Treaty on Stability, Cooperation and Governance in the Economic and Monetary Union: Statements

Treaty on Stability, Cooperation and Governance in the Economic and Monetary Union: Statements

Thursday, 17 May 2012

Senator Ivana Bacik: I welcome the opportunity for a renewed debate on the stability treaty. This is the third time we have debated this issue in the Seanad. We debated the treaty itself in the first place and then we debated the Bill and we are now debating the matter again. I am delighted we were able to facilitate this debate because it is so important given how close we are to the date of the referendum on 31 May.

Like the majority of speakers who have spoken before me I too am calling for a “Yes” vote. I am out campaigning actively for one. I have debated publicly against those on the “No” side and I am happy to debate with them again in this Chamber. I am happy to debate the issue on the doorsteps and out and about also. It is always important on both the “Yes” side and the “No” side that we seek to conduct the debate in a respectful and dignified fashion and that we do not resort to scaremongering, misleading, overstating or making false claims. All of us would agree with that in principle but it is unfortunate therefore that there are some on the “No” side – I emphasise that it is only some – who have made outrageously misleading claims in the course of the debate. I do not refer to the debate in the Seanad Chamber today but to the debate more generally. In particular we have seen in the past 24 hours an extraordinary link being made between the stability treaty and our rate of corporation tax. There is absolutely no link between the stability treaty and the issue of corporation tax. The Government has made very clear its commitment to retaining Ireland's 12.5% corporation tax rate. That will remain clear when the treaty is ratified, assuming it is ratified. It would be extraordinary for the vast majority of businesses and employers in the country who support a “Yes” vote to do so if there was some sort of link between the treaty and an undermining of Ireland's tax rate. That is one claim that has to be firmly nailed.

The other glaring issue that has dominated the debate is the use of the “A” word by the “No” side. I refer to the issue of austerity. There is an insistence on the “No” side to call this the austerity treaty, despite the fact that the full title is the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union. Stability treaty is the most accurate shortened version. I take issue with RTE which insists on calling it the fiscal treaty. That is not the correct shortened version. An editorial in, I think, The Irish Times today, very usefully, deals with this issue of austerity and criticises what the writer calls the simplistic refusal of some “No” campaigners to acknowledge that the alternative to what those campaigners call the austerity treaty is, in fact, austerity in spades. The Irish Times goes on to refer to the naive and wishful thinking on the “No” side and the irresponsible feeding of a fanciful narrative to a people who are anxious for some sort of reassurance. Nowhere is this more evident than in the “No” side's refusal to accept that access to the European Stability Mechanism, ESM, would be a good idea for Ireland. It is utterly irrational to rule out access to the ESM. As my colleague, Senator Gilroy, pointed out, the question is where else will we get the money. If we cannot access the ESM, and if we have ruled ourselves out of access to it, we are not guaranteed or assured of access to any other fund. Those who argue that we could seek to access IMF funding or that our European partners will not let us down are engaged in the sort of fanciful narrative The Irish Times has, rightly, criticised.

There is no issue of blackmail. We are not being asked to sign up to a treaty under threat of losing access to the ESM. The issue is one of reassurance for the states that are funding the ESM that the states that are accessing the ESM will have signed up to certain targets. The majority of those targets have already been agreed at EU level as part of the Stability and Growth Pact. Access to the ESM has come to be a dominant issue in the debate.

The other issue is the ESM itself and what it entails. This week, the Government published the European Stability Mechanism Bill 2012 in order to ensure that people are fully informed when casting their votes on the stability treaty. The Bill, and the terms of agreement that led to it, make clear that Ireland's capital contribution is capped at 1.59% of the total €80 billion, amounting to a total of €1.27 billion over three years. This is a small price to pay for the security and certainty that will come with access to the ESM, especially in the context of the €36 billion of funding we will require to run the State in 2014 and 2015. Those on the “No” side are fully aware of the level of Ireland's contribution. They are also fully aware, because it is on the public record, that the capital contribution to the fund is fully factored into our latest budgetary forecasts and will not impact on our general deficit target of 8.6% in 2012, which we are well on the way to reaching.

There has been some talk about callable capital in the ESM. It is important to note that the callable capital is not expected to be called upon and has no impact on our measured debt levels or our deficit, so it does not affect our deficit reduction plans. There has been a good deal of scaremongering about what the ESM entails. The Bill is on the website of the Department of Finance and is clear for all to see. The commitments under the ESM are clearly set out and separate from the commitments under the stability treaty, albeit that to access the ESM after 1 March 2013 we need to have ratified the treaty. That is a key issue for many people in debating the pros and cons of the treaty.

Finally, we must deal with the consequences of a “No” vote. Growing instability and chaos in Greece is bringing home to people the need to ensure maintenance of our steady path to recovery and stability in our own finances. Senator Gilroy has pointed out to me a comment made some time ago by Alexis Tsipras of the ultra-left Greek party, who did not engage in the recent attempts to form a Government. He said some time ago that the EU, led by Berlin, is engaged in a high stakes game of bluff and that the threat to accept more austerity or exit the eurozone would never happen because the eurozone itself had too much to lose. That is wishful thinking. It brings home to us in Ireland the vital importance of maintaining stability in public finances when we see what can happen in other countries and the political, as well as the economic, fallout in Greece.

Other colleagues, most recently Senator Conway, referred to the great benefit we have derived from foreign direct investment. The job creation figures in recent months alone are considerable. Thousands of jobs are coming in because companies from abroad feel confident in investing in Ireland because we are a stable economy on a steady path out of our current programme. We need to ensure the maintenance of that stability. We need to ensure growth but we cannot have growth without stability. All of us, particularly those of us in the Labour Party, are very supportive of Francois Hollande's efforts to ensure that there will be a growth package alongside the fiscal restraints contained in the stability treaty. That is very important. The fact that we will see a growth package developed alongside the treaty and in parallel with it will be a positive factor in speaking in favour of the treaty.

The treaty aims to maintain the stability of the eurozone. It aims to maintain security of confidence in the eurozone countries. It is about much more than Ireland. As everyone is now aware, Ireland has no veto on the treaty. If we vote “No”, ratification of the treaty will go ahead and we will be left behind, with all the ensuing instability and potential political fallout that will involve.

For all of those reasons, and many more, I will be urging everyone I meet between now and 31 May to vote “Yes” to the treaty in the referendum on that date.