Ladies and gentlemen, I’m very pleased to join you here this morning ahead of my first ECOFIN meeting as Minister for Finance. I would like to thank you for the kind invitation to address you on how ratification of the Lisbon Treaty will restate Ireland’s position at the centre of the European Union.
Since Ireland joined the European Union in 1973, the people of our country have taken successive opportunities to reaffirm their commitment to the European project.
We acknowledge that the EU is the most successful peace project in history. We know that the development of the EU has created unprecedented peace, economic and social growth throughout Europe in the past 50 years.
We also know that our membership of the European Union has brought us countless benefits. For example:
· Without the Common Agricultural Policy, Irish Agriculture could not have developed to the extent that it has.
· Equally, the Structural and Cohesion Fund payments have supported the development of much of our physical and human capital.
· Participation in a political and economic grouping has given us real negotiating power in terms of international relations. Namely in the areas of trade and increasingly in the field of diplomacy; and
· Our membership has also given free access for indigenous industry and international firms to the EU’s internal market which numbers 500 million consumers.
But of all the benefits that have accrued to us, I believe access to the internal market is the greatest. It is doubtful that any Member State gained more from the 1992 completion of the single internal market than Ireland. Speaking to this organisation here today emphasises the significant levels of Foreign Direct Investment in Ireland. I note that many of your firms have significant presences in Ireland, indeed several of your European Headquarters are situated in Ireland. I am sure that everyone in this room knows that the location of these corporate headquarters was no accident. It is attributable to Ireland’s active role at the centre of the European Union.
The statistics in relation to Foreign Direct Investment in Ireland are excellent:
* Foreign Direct Investment in Ireland now exceeds €30 billion as compared with €16 million in 1973;
* Foreign Direct Investment on a per capita basis is higher in Ireland than any other European member state;
* Trade has increased 80 fold with consequent benefits for the number of people at work and the choice of products available to all consumers; and
* Our economy has been transformed with over 128,000 people employed in over 1,000 foreign-owned companies based in Ireland.
It must be acknowledged that membership of the internal market alone was not the catalyst for such dramatic levels of Foreign Direct Investment. There were other factors in Ireland’s favour, for example:
* The fostering of sustainable macro-economic policies by successive Governments;
* The creation of a pro-enterprise environment;
* A well educated young labour force; and
* The effect of transfer payments from the European Union.
Only the well educated young labour force factor is not directly attributable to the internal market. This factor is attributable to the substantial investment in education made by visionary Ministers for Education, such as Donogh O’Malley and Patrick Hillery. The remainder of these factors are directly linked to the creation and operation of the EU internal market. The need to compete effectively in an internal market fostered sustainable macro-economic and pro-enterprise policies, while the EU transfer payments were the Union’s means of facilitating an equal playing field for those participating in the Internal Market.
Benefits of Foreign Direct Investment
In addition to the direct employment opportunities created by Foreign Direct Investment in Ireland, there have been positive consequences in terms of employment, technology and knowledge gains to the domestic economy for example:
* The 130,000 jobs created by Foreign Direct Investment has been mirrored in the companies which supply goods and services to these international companies.
* The transfer of technology, skills management and business know-how and a global orientation from foreign companies to local companies has facilitated significant improvements in the overall economy’s total factor productivity.
* Many of these international firms have created a breeding ground for Irish entrepreneurs who have gone on to build their own small and medium sized enterprises. These businesses have increased the critical mass of key sectors of our economy such as Pharmaceuticals, Information Technology and Financial Services.
FDI requires Ireland to be at centre of EU
I have only listed the significant benefits of the internal market. There are many more benefits to Irish firms which have utilised their access to expand in the internal market, creating jobs both in Ireland and in other member states. But of course we must be conscious that as a whole the Union has to compete with other global economies, such as China and India. The internal market provides the EU with a critical mass to compete on this global level.
Ireland’s position at the centre of the EU is very important for business: we have been a consistent voice for the factors that create economic growth, such as reducing the regulatory burden on business and freeing up markets to competition. The No side in the upcoming referendum continually attempt to portray the Lisbon Treaty as a document being foisted on Ireland that does not reflect our key concerns. Ireland was at the forefront of writing this Treaty. Our last Taoiseach, Bertie Ahern, and our present Taoiseach, Brian Cowen, were two key driving forces behind this Treaty. They were assisted by other members of the Government and some of Ireland's leading Civil Servants. The critics of the Treaty do a great disservice to the political, official and business people who led Ireland's economic miracle over the past 15 years by suggesting that they could get it so wrong on this European Treaty.
Lisbon Treaty
The fact is that the Lisbon Treaty does not, in truth, introduce changes on the scale of, say, the Single European Act, which paved the way for the single market, or the Maastricht Treaty, which set out the basis for the euro and the Union’s Common Foreign and Security Policy.
But it does make important administrative and procedural changes which will make the EU more efficient and effective in its everyday actions. These changes will greatly improve the manner in which a Union of 27 or more Member States, can serve its citizens. The improvements in efficiency and effectiveness include:
* The strengthening of democracy within the EU by giving greater powers to National Parliaments and the European Parliament.
* The safeguarding of the delicate balance between the interests of the larger and the smaller Member States, through a new system of double-majority voting which gives an equal say to each Member State.
