 I begin by saying that I'm delighted to see that this process is taking place and I hope it develops from here. I can't remember a time when we had so much open involvement from both sides in the analysis of the Irish budgetary policy. I think it's been lacking for a long time and the European semester did nothing else but promote that kind of open debate I think it would have turned out to be very well worthwhile. I also slightly take issue with what the chairman said in his initial remarks. He said that it's an opportunity for us to discuss the Irish programme. That's true. We could of course be discussing the French programme or the German programme or the Slovakian programme because this is part not just of the post bailout surveillance of the Irish economy. It's part of the surveillance of the economies of the European Union. I think it's important to make that point, not least because it has become fashionable among the Irish media to make the point that we poor Irish are subject to all this kind of interference from that other crowd over there in Brussels or even worse over there in Berlin. They're bad enough in their own ways but we're not the only ones who are subject to that kind of surveillance. It's a common effort on the part of the European Union. In another bit of my life I do some public affairs work and whereas for the purpose of today's discussion CSR stands for country specific recommendations. In the other bit of my life it stands for corporate social responsibility. I'm sure a lot of you are familiar with that. I mean there are some cynics who don't like the idea. Corporate social responsibility goes I suppose on one end of the spectrum from the Heilig and Cop in rugby to at the other end other very worthwhile events that are sponsored by people who don't seem to have ended the gain out of it and without going into the politics of any issue today I would give you the instance at the other end of the spectrum of what used to be known as the GPA piano competition. I don't think I ever met anybody at any of those concerts who was going to rush out and lease a few aircraft and GPA just because they ran a piano competition. So the spectrum is there but corporate social responsibility has a meaning and I think it is something that the commission might reflect about and I'm comfortable what I mean by that. These country specific recommendations are based for each member of state on a set of priorities set out in the annual growth survey published at the end of last year by the commission and in the end of 2013 the growth survey identified five priorities. They were pursuing differentiated growth friendly fiscal consolidation restoring lending to the economy, promoting growth and competitiveness for today and tomorrow tackling unemployment and the social consequences of the crisis and modernizing public administration. I don't think anybody could argue that these are not appropriate priorities but they're not the whole story. The first two of those priorities that is pursuing differentiated growth friendly fiscal consolidation and restoring lending to the economy they seem to me to concern areas in which the commission shows a lack of responsibility, a lack of appreciation of what I would call corporate social responsibility in the political field. The annual growth survey on which this is all based makes no reference to monetary policy. Monetary policy figures nowhere in the European semester and that suggests to me that the erroneous mindset that helps that the crisis in the eurozone is at root a fiscal crisis continues to rain and that in my view is to everybody's detriment. For as long as this continues to be the case the European semester process will I think be an elegant, internally consistent, suitably rigorous and effective recipe for stagnation. Without an appropriate monetary policy framework and the mechanisms of a properly designed monetary union the kind of policies we're talking about here, fiscal policy will not make the kind of contribution to the restoration of growth that everybody claims to be in favour of these days. Sound fiscal policy absolutely needs the underpinning of an appropriate monetary policy. And for those of you who have a bit of courage and a strong stomach and who weren't there I would recommend that you have a look at the IAEA's website and look at the address that Martin Wolfe made a couple of weeks ago and I think the points are extremely well made there. Not just about monetary policy but also about the unprecedented nature of having such a tight fiscal organisation in such a loosely defective political structure such as we have in the European Union. The Commission may argue and I'm sure it will that monetary policy is the domain of an independent European Central Bank. That indeed is the case but the European Central Bank like the rest of us has to operate in the real world there where and there are very sound reasons for setting an inflation target of an I quote close to 2% we're nowhere near that at the moment and there are no reasons to fear the danger of an overshoot in inflation in the foreseeable future. Independent actors like the ECB are not precluded by their independence from dialogue with other interested parties neither are they precluded from drawing their own conclusions from such a dialogue. Perhaps there is one little chink of light on the horizon there. Last week according to reports the European Central Bank and I think it's board of governors had a seminar to which they invited a number of outside commentators including as far as I can remember Martin Wolfe. I would really like to have been a fly on the wall at that meeting because I'm sure the debate would have been very interesting. We do need a marked change of attitude and energy on the part of the European Central Bank and I think a good many people will share with me the impression that if the present governor of the ECB Mario Draghi were given his head monetary policy might indeed make a more substantive contribution to livening up light in the eurozone. As it is he seems to be obliged to make the kind of rather obscure opaque statements that maybe something might happen at the end of this year if things are going