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

I do not want to hold up the committee as this is primarily a technical adjustment, which I will now explain. Obviously, if members have any questions, we are here to answer them.

I am grateful for the opportunity to present this request for a Supplementary Estimate for 2014 to increase the Department of Agriculture, Food and the Marine’s permitted net expenditure to deal with a shortfall in appropriations-in-aid. This Supplementary Estimate is not required to cover an increase in gross spending. It is more technical in nature as it is required to avoid an excess of net expenditure – that is, gross expenditure minus appropriations-in-aid, which, effectively, is money we get back from Europe. In essence, the Department needs to increase its permitted net expenditure to deal with a delay in receiving some €180 million of its expected receipts. Accordingly, the net expenditure that had been originally set at €958 million must be increased to €1.135 billion.

The Department's budgeted total appropriations-in-aid for 2014 is €245 million. It is now forecast that some €66 million will be received in appropriations-in-aid, which would represent a shortfall of some €178 million in current receipts. The overwhelming factor in this overall shortfall is the absence of anticipated receipts of €180 million from the EU in respect of the co-financing of expenditure under the 2014-20 European Agriculture Fund for Rural Development, EAFRD. It is important to make the point that this €180 million in receipts which are not drawn down in 2014 are protected and will be drawn down in 2015 following approval of Ireland’s partnership agreement and rural development programme, RDP. Hence, the issue is one of timing rather than the amount to be recouped.

The Department of Agriculture, Food and the Marine appropriations-in-aid projections for 2014 were €245 million, split roughly 80-20 between funds from the EU and income generated nationally. The non-EU part is comprised of fees for services provided and other purchases from the Department, including inspection fees at meat plants and meat export points, certain vaccine sales, farmer contributions towards disease eradication and so on.

On the EU side, we get substantial refunds of around €14 million from the EU for our work on disease eradication – TB and TSE - and modest receipts for the European Fisheries Fund. However, the vast bulk of receipts in respect of 2014, amounting to €180 million, were to come from the European Agriculture Fund for Rural Development on foot of co-funded investment in rural development schemes. The EU co-funds schemes and programmes in arrears based on the submission by member states of appropriate claims following payment of funds to beneficiaries. Some €180 million was the Department's forecast for EU co-funding contribution to 2014 expenditure on disadvantaged area payments, REPS, the agri-environment options scheme, AEOS, and an initial advance of 1.5% of the total RDP programme fund for 2014-20.

The Department was confident of receiving payment because, as part of the CAP reform process, the Commission and the legislators in Council and Parliament had put in place a specific regulation dealing with the period between the two RDP periods to explicitly provide for the eligibility of payments in respect of old programme schemes such as REPS, AEOS and DAS to be drawn from the new programme budget. While this allowed co-funding of schemes operated in the transitional period between programmes, it did not provide explicitly for the physical payment of that EU contribution to the member states in the year in question. That payment depends on the Commission approval of a member states partnership agreement which was approved in mid-November and its new rural development programme, which is not yet agreed.
Our estimates for 2014 were established before the completion of the programming regulations on 17 December 2013. When framing the Estimates, it was not possible to accurately predict when Ireland’s rural development programme would be approved. Despite ongoing intensive discussions, this is not yet the case. As the final date for making a claim in order to recoup funding in 2014 was 10 November last, EU funds cannot now be drawn down this year.
Considerable effort has been put into drawing up our rural development programme. Following needs assessments and the extensive multi-consultative process required by the regulations, Ireland submitted its draft programme on 3 July 2014, well ahead of the end-July deadline for submission. The Commission replied with its comments on 20 October, somewhat outside the three month period for reply, and Ireland has already submitted its comprehensive response to those comments and is now engaging bilaterally with the Commission to progress to the next stage of the approval process. For its own part the, Commission is engaging with 118 other managing authorities each of which is as anxious as Ireland to conclude negotiations and implement all aspects of its new rural development programme. To date, no other member state’s rural development programme has yet been approved.
As I said at the outset, the EAFRD receipts not claimed or received in 2014 will be received in 2015. Accordingly the issue is concerned with timing of the receipts rather than quantity of such receipts from the EU in the multi-annual programme. Our 2015 appropriations-in-aid include estimated receipts amounting to €459.71 million, of which €394.3 million is in respect of EAFRD receipts. This amount includes the unclaimed 2014 amount of €180 million. The Department anticipates some minor current savings in elements of its administrative budget and its expenditure programmes and proposes to use €1 million of these savings to offset partly the short-fall in appropriations-in-aid. It is proposed that any other current savings which may arise in 2014 would be used to provide for expenditures which, if postponed, would have to take place in 2015.
The amount being sought from the Dáil is €177 million, since the €180 million receipts shortfall is offset slightly by higher than expected appropriations in aid in some other headings and €1 million in expenditure savings. This Supplementary Estimate for €177 million is essential for my Department to deal with the shortfall in the appropriations in aid for 2014 and I strongly recommend it to the committee for support.
I am happy to respond to any questions members may have. In simple terms, we were due to get this money from the European Commission, but it was subject to approval of the rural development programme. This has not been done in time for the budgets to be signed off so we must now factor in a higher figure than expected, with a view to getting the money back next year when the appropriations-in-aid come through once the rural development programme is finalised, hopefully in the not too distant future.