Fergus O'Dowd (Louth, Fine Gael)
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Before I outline the purpose and contents of the Bill, I would like to thank the Seanad for agreeing to discuss and consider all Stages of the European Financial Stability Facility and Euro Area Loan Facility (Amendment) Bill 2011 today at short notice. Although a fairly technical Bill, it is of critical importance to the public finances and to our economy. Enactment of the Bill is required to allow Ireland to ratify the changes to the European Financial Stability Facility that were agreed by the Heads of State or Government on 21 July 2011 as well as earlier changes to the Greek loan facility. The changes agreed to the European Financial Stability Facility framework agreement, which I will go through shortly, are viewed by the Government and the other euro area member states as essential for ensuring financial stability within the euro area.

As Senators will be aware, euro area member states agreed in May 2010 to create a European Financial Stability Facility, EFSF, in order to financially support euro area member states which are in difficulties caused by exceptional circumstances beyond their control. The EFSF was incorporated on 7 June 2010 for the purpose of providing stability support to such euro area member states in the form of loans of up to €440 billion. The EFSF can only advance loans up to the end of June 2013. After that, the new European Financial Stabilisation Mechanism or EFSM will take over.

In order to ensure that the EFSF secured a triple A rating and thereby borrow at the lowest possible interest rates, certain complex structures known collectively as credit enhancement measures were adopted. These involved the over-guarantee of bonds, cash buffers and the prepayment of margins on loans. A major effect of these measures was to reduce the effective lending capacity to some €250 billion, and they also increased the effective cost of borrowing for borrowers.

Ireland received one loan from the EFSF on 1 February this year worth €4.2 billion. The term of the loan is five and a half years, which means it will mature in July 2016. The total amount available to be disbursed to Ireland from the EFSF under the EU-IMF programme is €17.7 billion.

At the end of June 2011, euro area Ministers for Finance signed an amendment to the European Financial Stability Facility Framework Agreement, subject as usual to national ratification. The main purpose of the June 2011 amendment agreement is to increase the effective lending capacity of the EFSF back up to its headline volume of €440 billion from its effective capacity of €250 billion.

Feargal Quinn (Independent)
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Is the Minister of State's speech going to be circulated? I have great difficulty following the numbers.

Fergus O'Dowd (Louth, Fine Gael)
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I had assumed it would be circulated and apologise if it has not been.

Paddy Burke (Fine Gael)
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Copies are being arranged at the moment.

Fergus O'Dowd (Louth, Fine Gael)
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I apologise for that. As a former Senator, I know how important it is to circulate such scripts.

Thomas Byrne (Fianna Fail)
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Contrary to what the Minister of State says, this Bill has not been introduced at short notice; we had to wait a couple of months for it. There are no explanatory memoranda with it, which is a new departure. While it is crucial we read the exact text of Bills, the explanatory memoranda are a help to legislators to give them an overview. We are indebted to the Oireachtas Library and Research Service for its work but this is an unwelcome departure.

Darragh O'Brien (Fianna Fail)
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Like Senator Byrne, I have never seen a Bill with no explanatory memoranda. Could the officials clarify why the explanatory memoranda were not published with the Bill? I tried to get them before the debate and they were not available. That infringes upon the job Members are supposed to do, and this is very important legislation, which we support. There should, however, be explanatory memoranda with it.

Fergus O'Dowd (Louth, Fine Gael)
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There should be explanatory memorandum but the Oireachtas Library has facilitated everyone with a very detailed digest of the Bill. We all know, particularly Fianna Fáil Members, why we are having this debate; it is because Fianna Fáil got us into trouble when it was in government with the bank guarantee and the way it ran the economy.

Darragh O'Brien (Fianna Fail)
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Fine Gael supported the bank guarantee.

Thomas Byrne (Fianna Fail)
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The Minister of State is making a serious contribution to the debate and on that basis, and also that all Stages are being held on the same day, a quorum should be called. Notice taken that 12 Members were not present; House counted and 12 Members being present,

Fergus O'Dowd (Louth, Fine Gael)
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On the absence of explanatory memoranda, I have a briefing that was circulated by the Department of Finance to all Opposition spokesmen in the Dáil and Seanad last Friday. This is clearly emergency legislation and it is important for the State that we pass it. I agree, however, that time is of the essence and this should have been circulated as explanatory memoranda but it has the same purpose and format.

To ensure that the EFSF secured a AAA rating and can thereby borrow at the lowest possible interest rates, certain complex structures, known collectively as credit enhancement measures, were adopted. These involved the over-guarantee of bonds, cash buffers and the prepayment of margins on loans. A major effect of these measures was to reduce the effective lending capacity to some €250 billion, and they also increased the effective cost of borrowing for borrowers. I have already read this but I will read it again anyway.

Ireland received one loan from the EFSF on 1 February this year worth €4.2 billion. The term of the loan is five and a half years, which means it will mature in July 2016. The total amount available to be disbursed to Ireland from the EFSF under the EU-IMF programme is €17.7 billion.

At the end of June 2011, euro area Ministers for Finance signed an amendment to the European Financial Stability Facility Framework Agreement, subject as usual to national ratification. The main purpose of the June 2011 amendment agreement is to increase the effective lending capacity of the EFSF back up to its headline volume of €440 billion from its effective capacity of €250 billion. This will by accomplished by increasing the over-guarantee percentage to 165% of the amount raised by the facility. Further amendments include specifying the margin applying to loans, changes to the pricing structure including the introduction of a new advance margin, a specific reference to Ireland becoming a stepping out guarantor, which occurred on entering the EU-IMF programme, and the potential transfer of EFSF rights, obligations and-orliabilities to the ESM.

Subsequently, on 21 July 2011, the Heads of State or Government announced further measures to ensure the financial stability of the euro area and stem the risk of contagion. These measures include a new programme of assistance for Greece and increasing the flexibility of the EFSF and the ESM by allowing them to act on the basis of a precautionary programme, finance recapitalisation of financial institutions through loans to Governments and intervene in primary and secondary sovereign bond markets on the basis of ECB analysis. Of particular interest to the existing programme countries, the Heads of State or Government agreed to reduce the interest rate on EFSF loans to Ireland, Greece and Portugal to lending rates equivalent to those of the balance of payments facility close to, without going below, the EFSF funding cost as well as lengthening the loan maturities. This was discussed further in Poland at the informal meeting of ECOFIN Ministers this week.

Following that discussion, the level of savings available is becoming clear. It is now calculated that overall savings from the reductions in the margins applying to the EU-related programme funding will be a total of approximately €9 billion over the average life of seven and a halfyears, as originally envisaged for the loans. This saving of approximately €9 billion represents 5.7% of the current forecasted level of GDP in 2011. In terms of 2012, the National Treasury Management Agency calculates that the savings on the EU funds to be approximately €900 million.

