Oireachtas Joint and Select Committees
Thursday, 31 January 2013
Joint Oireachtas Committee on Finance, Public Expenditure and Reform
Scrutiny of EU Legislative Proposals
11:45 am
Ciarán Lynch (Cork South Central, Labour)
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Item No. 7 is the scrutiny of COM (2011) 398 and COM (2012) 388 Multi-Annual Financial Framework 2014-2020. I welcome the following: Mr. Brendan O'Leary and Ms Niamh Campbell from the Department of Finance; Mr. Kyle O'Sullivan, from the Department of the Taoiseach; Mr. Jim Deane, from the Department of Public Expenditure and Reform; Ms Brid Cannon, from the Department of Agriculture, Food and the Marine; Mr. Pat Kelly, from the Department of Jobs Enterprise and Innovation; and Mr. Vincent Landers from the Department of Education and Skills.
After the opening remarks of Mr. O'Leary and Ms Campbell, we will have a question and answer session. I remind members, witnesses and those in the public Gallery that all mobile telephones must be switched off.
By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of the evidence you are to give this committee. If you are directed by the committee to cease giving evidence in relation to a particular matter and you continue to so do, you are entitled thereafter only to a qualified privilege in respect of your evidence. You are directed that only evidence connected with the subject matter of these proceedings is to be given and you are asked to respect the parliamentary practice to the effect that, where possible, you should not criticise nor make charges against any person or persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.
I thank the officials for coming before us this morning. I now ask Mr. O'Leary and Ms Campbell to make their opening statements.
Joe Higgins (Dublin West, Socialist Party)
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The Chairman has referred to Mr. O'Leary, but I see no witness listed as Mr. O'Leary.
Ciarán Lynch (Cork South Central, Labour)
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My notes say Mr. O'Leary is a witness.
Ciarán Lynch (Cork South Central, Labour)
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I apologise to Mr. O'Sullivan.
Joe Higgins (Dublin West, Socialist Party)
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That is important to know.
Ciarán Lynch (Cork South Central, Labour)
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I thank Deputy Higgins for alerting me. I need to go to Specsavers.
Ms Niamh Campbell:
We are here to make a presentation on the Commission proposal COM (2012) 388, for the regulation and laying down the multi-annual financial framework, MFF for the EU budget 2014-2020. The committee will be aware that next week the European Council will discuss the multi-annual financial framework, MFF. Since the proposal was tabled, events have moved on. In order to be helpful to the committee, we had agreed with the Chairman, to make a broad presentation on the MFF, rather than going through the detail, line by line of the regulation. We are happy to answer any questions on the regulation. There have been many developments since then and we thought it would be useful to set out the overall context.
At national level this work is carried out jointly by the Departments of Finance and the Taoiseach. I will speak for the first five minutes and then my colleague, Mr. Kyle O'Sullivan, will speak for the second five minutes. I will speak on the actual Commission proposal and the state of play in the current negotiations and Mr. O'Sullivan will talk about Ireland's position, the position of the other member states and the process for securing final agreement.
I have a power point presentation, but I notice that the slides are difficult to read and I do not think members will be able to read them.
Ciarán Lynch (Cork South Central, Labour)
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A hard copy of the presentation is available.
Ms Niamh Campbell:
I ask the members to bear with me in regard to the numbers and figures. The Commission presented its proposal in June 2011, which was updated to take account of Croatia's accession in July 2012. The proposal has elements inside the multi-annual financial framework, MFF and elements outside the MFF, which are being moved in and out. There are many moving parts. If some elements cause confusion, please ask me about it and I hope I will be able to allay the confusion.
The treaty base for the multi-annual financial framework, MFF, is Article 312 of the Lisbon treaty, which defines the MFF as the multi-annual financial framework that sets out the ceilings for budgetary commitments and payments under a limited number of headings. There are six headings in the current proposal. The treaty also provides that the MFF regulation is adopted by unanimity in the Council of Ministers and with the consent of the European Parliament. Every year the annual budget is negotiated between the Council and the European Parliament within the multi-annual framework.
The regulation we are discussing today is the overarching regulation. The MFF as a whole consists of about 75 sectoral regulations covering CAP, cohesion, research, education. Once the overarching regulation is agreed work will be able to advance on the various sectoral components. I understand these have been discussed by the Oireachtas committees dealing with the sectoral areas. There are a number of proposals related to the Revenue side and how the EU budget is funded but we are not discussing that specifically today, but again we are happy to take questions, if the committee members wish to have information on it.
