Parliament's rapporteurs on six proposals to beef up economic governance set out their preliminary views in the Economic and Monetary Affairs Committee on Tuesday. They stressed the need for Parliament to take a strong, united stance on setting up a deficit surveillance mechanism, debt levels, and economic imbalances in the eurozone.
The six legislative proposals aim, on the one hand, to strengthen the Stability and Growth Pact (SGP), allowing for better surveillance and sanctioning of excessive deficit and debt levels, and, on the other, to lay down rules for identifying and correcting economic imbalances that threaten the stability of the eurozone.
Focus on debt, as well as deficits
Corien Wortman-Kool (EPP, NL), rapporteur on the Commission proposal to strengthen the SGP, said that although Parliament had already touched on this issues in the Feio and Berès reports on economic governance and the economic crisis, the economic governance debate to date had taken too little account of Parliament's views. "We are determined to play our role," she said.
She welcomed the proposed strengthening of the SGP and demanded a strong role for the Commission in applying its rules, which provide inter alia for sanctions against governments that do not abide by the principles of prudent fiscal policy making. "If Member States in the Council decide, the risk is that the debate will be highly politicized", Ms Wortman-Kool warned.
"Reverse majority" is a good idea, said rapporteur on SGP sanctions Sylvie Goulard (ALDE, FR), referring to the Commission's suggestion that proposed sanctions should be considered approved unless the Council decides otherwise by a qualified majority. Ms Goulard emphasized that in the context of the "European semester" proposal for EU surveillance of Member States' economic and fiscal policies, the focus on fiscal discipline should be complemented by a focus on jobs and growth. She also called for a cross-border debate on economic governance.
The SGP will focus not just on deficits, but also on debt levels, said rapporteur on the excessive deficit procedure Diogo Feio (EPP, PT). Public debt should not exceed 60% of GDP, but if it does, the government should aim to reduce the overhang at a rate of one-twentieth per year, Mr Feio explained. Many national politicians have strong views on these issues, he pointed out.
Economic imbalances in the spotlight
The excessive imbalance procedure, the other key thrust of the Commission proposals, is an entirely new area, and one in which Parliament must play a substantial role, said rapporteur Elisa Ferreira (S&D, PT).
Ms Ferreira complained that it was not yet known which indicators, to be included in a "scoreboard" proposed by the Commission, would be used to help identify economic imbalances.
Carl Haglund (ALDE, FI), rapporteur on sanctions in the context of the excessive imbalances procedure, pointed out that bilateral deals between Member States on economic governance issues do not enhance Parliament's negotiating position. "People expect us to come up with something ambitious," he said, warning against watering down the Commission's proposals. In his view, the biggest challenge is how to define an "excessive imbalance".
Sunlight is the best disinfectant
The starting point for all efforts in the economic governance field is accurate, accessible data, said rapporteur on national budget standards Vicky Ford (ECR, UK). "Sunlight is the best disinfectant," she said, adding that if such data were available, perhaps the eurozone would not be in so much trouble. Ms Ford welcomed the three-year budget planning horizon that governments should apply in the future, but called for the same standard in the case of the EU budget.
As for taxpayers bailing out financial institutions, Ms Ford thinks that markets should "take some of the pain" and that a crisis resolution system should reflect this. Here she agreed with Sven Giegold (Greens/EFA, DE), that taxpayers should not have to bail out those who gave easy credit to governments.
Mr Giegold also warned that demanding that governments cut their deficits and public debt at a time of crisis could lead to deflation. Liem Hoang Ngoc (S&D, FR), agreed, saying that tightening the SGP could kill off recovery, and push economies back into recession. "Automatic sanctions will not go down well", opined Mr Hoang Ngoc, saying that Parliament should opt for a country-by-country approach.
The draft reports are scheduled be presented in committee on 24 and 25 January 2011.
In the chair : Sharon BOWLES (ALDE, UK)