Legislation published to give effect to fiscal treaty
LEGISLATION TO give effect to the stability treaty if there is a Yes vote in the referendum on May 31st has been published by Minister for Finance Michael Noonan.
The Minister said yesterday that the General Scheme of the Fiscal Responsibility Bill 2012 would underpin the fiscal rules in the stability treaty. The Bill also reflects commitments in the Fine Gael manifesto and programme for government, and was part of undertakings by the Government to the EU-IMF troika.
“These rules are sensible and prudent and represent a responsible approach to budgeting,” said Mr Noonan.
He added that the Government was committed to ensuring that the public will be fully informed on the implication of the treaty and will have access to all available information to enable them to make an informed decision.
“Information leaflets are being circulated to every home in Ireland in the coming week and a website www.stabilitytreaty.ieis now up and running.
“The treaty and the publication of the Bill is another important part of this information process,” he added.
The Bill provides for the implementation in national law of articles 3 and 4 of the treaty. The other articles of the treaty are binding obligations under international law that do not require to be reflected in national law.
Article 3 of the treaty requires provision in national law for the fiscal rules set out in that article. These include:
- A commitment by governments that the budgetary position of the general government shall be balanced or in surplus. This is the general policy approach which governments must take.
- Provision for an automatic correction mechanism that will be triggered if there are significant deviations from the budgetary target or the adjustment path towards it.
- Provision is also made for deviation from objectives in the case of exceptional circumstances.
The treaty also requires that there is an independent institution at national level responsible for monitoring compliance with the rules in article 3 of the treaty. The Bill allocates those functions to the Irish Fiscal Advisory Council, which was set up last year, and which will now be put on a statutory basis.
Article 4 of the treaty sets out the debt rule that is already a requirement under the Stability and Growth Pact adopted in late 2011.
This provides that where a member state’s general government debt to GDP ratio is in excess of 60 per cent, the difference between the actual ratio and the 60 per cent threshold must be reduced by an average of one twentieth per annum.
Meanwhile, Minister for Justice Alan Shatter said any French-led move to reopen Europe’s fiscal treaty after next month’s referendum would be unlikely to present any difficulty for the Government.
The Socialist frontrunner in the French presidential election, François Hollande, has repeatedly declared he will change the treaty in favour of growth-oriented policies if elected. This could be done by inserting a legal “protocol” into the text of the treaty, which was signed by EU leaders as recently as last month.
While any push to the change the treaty would come only after the Irish referendum on May 31st, Mr Shatter suggested this would not present any problem for Ireland and would be unlikely to raise the prospect of a second referendum.