rather well. If the history of the last seven years shows us anything at all it is that small measures that go in the right direction are pretty much a waste of time and I could say if you look back at the history of economic policy and budgetary policy in this country over the last 30 years you'll come to the same conclusion if you're going to make a change make a lot of change very quickly. That was well illustrated to me many years ago by the first Polish finance minister after independence who was talking about structural change in the economy and he said to a group of us he said I have a market that's not a market it was still a command economy, I have a currency that's not a currency it wasn't convertible and I have a political system that isn't yet a political system and he said we have to change that and he argued that all the change had to happen very quickly some of us looked at him a bit agasta the nature of what he was proposing he said if you in Ireland decided that instead of driving on the left you would drive on the right you couldn't just start with the buses and the lesson really is that if you're going to get the benefit of making a substantial change in policy it has to be a very substantial change made quickly and the kind of incremental reaction that we have seen to the fiscal crisis and to the problems we have to the eurozone crisis and indeed to others small incremental steps are very largely a waste of time they use up huge amounts of political energy and get very little result who remembers or who can forget the amount of political energy we used up in this country to pass the fiscal treaty which only now begins to have relevance to us perhaps what's in it will turn out to have been useful it will turn out to have been a lot more useful than it is today if we had real progress in resolving the monetary problems of the eurozone having said all that which is not really concerned directly with the corporate social irresponsibility but the country specific recommendations I come to the recommendations themselves this our government submitted its national reform program and stability program last April with the endorsement of the Irish fiscal advisory council another very very useful innovation in our system the commission broadly agrees with the forecast for 2014 and 2015 but it's important to point out it enters a number of caveats it says that the authorities forecast that the later years of the program are optimistic I would agree with that I would have to say that in terms of sustainability I'm very much on the minus side of official Ireland and I think if you look at even the government's own analysis of the difference between the forecast for last year and the out turn for last year you'll see that the tendency to optimism is not entirely gone the commission makes the point that the achievement of budgetary targets is not supported by sufficiently detailed targets for 2015 as a result of the commission deficit forecast for 2015 is higher than the target recommended by the council the commission believes that the program's targets are consistent with the requirements of the stability and growth pact but need to be supported by specific measures from 2015 onwards it makes the point that medium term budgetary plans are not supported by when specified adjustment measures and are subject to revisions at the time of annual budget decisions a very very prescient remark and I think the end of this year would be very interesting to see just what kinds of revisions we might see then and finally it says that the medium term expenditure ceilings are not sufficiently constrained by legally binding specific adjustments I think perhaps that point has been dealt with but I agree with the view that the forecast for the period after 2015 are optimistic not to be fair, the government's documents point out in a number of places that there are qualifications to the presentation and the stability program itself as presented by the government contains a sensitivity analysis on page 26 which I think is a very useful addition to the documentation for the rest, the commission's quibbles seem to me to be rather disingenuous because the European semester process itself gives the commission and the council further opportunities to have an input into the process before it's finalised they get another bite of the cherry before the budget proposals in October so it seems to me that some of those caveats are there just to make us all believe that the commission is alive and well and doing the work it's supposed to do but there are not things to worry about hugely but there are some further caveats and some qualifications that they make before coming to the recommendations the commission says that there is further scope to improve the efficiency and growth friendliness system and that there is scope to improve the effectiveness of environmental tax instruments and scope for removing environmentally harmful subsidies I was amused to see a letter in the Irish Times the other day from a resident of a housing estate in Cork who said yesterday the Ischga Eirin people were here installing metres there was no protest and there were no media here to record the fact that there was no protest I wonder if that's what the commission has in mind when it talks about the effectiveness of environmental tax instruments in the health sector it says financial management and accounting systems and processes are fragmented across healthcare providers this hinders the monitoring of healthcare expenditure and efforts to achieve value for money and an appropriate allocation of resources I wonder have they reflected on the effectiveness of binding expenditure ceilings in that sector there seems to me to be a real problem there maybe the bindingness isn't big enough or maybe the ceilings aren't appropriate but there is an issue there that will certainly come up before the end of this year it makes the point that is the commission in its commentary on the recommendations it says replacement rates are relatively high for the long term unemployed with low income potential and other categories of workers depending on family circumstances I have to say that I find that remark to be