As already stated, this Bill is required to enable Ireland to ratify the agreed changes to the EFSF framework agreement. As most member states had not had time to ratify the amendments agreed in June before the subsequent amendments arising from the 21 July decision, the June amendments to the EFSF framework agreement and those arising from the decision of 21 July 2011 were consolidated into a single amendment agreement, as set out in Schedule 1to the Bill before the Seanad today.

Urgent ratification of the amendment to the EFSF framework agreement is important for a number of reasons. Delays in implementing the measures announced by the Heads of State or Government on 21 July is adding to market volatility. Also, from a national viewpoint, neither Ireland nor Portugal can benefit from the reduced interest rate announced on 21 July last until the revised EFSF is implemented. It is only then that the necessary changes can be made to the Irish EFSF loan facility agreement with the unanimous agreement of the loan guarantors. All euro area countries confirmed at the informal meeting of Finance Ministers in Poland last weekend that they will work to ratify the amendments to the EFSF as quickly as possible. Several countries have already provided confirmation that they have ratified it. Ireland, as a recipient of assistance from the EFSF and a beneficiary of the changes, should not delay the ratification of the amendments to the EFSF.

The euro area Heads of State or Government also announced on 21 July 2011 that the new flexibilities announced for the EFSF would also apply to the ESM. This means that the ESM treaty signed by euro area Finance Ministers in July will, subject to the necessary parliamentary procedures, now require amendment. Technical discussions are continuing on the text of the required amendments. Legislation to ratify the revised ESM treaty, incorporating these amendments, will be brought before the Oireachtas later this year or early next year. The ESM is due to come into force and take over from the EFSF during 2013, subject to ratification by all euro area member states.

Senators will be aware that Greece entered its first programme of financial support in May 2010 on foot of an intergovernmental agreement to provide bilateral loans totalling €80 billion to it from the euro area member states, together with IMF assistance of €30 billion over a three-year period to mid-2013. Finance Ministers agreed at euro group in June 2011 to revise the Greek loan facility by extending the grace period between drawdown and commencement of repayment from three to four and a half years, increasing the maturity period for loans from five to ten years and to reduce the margin applying to loans to Greece under the Greek loan facility by 100 basis points. The Commission signed the amendment to loan facility agreement with Greece on behalf of euro area member states on 14 June 2011, subject to ratification by all euro area member states. The Bill provides for the amendment of the Euro Area Loan Facility Act 2010 to ratify these amendments to the Greek loan facility agreement.

On 21 July, the Heads of State or Government agreed to support a new programme of assistance for Greece and to increase the length of the grace period and the term of loans already made under the Greek loan facility agreement. The new programme will be facilitated by the amendment to the EFSF framework agreement but a second amendment to the Greek loan facility is required in respect of the longer grace period and a lengthening of the loan maturity to 15 years. Once finalised, the Commission will sign the second amendment on behalf of the euro area member states. As it has not yet been signed by the Commission, it is not possible to provide for its ratification in the Bill before the Seanad today. When it has been signed, we will have to bring forward separate legislation to ratify it. As the amendment to the EFSF framework agreement is important in terms of the stability of the euro area and to Ireland in securing an interest rate reduction, we cannot delay this Bill waiting for the second amendment to the Greek loan facility agreement to be agreed and signed. However, the Bill includes the first amendment to the Greek loan facility agreement.

The Bill amends the European Financial Stability Facility Act 2010 and the Euro Area Loan Facility Act 2010. It has three sections and two Schedules. The amendment to the EFSF framework agreement is set out in Schedule 1and the amendment to the Greek loan facility agreement of 14 June 2011 is set out in Schedule 2. Section 1 of the Bill provides that the references to the EFSF framework agreement in the European Financial Stability Facility Act 2010 shall include the amendment to the EFSF framework agreement. It also increases the amount that may be paid out of the Central Fund from €7.5 billion to €12.5 billion in line with the increase in the guarantee ceiling for Ireland as set out in Annex 1 to the amendment agreement. While this is notional because the amendment agreement specifically notes that Ireland and Portugal have become stepping-out guarantors, the Central Fund figure is being amended for reasons of consistency. Section 2 provides that the references to the loan facility agreement in the Euro Area Loan Facility Act 2010 shall include the amendment to it of 14 June 2011. Section 3 sets out the Short Title of Act.

I will now explain the main changes to the EFSF framework agreement. Article 1(1) provides for Estonia to become a party to the framework agreement. This was a requirement of it joining the euro at the start of 2011. Article 1(4), which amends paragraph (2) of the preamble to the EFSF framework agreement, sets out the changes arising from the decision of the Heads of State or Government in July to expand the financial assistance that the EFSF can provide in the future, beyond the loan facilities it is currently limited to. The changes include the provision of loans; precautionary facilities and loans to Governments of euro-area member states, including non-programme member states to finance the recapitalisation of banks; the purchase of bonds in the secondary bond markets on the basis of an ECB analysis recognising the existence of exceptional financial circumstances and risks to financial stability; the purchase of euro area bonds in the primary market; increasing the effective capacity of the EFSF to its headline €440 billion figure by increasing the level of over-guarantee from €440 billion, 120%, to €780 billion, 165%; and amending the pricing structure to cost of funds plus a margin of 200 basis points for the first three years for each financial assistance and 300 basis points thereafter. However, in line with the 21 July decision, the preamble will also state that Greece is to receive loans at lending rates equivalent to those of the balance of payments without going below the cost of funds and that these lending rates will also be applied for Ireland and Portugal and providing that the maturities for Greece are to be a minimum of 15 years and up to 30 years, and these should also apply for Ireland and Portugal.

The remaining paragraphs of Article 1, from (9) to (60) amend the Articles of the framework agreement to provide for the changes listed above. Many of the amendments are technical or text changes, such as changing "Loan Facility Agreement" in a number of Articles to read "Financial Assistance Facility Agreement". I do not propose to go through them. Annex 1, containing the guarantee commitments for each euro area member state, has been amended because of the increase in the level of total guarantees to €780 billion. Ireland's figure is increasing from just over €7 billion to just under €12.4 billion. However, the annex has also been amended to make it clear that Ireland, Greece and Portugal have become stepping-out guarantors, thereby bringing the effective level of total guarantees down to €726 billion, which is 165% of €440 billion.

Annex 2, which sets out the contribution key based on the ECB capital subscription, has also been amended because of Estonia joining the euro and the European Financial Stability Facility, EFSF. Ireland's contribution key decreases from 1.5915% to 1.5874%.