The current MFF was for a seven year period that expires at the end of 2013. The yellow slide deals with the Commission proposal, which is probably the second in the pack, and is the latest version of the proposal dating from July 2012.
In the bottom corner of the right hand side, one will see the figure €1,033 billion, which is the total value of the multi-annual financial framework, MFF proposal in 2011 prices. It represents 1.08% of EU GNI, - which is basically EU GNP minus EU budget pluses and minuses. Not to cause too much confusion, there are a number of elements outside the MFF, that are added on to the figure of €1,033 billion. This can be seen in the green slide, the provision for elements such as the emergency aid reserve, the EU globalisation fund and the solidarity fund totals €58 billion.
These elements are outside the multi-annual financial framework, MFF, because they are demand-led contingency funding instruments which are allocated towards areas in which funding is unpredictable, for instance, large pan-European projects such as ITER and GMES. When these elements are added, the total volume in the Commission proposal is €1,091 billion, which is equivalent to 1.14% of the European Union's gross national income. These figures are important as the main focus of the European Council negotiations is what will be the size of the MFF. Mr. O'Sullivan will explain the different views in the European Council about its size.
The Commission proposal was for a multi-annual financial framework of €1,033 billion, with a total budget of €1,091 billion. As regards the breakdown, to return to the table in yellow, the proposal is broken down into six different headings, the largest of which is Smart and Inclusive Growth, for which the proposed figure is €494 billion. This heading is divided into two areas, the largest of which is Economic, Social and Territorial Cohesion, for which the figure proposed is €379 billion. This heading also includes smart growth elements, including the research instrument, Horizon 2020, the Connecting Europe facility, for which the proposed allocation is €40 billion, and education. We have included a slide which gives the breakdown of all the different elements of this heading in case members would like greater detail.
The second largest heading is essentially expenditure on the Common Agricultural Policy, for which the proposed figure is €386 billion. Without speaking in too much detail, Cohesion Funding and the CAP combined account for 73% of the total spending under the multi-annual financial framework. They are, therefore, the big spending areas of the MFF. The document I circulated includes a paragraph setting out areas of expenditure outside the MFF, which I will not list as I have spoken about these areas. However, we can answer any questions members may have on the issue.
The table is the annex to article 1 of the multi-annual financial framework regulation and while the latter is obviously the focus of this discussion, the table is the most important part of the regulation. Apart from the table, the MFF regulation contains a number of largely technical provisions which relate to the rules for agreeing the annual budget within the MFF ceiling, arrangements for annual inflation adjustments, provision for unforeseen circumstances, GNI capping for Cohesion Funding - this is not applicable to Ireland - and a number of other matters on which we can elaborate if members so wish.
What is the current position following the Commission proposal? The political discussions on the multi-annual financial framework have been ongoing for the past 18 months under the Polish, Danish and Cypriot Presidencies. These discussions are not about the regulation but about the financing table and overall principles relating to the operation of the expenditure and revenue elements. Since November, the negotiations have moved up to European Council level and are being chaired by President Van Rompuy. The first substantial discussion by the European Council, which took place at the end of November last, was based on a compromise proposal from President Van Rompuy which involved a reduction of €80 billion in the figure in the table. This €80 billion cut was spread across the different headings and I can provide more details if members so wish. While agreement was not reached at the discussion, the Council concluded that there was "a sufficient degree of potential convergence to make an agreement possible in the beginning of next year". On that basis, the European Council has been scheduled to meet on Thursday of next week to continue with discussions with a view to reaching agreement. My colleague, Mr. O'Sullivan, will continue the presentation.
11:55 am
Mr. Kyle O'Sullivan:
A word first about the position Ireland has taken so far in the negotiations. We have an overall objective, namely, to optimise Ireland's net budgetary position and establish a framework which supports growth and employment in Europe. Within this overall objective, the Government's approach has been guided by a number of priorities. The first is to have a properly funded and properly functioning European Union with the right mix of priorities, fair allocation of resources and a focus on jobs and growth. As members can imagine, in allocating funding for the next seven years, we are also setting out political priorities. It is, therefore, important that the allocations fit these particular priorities.
The second priority is to protect Ireland's receipts under the Common Agricultural Policy to the maximum extent possible. This is our overriding financial priority.
The third priority is the protection of Ireland's cohesion receipts to the maximum extent possible in the context of changing relative GDP per capita rates and pressure to concentrate funding on less developed regions.
The fourth priority is to ensure adequate resources to reflect Ireland's and Europe's needs and priorities in the areas of research, infrastructure and education.
