OPINION:A treaty that introduces so little that is new does not warrant a referendum
LIFE, ACCORDING to Macbeth, is a tale full of sound and fury, signifying nothing.
The new fiscal treaty, agreed on Monday by 25 states including Ireland, has something in common with that. The sound of demands for a referendum has grown louder, and there has been some fury expressed over the Government’s refusal to promise a referendum unless one is legally required. Yet whether the treaty really signifies very much has received little analysis. Opponents claim it will result in crippling austerity and stagnation. But is that true?
The treaty’s core consists of debt and deficit rules. However, its preamble provides that the treaty is not to be interpreted in any way as altering the economic policy conditions under which financial assistance is granted to a state (like Ireland) in a stabilisation programme.
Thus the treaty’s deficit and debt requirements simply don’t apply here for the duration of the present bailout (or any second one). Moreover the exemption under existing EU law from the application of debt-reduction provisions for three years after any such programme ends will evidently also continue.
Only after this transitional period will the fiscal treaty’s debt-reduction requirements apply: article four requires an annual reduction of one-20th of the excess of national debt-to-GDP ratios exceeding 60 per cent. However, precisely the same obligation already applies under EU “six-pack” regulations – adopted by EU leaders with little protest last November. The treaty’s debt rules thus involve nothing new.
Nor will the treaty’s deficit rules impose any extra burden (as is pointed out in an Institute of International and European Affairs research paper on this topic by Pat McArdle).
We have just seen that after Ireland’s stabilisation programme exit, existing EU “six-pack” debt rules will require an annual reduction of one-20th of the excess in Ireland’s debt-to-GDP ratio. In other words, Ireland will be required to run structural surpluses rather than deficits for many years. The treaty’s ban on structural deficits of over 0.5 per cent will thus involve no extra burden, because under existing law, we will not legally be entitled to run deficits anyway.
To summarise, the new treaty rules concerning debt reduction and structural deficits will make not an iota of difference to Ireland’s existing economic obligations for at least the next quarter-century, other than to copperfasten them. Even after that (when our debt-to-GDP ratio drops below 60 per cent) we will normally be permitted a structural deficit of 1 per cent (not 0.5 per cent) under the treaty – similar to the level allowed under existing EU rules.
Will any of the new fiscal treaty rules render a referendum necessary? Attorney General Máire Whelan will advise the Government on this within the month.
If she advises that a referendum is not necessary, a concerned litigant could challenge both the ratification of the treaty and any implementing legislation – probably the mooted “Fiscal Responsibility Act” – before the High Court. Almost inevitably, any ruling will be appealed to the Supreme Court.
Draft implementing legislation could also be referred to the Supreme Court by the President under article 26 of the Constitution for a decision on its constitutionality.
(Given Fianna Fáil’s support for a referendum, article 27 of the Constitution might possibly be deployed to petition President Higgins to exercise his discretion to ascertain the will of the people on draft implementing legislation – although not the treaty itself. This would require a majority of Senators (of whom the Government has a slim majority) and 56 TDs – almost every Opposition TD in the Dáil – to agree. An article 27 petition will be initiated by some Independent TDs next week.)
It is impossible to be certain how the Supreme Court would rule on the constitutionality of treaty ratification or of implementing legislation. David Cameron’s veto of a normal EU treaty has prevented the fiscal treaty itself from enjoying the normal protection of article 29.4 of the Constitution, the immunisation and authorisation clause that might otherwise have permitted it.
Nevertheless, the court does usually defer to the executive in foreign policy matters. That should assist arguments that treaty ratification is constitutional. But deference does not always prevail, as the 1987 Crotty ruling shows. There, the court (deploying unconvincing logic) held the unassuming “European political co-operation” (foreign policy protection) provisions of an earlier treaty violated the sovereignty clause in article 5 of the Constitution.
What a differently constituted court will make of the fiscal treaty’s somewhat analogous commitment to working towards a single economic policy is unclear.
It is hugely significant that so much of this treaty substantially repeats provisions already (a) agreed at EU level (the so-called six-pack legislation), (b) in the process of being agreed (the so-called two-pack proposals) or (c) about to be proposed (such as legislation on ex ante reporting of debt issuance plans, economic partnership programmes, and co-ordination of major economic policy reform plans).
Legislation will thus not be generally needed to implement any such rules even where they are repeated in the fiscal treaty. Where it is needed, such laws will be protected by article 29.4 of the Constitution. Insofar as the treaty itself does not go beyond existing EU laws (protected as these are by article 29.4) it can scarcely be accused of any unconstitutionality.
One treaty provision that might cause constitutional concerns is the automatic debt brake in article three of the treaty, which does not feature in existing EU law. Depending on how it is implemented such a mechanism might perhaps be argued to infringe constitutionally ordained Oireachtas powers.
Overall, however, this treaty barely goes beyond the existing legal and political framework. There would not even be a treaty but for the political imperative for Angela Merkel to demonstrate other member states’ financial bona fides to her electorate.
Nor would there be a potentially constitutionally problematic intergovernmental treaty but for Cameron’s practically ineffective veto of an EU-level one (also intended for domestic consumption). Legally, economically and practically, Ireland’s choosing a referendum seems largely pointless: almost all the treaty’s substantive obligations either already exist in EU law or soon will – and will continue to bind us whether or not we vote against the treaty.
Moreover, a No vote in any poll would (a) alienate our fellow member states on whose financial solidarity we depend to save us from insolvency; (b) deny us access to ESM funding on which the economic future of this country might one day depend; and (c) likely frustrate our return to sovereign debt markets.
This country has enough problems without risking such dire consequences over a treaty whose significance is largely symbolic. If we create sound and fury, we should find better-chosen targets than this fiscal treaty.
Dr Gavin Barrett is a senior lecturer specialising in European law in the school of law, University College Dublin