Schedule 2 to the Bill sets out the amendment agreement to the Greek loan facility agreement. The changes are that the grace period at the start of each loan during which principal is not payable is increased to four and a half years from three years, the maximum term of a loan is increased to ten years from five years, and the margin applicable to loans from this facility is to be reduced by 100 basis points.

Now is a time for euro area member states to contribute to ensuring financial stability within the euro area. It is in all our interests. The revisions to the EFSF form a key part of the measures being put in place to ensure this stability. Ireland must play its part. Therefore, I urge Senators to agree to ratify the changes to the EFSF and the Greek loan facility agreement. I commend the Bill to the Seanad.

Thomas Byrne (Fianna Fail)
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Certain Government Senators were disquieted by my quorum call. We will continue to call quorums until the Government adheres to its commitment in the programme for Government to deal with the problem of legislation being shunted through at high speed and to ensure that Standing Orders provide a minimum of two weeks between each Stage of a Bill except in exceptional circumstances. Unfortunately, the reality facing the Houses is that the exception is becoming the rule and every legislative debate is on all Stages. This does not provide for proper scrutiny of legislation or allow one to reflect after a Second Stage debate on what amendments might be made. It is not in the interests of democracy. I urge Government Senators not to express their annoyance with me or my colleagues on this side of the House, but with their senior colleagues who are failing to implement their programme for Government.

Contrary to the Minister of State's remark, we are not here at short notice. This agreement was signed on 21 July. Unfortunately, every European leader went away on holiday immediately thereafter. If necessary, it would have been appropriate to recall parliaments all over Europe to ratify this treaty, but that was not done. At all levels, the EU has shunted from crisis to crisis.

Nor are we present because of last November's EU-IMF agreement, as the Minister of State alleged. As the Bill's Long Title states, we are present to ensure the financial stability of the EU and safeguard the financial stability of the euro area as whole.

We welcome the Bill's publication, but it is too late. It is not right that many of the provisions, including those that relate to Greece and the European Financial Stabilisation Mechanism, EFSM, that need to be enacted or ratified by countries have not been finalised by various European bodies, including ECOFIN and the European Commission. I hope the EFSM is the complete solution. To date, we have lurched from one crisis to another. Chancellor Merkel, President Sarkozy and the Taoiseach went on holiday in August and left this matter on the back boiler.

I do not know what the issue was. Perhaps the Minister of State could explain it. A communique rather than the text of the treaty was provided on the website. Is the amendment in Schedule 1 the document that was signed on 21 July? I cannot see a date. The legislation ratifies the document, yet the latter is only a couple of pages long. This treaty was not available to the public on the day, but if it had been available to the Government, could we not have signed it then and ratified the treaty almost immediately?

The fault does not lie with Ireland alone. Parliaments across Europe should have been recalled where their approval was required for ratification. Undoubtedly, Fianna Fáil would have facilitated a recall. Events continue to overtake us.

Fianna Fáil has welcomed the reductions in the two funds' interest rates, which the EU has done in the interests of stability. We and the people at home want to know what impact the reductions will have practically. For example, what impact will they have on this year's budget and will they affect our deficit targets? We are unsure as to whether they will make achieving those targets easier. However, they are of benefit. The Minister of State must clarify the monetary figure we must reach to achieve our targets.

Today brought good news regarding economic growth. This type of good news tends to come before good news on jobs, which must be the priority at Irish and EU level. I have done a bit of research. An interesting wikipedia page - one must check it for accuracy - lists the unemployment rates in countries all over the world. The EU, in particular the euro area, and the US stand out as having high levels. This is not to shift responsibility for the unemployment rate from our Government, but the level is too high in Europe and the US. Europe has long-term strategies to deal with unemployment, such as the 2020 strategy and so on. All relevant Commissioners, European officials and Members of the European Parliament should down tools and consider what immediate solutions or help can be found for the unemployment situation. Europe's strategies are too long term and do not cater for the problem, which is specific to the EU and US rather than just Ireland.

The Government will publish a multi-annual plan shortly, albeit subsequent to the by-election and the presidential election. I urge the Government to publish its plan as soon as possible to give people some level of certainty. I can say this from a strong position, as we announced our plan in the middle of a by-election last year. It was the right thing to do. I urge the Government not to postpone publication for political purposes. It is important that people's lives and job creators have certainty. Consumers want to start spending again but cannot. They need certainty first.

There is little clarity regarding secondary bond purchases and how extensions of maturities on loans will affect us on a day-to-day basis. I do not know whether the Minister of State will be able to offer clarity. The situation changes constantly. Everyday there is another crisis or something that must be addressed, but there is no political will to do so. That will should come from all levels, including from Ireland. It is not good enough for the Taoiseach to say that Chancellor Merkel and President Sarkozy can meet. It is helpful if the leaders of Germany and France meet, but we always seem to be on the outside. We had no direct role in the negotiations that led to the interest rate reductions. They were handed to us on a plate. While we are grateful, Ireland is a member state of the EU and, like other member states, has a right and obligation to be involved in discussions on these issues at European level. It is not enough for us to stand idly by and let Chancellor Merkel and President Sarkozy get on with it. Germany and France are sizable contributors and important countries, but the basis of our membership of the EU is our involvement and voice at the table. We share sovereignty. We give something up, but we get something in return. To the public, this does not seem to be happening in the case of the Merkel-Sarkozy discussions, etc.

We will not oppose the Bill, but my concerns about the legislative procedure and the European and national parliamentary responses are genuine. I do not know how many European parliaments must ratify this treaty. I do not know whether the Minister of State can update the House as to which countries have already ratified it. Where do we appear in the pecking order? We could have ratified it more quickly and been an example to others.

Michael D'Arcy (Fine Gael)
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It is no pleasure to discuss this Bill, but we are doing so because of the position in which we find ourselves. Much of that position is self-inflicted. Senator Byrne was part of the infliction when his party was in government. He voted for his Government's appalling decisions.

We must consider some of the facts that are relevant to the context of our being here today. The euro has been a relative success in a number of areas but this is forgotten in respect of inflation and the interest rates that have obtained since its introduction. Over that past ten years, inflation has averaged less than 2%. That would have been very good for so many in this country and the eurozone as a whole had insane funds not been made available by banks, including from one bank to another. These funds were unchecked owing to the lack of regulation. We debated this last week. We learned the insurance bill could cost the State another €1 billion because of the lack of regulation.

The lack of regulation in this jurisdiction will cost the State approximately €50 billion because the banks did whatever they wanted and the actions of former Financial Regulator, Mr. Neary, went unchecked. I feel some sympathy for him because when he was Regulator the then Taoiseach, Mr. Bertie Ahern, was saying everything was grand and that we should keep spending. We cannot forget that. In addition, inflation was low. It should have led to an extremely strong economy, which we do not have today.

