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Kyne, Seán

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Fiscal Responsibility Bill 2012: Second Stage (Resumed)

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Fiscal Responsibility Bill 2012: Second Stage (Resumed)

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Fiscal Responsibility Bill 2012: Second Stage (Resumed)

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Deputy Seán Kyne

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Seán Kyne

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Snippet Contents:

I am delighted to have an opportunity to speak on this important Fiscal Responsibility Bill. As we know, the people voted last May in a referendum to pass the stability treaty. Stability in this context means fiscal responsibility or, in simpler terms, good housekeeping. The stability treaty comprises many elements of international law, but also three or four articles of national legislation. These require this Bill to be passed through the Oireachtas in order to give effect to the treaty. Considering the support we receive from other countries and the ECB, it is appropriate that we give a pledge in this Chamber on financial responsibility. Therefore, the introduction of this national legislation is required to give effect to the stability treaty.
The Bill gives a commitment to a balanced budget, as required in Article 3 of the treaty. Everyone would agree that it is right and proper we have a balanced budget in the interest of the country. If, however, a Government fails to enact a balanced budget, a correction mechanism will come into play. If these rules had been in place in previous decades, our economy would be in a much better place. Fiscal rules are not something new. For many years we have had rules, targets and expenditure ceilings and constraints. Now, under this Bill, we will have specific definable and measurable rules for our budgets. Article 3 also recognises that despite the best efforts of a government, exceptional or extraordinary events may take place from time to time that could hinder the capability of a government to balance its budgets and provides that temporary deficits will be permitted.
The Irish Fiscal Advisory Council was formed in June 2011 and it will now be put on a statutory footing. It will be an independent watchdog and will ensure that sound financial measures are enacted and that the Government complies with the terms and conditions of the stability treaty. The advisory council is already producing reports and assessing the Government's budgetary targets. It published its most recent report in September and it has reviewed the accuracy of previous Governments' financial forecasting and projections. The council will act as a watchdog that will keep an eye on the Government to ensure it complies with and abides by the terms and conditions of the stability treaty. This is important. This week, the council called for greater transparency and openness from the Government in budgetary and financial planning. It is hugely important the council has a statutory basis.
Conducting budgetary planning in public creates certain difficulties, because while there is a need for freedom to express and espouse ideas and measures, irrespective of whether they are popular or not, there should be balance between that and discussion by the media, whether in print or over the airwaves, of what may or may not happen. Such discussion creates an element of fear and concern among certain sectors of the population. In terms of confidence, it is important we limit that to a certain degree, while allowing some discussion. There is a fine balance between doing the right thing and not scaring people while putting out in the open what is being considered.
In section 6 of the Bill the Government commits to outlining its plan of action in the event of a deviation from its targets. Where targets are not adhered to, an early warning system will operate. The public will be informed that the Government is in danger of not meeting its targets and will be made aware of the attempts to rectify the problems presented. Last week, Martin Schulz, President of the European Parliament, made a very impressive speech here in the Dáil. He spoke about a number of issues, including the connection between national and European parliaments. He stated it was very important that we continue the prerogative that national parliaments enact their own budgets. It is hugely important now and in the future that this Chamber rather than the European Parliament retains control over our budgets.
This Bill and the Irish Financial Advisory Council provide safeguards against reckless spending and economic mismanagement. I welcome the Bill. If these targets had been in place and if we had had a watchdog to ensure they were adhered to by Governments, we would be in a better place than we are now.