Irish Politics, Current Affairs and Magazine Archive - Politico.ie

On Tonight with Vincent Browne, Catherine Halloran, Senan Moloney, Elaine Byrne and Johnny Fallon review the highs and lows of the fiscal treaty referendum campaign.

Below, Vincent blogs ahead of the show.

On Tonight with Vincent Browne, Minister for Jobs, Enterprise and Innovation Richard Bruton, Sinn Féin TD Pearse Doherty, Danish MEP Morten Messerschmidt and Patricia Callan of the Small Firms Association discuss the Irish Independent's poll on the fiscal treaty and the latest on the euro zone crisis. Below, Vincent blogs ahead of the show.

We'll be curating #vinb tweets below and Vincent will respond after the show. Refresh the page for updates.

The Fiscal Treaty is a recipe for extending and deepening stagnation across the Eurozone and the EU. By Michael Taft.

Understandably, in this referendum we are focused on the impact of the Fiscal Treaty on Ireland. But this is a Treaty for the Eurozone and the entire EU (with the exceptions of the UK and the Czech Republic, which are pursuing their own home-grown austerity policies). The Government has made much about how the Fiscal Treaty will introduce ‘stability’ and ‘confidence’ into the Irish and European economies. So what might we expect from this unique experiment in simultaneous austerity and how might it impact on an open economy like Ireland. Will the Fiscal Treaty actually result in ‘stability’ and ‘confidence’?

Not according to the Institute for Macro-economic and Economic Research (IMK) based in Germany. They teamed up with other research institutes in Austria and France to assess the impact of the Fiscal Compact on Eurozone and EU growth. And the numbers are not good.

The cacophony of ministerial threats upon the people threatens to drown out all reasoned debate on the Fiscal Treaty. By Michael Taft.

The Government is doing everything possible to prevent a debate on the Fiscal Treaty. The tactic employed is as old as government itself – fear. It is hard to keep track of all the plagues and maladies that will be visited on this fair land if the people dare vote No in the referendum: we will be isolated, we will be turned into Greece, hospitals and schools will close down, public sector workers won’t get paid, the elderly will have to beg for alms on the cathedral steps.

The Minister for Finance came out today threatening people with an even harsher budget if they dare vote No. More tax increases, more spending cuts, more misery to redistribute. People are not being invited to participate in a debate; they are being bludgeoned. The Government has turned on its own people. In such circumstances, debating the treaty is redundant.

According to the Sunday Times/Behaviour and Attitudes Survey published on 22 April, 55% of the electorate do not fully understand the Fiscal Compact. This is worrying - if you are going to vote on something that will have profound implications for your fellow citizens, you owe it to yourself and the rest of the country to fully inform yourself as to its implications. After all, would you sign a contract without knowing its terms?

With the results of the survey in mind I thought it timely to set out some simple to understand comments about the treaty.

What are the primary purposes of the treaty and how might it affect the economy?

The Government have produced a short video as part of their public 'information' campaign in the run-up to the referendum on the Fiscal Treaty on 31 May. Whether or not the content of stabilitytreaty.ie and the video aforementioned is best described as 'information' or as 'lopsided propaganda for the Yes side funded by public monies in contravention of the the McKenna judgment' has been the subject of some debate. Sinn Féin and the Socialist Party are both currently seeking legal advice on the matter.

In the meantime, the CounterSpin Collective have produced their own version of the Government's 'information' video, which is embedded below, along with the original. {jathumbnailoff}

Vincent Browne responds to comments on last night's show with Minister for Transport, Tourism and Sport Leo Varadkar, Independent TD Stephen Donnelly, Catherine Halloran of the Irish Daily Star and Sinn Féin TD Padraig Mac Lochlainn on the fiscal treaty. {jathumbnailoff}

Controversy has erupted surrounding the Government’s use of public funds for an allegedly neutral “information” campaign for the forthcoming referendum on the “Stability Treaty” (aka the Fiscal Compact).