* The Treaty will also strengthen the rights of European citizens by giving legal status to the Charter of Fundamental Rights and allowing EU ratification of the European Convention on Human Rights.
* It will also improve decision-making through reducing the size of the Commission but guaranteeing complete equality of membership among the Member States.
* It will increase the effectiveness of the EU on the world stage through a High Representative for Foreign Affairs who will also be a Vice President of the Commission.
* And a new President of the European Council will better coordinate the work of that body and represent the Union at his or her level.
A more effective and efficient European Union will allow the further development of key EU policies that have reaped such significant benefits, including:
· The reduction of regulation in the internal market with its consequent benefits for jobs and consumer choice;
· The introduction of comprehensive equality legislation that is working towards ending discrimination on many grounds; and
· The entitlement of all European citizens to avail equally of services provided by other member states.
At present, the Irish Government is taking action to improve the efficiency and effectiveness of our public sector on foot of a wide ranging OECD report. We should assist the EU in doing likewise with its administrative functions through the ratification of the Lisbon Treaty.
We are the only Member State to hold a referendum on the Lisbon Treaty. We have an opportunity to demonstrate once again our strong commitment to Europe, which has been of such enormous benefit to Ireland, and our strong commitment to the principle of reform of institutions to improve their efficiency and effectiveness.
Tax Treatment under Lisbon Treaty
I wish to set the record straight on a number of issues directly related to my Department’s responsibilities about which there has been some scare mongering.
I’ll deal first with the issue of tax sovereignty, which I know is of concern to those of you who have invested significantly in Ireland and indeed in other EU member states.
First, the Reform Treaty does not change any of the existing arrangements in relation to taxation matters.
Second, Ireland's veto over any EU proposals in the taxation area remains.
I do not think it is possible to be more unequivocal than this. Even opponents of the Treaty must acknowledge the truth of these statements as more and more reasonable and well informed commentators confirm the facts.
The independent Referendum Commission has verified that Ireland's taxation veto is retained in the Lisbon Reform Treaty. This is clear, unambiguous, independent and totally consistent with what the Government has been saying all along. The retention of the veto was one of our key achievements in the Treaty negotiations.
Moreover, the President of the European Commission, Manuel Barroso, has confirmed Ireland’s tax policy veto in his recent speech to the Forum on Europe in Dublin. He has stated that no tax policy change can be imposed on Ireland, without our consent.
CCCTB and Enhanced Cooperation…
Another strand of the argument from those opposing the Treaty is that the existence of “enhanced cooperation” provisions will undermine our ability to defend our strategic interests in the area of tax.
Once again this is simply wrong. The existing treaties already contain a provision for a group of Member States to proceed with closer co-operation under the so-called “enhanced cooperation” procedure.
However, this “enhanced cooperation” procedure has never before been used and could be highly divisive within the EU. Any decisions that would be taken under “enhanced cooperation” would only be binding on those Member States that participate in such cooperation and would be directly applicable only in those Member States.
As regards the Common Consolidated Corporate Tax Base and “enhanced cooperation”, it is quite clear to me that a very significant number of Member States oppose the introduction of such a Common Consolidated Corporate Tax Base. The Commission is currently undertaking an economic impact assessment of a Common Consolidated Corporate Tax Base and I understand that a decision on whether or not to bring forward a proposal to Council will not be taken until that impact assessment has been completed later this year.
European Court of Justice and Tax Sovereignty …
Finally, the No campaign claims Article 113 of the Treaty could allow the European Court of Justice to force changes to our corporate tax regime on the grounds of avoiding a “distortion of competition”.
These claims are fanciful for two reasons.
First, Article 113 deals with indirect tax and could not be used as a basis for any judgements on corporation tax.
Second, the opponents of the Treaty choose to ignore the opening words of the Article itself which makes it clear that the Council's actions, even in this specific area, must be by unanimity.
Let us be clear: the “No” campaign is simply wrong on the issue of tax sovereignty. There is no change in the existing position; the Lisbon Treaty does not undermine Ireland’s national position on tax matters and tax sovereignty.
Misleading Statements
There are a number of other dubious statements that have been made in the course of the debate so far. But in reality we have heard them all before. In each successive referendum, the same groups have articulated the same bogus arguments and they have always been proved baseless.
It is quite simple; do we see Europe as an opportunity or as a threat. Our experience over the past 35 years answers this question. Our membership has been an overwhelming success on all fronts, whether they be economic, social or political.
Closing Remarks
A Yes vote to the Lisbon Treaty will ensure that Ireland remains at the centre of a more effective and efficient European Union. It is precisely this status that has brought us the high level of Foreign Direct Investment that we have achieved thus far. I believe the single market will become even more important as we focus on export led economic growth to compensate for the readjustment of housing construction to more sustainable levels.
By endorsing this Reform Treaty, we can give a lead in Europe and at the same time help secure our future prosperity. Ireland has benefited from being at the centre of Europe and Europe has benefited from Ireland being at the centre of Europe. That is why the Government and indeed our leading opposition parties will be saying to the Irish people in June “Vote Yes for a better Ireland and a better Europe”. I encourage you to do likewise.
Thank you