Yes vote important step on road to recovery- Costello

10 May 2012

by Cllr Joe Costello

I am sure that everyone here is keenly aware of the challenges facing this country and the wider global economy. The Government is committed to meeting these challenges.

The Irish economy is growing again, our public finances are under control and the Government is using its strong political mandate to build upon this to deliver long term, sustainable growth. We are on track to bring the deficit below 3% of Gross Domestic Product by 2015. We have restructured and recapitalised our banking systems. New initiatives have been launched to boost job creation.

However, our living standards and our capacity to create jobs depend on our ability to trade and to attract investment. For that to happen and for economic recovery to be possible, we need stability -- stability in Ireland and stability in Europe. The kind of stability that gives investors and families reasonable certainty about what the future holds.

This Government has made steady progress in rebuilding Ireland's international reputation, which has seen investor confidence in Ireland increase significantly. This has led to new investments and these investments are creating new jobs for our people. Ratification of the Stability Treaty will allow this flow of investment to continue and expand.

The creation of stronger fiscal rules is an essential element of the steps that are needed to ensure stability, confidence and growth here in Ireland, and in the Eurozone. No one is claiming that the Stability Treaty is a panacea, but the Treaty is an important part of the package because it provides assurance that the kinds of problem that have emerged in Greece cannot happen again. This treaty will also ensure that the reckless economic mismanagement that drove our country to the brink of bankruptcy will not be repeated by any future Government.

Putting in place this credible commitment to responsible budgeting will be key to keeping interest rates low and unlocking credit availability for investment and job creation.

On Sunday evening, I was delighted to see Francois Hollande's elected as the President of France. Francois Hollande's focus is on boosting the growth dimension of the EU's work. I agree wholeheartedly with him, and I look forward to seeing his specific ideas. The Irish Government has already been pushing the growth agenda at European level, and Hollande's election strengthens our position.

However, we must clear that Francois Hollande has also committed France to balance its books in 2017. He has said - and I quote - "I am in favour of budgetary seriousness and the discipline that underpins it". It is patent that, while Hollande is keen to push the growth agenda, he also recognises the importance of good housekeeping.

Much of the discussion over the last couple has been on access to funds from the European Stability Mechanism and suggested other sources of funding. The treaty makes it clear that in the future only those countries that have ratified the Stability Treaty will be able to access emergency funding under the ESM.

That link simply reflects the reality that those who are putting their money at risk in lending to others, as Ireland may have cause to do in the future, have an expectation that the country concerned is prepared to run balanced and sensible budgetary policies. This should not be seen as something unusual. All exceptional lending, whether to countries or individuals, comes with conditions attached. We have seen how stringent the terms of our own EU-IMF programme are.

The Government does not believe Ireland will need to access the ESM and it is our strong intention to lead Ireland out of our programme and back into normal borrowing on the open markets at as early a date as is possible. However, if we decide not to ratify the treaty, we will leave Ireland without an important safety net. Whether we like it or not, that will send a negative message to those thinking of lending to Ireland or investing money here. It will suggest the position has become a great deal riskier; as we know, confidence and certainty are the lifeblood of investment, without which investors who create jobs will look to safer harbours elsewhere. Paradoxically, a decision to lock ourselves out of the ESM will make it more, not less, likely that we will need it. People must weigh this issue very carefully in deciding how to cast their vote.

It has been suggested that, if required, we could obtain funding from the IMF. The IMF has stated that we are open to apply for funding; however, there is a clear distinction between "applying" for funding and "accessing" funds. We have already received funding from the IMF well beyond our quota, and the only reason we have been able obtain this additional assistance is because it has occurred in conjunction with EU assistance. It is unrealistic to presume that we would be able to access further funding, and, in any case, the conditions the IMF normally attaches to funding are much more stringent than the condition of the current Troika deal.

I hope people will take the time to read them and make up their own minds. I also hope they will see the decision ahead is an important part of Ireland's road to recovery and that a vote in favour of ratification on 31st of May will send a strong positive signal about the country to our European partners and the wider world. It will say that Ireland is looking to the future with confidence and that we are committed to sensible, sustainable economic policies that will allow this Government to get people back to work, to grow our economy and to create jobs.