While the Referendum Act 1998 provides for an independent referendum commission to inform voters on proposed amendments, the Government has committed an additional €2million for a separate “information” campaign. This has been spent on a website, stabilitytreaty.ie, already live, as well as a booklet due to be sent to all households next week, along with a leaflet later in the Campaign.

Sinn Fein has declared it will seek legal advice on the constitutionality of this expenditure. Indeed, while the Government has responded that the campaign is “informative” only and therefore not unconstitutional, it is somewhat odd, to say the least, that it has decided to launch a separate publicly-funded campaign outside of the independent statutory framework that already exists for informing voters.

{jathumbnailoff} Vincent forgot his pre-show piece this evening, but we're curating tweets regardless, and Vincent will respond to some of them afterwards. Please refresh the page for updates.

Those who claim that Ireland would be denied access to EFSF funding – or any other funding sources – in the event of No vote on the Fiscal Treaty should provide concrete evidence to this effect. By Michael Taft and Tom McDonnell.

In our first post, we outlined some of Ireland’s financing alternatives; namely through the IMF and the European Stability Mechanism. There is, however, a more compelling source of institutional funding in the eventuality of a No vote: the European Financial Stability Facility (EFSF).

The EFSF is one of four external sources of funding for the current Irish bailout (along with the IMF, the European Financial Stabilisation Mechanism (ESM), and bilateral loan agreements with the UK, Sweden and Denmark). The EFSF remains a source of funding for all Eurozone countries until the middle of next year. 

How can we trust a government that insists on describing the economy in a way that is completely at odds with the fact? By Michael Taft.

Even when presented with cold hard reality, Government ministers refuse to acknowledge it, preferring to live in a fantasy island. Spin is one thing, denial is another.

Take Lucinda Creighton on RTÉ’s This Week programme.  She was being interview with John Douglas, General Secretary of MANDATE on the issue of the Fiscal Treaty. Douglas was putting the case against the treaty. The minister responded with arguments for a Yes vote.

Minister: “Since last year, 2011, the economy has returned to modest growth but nonetheless it has emerged from recession.”

The following is my presentation to the Dáil Committee on European Affairs.

On behalf of UNITE the Union I would like to put forward seven points regarding the Fiscal Treaty. {jathumbnailoff}

1.            The Fiscal Treaty will require substantially more austerity measures in the medium-term.

The Government estimates the structural deficit will be 3.7% in 2015. We will have to reduce this to 0.5%. This could require fiscal adjustments of over €8 billion on top of the current fiscal consolidation schedule. Therefore, we could be looking into a doubling of the austerity measures the Government has planned over the next three years.

This continued austerity could result in economic growth being cut by over 2% of nominal GDP. This will reduce employment, drive up the Live Register, and cut wages and incomes.

Below, Vincent blogs ahead of the show. {jathumbnailoff}

The historical basis of the Fiscal Treaty lies in German ordo-liberalism - a strand of thought which tries to make the market free by doing away with the unpredictability of politics. By Tom Boland.

So far, many commentators have drawn attention to two aspects of the Fiscal Treaty that is subject to referendum in Ireland on 31 May.

First of all, there is the economic prescription for austerity under the guise of the insistence of a structural deficit of no more than 0.5%. While keeping deficits under control is sometimes important, what this basically does is to rule out Keynesian stimulus spending. Sure, the state should balance its books and save during the good times, but the counterpart to that, which is the state leading the economy out of recession through large projects of public infrastructure in the bad times, is outlawed. There can be no ‘New Deal’ under the Fiscal Treaty. Alongside this there is the requirement to reduce debt to GDP ratios to 60%, by 1% per year if the ratio is high, but only 0.5% if not so bad. In either case, there is a penalty for those who are in trouble. The Fiscal Treaty makes right wing policies constitutional – making a democratic mandate unnecessary.

