Publication of the General Scheme of a Bill to be called the Fiscal Responsibility Bill 2012
The Minister for Finance, Mr. Michael Noonan T.D. has published today (26th April 2012) of the General Scheme of the Fiscal Responsibility Bill 2012. This General Scheme sets out the draft legislation that the Government will bring before the Houses of the Oireachtas to implement key provisions of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (“the Stability Treaty”), if the Irish people decide to ratify the Stability Treaty in the forthcoming referendum.
Commenting on the publication, Minister Noonan stated:
“The General Scheme of the Fiscal Responsibility Bill, which is published today on Department of Finance website, outlines the legislation that underpins the fiscal rules in the Stability Treaty. These rules are sensible and prudent and represent a responsible approach to budgeting.
The Government is committed to ensuring that the public will be fully informed on the implication of the treaty and will have access to all available information to enable them to make an informed decision. Information leaflets are being circulated to every home in Ireland in the coming week and a website www.stabilitytreaty.ie is now up and running.
The Treaty and the publication today of the Bill is another important part of this information process.”
The Scheme of the Bill is available at http://www.finance.gov.ie/documents/...billscheme.pdf
Notes to Editors
The General Scheme sets out the legislation that the Government will initiate in the Houses of the Oireachtas, if the Treaty is ratified by the Irish people. The purpose of the proposed legislation is to provide for the implementation in national law of Articles 3 and 4 of the Treaty. The other articles of the Treaty are binding obligations under international law that do not require to be reflected in national law.
Article 3 of the Treaty requires Article 3 of the Treaty requires provision in national law for the fiscal rules set out in that Article. These include:
·A commitment by governments that the budgetary position of the general government shall be balanced or in surplus. This is the general policy approach which governments must take.
·provision for an automatic correction mechanism that will be triggered if there are significant deviations from the budgetary target or the adjustment path towards it.
·Provision is made for deviation from objectives in the case of exceptional circumstances.
The Treaty also requires that there is an independent institution at national level responsible for monitoring compliance with the rules in Article 3 of the Treaty. Accordingly, the General Scheme also provides for the establishment of the Irish Fiscal Advisory Council on a statutory basis and allocates this function to it. The Government established the Irish Fiscal Advisory Council on a non-statutory basis in July 2011 and it has already published a number of reports, which can be found on its website www.fiscalcouncil.ie.
Article 4 sets out the debt rule that is already a requirement under the revisions to the Stability and Growth Pact adopted in late 2011. Where a Member State’s General Government Debt to GDP ratio is in excess of 60%, the difference between the actual ratio and the 60% threshold must be reduced by an average of one twentieth per annum.