Why we need a referendum on the Austerity Treaty

Negotiations on a new international treaty involving all the EU states, except for Britain, are now at an advanced stage. Its working title, which has changed with each draft, is the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union. The essential elements of this Treaty are much clearer than its name. It is effectively a Treaty to institutionalise austerity policies and represents a further significant attack on democratic rights. The campaign for a referendum and for a No vote will be vital for those opposed to austerity policies in the coming months. I will therefore be writing in detail about the different aspects of this Treaty in the next weeks. Here, I simply want to set out the overwhelming case for a referendum on this Treaty so that the people can decide. By Paul Murphy, MEP. 

The most significant proposal in the Treaty is for "balanced budget" provisions to be written into every country's law "through provisions of binding force and permanent character, preferably constitutional, that are guaranteed to be respected throughout the national budgetary processes". Earlier drafts specified that this must be at a "constitutional or equivalent" level and apparently the German government is arguing for the re-instatement of this harder language , which would certainly trigger a legal requirement for a referendum.

Either way though, this would outlaw any deficit greater than 0.5% of GDP. Paul Mason, Newsnight's economic editor, accurately described it as an attempt to "outlaw expansionary fiscal policy". It is a measure to force governments to engage in slash and burn policies rather than borrowing to invest in public works programmes to create jobs and redevelop the economy.

The other significant proposal is to go further along the road already trod by the "economic governance" proposals (outlined in an article I wrote here) – with significant budgetary power shifting from elected governments to the unelected European Commission and the European Council . States that end up in the "excessive deficit procedure" will effectively be placed in administration and their economic programmes will have to be endorsed by the Commission and Council. Massive fines face those countries that breach their targets.

There is no question that this Treaty represent a very significant transfer of power from elected governments to EU institutions. In my opinion, this is with the aim of moving decision making further away from ordinary people to make it less likely that governments will buckle under the pressure of mass movements against austerity. There is clearly a political requirement for a referendum on such a transfer of power.

The legal case arguing that there is a constitutional requirement on the government obliging them to hold a referendum on this issue has been set out comprehensively by Eoin Daly and Darren O'Donovan (here). The essential argument is that the constitution vests legislative, executive and judicial powers in the Oireachtas, Government and judiciary. By transferring power on budgetary matters from the Oireachtas and government to European institutions, this treaty will trigger the need for a referendum to amend the constitution. In particular, Eoin Daly argues that: "since we do know that the fiscal compact treaty will entail submitting national budgetary powers not only to scrutiny and informal supervision– but to specific, formal supranational sanction – it is almost certain to require an amendment."

The government's fear of a referendum is palpable. They know that the Irish people are currently experiencing EU/IMF imposed austerity medicine and may not react positively to the proposal to enshrine it permanently in a Treaty. They are therefore manoeuvring to try to avoid a referendum while not giving the No campaign the boost of a victorious court challenge forcing a referendum. That explains why, according to the Sunday Business Post, they have been discussing passing it to the President to be signed but pressurising him to pass it to the Supreme Court to check its constitutionality.

This manoeuvring should be stopped. The government should accept that it faces a political and legal obligation to hold a referendum and immediately prepare for one. If it thinks that institutionalising the austerity that is failing before our eyes across the peripheral European countries is a good idea, it should argue for that, instead of scaremongering about this being a referendum on Ireland's membership of the euro or the EU itself.