Below, Vincent Browne responds to some of your tweets about tonight's show. {jathumbnailoff}

Through the EU, we have bought into a system of inflicting the costs of austerity on to the poorer sectors. By Vincent Browne.

Michael Noonan was again expressing satisfaction yesterday with how the economy was performing under the aegis of this Government.

He was referring to tax returns about to be published for the January-March period. He did qualify his optimism by emphasising the results were only for the first quarter, but he was optimistic things were improving. While self-praise by politicians is commonplace, in our present circumstances it suggests disquieting denial, for the Irish economy has reverted again to another recession just a year after it emerged from the worst recession recorded since independence.

In 2006 the economy grew at a rate of 6.3%, as measured by gross national product (GNP). GNP growth in 2007 was 3.9%. It plunged to -2.8% in 2008.

The Government should ease off on the scaremongering that has been a hallmark of its Fiscal Treaty referendum campaign so far. By Paul Murphy.

Enda Kenny’s Chuck Norris moment - whereby he encouraged us to vote Yes in order not to “kick the future in the face” - gave a comical aspect to the scaremongering of this government, but it underlined a very serious point. In the absence of the usual ‘social Europe’ figleafs in the Fiscal Treaty, the Government’s argument will rest overwhelmingly on fear. This fear essentially comes in two different forms – a general fear about the country’s position within Europe and our membership of the euro and EU – and a specific fear about access to funding for a so-called ‘second bailout’.

The plan to postpone the payment of the Anglo Irish promissory note until 2025 is part of a wider attempt to save the asses of the banks by maintaining the fiction they are not insolvent. By Donagh Brennan.

Ann Pettifor has argued regularly that the problems in the British economy stem from the vast level of private sector debt, principally in financial institutions rather than with public sector debt.

The 'solution' to the crisis proposed by the political establishment across Europe - namely the Fiscal Treaty - is a cure for a wrongly diagnosed disease. By Paul Murphy, MEP.

Eamon Gilmore launched the Government’s campaign for a Yes vote in the Dáil by arguing that this is a “vote for economic stability and economic recovery”. Frances Fitzgerald in the Blanch Gazette on 8 March put a bit more meat to the bones of this argument by suggesting that by voting yes, “we will be putting an end to the excesses of domestic and international boom-to-bust cycles and sending a clear message of stability and fiscal responsibility internationally.”

Apart from the scaremongering that is the dominant feature of the Yes campaign, it seems the centrepiece will once again be  arguments about economic growth and, implicitly, about jobs. This is based on the suggestion that this Treaty provides a fiscal discipline that is an answer to the excesses that caused the crisis.

Even before the wording has been published and a referendum date named there is one issue that looks set to dominate the debate over the Fiscal Treaty: namely, what future financing options does Ireland have in the eventuality of a ‘No’ vote? While we are not taking a position on the substantive issue in this piece, the following is intended to aid the debate by helping to answer that question. By Michael Taft and Tom McDonnell.

The 'indispensable’ condition

First, regardless of the Treaty vote, Ireland is guaranteed funding under the current programme – as long as it meets its targets. A Yes or No vote will not change this.

In the event of a No vote with Ireland unable to fully return to the markets, what would the situation be?

The Irish Government has the power to remove the 'blackmail clause' from the Fiscal Treaty. It should use it. By Paul Murphy.

The Government’s primary input into the referendum debate so far has consisted of scare mongering. Enda Kenny told us that we were really voting on whether we wanted to stay in the Eurozone and the EU. Brian Hayes implied that a ‘No’ vote would result in a mass exodus of multi-national companies. The most credible threat they have made is that should the Fiscal Treaty not be passed, then Ireland would find itself locked out of any future funding from the Economic Stability Mechanism (ESM).

This threat has become the centrepiece of the Yes campaign. Economist Karl Whelan wrote a piece in the Irish Times effectively damning the content of the Treaty, before concluding that because of the question of access to ESM funding, we have no choice but to vote Yes. Cuts guru Colm McCarthy similarly answers the question “Is this a good treaty for Europe?” with a no, saying the structural deficit target “makes no sense at all”, but favours a Yes vote too, with the question of ESM funding playing a large role in his argumentation.

