Is Labour for or against the Fiscal Treaty?

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.

Supporters of the Treaty, including the Labour Party, say that there is really nothing new in it. They say that it is simply a restatement of the existing Stability and Growth Pact rules and some modifications to these rules agreed to by the European Council in 2011.

These modifications, known as the ‘Six Pack’, were approved by the European Parliament and European Council in September and November 2011 and came into force from December 2011.

They are five separate EU regulations and one directive dealing with aspects of economic governance.  They were described by the European Council as “the most comprehensive reinforcement of economic governance in the EU and the euro area since the launch of the Economic and Monetary Union.”

So, given the Labour Party’s support for the Fiscal Treaty, including those elements whose origins are to be found in the so called Six Pack, you would think that their MEPs would have supported the Six Pack proposals themselves when they were voted on in the European parliament last September.

Not so. Labour’s three MEPs, Proinsias de Rossa, Phil Prendergast and Nessa Childres opposed the package of measures, voting against four of them, abstaining on one and supporting only one.

The reasons for their opposition to the overall package are quite interesting.

On 28 September 2011 Proinsias de Rossa said that the Six Pack “…legislative package will reinforce the EU austerity programme driving us into recession.” While welcoming the inclusion of the protection of social rights in the one measure they supported (Ferreira A7-0183/2011) the Dublin MEP went on to say that “four of the so called ‘6-Pack’…are economically misguided…” and will “…kill growth, destroy jobs and derail economic recovery.”

On the same day his party colleague Phil Prendergast criticised the European Commission proposals as “missing the most important ingredient: a jobs and growth strategy.”  She went on to say that the, “austerity-only approach is a recipe for the rich getting richer and the poor getting poorer.” The Ireland South MEP noted that, “The six-pack proposal approved by the European Parliament will further isolate weaker member states…” and  described the “fiscal consolidation” demanded by the legislative proposals as “punitive”, “divisive”, “ineffective” and “destabilising”.

Focusing on the impact of the Six Pack on the Irish economy Nessa Childers said that, “At a time when the Irish economy is showing signs of recovery due to increased foreign investment and booming agricultural exports, depressed demand in our European markets will only undermine our recovery.” The Ireland East MEP said that, “To focus only on the side of fiscal austerity will depress demand further and destroy job creation...” and called for a “change from this extreme austerity approach.”

Importantly, the reason why the three Labour MEPs supported one of the Six Pack proposals was because of the inclusion of what is known as the “Monti Clause”, which states that the regulations will not affect the exercise of fundamental rights or the right to negotiate, conclude or enforce collective wage agreements (Ferreira A7-0183/2011).

This commendable clause is of course absent from the text of the Fiscal Treaty

So the Labour party in the European Parliament strongly opposed the “irresponsible” “austerity only” approach of the Six Pack on the grounds that it will “kill growth, destroy jobs and derail economic recovery.”

But the Labour Party in the Dáil support the Six Pack inspired Fiscal Treaty on the grounds that it is an “important milestone for Ireland in our road to recovery” and “vital to our national interests.”

In one of his final acts as an MEP before he stood down in February of this year Proinsias de Rossa again called for European political leaders to rethink their support for the “austerity-only” approach contained in the Six Pack and the Fiscal Treaty.

The Dublin MEP called on EU leaders to “place greater emphasis on solidarity and growth with jobs in the negotiations on the new inter-governmental treaty”. He advocated a “fiscal stability pact” rather than a fiscal compact.

Unfortunately none of the leaders involved in the negotiations of the Fiscal Treaty were listening, not even his own party leader Eamon Gilmore. {jathumbnailoff}

This article is part of our Fiscal Treaty Files series. For more of our coverage of the Fiscal Treaty click here.

Image top: The Labour Party.