crass in the extreme it speaks of replacement rates being relatively high for long term unemployed with low income potential the long term unemployed with low income potential are people who are in danger of remaining long term unemployed so the very concept of replacement rates for those people is absolutely irrelevant and I think if we're going to have a look at reordering our social support system we shouldn't start from that kind of point it makes the point that dedicated schemes and funds have been put in place to improve access to finance for SMEs but so far the take-up has been low that's actually quite true and I'm not sure if we have fully understood the reasons for that take-up being low there is of course a new provision with German provided funds specifically to be directed at SMEs and it would be interesting to see how that is organised and how it actually works out in practice and it makes the point that John has mentioned already about household and SME delivery continuing the recommendations on the hold seem to me to be rather well focused and I don't think that in terms of general direction the government will have any major problem with them but there are a couple of specific points I'd like to make about this first one the process of pursuing a structural adjustment towards the medium term objective of reducing the deficit by at least 0.5% of GDP a year and putting the general government deficit on a sustained downward path will be extremely difficult in the current monetary climate and I come back to this issue of the monetary policy underpinning if we don't have a properly active and effective monetary policy approach all of this process is going to last for much longer and it's going to continue to be extremely difficult and painful second comment I'd make is that there's a recommendation number four which includes the proposal to tackle low work intensity of households and address the poverty risk of children through tapered withdrawal of benefits and supplementary payments upon return to employment that seems to me to be absolutely essential and long overdue and it makes me very very angry to reflect that we first started talking about the need to taper benefits on return to employment over 30 years ago 30 years ago there might have been some excuse for it at that point we had information systems in the Department of Health and the Department of Social Welfare we had multiple information data retention systems in those departments that couldn't even talk to each other within those departments in the meantime we've had P parts which has been one of the great fiascos of our time but surely we should have arrived at the point today where our public expenditure system could operate a tapered system on return to employment and get rid for good and all of this business these arguments that we constantly have about whether or not there are poverty traps we know that there are and there is no great rocket science in figuring out what needs to be done to get rid of them but we're still at the point where we haven't even begun to think about how we would do this mind you if I could betray for a moment to your great surprise I would have to say that our system had been damned for generations by this nonsensical idea of universal entitlement so beloved of left-wing parties around the world but that's maybe another day's work but it does seem to me that if we could ever get some effective outside pressure on our benighted system to operate a tapering production of benefits we would do something really worthwhile for groups of people in our society who have been very badly served third comment I'd make is that recommendation number six asks the government to announce ambitious targets for the conclusion of the restructuring of mortgage loans in rears of more than 90 days again that seems to me to be long overdue I remember a time not so long ago when one of the senior people in the central bank got great thoughts for describing the banks as teenagers who hadn't yet grown up in the way they were approaching their job I think it was probably a well merited comment but it seems to me that it's time for both the central bank and our government administration to move past the points they have reached they need to be more determinadly prescriptive in telling the banks and mortgage lenders how to deal with this issue John has just said and I'm not sure that he would be too keen on being fully taken up literally on it but provision has been made in the recapitalisation of our financial institutions for what was seem to be or considered to be the risk to their balance sheets at the time of the recapitalisation that's making all the qualifications in advance but it seems to me that the prospect of capital write downs having to be made is inevitable for all of the financial institutions certainly for mortgages that are in new years whatever solution that they choose even today's most optimistic property market observers and isn't it interesting to notice how our national newspapers property supplements are getting to look more and more like the way they did in the middle of the boom but I don't think even the most optimistic guilders of the lily in that business would expect prices to get back anywhere near where they were in 2006 in the immediate future so starting out the problems of mortgage holders in new years whatever way it's done whether it's by repossession or by-to-let or split mortgages or simply that write down is going to be a costly business and I think the principle of making an effective change quickly applies here also if they're going to take a capital hit which they are they should take it rapidly but the problem is quickly as we can and finally get to the point where the fundamentals of the economy are beginning to work and to mean what they look like meaning on the surface having said all that as I said at the beginning I think this whole process is a huge improvement in the way that we can look at budgetary policy and I hope that it's taken really by all of those here that I could say that it would be taken equally seriously by the million and a half people who vote in this country but that's probably for another day thank you