Stephen Collins's arguments for a 'yes' vote in the Fiscal Treaty are deeply flawed. By Eoin Ó Broin.

Stephen Collins is at it again. His latest Irish Times column on the Fiscal Treaty (10 March 2012) displays a disregard for the facts.

The column makes four key arguments. Let’s take them in turn.

Collins warns against the arresting but “baseless” slogans of no campaigners in EU referenda. He claims that opponents of the Fiscal Treaty have adopted the mantra that the treaty will outlaw Keynesian economics.

The first economist to claim that the Fiscal Treaty will outlaw Keynesian economics was Paul Sweeney, speaking to an Oireachtas European Union affairs committee on 23 February 2012.

Had the Fiscal Treaty been in situ during the Irish boom, it would have made no difference whatsoever to Irish budgetary policy. By Michael Taft.

In Saturday’s Irish Times Stephen Collins wrote:

“Far from outlawing Keynesian economics, what the treaty seeks to do is to put an end to the kind of populist and inept fiscal policies that brought Ireland to the brink of ruin. The treaty on its own won’t achieve that objective but it should at least make it more difficult for politicians to behave irresponsibly in the future – and that can only be a good thing.”

Eoin O'Broin has already pointed out the many flaws in Collins’s piece. Here I just want to examine one point – namely, whether the Fiscal Compact would have either ended “populist and inept fiscal policies” or “make it more difficult” to pursue such policies; and to do so from the EU Commission’s perspective.

While Labour TDs support the Fiscal Treaty as “vital to our national interests”, the same party's MEPs take a quite different view. By Eoin Ó Broin.

Speaking to the Dáil on 28 February Labour leader Eamon Gilmore told the assembled deputies that the purpose of the so-called Fiscal Treaty was to help build a “thriving and prosperous European economy that has moved beyond the present crisis.” He said that, “It is part of a package of measures being put in place in Europe, to stabilise the situation in the Eurozone.”

In conclusion the Tánaiste said, “Endorsing the Treaty will be another important milestone for Ireland in our road to recovery” and doing so was “vital to our national interests.”

On the basis of these comments it seems pretty clear that the Labour Party believes that the content of the Fiscal Treaty is good for economic recovery, will help boost investment and jobs and that you should vote for it come referendum day.

A campaign group calling for the write down of Irish debt has labelled the link being drawn between the debt and the Fiscal Treaty as “obscene and tantamount to blackmail”. Community worker and Anglo: Not Our Debt spokesperson John Bissett said he “utterly rejected any spurious quid pro quo between voting Yes in the forthcoming referendum on the Fiscal Treaty and the suspension or cancellation of the Anglo and Irish Nationwide debt.”

He went on to say that “there has been far too much of this sort of horse-trading in Ireland in recent years and what we need now is for the debt to be dealt with ethically and on its own terms.”

Another campaign spokesperson, UCD lecturer Marie Moran, said that the debts arising from Anglo Irish Bank and Irish Nationwide Building Society were illegitimate.

“This is not our debt in the first place, and the idea that we should be offered some minor concession on it to vote Yes to the Treaty is obscene - it has all the hallmarks of a ‘stroke’ where one has to pay to receive some of one’s own possessions back after the ignominy of a daylight robbery.”

While there are many questions to be asked and answered during the referendum campaign on the Fiscal Treaty, let’s start with asking about its cost. By Michael Taft.

The very first question that should be answered is how much more austerity the passage of the Fiscal Treaty will mean. After all, this is a ‘fiscal’ treaty. It is intended to have an impact on Government budgets. So the first question should be: what fiscal impact will this fiscal treaty have on Ireland’s fiscal policy.