In addition to touching on low inflation, we must touch upon low interest rates. Owing partly to the consternation in the European markets during the summer months, we have benefited. This is because the ECB signalled six or seven months ago that there were to be four quarterly increases to the interest rate amounting to 1%. That 1% would have cost all the lending institutions, not just the banks underwritten by the State, €4.5 billion in extra payments, thereby affecting people with loans. The loan book is worth €440 billion and 1% amounts to a little under €4.5 billion in extra interest. To put that into context, it is the equivalent of the spending reductions and tax increases that will occur in the budget. It would have been the equivalent of two budgets in one year if the four quarterly increases were made. I am thankful they are not being made. I anticipate from the noises coming from the ECB that there could be a move towards decreasing the interest rates in line with the USA, which is holding its rates firm.

We must consider our current position. It is a little ironic that Mr. Geithner came over from the Unites States to push Europe in a particular direction through getting hold of the finances. The reality is that eurozone debts are between 50% and 60% of those of the United States. The United States owes just less than €15 trillion dollars, of which €10.5 trillion is publicly owned. The remainder is intergovernmental debt. I could not find the figures on the moneys owed in the eurozone but it appears they amount to approximately €6.5 trillion. Since the figures were broken down per state, I was not able to discern how much was publicly owned and how much was intergovernmental, be it owned by Governments or central banks.

We are not in as bad a position as many are saying. The problem is there is no political leadership. The primary political leadership should be coming from Germany and France, as was the case under former leaders such as Helmut Kohl and François Mitterrand. Unfortunately, Chancellor Merkel and President Sarkozy are putting their own political advancement over what should be done for Europe. I will not pretend it will be easy for them. The library research digest shows Germany is putting up almost €120 billion. That is a lot of money and will come from the German taxpayer.

We have not stabilised the debt structure. The European Union, as an entity, is less borrowed than the United States and many other economies. The truth is that some countries will have to pay more to assist those in difficulty. We know countries such as Ireland, Greece and Portugal are in difficulty but there are others that are close to the brink. If countries such as Spain and Italy go over and find themselves in a position like ours, the markets will be satisfied the ESM is not big enough to deal with what is to come down the tracks.

The International Bank of Settlements showed that the French and German banks are exposed to the tune of €475 billion in respect of Italian debt and another €175 billion in respect of Spanish debt. The existing funds will not be large enough if any of the larger economies find themselves in the Irish position. This was very close to being the case. The Italians were very much on the brink in that its debts were at a level that warranted a bailout in Ireland. Italy has reversed this but it is not far from a bailout.

I have some questions I would like clarified. With regard to secondary markets, we were told there could not be a default. Effectively the Greeks defaulted through an agreed default. We have been told consistently by the ECB that there can be no purchasing in the secondary markets of debt trading at a significant write-down.

The Minister of State referred to the purchase of bonds in secondary bond markets on the basis of the ECB analysis, recognising the existence of exceptional financial circumstances and the risks to financial stability. I can understand the latter but I would like some clarity on what constitutes exceptional financial circumstances. If the Minister of State does not have the answer, he may send it to me in writing.

On the ESM, I welcome very much the possibility of private sector involvement in debt restructuring. Where there is recklessness on the part of financial institutions, as there clearly was, be it in regard to lending to a country or a lending institution while understanding the risks being taken, and they find themselves in a position such as ours, they should lose some of their own funds.

Following the discussion between President Sarkozy and Chancellor Merkel, reference was made to the placing in constitutional law of an upper limit for a country in terms of borrowing. That would be helpful as it would prevent a country from going down the route of buying election results. I refer to electioneering throughout the political process. There is no better example than sports capital funding. Fianna Fáil Members were able to ask for and receive what they wanted.

Thomas Byrne (Fianna Fail)
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We did not borrow for it.

Michael D'Arcy (Fine Gael)
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The Taoiseach, Tánaiste and Minister for Finance have been travelling to re-establish diplomatic ties with countries with which diplomatic relations have failed. We now have friends again in Europe and that is a result of six to eight months of very hard negotiations.

Thomas Byrne (Fianna Fail)
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The Taoiseach should be told to telephone Angela Merkel; he has not done so.

Michael D'Arcy (Fine Gael)
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It should be noted that this work is not easily measured but it should be stated clearly-----

Darragh O'Brien (Fianna Fail)
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Even if it is not true.

Michael D'Arcy (Fine Gael)
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-----that it is bringing us forward and putting us in a position where we are obtaining a result rather than a bad negotiating position.

John Gilroy (Labour)
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I will start by assuring Senator Byrne that if he detects a measure of disquiet on this side of the House, it is not any desire on our behalf to interfere with his procedural and democratic rights; it is more a measure of disquiet at the petulant manner in which he sometimes calls a quorum.

I welcome the Minister of State to the House. The amendment relates to a technical change and does not appear to have any significant controversial element to it. Once the previous Government, with the support of all parties in the Dáil including Sinn Féin, but with the exception of the Labour Party, accepted in 2008 the argument in favour of guaranteeing the banks, a chain of inevitability was established which ultimately led to the Irish economy needing to be bailed out by the EU and others, including our nearest neighbours and friends in the United Kingdom who generously offered €3.8 billion, and unfortunately led us to losing our economic sovereignty.

However appalled we are at this and however much it grieves us to be in this position, we are democrats and bound by the decisions of the majority of the Oireachtas. Now that we are in government, we are contractually bound to uphold international treaties into which the State has entered. Much as everyone would wish this were not the case and that some other course was open to us which would allow us to become debt-free immediately and painlessly, unfortunately, such a route is not available to us. We have been left to deal with the legacy of 14 years of economic carelessness and simple incompetence. Looking back to find blame probably will not help us today, although it is necessary to do so. We note a new-found belligerence in Fianna Fáil unfortunately mingled with the same old delusions and denial. No doubt we will be entertained also-----

Darragh O'Brien (Fianna Fail)
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I am entertained now.

John Gilroy (Labour)
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-----by some type of utopian economic promise from Sinn Féin.

As an act of solidarity we have supported the stabilisation funds and now find ourselves receiving €67 billion. We will hear much fine talk about burning bondholders, walking away from our obligations as a State and perhaps pulling out of the euro but the question remains, and it has not been addressed by those who advocate such a course - perhaps it might be answered soon - as to how we would fund our public services, schools and hospitals and pay our teachers, nurses, gardaí and fire personal. What would happen if we pulled out of the euro to find our debts remain in euros while our wages are paid in a devalued punt? I have heard these arguments put forward as policy with bogus simplicity and dishonest populism. We have heard them repeatedly, including as recently as this morning on the Order of Business. However, we all know that nonsense repeated, no matter how often it is repeated, remains nonsense.

