Thursday 12 December 2019

Joan Burton: 'Why would anybody urge voters to say No to a €700bn safety net?'

YES says Joan Burton because a positive outcome will promote stability in the Irish economy and enhance a stable euro

Joan Burton

ABOUT 20 years ago, I attended the launch of pharmaceutical company Covidien in my own constituency of Blanchardstown in Dublin. It was the early Nineties and Ireland was about to emerge from a very difficult period when our debts had soared well over the 100 per cent of GDP.

But with the help of sound financial management, EU structural funds, access to European markets, strong growth in the economy and a little inflation, our debt levels began to fall as the economy recovered.

I say this because sometimes when you are sailing in stormy seas, it is hard to imagine that calmer waters lie ahead. But countries can, and do, emerge from periods of financial difficulty.

I was back at Covidien last week to see a company that was still thriving -- quietly getting on with the important business of manufacturing medical devices and pharmaceuticals, providing wonderful career opportunities for our people in this key global industry.

Covidien chose Ireland because we give it a strong platform to sell its goods in the eurozone. That is also why companies such as IBM, PayPal, Apple, Cisco, Amgen, Mylan and SAP have recently announced that they are expanding here.

The IDA, which is in the business of getting more multinationals to create jobs here, is urging us to vote Yes to demonstrate that we remain fully committed members of the eurozone. It says this because it knows more than anyone else in Ireland how competitive the market for international investment is. For the first time in five years, more jobs are being created than are being lost.

A wrong signal from this country on Thursday puts that achievement at risk, and could fatally weaken our position in this market. It could also undermine the efforts we have made in recent times to create new markets for Irish goods and services in China and elsewhere in Asia.

Why do we have this treaty? Well, because late last year the euro was in real trouble. It was genuinely close to collapse, and European governments had to respond.

What 25 European countries -- including everyone using the euro -- proposed was the Stability Treaty.

This treaty is designed to stabilise the euro, and set out how countries work together and help each other. The treaty has rules for good housekeeping so that each country's finances are managed properly.

Critically, a Yes vote also

gives us access to the new €700bn bailout fund, the European Stability Mechanism (ESM), if and when we need it.

I cannot understand why anyone would urge voters to say No to a €700bn safety net at a time of such extraordinary tumult in Europe.

It has been established beyond doubt that ESM funding will be made available only to those countries that ratify the Stability Treaty, as the independent Referendum Commission has also made clear.

The treaty provides for an adjustment period to enable individual countries, including Ireland, to negotiate the timetable to meet the requirements. During that period, we will still need to borrow huge sums to maintain our health, education, welfare and employment services. It will be impossible to access funds on that scale at affordable interest rates if there is any uncertainty about Ireland's intentions.

Europe is now in a game-changing mood, with a welcome emphasis on growth and investment. Our own recovery 20 years ago was made possible, in part, by valuable injections of funds from European Structural and Social Funds. A new Social Fund could be a powerful instrument, as it was before, for young people to get new educational and training opportunities.

That is the value of constructive engagement with the EU, to combine common financial management rules with an investment programme to promote growth and employment. I am heartened by the renewed focus on the issue of Eurobonds, which would help Ireland source funding at a cheaper rate than issuing Irish bonds.

I also welcome the positive momentum behind a range of ideas such as fresh funding for the European Investment Bank and project bonds. Last week, the Council of the European Union and the European Parliament agreed a pilot phase on European project bonds for 2012-2013. The rationale is to ensure easy capital access for profitable projects that are hampered by the short-term economic situation. We expect more concrete proposals to be agreed at the formal council in June.

I am voting Yes in the referendum on Thursday because that outcome will promote stability in the Irish economy and enhance a stable euro.

Voting Yes will increase investor confidence.

Voting Yes will give us guaranteed access to funds if we need them.

Voting Yes keeps us in the game. The run of play has changed very much in our favour in recent weeks. Let us keep it that way when we vote on Thursday.

Joan Burton is Minister for Social Protection and is TD for Dublin West

Sunday Independent

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