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Treaty will not solve the EU crisis nor fix the Irish economy

18 April, 2012 - by Peadar Tóibín TD


Speaking on the debate on the 30th Amendment to the Constitution, Peadar Tóibín, Sinn Féin spokesperson on jobs, enterprise and innovation said:
“The Austerity Treaty will not solve the Eurozone crisis nor will it fix the Irish economy.
“In Ireland these policies have delivered job losses, the Universal Social Charges, bin changes, septic tank charges, household charges, VAT increases and water charges. Ghost estates have been joined by Ghost Main Streets. 1,900 businesses have closed in the last year. Some 50,000 jobs have been lost in the last five years in retail and another 30,000 are in jeopardy.
“History demonstrates that if the United States was signed up to this treaty in the great depression Roosevelt’s New Deal would not have seen the light of day and the United States would not have been lifted out of the great depression.
“Yes, we have to live within our means. Levels of debt and spending are not sustainable. But let’s not rewrite history. The unsustainable debt that faces this state arose out of the nationalising of banking debt. A process continued by this government.
“Some commentators have sought to liken the national economy to a household budget. All households will seek a loan in times of trouble, to feed, house or cloth their children. “Businesses by their very nature rely on credit to grow. Few businesses make a profit without going into debt first. This application of this treaty would remove these options
“What a household, a business and a state needs is flexibility. To pay down debt when the going is good, and borrow to invest when required.
“In removing this flexibility the Treaty is a major attack on Irish Sovereignty. If we want to see what such a loss of economic sovereignty looks like we only have to go 100 miles to the Belfast.
“The reality is that the Executive lacks the powers to fully manage the economy and has to look on at government in London that has no mandate for the north, but sets the budget.
“It is frustrating. It is wrong and it is undemocratic. And it fails the people in the North. That is why Sinn Féin is about returning full economic powers to Ireland.
“If this government is comfortable with the idea of becoming provincial administrators accountable to Brussels then let them be honest. But that is not the vision of Sinn Féin. It was never the vision of Collins, Pearce or Connolly.
“Partnership with in the EU should be on the basis of independent sovereign nations working for mutual benefit. Our relationship with the EU should be engaged, confident, proactive and critical when necessary. Our government should unashamedly put Irish interests centre stage of that engagement.
“We need is investment in Jobs, EU Banks need to be cleansed of toxic debt. Debt needs to be written down. The ECB needs to be the emergency lender of last resort. This Treaty fails to address these issues and removes the tools and options to invest and grow the economy.”

Go raibh maith agat, a cheann comhairle.

Ba mhaith liom buíochas a gabháil do Teachta Mary Lou McDonald for the detailed and informed overview of the Austerity Treaty that is to be placed before the people.

We are told that this is about being at the heart of the EU yet it is not an EU treaty. We are told that this treaty will prevent the repeat occurrence of the economic catastrophe engulfing the Eurozone by enforcing rules that were actually adhered to by countries such as Spain who, guess what, find themselves at the heart of the turmoil and crisis.

We are told that this treaty will create stability and confidence --- by continuing the policy of austerity that has led to double dip recession in the EU, unemployment rates of nearly 25% in Spain and youth unemployment of 50% in Greece. We are told that that this treaty will create jobs by continuing a policy that has led to 440,000 people being unemployed in the state and 76,000 emigrating from the state last year.

I hope I’m not pointing out the obvious here but unemployment, austerity, not being able to provide food or health care for children are not the ingredients of stability.

I would caution also the government parties and Fianna Fáil not to peddle the lie about jobs again. In Lisbon they built their campaign around the promise of jobs. Since Lisbon 170,000 jobs have been lost. The 440,000 people unemployed many living on the edge have very little tolerance for this sort of lie again.

The people of Ireland have experienced for themselves the true meaning of Austerity. They understand it through job losses, Universal Social Charges, bin changes, septic tank charges, household charges, VAT increases, water charges much water etc. Ghost estates have been joined by Ghost Main Streets. 1,900 businesses have closed in the last year. 50,000 jobs have been lost in the last 5 years in retail and another 30,000 are in jeopardy.

As a result the people of Ireland are all too aware what the Austerity Treaty really means. It means the Unemployment Treaty, the Emigration Treaty, the School Closing Treaty, the Hospital Bed Closing Treaty, Garda Station Closing Treaty. The people of Ireland are not stupid, they can join the dots between the policies being delivered by the government which are inherent in this treaty and the circumstance of their lives.

People are asking why is this happening. The figures tell us that there was a radical increase across the EU in private debt. Much of it has proved to be toxic and unsustainable. The previous government and the French and German core took an ideological position that private bondholders were to be bailout at all costs. As a result the wealth of the nation and the future of a whole generation has been handed over to unknown bondholder.