The European Financial Stability Facility Act 2010 passed through the Houses in June 2010 with some amendments tabled by Fine Gael and the Labour Party on the dissemination of information. Like everything, it was opposed by Sinn Féin but there was no great disagreement on either side of the House on the principle involved. If the original Act generated no great political heat on its journey through the Oireachtas, an amending Bill which seeks to expand the provisions of the original Act should pass through the House without, in the words of a former Senator, leaving blood on the blouse.

To expand our guarantee commitments to €780 billion which will allow lending capacity of €440 billion seems prudent as the EU has stated the existing fund is too small. Of course, if Spain and Italy were to follow us into bailout territory, no expansion of this facility would be adequate as the combined indebtedness of these countries is €3,350 billion. The widened scope of activity for the European Financial Stability Facility, whereby it may in exceptional circumstances intervene in the primary debt markets and, more importantly, in the secondary markets, seems to be a reasonable option which will not leave the secondary market operators a free run of the pitch, so to speak. It will allow the EFSF to become a player in its own right which has the potential to support in a wider way countries which are indebted.

The benefits for Ireland are substantial, and we hope everyone here would wish to see Ireland avail of these benefits and not use this debate as an opportunity for political party posturing. That we regret to find ourselves in this position hardly needs to be restated but now that we are here we had better make the best of it. Already we have seen the Government through the Ministers, Deputies Howlin and Noonan, achieve a substantial cut in interest rates with regard to the existing funding of the EFSF worth 2.47%, or €342 million, this year and this will increase to between €800 million and €1 billion as the drawdown continues. Allowing the EFSF to take active part in the secondary bond markets will help to stabilise bond rates for peripheral countries including Ireland. Ireland's ten year bond yields have already decreased from an unsustainable 14% to less than 9%-----

Darragh O'Brien (Fianna Fail)
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Back to where they were at the election.

John Gilroy (Labour)
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-----since the changes to the structure of the EFSF were announced in July. By any standard, this must be welcomed and a continued reduction in Irish bond rates will ensure we will be able to re-enter the markets sooner rather than later and regain the element of sovereignty we relinquished.

The changes outlined in the Bill are aimed at helping Ireland, Greece and Portugal in particular become fiscally sustainable. As Irish legislators we can only welcome this, irrespective of what we think of what led us here. Although it pains me to use the awful phrase "we are where we are", the Bill represents an upside for Ireland and a win for the negotiators on the Government side. I hope Senator Byrne and his colleagues, who easily and fully praise Chancellor Merkel and President Sarkozy for their new-found acts of charity by offering a unilateral reduction, would be generous and patriotic enough to recognise the quiet diplomacy of our diplomats and Ministers who renegotiated this and achieved a very substantial decrease in the rates. This needs to go on the public record and any attempt by Fianna Fáil to hide this fact is dishonest.

Paul Coghlan (Fine Gael)
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I call Senator Darragh O'Brien.

Darragh O'Brien (Fianna Fail)
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I thank the Acting Chairman.

Paul Coghlan (Fine Gael)
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I apologise. I should have called Senator Barrett.

Sean Barrett (Independent)
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It is only a small difference between Kerrymen and Dublinmen this week so we understand.

Michael Mullins (Fine Gael)
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One point.

Sean Barrett (Independent)
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I welcome the Minister of State and thank him for his speech. It was terrific to have a copy of it. He stated: "Now is a time for euro area member states to contribute to ensuring financial stability within the euro area." Reading the Bill, all I could do was to assent grudgingly. I realise opposition might be futile, but we will return to this in a few months because we are papering over the cracks in the euro area. This is because the problems are much more fundamental than we realised at the time, and the euro is flawed in its design. We did not put enough thought into it when we joined it. As we speak, the Scandinavian countries and the United Kingdom were correct not to join it. This raises the issue of economic expertise in Ireland and what the Wright report stated about the Department of Finance having only 7% of its people qualified. Serious people warned us this would happen prior to when we joined the euro and we did not take a blind bit of notice.

This measure is a bandage. I approve of bandages in the short term as they bind up wounds and stop the spread of infection. However, it is also the socialisation of inefficient banking. This was done nationally on 30 September three years ago and today the European banks are doing it. Their inefficiencies and wasteful lending are being visited on the taxpayer yet again. Due to the faults in the euro, it is estimated that to leave it would cost €11,000 per family. Based on the Colm McCarthy estimate, we are approximately €18,000 worse off and our GDP will be 44% less in 2013 than it was in the national plan. One of the faults of the euro is that massive irresponsible bank lending was funded by the currency.

In 2001, Milton Friedman stated in The Irish Times that the euro was adopted for political purposes and not economic ones as a step towards the myth of a united states of Europe. He stated he believed the effect would be exactly the opposite as the need for different policies, such as tightening monetary policy in Ireland or a flexible monetary policy in Italy, would produce political tensions that would make it more difficult to achieve political unity. He stated Ireland was stuck with the euro and asked:

How would you break out, and start all over again to establish a new monetary system, the punt? You are not going to give it up. You have locked yourselves together and thrown away the key.

They have locked themselves together and thrown away the key. That is the basic design fault.

It is incredible, if the Minister reflects on it, that there is no exit from the euro. Someone said to me that if a man in College Park was offering free trips to the moon, a big queue would form but what would happen if one saw in the small print or if it was not stated that there was no way back? What kind of people designed the euro that one must repeatedly paper over the cracks by measures such as this? That must be the first thing when one is asked to make a contribution towards financial stability.

Peter Sutherland as good as said today that he cannot foresee a solution without some form of Greek restructuring, which is probably a nice word for a default. He knows more about Europe than probably the entire assembly of the House. Who allowed Greece to join and who is compelling it to stay? Would it not have been better if there had been sensible rules on joining and Greece was allowed to go now under some arrangement, devalue its currency and get back into business? I do not see the measure as helping Greece very much at all because of the design faults.

Another design fault is the one-size-fits-all approach. As Milton Friedman pointed out and speakers previously indicated, the policy that is needed in Germany is different from the policy required in the peripheral and Mediterranean regions. In this country's case it was a disaster. I refer to the massive lending of euro funds by our banks in real estate and financial intermediation. There was an increase in personal lending by a net €57 billion. Real estate lending increased from €4.8 billion to €97.5 billion. Lending for financial intermediation increased from €18.3 billion to €97.5 billion. Lending in construction increased from €1.8 billion to €22.3 billion. By contrast, the increase in advances after we joined the euro in manufacturing and agriculture were €4.8 billion and €2.6 billion, respectively, amounting to only 1.9% of the total increase in advances. European banks were lending irresponsibly, to what Morgan Kelly called inferior rugby players running Irish banks. It has been a disaster for this country that there were no procedures to control the capital inflow and its use.

