European Stability Mechanism Bill 2012

7th June 2012

I am delighted to welcome this legislation, which will put the European Stability Mechanism in place. It is extremely progressive and I salute our Minister for Finance for introducing it. He also avoided having to pay the €3.1 billion promissory note that would have had extraordinary implications for the country which would have involved the removal of real services for people. Those two achievements are the backdrop to today.
Last week, in passing the treaty, the people acted wisely and prudently and should be congratulated for that. The passing of that treaty was a prerequisite to accessing the ESM. The European Stability Mechanism will establish a fund of initially €80 billion but potentially €700 billion that will be available to member states as a backstop when funding is needed in an emergency, albeit with conditions. It will also provide a safety net for us as we go into the bond markets to borrow. Those are the practical implications for the country but the greater practical implications for Europe are that it is part of the process of recovery and stabilisation of the euro and European finances, restoring confidence internationally in the euro and stability in the market place. That is a crucial element.
This is another stage in the rectification of the difficulties within the euro. Obviously this will involve introducing prudent financial management, as the terms of the treaty dictate, at national level. That will assist in gaining international credibility and involves conditionality for any available funding. Naturally that will encompass achieving proper regulation in the financial area. This is an extra dimension that is equally important. No one disputes the contention by those opposing this today that we need regulation and control of the financial market and banking sector. That is implicit.
This creates the conditions that will allow us to move on to the next stage that is parallel with prudent financial management, namely, investment and stimulus. There must be a job stimulus package within Europe, within the eurozone and, specifically, in Ireland. There is no doubt we must tackle the issue of youth unemployment, which is a problem throughout Europe. I will say to the Minister for Finance and to the Minister of State with responsibility for small business, Deputy Perry, who is doing extraordinary work in this area, that it is vital that we put in place a jobs stimulus package to address youth unemployment and that we get investment in necessary infrastructure, thereby creating jobs. Implicit in the prudent vote of the Irish people is a belief this should happen now.
That must be done in parallel with the addressing of the personal debt crisis. If we can bring that to manageable proportions and create structures that will create confidence, it will increase consumer demand and get the economy to move in a more normal way again.
The European Stability Mechanism is a critical tool in stabilising the euro internationally, the eurozone countries and in providing a backstop. It creates the conditions whereby the jobs stimulus package can be put in place across Europe. The two are in no way mutually exclusive, the contrary is the case, the two work together. The question of personal debt can be also tackled now.
This is another stage in dealing with the crisis. It is by no means the end of the road but it is a critical stage en route to a solution. It must be done in parallel with spending policies that will result in job creation and consumer demand. It is unquestionably the case that austerity cannot work on its own and that the two must be done in tandem. It is also unquestionably the case that those from the Technical Group who oppose this Bill have not posited an alternative to the ESM. What they say is beautiful rhetoric with a great populist quality but the truth is that they have not come up with any alternative.
It is good that we are progressing this legislation quickly and I am glad to support it.

Senator Joe O'Reilly representing Cavan & Monaghan 2010. | An ExSite website