch the consultation regarding fiscal rules, within which governments and parliaments will be able to make their views known.

The Senator also put to me a point about the semester process. It is worth saying that even though the Stability and Growth Pact is referenced heavily in the semester process, many other non-fiscal issues are also referenced. The bigger question will ask what will be the future of the semester process, given the processes that are now in place and the recovery fund. These are debates and questions to which I am sure we will return on Committee Stage. I thank all the Senators for their questions and views, and for their support for the Bill, in most cases. This is an important Bill about the long-term resilience of the currency we use and share. I commend it to the House.