It contrasts with the exercise of economic sovereignty in the 1990s. When we did devalue in 1992 we experienced a period of growth afterwards. Throwing away economic sovereignty, which I support the Government in now seeking to retain and restore to this country, was a serious mistake. It was obvious that it would end up where it did on 29 and 30 September 2008. The reform agenda - the sticking plaster - must include a totally new regime for banks and a much smarter Department of Finance in terms of the treaties it gets us into, and a much more active Department in controlling public expenditure which to some degree includes measures such as the bailout. Putting in more money and returning to the markets encourages more wasteful public expenditure. The objective should be to get out of the markets and to run the country on a balanced budget basis. I am less than enthused about the goals.

In terms of problems such as regulatory capture, the growth of bureaucracy and interest groups, I support the whistleblower legislation to deal with that. In retrospect whistleblowers might wish to look at the 2005 report from the OECD which pointed out that public expenditure in this country was rising over 5% when it was actually declining in real terms in Germany by 0.5%. We had tied ourselves to Germany and pursued the exact opposite policies. That was bound to come unstuck. Those in the OECD who wrote the whistleblower part maintain that in this country the report was diluted. We were warned. It would be useful if we could find the original report. We were warned that pretending we were honorary Germans and behaving in the exact opposite way and being allowed to do that within the eurozone was bound to lead to the kind of tears we have experienced in recent times. I hope the whistleblowers in the Government will look at that.

The definition of successful macro-economic management was made by William Martin, the chairman of the US Federal Reserve. His most famous quote was about the trick being to take away the punchbowl just as the party gets going. Ireland had a European finance punchbowl. We gave in more punchbowls and then we gave the banks a free lift home with more than €60 billion worth of our money.

I do not see anything fundamental in what the Minister has brought before us to reform a system which was poorly designed and was a disaster for this country. Looking at the island of Ireland the sensible part was the Northern Ireland part, which stayed out of the euro. The euro is so flawed it cannot succeed. The reason we have the Bill today is that Europe has bankrupted the IMF. All the money that is used to bail out inefficient governments worldwide is gone. Europe has to get its act together, think the policies through and stop making decisions at 4 a.m. When Irish people reject European initiatives, which were flawed, as we did in two referenda, I hope the Government will not again run referenda twice because perhaps the people got the result right the first time.

Darragh O'Brien (Fianna Fail)
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In response to two points raised by Senator Gilroy, I put on the record that we gave credit where it was due - excuse the pun - to the Taoiseach, the Minister for Finance, Deputy Noonan, and the Minister for Public Expenditure and Reform, Deputy Howlin, for the work in which they participated to ensure a rate reduction not just for this country but for other countries. I have no difficulty saying that they did a good job. All of us are keen to ensure that citizens are protected as best as possible. If savings accrue to the State, which from looking at the figures could be in the region of €800 million or €1 billion per annum, that must be welcomed. I welcome it unequivocally.

Since the Government came to power it has seen that this is not simply an Irish crisis. I agree with a number of points made by Senator Barrett. In particular, he said that Europe has been far too slow in dealing with the economic crisis. Mixed messages are being sent. Europe is not working as a community. Peripheral nations exist. The axis of power has definitely swung towards France and Germany. I do not get a sense from them that they are dealing with their partners in Europe on the basis of community but on the basis of sovereign state interests.

With that in mind I have a couple of questions to pose to the Minister. As part of the new arrangements in the EFSF each state must ratify and agree the new legislation. Finland and other countries have sought additional collateral from Greece in particular before signing up to it. The Finns are the most prominent in that regard. None of the rate reductions to which I referred have been passed on yet because they are not in place. It is my understanding that the reductions will not come into effect unless all countries sign up to the legislation. Perhaps there is an update on the current Finnish position and how the negotiations are going with them and other countries.

The term "economic sovereignty" has been bandied about. I speak from my own point of view and do not expect everyone to agree with it. I and some of my colleagues met the troika in July of this year. We put that very question to the members on the Government saying it could not do X, Y or Z because we have lost our economic sovereignty. That is not true. Any Government has to work within the constraints of what is available to it, as was the case with previous Governments and the four-year financial package. It is for the Government to make choices on how it gets to the 3% deficit reduction target by 2015.

I reject the idea that this country has lost its economic sovereignty. It has not. I accept that the country must work within the confines of an international deal that has been put in place. It has had to do that as part of the eurozone in any event. When we put it to the members of the troika, they rejected that too. I will not be overly political but promises have been made on no income tax increases or social welfare rate cuts. Two weeks ago the Taoiseach said he would have to go back and negotiate with the troika on whether it is possible not to have any income tax increase. There is no specific reference in the agreement to income tax. We are talking about €2.1 billion being raised in taxes.

It is not true that we must go back and negotiate no increases in income taxes. The choices are for the Government to make. I know very well that they are difficult choices that will not meet with broad agreement. I have no doubt there will be issues that are contentious and controversial. The Government must be straight with people, however, and it cannot hide behind the deal with the troika, saying, "Our hands are tied because we cannot do this, that or the other". The choices within reaching the 3% by 2015 are for the Government, as well as for the Seanad and the Dáil.

The fiscal plan will be published shortly and will be up for discussion in both Houses, which I welcome. It is a good initiative to show citizens in advance what we are doing in each area. If the new EFSF facility is passed by all member states and savings to this State are in the region of €800 million, will the Government's targets take that into account? What will those choices mean for the general public? The Government is targeting €3.6 billion this year, with a further €3.1 billion next year on the basis that €800 million will come back to us next year. Given those savings, will the Government revise those targets downwards to ease the financial pressures?

We have been talking about the banking crisis, both here and in Europe, for months. I am seeking an update in this regard. The Government has continued to follow a policy - on which I did not agree with the previous Government either - of trusting AIB and Bank of Ireland to lend €3 billion each year to the business and SME sector. It is patently obvious that is not happening. Where is the national strategic bank, which was a good idea? It is necessary because I do not trust our two pillar banks. Is the national strategic bank plan still on the table? How regularly is the Government dealing with AIB and Bank of Ireland to ensure that they are hitting their lending targets for the economy?

Aideen Hayden (Labour)
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I welcome the Minister of State to the House. There is a Chinese curse which states, "May you live in interesting times". The times we live in are very interesting indeed and, like all Members of this House, I am almost afraid to turn on the radio every day to find what state Europe is in now. We all receive representations, particularly from older people who are worried about the collapse of the euro and possible loss of their savings. Economic stability within the eurozone is critical for this country. As my colleagues have said, the Bill before us is not a controversial measure. I listened to a similar debate in the Dáil yesterday and it was interesting how measured it was, with a couple of notable exceptions. It is irresponsible for some Members of the Oireachtas to make statements about burning bondholders and express other extremely simplistic attitudes.

