Friday, 2 March 2012

What exactly will we be asked in the fiscal treaty referendum?

Nat O'Connor: The Taoiseach has signed the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (also known as the 'fiscal compact' or the Fiscal Stability Treaty). However, it will only be ratified by Ireland if it is agreed by the Irish people in a referendum.

There is still some uncertainly about what exactly we will be voting about. Putting a debt brake in the Constitution would be a very different prospect from merely a ratification clause. We will know more when we see the actual wording of the referendum. Will it be simply "The State may ratify..." or will it include other constitutional changes and some formula of words in the Constitution to create a "binding, permanent" mechanism that will constrain future governments in relation to fiscal policy and how they deal with deficits and the national debt?

At this time, the advice of the Attorney General has not been published, so we do not know why a referendum will be held. We can probably assume that it is for the usual reason. That is, Ireland has had a series of referendums (modifying Article 29 of Bunreacht na h√Čireann) to permit the Government to ratify European treaties such as Maastricht, Amsterdam and Nice. The wording of Bunreacht na h√Čireann for recent treaties is straightforward: “The State may ratify the Treaty…”

On that basis, it is likely that the reason for Ireland to hold a referendum is again for the people to give the State permission to ratify the Fiscal Stability Treaty.

However, a second potential reason for Ireland to hold a referendum comes from the working of the Treaty itself. The Treaty calls for the Contracting Parties to "transpose the 'balanced budget rule' into their national legal systems, through binding, permanent and preferably constitutional provisions". Although there is no obligation in the Treaty to place the balanced budget rule (or 'debt brake') in Ireland's constitution, there is an implication that the rule should be transposed in a way that is stronger than ordinary legislation. The creation of a "binding, permanent" provision may therefore be part of the reason why Ireland is having a referendum. When we have clarity on this matter, it will easier to judge the long-term economic and democratic impact of the referendum.

8 comments:

Paul Hunt said...

@Nat O'Connor,

I think the speculation is a bit futile until we see the wording. Some have a view that the AG, on balance, recommended a referendum because David Cameron's half-arsed non-veto forced the eventaul other 25 to develop this compact largely outside of the existing treaty arrangements. Therefore the existing constitutional permission to allow governments and the legislature to act and to enact legislation in compliance with existing treaties probably didn't apply. The Constitution needed further amendment to sanction this.

The Government jusged, probably correctly, that a case would be take to the Suspreme Court and that it would lose if it tried to avoid a referendum. In addition, a large number of voters want a referensun so they will have the chance to give the Government a bloody nose - irrespective of the precise matter under consideration.

The Government now, of course, is seeking to make a virtue of necessity. An Taoiseach's declaration that 'Irish people won't be bribed' is a perfect example of 'confirmed by official denial'. The Government is hoping to be able to extract a piece of paper from Frankfurt that it can wave on return to Dublin and that the self-interest of the huddled middle class will carry the day.

The irony is that this matter could have been debated comprehensively in and resolved by the Oireachtas, as it will be in most, probably all, member-states - but we would need a properly functioning parliament (which we don't have).

But that wouldn't have been any fun for those who are pathologically disposed to reject anything that comes from the EU and who relish the opportunity to give government, any government, a bloody nose.

Nat O`Connor said...

@ Paul Hunt

It is well worth considering the constitutional and procedural question of what is a "binding, permanent" provision when it comes to Irish law. This requirement is in the text of the Treaty.

As you note, other European parliaments will debate and ratify the Treaty. Some of them have mechanisms that are stronger than ordinary law. For example, some European parliaments can vote with a two-thirds majority to change their constitutions. The only 'strong' mechanism we have is to put things in the constitution via a referendum.

In principle, it is bad policy making to put specific, legislative-type detail (like the specific rules on divorce put into Article 41.3(2)i) into a constitution. The reason for avoiding this is to keep the constitution simple, and above the cut-and-thrust of politics as much as possible. As we approach our own, limited, constitutional convention, it is useful to reflect on how we have (ab)used our constitution over the years and whether we want to continue to make it unduly complicated, politicised and ragged with technical amendments.

Paul Hunt said...

