Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

I thank the Chair and I take this opportunity to wish him a happy birthday.

I am pleased to present the 2013 Revised Estimate for my Department to the committee. Before we consider my Department, I wish to say a few words on the EU Presidency, the outcome of which is very important to Irish agriculture. We began the Irish Presidency of the EU in January last with ambitious and challenging objectives, namely, to deliver by the end of our Presidency a political agreement between the three EU institutions on reform of the Common Agricultural Policy, CAP, and the Common Fisheries Policy, CFP. I am very pleased that we have achieved both objectives. The agreement reached last week marks an historic moment in the evolution of CAP. This is the first occasion on which a major reform of CAP has been secured with the involvement of the European Parliament and the 27 - now 28 - member states. The agreement was linked to the parallel negotiations taking place on the multi-annual financial framework, MFF, for the next EU budget from 2014 to 2020.

Under the MFF agreement, the expenditure ceiling for heading 2 - CAP - was set at €373 billion. While this represents a reduction of just over €14 billion in comparison with the Commission's original proposal, heading 2 has been protected to a far greater extent than other headings. A decision was taken that direct payments will be more equitably distributed between member states. As a result, all members states whose level of direct payments is currently below 90% of the EU average will see one third of this gap closed by 2020. The method of calculation used in this exercise, which was initially proposed by Ireland and which uses eligible area as the comparator, has largely protected this country's share of direct payments funding. I will be returning to discuss the CAP with the committee in a few weeks so I will not spend much time outlining the detail involved. I have a speaking note in which the main elements of the reform of the CAP are outlined and I can circulate it to members. This matter is relevant to this year's Estimates, particularly in the context of the budgetary negotiations that have taken place at European level.

I will now deal with some of the detail relating to the 2013 Estimate for my Department. This year, the Department's Vote is again being presented on a strategic programme basis consistent with the high level goals set out in its statements of strategy. We are all very much aware that the general economic situation and the position relating to the public finances require the continuation of tight budgetary discipline. None the less, with the resources available to me I am determined to build on the progress achieved in recent years in developing the agrifood sector and, in particular, to contributing further to the future growth and prosperity the sector can achieve for Ireland, primarily through the expansion of its revenue base through growth in export earnings.

The Exchequer contribution to the Vote of my Department in 2013 is just under £1.242 billion. This includes a sum of €6 million capital savings carried over from 2012. While this represents a reduction on the 2012 outturn of €1.318 billion, I have managed to fund new schemes and programmes and secure savings in 2013. The 2013 budget reflects a significant Exchequer commitment of support for the agrifood sector and is a recognition of the contribution which the sector is making to economic recovery and future growth. The €1.24 billion expenditure in the Department's Vote comprises some €1.049 billion in current expenditure and €193 million capital expenditure. The downward budgetary movement of €76 million between the 2012 outturn and 2013 Estimate reflects lower budget requirements for a number of measures, including that which relates to public sector pay.

Considering the overall limit on resources, I was obliged to make difficult decisions and choices in the context of making prudent provision for essential areas, meeting maturing liabilities for grants approved in previous years and introducing reductions in expenditure in order that we might remain within the expenditure ceiling for the year. The 2013 budget for the Department is, however, consistent with last year's in terms of priorities. I refer here to the protection of incomes for family farms, support for small farm holdings in disadvantaged areas, providing support programmes in line with the targets of Food Harvest 2020 - in particular job creation - supporting the future of the sector through new research and development funding and investment in food safety and animal health and welfare controls, and an ongoing programme of reform within the Department aimed at continued improvement in service delivery and reducing costs. The latter has been a priority. When the 2013 gross Vote is combined with the €1.285 billion in EU funds which is paid through my Department, the total projected expenditure for the year amounts to more than €2.5 billion in public funds. In light of the current financial situation, this represents a substantial level of support for and commitment to the agricultural, food and fisheries sectors.

In addition to direct financial support for the agrifood sector, I have secured agreement for a range of taxation reliefs that would link in with the key measures being pursued under Food Harvest 2020 in respect of the growth and development of the agriculture, food and marine sectors. The main taxation measures contained in the budget introduced by the Government in December 2012 that will benefit the sector are as follows: the retention of the general 25% rate of stock relief for all farmers and 100% stock relief for young trained farmers; a new farm restructuring initiative to allow consolidation of land parcels, with the aim of improving the overall efficiency of the combined holdings; an expansion of the foreign earnings deduction scheme, which benefits SMEs and which we have extended from the previous year, to apply where an individual spends 60 days per year developing opportunities for Ireland in certain key markets; the extension of the farm partnership scheme to sectors other than milk production partnerships, subject to state aid approval; and relief from excise duty on auto diesel for licensed road hauliers. The last had an impact on the agriculture side.

I will summarise briefly the financial allocations for this year on the basis of the four strategic programmes which are set out in the 2013 Revised Estimate. As stated, the Revised Estimate links the resources required for the programmes with the key outputs to be achieved in 2013 and includes information on the outcomes achieved in 2012. Programme A deals with agrifood policy, development and trade. The funding relating to it is focused on establishing the policy framework to develop an internationally competitive, innovative and consumer focused agrifood and fishing sector. This programme involves a total expenditure estimate of €341 million for 2013.

Programme B deals with food safety, animal health and welfare and plant health. The aim of this programme is to ensure the maintenance of the highest possible standards of food safety, consumer protection, animal health and welfare and fish and plant health. This is the bedrock upon which consumer confidence in the agrifood and fisheries sectors, and in particular, our export trade, is built. Expenditure under this heading in 2013 will amount to €222 million and the targets for the programme are set out in Part III of the published Vote. Obviously, there has been some additional expenditure in this area as a result of the horsemeat crisis earlier in the year and animal welfare concerns relating to the fodder shortage experienced in late spring.

Programme C relates to the promotion of economic, social and environmental sustainability, and appropriate structural change in the agriculture, forestry, fisheries, bio-energy and food production sectors. The programme has obvious complementary links with programmes A and B in that it contains a number of schemes and measures to facilitate farmers to influence the structure and output of their holdings to meet the market needs.

This programme contains the majority of the demand-led schemes operated by the Department and the funding allocations are determined largely by forecast of the rate at which beneficiaries draw down grant approvals, which is sometimes inconsistent.

Expenditure under Programme D involves national expenditure of just under €248 million and includes the disadvantaged areas scheme, DAS, for which €195 million is provided this year. In addition to the Voted expenditure under this programme, my Department will incur expenditure of a further €1.285 billion of EU funds, most of which relates to the single payment scheme.

I have allocated an increased allocation of €195 million in support of disadvantaged area payments to reflect my commitment to protecting farmers and farming in disadvantages areas, particularly to the smaller farmers whose livelihoods are most dependent on this scheme. That is reflected in the fact that last year the Estimate for the DAS was €190 million and this year it is €195 million, even though we did not make the projected savings last year. Essentially, we are planning for more expenditure in the DAS rather than less.

That is an outline. I understand there is a series of issues the members might want to discuss whether it is linked to the Common Agricultural Policy or to direct expenditure. I am happily in the hands of the committee in terms of the areas on which it wants to focus.