Thomas Byrne (Fianna Fail)
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That was the Labour Party's policy before the election.

Paddy Burke (Fine Gael)
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Please allow Senator Hayden to continue without interruption.

Aideen Hayden (Labour)
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In effect, they are proposing what is economic isolationism for this country. One of the advantages of having this debate is not necessarily to examine the Bill's specifics, which in the main are not controversial, but to examine the wider issues around the euro and the stability of the single currency. Senator Barrett referred to the 1990s, which I would like to address briefly. I remember studying economics back in the 1970s when Ireland was categorised as a small, open economy - nothing better than a cork floating in mid-Atlantic. I remember the 1990s vividly when the Irish punt went from £1.20 sterling down to £0.80. Mortgages were trading at 17% and the situation was utterly distressing for the vast proportion of Irish people who lived through that era. We should bear in mind the stability the euro has brought to this country, particularly to ordinary people. There are criticisms nonetheless. This Bill is designed to engender stability. If anything, I would have a criticism of the level of the fund. Given what is currently going on in the international domain, the level of the stability fund will be insufficient. That matter will have to be addressed. There are cracks and to some extent Senator Barrett is right to say they are being papered over.

I would like to raise three issues in the spirit of this debate and looking at the wider issues of European stability. First, I have always supported the European project but there have been some fundamental flaws. We all witnessed the failure of European foreign policy during the break-up of the former Yugoslavia. I agree that the eurozone has been too slow and cumbersome in reacting to the current crisis and we need to learn from that. Surely a run on the euro could have been anticipated. There is plenty of international evidence of runs on other currencies and the sharks will always be circling when they can see weakness.

Second, it is a fact that the European experience has not always been in Ireland's interests. It will be an issue for us in future as to how we dealt with the eurozone at a time - I will not engage in bashing the previous government - when it did not suit this country to have euro interest rates at such a low level. They did not suit the economics of this country or, indeed, other peripheral regions. Similarly, as Senator D'Arcy has pointed out, rising interest rates do not suit this country now.

Third, I strongly believe that the weakness of our foreign policy, in the past decade in particular, has weakened Ireland's capacity to engage in supporting our interests. In the past it was beneficial to have a strong relationship with other peripheral countries. Through this we managed to achieve moving European funding away from the Common Agricultural Policy and through the Structural Funds, which were very beneficial. It is in our interests today to engage more with the other peripheral regions to ensure that in future the development of the euro is designed more to favour the needs of peripheral countries, and Ireland in particular.

Feargal Quinn (Independent)
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I find this debate so interesting and in particular the views of Senators Hayden and Barrett. I wish they had been here in recent years to make some of those arguments. I wish Senator Barrett had been here back in 2001 when we could have heeded him. To a certain extent, however, they are talking about the past. Senator Hayden is right to mention the European movement and what went wrong in the past. Perhaps there were things we should have done differently, but we are where we are now and, therefore, the Bill is a necessary measure. We must help a fellow European member state, given that we were helped out when we needed it. The situation in Greece and some other countries in the eurozone should make us reflect more realistically on our own situation and what could have happened here. Greece is still procrastinating on introducing measures just to get back on track. I am due to visit Greece where I have friends. In reading the newspapers every day, one realises how easily that could have happened to us.

The Greek media have published a list of 15 austerity measures which, it is said, the troika was demanding the socialist government implement in order to receive the next tranche of aid. The measures include firing another 20,000 state workers, cutting or freezing state salaries and pensions, increasing heating oil tax, shutting down loss-making state organisations, cutting health spending and speeding up privatisations. How difficult will that be for them to take? One can see just how difficult it is by looking at the newspapers and television. International lenders have told Greece that it must shrink its public sector to avoid running out of money within weeks. It is a reminder of what could easily have happened to us, so we really have to be careful and wary of these developments.

The measures introduced here have allowed us to avoid many of what would otherwise have been incredibly harsh steps. It is interesting to note that one Greek newspaper suggested that the Greek Prime Minister, Mr. Papandreou, is considering calling a referendum on eurozone membership as a way of strengthening the Greek Government's hand in dealing with the debt crisis. I am not sure how this will be achieved but it is a reminder of the intensity of the situation.

In a related story, the Swiss firm, Roche, has halted shipments of cancer drugs and other medicines to a number of public hospitals in Greece after years of unpaid debts. The European Commission has denied its austerity measures are to blame for a decision by that company to stop the delivery of cancer drugs to Greek public hospitals. What is very worrying is that the company has warned Italy, Portugal and Spain, that they might be next. On the other hand, EUobserver writes that Ireland, which like Greece and Portugal is under the EU-IMF bailout, has not had any trouble paying its bills. The term, "any trouble" might not be the appropriate term. We should be thankful that we are in this situation because we have taken action to get ourselves back on track. It is the horror of what could have happened and could yet happen if we do not get it right.

We have had positive good results in recent times. The EUROSTAT figures show that our trade surplus was the third highest in the EU in the first half of the year. Our GDP increased to gain 1.6% today. There was a drop in export growth last month but we are still doing very well. There has been a 7% rise in exports over the period to €46 billion while imports rose by 9%. This is an amazing result. Ireland also has the second largest annual fall in EU hourly labour costs at 3.5% during the second quarter of 2011. We are becoming more competitive. However, I am quite concerned about the danger of complacency. The European Union noted it was pleased with Ireland's progress. There has been much bad news and doom and gloom. Both the Minister of State and I were in Drogheda recently. We listened to people who are trying to get on top of things. There is a belief that in recessionary times, nobody succeeds but I know of people have are succeeding in these tough times.

I support the Bill and I understand the Minister's intentions. This has been a good debate but we must ensure we do not become complacent.

Kathryn Reilly (Sinn Fein)
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I welcome the Minister of State to the House. As other speakers have mentioned, my party opposed the original legislation which this Bill seeks to amend. At the time, my party colleague and then boss, Arthur Morgan, argued that the loans facilitated for Greece were not an act of solidarity to assist a beleaguered member state but rather a massive bailout for toxic banks. He predicted that this would lead to further difficulties and add to the debt burden. The Government at the time, in common with this Government, dismissed the claims and promised that the legislation would deliver stability and safeguard our economy, but since that initial legislation, some of his prophecies have, sadly, been vindicated. Austerity, bailouts and cuts did not work and Greece is looking at its next bailout.