@Nat,

You're raising a very important issue, but it's probably taking us off topic. The reality is that we don't have a properly functioning parliament. It's difficult to decide whether this is down more to successive governments emasculating it (as they certainly have) or to most voters preferring to have TDs as constituency advocates and mini-ombudspersons who elect and support or oppose a government and keep doing it for the life-time of a Dail. But it does seem clear that, when important issues arise, most people prefer to have a public barney and a popular vote on a Constitutional amendment as an alternative to resourcing and empowering the Oireachtas to sort it out.

And governments seem to prefer to run the gauntlet of these occasional encounters with the voters between general elections rather than having an empowered and resourced Oireachtas that would direct it and subject it to continuous scrutiny, restraint and accounability. Cluttering the Constitution with provisions that should be in legislation is seen a small price to pay.

Ireland is in the mess it's in largely because it doesn't have a properly functioning parliament, an empowered and resourced system of local governance, a fully accountable government apparatus and effective representation of the collective interests of consumers.

But there is either too much insular navel-gazing or too much focus on selective and convenient comparison data to recognise how dysfunctional Ireland is relative to other better governed polities.

Tom Healy said...

@Nat I am not convinced that the wording to be introduced is that crucial. whatever precise formula is used one thing is sure - the Irish people are being asked to endorse the ratification of the Fiscal Treaty. The Treaty is a solemn agreement that binds and is permanent. It also is plain, short and blunt in 11 pages. it hands power over to the the European court to make a definitive call on the size of the structural deficit. Macro economic measures will be decided in court. this is the choice. Yes or no.

Paul Hunt said...

@Tom Healy,

Macroeconomic measures will be decided in court if governments wish to dance continuously at the edge of the fiscal cliff. My response to a commenter in another place who is concerned about this point should also be relevant here:
http://www.irisheconomy.ie/index.php/2012/02/28/ireland-to-hold-fiscal-compact-referendum/#comment-246706

Aplogogies for the typos.

Tom Healy said...

@Paul - problem is that nobody has a clear idea where the cliff is if we insist on crazy rules that defy measurement. Colm McCarthy writes today in the Sunday Independent: ' It is reckless and irresponsible to specify, with actionable consequences, a precise target level in an international treaty for a concept which is incapable of meaningful measurement.'

Nat O`Connor said...

@ Tom

Sorry for the delayed response.

I am convinced that the wording to be introduced is very important. However, this may be a moot point now as the Government have indicated that the referendum wording will be “strictly technical”, by which I think they mean wording along the lines of “The State may ratify the Treaty”.

You are right that even if we simply ratify the Treaty, its existence will be fairly binding and permanent. But there will be further Treaties over time in order to address the radically incomplete nature of what's being proposed at Eurozone level, either before or after the next crisis.

However, if we put a ‘debt brake’ into our own Constitution, this has deeper political repercussions. It would mean one government putting contentious economic policy into the Constitution and therefore inviting the next government to take it out again, all of which politicises the Constitution in a way that undermines its purpose as a guiding document that articulates a vision of the public interest and stands above day-to-day political wrangling.

Paul Hunt said...

@Nat and Tom,

Apologies for linking to a comment on another blog:
http://www.irisheconomy.ie/index.php/2012/03/04/mccarthy-vote-yes-to-this-flawed-treaty/#comment-247428
but this is perhaps the first time I'm seen Colm McCarthy quoted with approval on this blog.

This vote on the 'fiscal compact' is asking the Irish people to commit irrevocably to a very vague vision of a much more politically and economically integrated core (aka coalition of the willing) EU.

'Official Ireland' is not spelling out the implications, but those who are opposed are not fully spelling out the full implications of a rejection either.

There is an abject lack of honesty on both sides. In my view rejection means (1) total reliance on the IMF when Ireland comes out of the current Troika support programme (assuming it has not yet been able to enter sovereign bond market at reasonable coupons - which is likely), (2) the negotiation of some sort of revised relationship between Ireland and the EU, (3) a rapid closing of any remaining fiscal deficit, (4) meaningful structural reforms of the king the Government has avoided or watered down up to now and (5) closer economic integration with Britain.

I'm sure many voters will be able to figure the underlying reality and choices, but why should they have to beat their way through this thicket of cant, hypocrisy and bluster?