Answers such as “Oh, this treaty is about growth, jobs, stability,” etc. etc.  are not acceptable. The particular question here is: How much more austerity? It is an issue that can be measured (insofar as measuring structural deficits can be considered reliable). Let’s see if we can come up with some kind of answer.

The opening salvos of the debate about the Fiscal Treaty from the right-wing political parties and the establishment media have attempted to ridicule the argument that this is an Austerity Treaty. Leo Varadkar called on the Socialist Party not to "lie about the treaty and what it's about" (quite a serious charge, especially considering it's over a week since I wrote to him seeking a public debate and have received no reply!). The Irish Times featured an editorial criticising my description of the referendum as 'people's opportunity to reject austerity at the ballot box.' and did not print my letter in response.

Despite describing one of the main measurements in the Treaty as “highly uncertain” and “unrealistic”, the Government still wants to put it in the Constitution. By Michael Taft.

A kind of surprising question, you might think. Sure, they’re the ones who negotiated it, signed it and now asking people to vote for it.  They must think it’s great. Yet they publish documents criticising one of the main elements in the Treaty; namely, the structural deficit. In short, the Government’s position is: “These are bad measurements, now please put them into the Constitution.”

The structural deficit attempts to tell us how much of the deficit is cyclical (or will disappear when the economy returns to full growth) and how much is structural (will remain with us even after the economy returns to full growth). A structural deficit means the Government must take action – it must raise taxes, cut spending or do a bit of both to get rid of the structural bit.

Irish corporation tax policy is not about attracting companies that create growth within the country in terms of jobs or through helping to develop indigious Irish enterprises through skills transfer or use of services - it's about attracting companies whose only reason for establishing a base here is tax avoidance. By Donagh Brennan.

The final draft of the Fiscal compact is now available, meaning Irish pundits can no longer say "listen, we haven't seen the final draft yet" when declaring that the requirements involved are really no different to what is in place in international agreements already. While the final treaty is regularly described as a list of German demands, there are two, broadly, that are considered to meet Germany's needs explicitly: a debt brake and a writing of the treaty into the constitution of the countries that have signed up. Given the pressure that we are told Germany is able to exert within these negotiations it is interesting which demands the Irish Government has been able to resist and which they are happy to comply with. The Government has used its negotiating skills to successfully avoid the constitutional requirement.

The Government, in signing the Fiscal Treaty, has effectively committed itself to introducing up to €6bn more in tax increases and spending cuts in the medium-term, over and above what it has already planned. While the news in the short-term will, understandably, focus on whether a referendum will be necessary, once attention starts honing in on the details of the treaty, we will all come to understand why this agreement has come to be known as the “austerity treaty”.

Members of Government are resorting to invention to justify their capitulation to ECB blackmail. By Vincent Browne.

On Sunday evening Minister for Transport Leo Varadkar, on RTÉ’s The Week in Politics programme, was asked why the State was paying unguaranteed Anglo bondholders and in particular the €1.2 billion it is paying today. He said the Government had to weigh up the advantages and disadvantages of doing this and the advantages were almost non-existent, for the €1.2 billion was not money we could retrieve in the short term, whereas the disadvantages were considerable.

Among the disadvantages he cited was that, as a consequence of defaulting on the bond payments, interest rates for semi-State firms here would increase, leading to higher electricity and gas charges for households.

Explaining this, he said: “We can look at Denmark. Denmark put one of the banks into resolution [ie default] last year and as a result of this the cost of borrowing for the Danish state and for Danish semi-states increased.”

With the "Draft Agreement on Reinforced Economic Union" Ireland finds itself in the final instalment of a very scary movie trilogy. By David Johnson.

To the B-movie horror pantheon of zombie banks, ghost estates and the grasping, mauling tendrils of the bloated vampire squid that is Goldman Sachs, we can now add Lisbon 3, the Treaty That Would Not Die! As the initial shock of this revelation subsides and the beads of perspiration begin to cool, it slowly starts to dawn on us all that we have found ourselves in the final part of a scary movie trilogy.