The original legislation failed. It was a bad deal then and it will be a bad deal now and in the future. The changes we are discussing have come about as a result of a further round of economic changes arising from the July summit. It should be noted that this Government has consistently held to the terms of the original and maintained the position that the terms could not be substantially changed. It has continued to implement the cutbacks demanded by the troika on the basis that change was not possible, yet we have seen that, in July, the terms were changed to reflect that the deal was failing the Greek economy. We need an Irish Government which will stand up for Irish interests and not just sit on the sidelines and wait for changes to suit other states. We have become a beneficiary of the consequential reduction for Greece and this is to be welcomed. However, it must be remembered that this is only a fraction of the money paid to bail out the failed banking sector.

The original deal remains a bad deal because its fundamentals are wrong. This is not a dogmatic or ideological judgment but rather it is based on the evidence. We can note what is happening in our economy, what is happening to our people and the continual implementation of cuts and cutbacks in public services, the sale of public assets and the introduction of aggressive taxes come December. There is talk of growth but at the same time money and investment is being taken out of the economy.

It is both our people and our economy which suffer and nearly half a million people are unemployed, of whom 20% are young people under the age of 25. More than 40,000 people have emigrated and tens and hundreds of thousands of people are struggling to pay mortgages and utility bills and to buy food. The response has been to put a greater burden on poorer households by means of the household charge.

This is also a bad deal for Europe. Since the meeting in July, the euro has lurched from one crisis to another. Italy and Spain are now in the sights of the speculators, as are the French banks. Greek bond yields are now at unprecedented high levels and every commentator and economist is talking about default.

This legislation which we are being asked to consider had already failed the test of time before it had been presented in the House. This is not a crisis of sovereign debt and it cannot be solved by the nationalisation of private sector debt and the privatisation of national assets. This is a banking crisis brought about by the markets and years of reckless borrowing and lending, as other contributors to the debate today have mentioned. The level of bailout placed on national governments has brought economies to their knees. The July agreement sought to have governments solemnly reaffirm their inflexible determination to honour fully their own individual sovereign signature.

Regardless of the shapes thrown by the Government to the media, it has signed up to the Anglo Irish Bank promissory note and it is unwilling to go after many of the bondholders in any concrete way. Worse, given the lowering of economic activity in the State and the high levels of unemployment, the summit affirmed to meet commitments to sustainable fiscal conditions and structural reforms. In the case of Ireland, this is a commitment by the Government to fully implement the austerity programme agreed by Fianna Fáil in 2010. However, another way is possible, as referred to by Senator Barrett. Now is the time for euro area member states to contribute to ensuring financial stability within the euro area. To do this what is required is a clear view of the scale of the problem facing all the European banks. Given the interconnected nature of the problem, it requires a European-wide solution to address the European banking crisis, including significant burden-sharing.

There is a need for a banking solution to the banking problem. We need to open up fully the asset books of all the banks across Europe. We need to have a look at the hidden liabilities and the true asset values in order to have a better idea of what we are facing. The EU-wide private sector debt cannot and should not be shifted onto the national balance sheet of small peripheral and open economies. Sovereign debt issues can be addressed and resolved by investment, employment and a return to growth.

We must look for a solution to the core issue and work on what is in the best interests of the Irish people. Sinn Féin believes there can be employment and growth across Europe. My party welcomes the reduction in the interest rates but this is only a returning of a small proportion of the moneys used to bail out the European banking system. Sinn Féin believes that the EFSF, European Financial Stability Facility, in its current form, will not deliver economic growth or employment and neither is it in the interests of the Irish people or the people of Europe. We will oppose the Bill for all our worth and argue once more for a more comprehensive and sustainable solution to the current crisis.

Fergus O'Dowd (Louth, Fine Gael)
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This has been an important debate. Whatever our political views, we are all here for the good of the country and everybody acknowledges that. I thank the Seanad for facilitating the taking of this legislation in one day. It is a unique and special circumstance, exceptional in every respect, and I acknowledge the commitment of all parties here to ensure we complete it. I will try to reply on all of the issues that were raised, and if any issues remain outstanding when I have finished, I am sure the Department and the Minister for Finance will be happy to respond on them.

Senator Byrne commented on how long it has taken for this Bill to come before the House. The Heads of State or Government agreed to change the European financial stability framework, EFSF, on 21 July and following this officials were engaged in the working out of the technical details. As soon as these technical issues were finalised, the Minister for Finance brought the Bill to Government and received permission to publish it in early September.

Senator Byrne also raised a number of other queries. As outlined by the Minister for Finance, Deputy Noonan, yesterday in the Dáil, there are specific Exchequer primary balance targets that Ireland is required to meet under the terms of the programme of financial support. These are set out in a technical memorandum of understanding which is part of the programme documents. As they are primary balance targets, they exclude Exchequer debt interest payments. They also follow from the exclusion of expenditure related to the banking sector recapitalisations and adjust for over or under performance in Exchequer tax revenues and PRSI receipts. We have adhered to the first three of those targets, which were set for end-December 2010, end of March and end of July 2011. The next target is set for the end of September 2011. In December 2010, the ECOFIN Council, in a revised excessive deficit procedure recommendation, decided that Ireland's general Government deficit must not exceed 8.6% of GDP in 2012. The recently announced interest rate reductions will be certainly of benefit in helping us to achieve this target.

There are other pluses and minuses, however, that we must take into account in formulating a view on the likely deficit for next year and the level of adjustment that will be required to ensure we adhere to the deficit target. The Minister, Deputy Noonan, will set out revised economic and fiscal forecasts in next month's pre-budget outlook. These forecasts will take account of the most up-to-date information available, including Quarter 2 national accounts data from the Central Statistics Office and the end of September Exchequer returns. As Members know, the Government is committed to reducing the general Government deficit to below 3% of GDP by 2015. The Minister for Finance will bring forward the budget in December.

Reference was made to the interest rate and the issue of savings. I understand from the NTMA that there will be a relatively small benefit this year from the recently confirmed interest rate reductions. A coupon payment is due on the first European financial stabilisation mechanism drawdown towards the end of this year. On the basis that the full margin cut is applied to this loan for the full life of the loan, the cash savings will be in the order of €130 million.

With regard to the position of other member states, the amendments to the European Financial Stability Facility must be approved by all 17 euro area member states. A number of states have confirmed that they have already approved these amendments and all countries have committed to passing these amendments by mid-October. Ireland, Portugal and Greece cannot benefit from the reduced interest rate and increased flexibility until the revised EFSF is implemented. This is one of the main reasons the ratification of the EFSF and the revised Greek loan facility agreement are now an urgent priority.

Events in the European Union are moving rapidly. I am well aware, as is the Government, that we need to continue to look at the bigger picture. I believe our contribution to this debate has been influential, despite our current difficult circumstances. I commend the Bill to the House.

Paddy Burke (Fine Gael)
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When is it proposed to take Committee Stage?

Michael D'Arcy (Fine Gael)
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Now.