The next logical question is will it work. The Austerity Treaty will not solve the Eurozone crisis nor will it fix the Irish economy. It does not solve the crisis in private debt. In fact it worsens it. It will deepen the recession and lead to greater levels of instability at home and across Europe. The policy inherent within the treaty has already led to the EU entering into recession twice is a limited period of time. EU recession bodes extremely bad for Irish exports. Irish exports is the singular basket within which this government has placed all its eggs.

The fundamentals of the treaty are based on the so called ‘Six Pack’ modifications to stability and growth pact.

At the time the Labour MEP’s rightly opposed these. Less than six months ago Proinsias de Rossa said of the Six Pack, ‘legislative package will reinforce the EU austerity programme driving us into recession’, and added, ‘four of the so called Six Pack are economically misguided, will kill growth, destroy jobs and derail economic recovery’

Six months ago that was the position of the Labour party. I would challenge the Tánaiste to outline how this Treaty fixes the failings of the Six Pact.

Article 3 of this treaty seeks to make structural deficit targets permanent and binding. It puts a nail in the coffin of Keynesian counter cyclical stimulus. The key provisions of Article 3 include a new structural deficit target of 0.5%; a restatement of the existing Stability and Growth Pact deficit target of 3% and debt target of 60% of GDP; a requirement for states who breach these targets to return to them rapidly by reducing the excess portion of their debt ratio by 1/20th a year. This will inflict budget cuts for years after this government has left office. As my colleague has stated this could also mean fines of up to €155 million being levied on Ireland.

If the United States was signed up to this treaty in the great depression Roosevelt’s New Deal would not have seen the light of day and the United States would not have been lifted out of the great depression.

We have to live within our means for sure. Levels of debt and spending are not sustainable. But let’s not rewrite history. The unsustainable debt that faces this state arose out of the nationalising of banking debt. A process continued by this government.
Labour may cat call on the issue, may stand over their position in opposition. But what have they delivered in government. – More money to the banks and bondholders.

Some commentators have sought to liken the national economy to a household budget. This analogy does not hold true. No household will not seek a loan in times of trouble, to feed, house or cloth their children. Businesses by their very nature rely on credit to grow. Few businesses make a profit without going into debt first.

What a household, a business and a state needs is flexibility. To pay down debt when the going is good, and borrow to invest when required.

This treaty is a major attack on Irish Sovereignty. If we want to see what such a loss of economic sovereignty looks like we only have to go 100 miles to the Belfast.

Many in the government benches have raised the policy decisions of the Executive. The reality is that the Executive lacks the powers to fully manage the economy and has to look on at government in London that has no mandate for the north, but sets the budget.

It is frustrating. It is wrong and it is undemocratic. And it fails the people in the North. That is why Sinn Féin is about returning full economic powers to Ireland.

If this government is comfortable with the idea of becoming provincial administrators then let them be honest. But that is not the vision of Sinn Féin. It was never the vision of Collins, Pearce or Connolly.

Partnership with in the EU should be on the basis of independent sovereign nations working for mutual benefit. Our relationship with the EU should be engaged, confident, proactive and critical when necessary.

It should be intellectually independent. Our government should unashamedly put Irish interests centre stage of that engagement. Instead we have Irish governments that are intellectually deferential and are passive and docile in the face of other member state self-interest.

This culture that simply accepts what is handed down to us is not good for Ireland and it is not good for Europe. Seeking favour by being a yes man and failing to robustly contribute to the debate weakens the quality of the debate necessary to halt the economic slide of the EU.

The EU is not the community organisation that we joined up to. Treaty by treaty, power is centralising towards the French and German core to the democratic detriment of the periphery.

Self-determination and independence is core to Sinn Féin. It was the reason we were founded in 1905 and we still strive for full Irish Self Determination. I believe that self-determination and independence is central to the vast majority of Irish people. Not for some fluffy romantic reason but because Ireland unfree will never receive the economic prioritisation nor focus that it deserves, that economic policies designed for the needs German or French economic cycle more often than not damage the Irish economic cycle.

One of the major weaknesses inherent in the single currency was the lack of a correcting mechanism to offset German and French centric monetary policy. Given that Ireland’s economy is 1% of the EU economy monetary policy is seldom if ever designed with Irish needs in mind. As a result Ireland requires flexible fiscal policy to offset common monetary policy.

We need is investment in Jobs, EU Banks need to be cleansed of toxic debt. Debt needs to be written down. The ECB needs to be the emergency lender of last resort. Only this way can we re-entry to bond markets and reclaim our independence.

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