The fifth priority is retention of the European Globalisation Adjustment Fund and the sixth is to ensure that any changes to the revenue side of the own resource arrangements have a minimal impact on our net contributions. I will say a word about net contributions in a moment.
The final deal will obviously be the result of a negotiation and it seems certain at this stage that it will result in a much smaller budget than that originally proposed by the Commission. This will involve trade-offs and compromises by all member states, including Ireland, and our negotiating tactics coming into next week's European Council must take account of that.
I should stress that the Government is acutely conscious of the importance to the Irish economy of European Union funding, in particular given our current national fiscal position. Negotiations on the multi-annual financial framework have been active since last September and the General Affairs Council, COREPER and the European Council have been fully engaged, as have Irish Ministers and officials in bilateral contacts. Irish embassies in EU capitals as well as our permanent representation in Brussels have also been intensively involved.
I draw members' attention to our national net position in a couple of the tables that were circulated to the joint committee to put these concepts into figures. I ask them to look at Table 10, Public Sector Receipts from and Payments to the EU Budget. I draw their attention to the bottom row, which sets out receipts and payments for 2011. The table states simply what we contribute and what we receive on an annual basis. Ireland's net position in 2011 was a net gain of €586 million. Members can see the history of the Irish position for every year going back to 1973. The €586 million figure is crucial to us in negotiations.
I draw attention to the line in Table 11, which indicates what parts of the EU budget provide the flows to Ireland. We receive €1.6 billion per annum from Pillars 1 and 2. The two relevant figures, €1.297 billion and €348 million, are shown at the bottom of the table. This is from where our income or flows from the European Union budget come. Of the total of €1.9 billion for the whole year, €1.6 billion is for agriculture. Clearly, therefore, this area is a key part of our considerations.
I ask members to look at a final graph which was, I believe, lifted from The Economist.
Ciarán Lynch (Cork South Central, Labour)
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Is that graph in the document circulated?
Mr. Kyle O'Sullivan:
Yes. The graph has an interesting indicator. In many of the negotiations, discussion varies between net contributors and net recipients. This is in some senses an artificial discussion but it is also an important one of which people are aware. The graph features a line, above which are the countries that are net recipients and below which are the countries that are net contributors. Ireland is a net recipient and intends to remain so. The other axis of the graph shows gross national income per capita. As members will note, Ireland is among the net recipients with the highest GNI per capita. This is an advantageous position for us nationally and one we hope to retain. I point this out because the issue frequently arises in negotiations. That is our national net position.
As holders of the Council Presidency we have a number of responsibilities and other priorities to address and we have to support President van Rompuy in securing agreement. We then have to take it to the European Council, put it into draft legislation, move it through the Council and obtain the European Parliament's assent. As a result of the Presidency we have a particular role at the European Parliament. One of our responsibilities next week at the European Council is to ensure that what the European Council decides is something on which the European Parliament would be able to negotiate and finalise. That is what I wanted to say on our national position and our national priorities.
In terms of the position of the Commission, the European Parliament and other member states, in summary, the Commission made its proposal in 2011 when it proposed a larger figure and it is still attached to its original proposal. However, it is aware that negotiations are moving in another direction. The Commission is concerned that the new elements in the budget are protected and particularly the new allocation towards research, innovation and SMEs. It is concerned also at the timetable and getting all the agreements reached as early as possible because the Commission has a role in implementing the budget. The European Parliament would have sought a larger budget. It was also concerned that its rights as co-legislator and its responsibilities in co-decision are not affected by an MFF which puts a different legislative procedure in front of it. It is seeking consultation, engagement and more flexibility.
In summary, the other two main groups involved tend to be divided into the nine member states which are sometimes referred to as the 1% club, a group of net contributors who have been pushing since 2011 for a lower budget. Essentially, they want it to be 1% of EU GNI or less. Those countries are the UK, Germany, France, the Netherlands, Finland, Denmark, Austria, Italy and Sweden. They contribute more to the budget than they get out of it and are seeking to reduce it. Some are more extreme than other but the UK, with German support, is pushing for an overall amount in the region of €940 billion. That is the amount they are moving towards and they will be working towards that amount again next year.
On the other side is a group of member states, mostly the newer members and those from southern and eastern Europe, who are particular supporters of cohesion policy. These are member states which have been pressing hard to ensure the cohesion side of the budget is protected and they have obviously resisted any attempt to reduce the overall size of the budget. Within that group, there are those who have argued against the 2.5% cap on cohesion and there are other specific interests. However, those are the two main groups.
Some of the member states which are not strong supporters of the CAP, including the UK, the Netherlands and Sweden, argue that rather than increase the overall size of the MFF, payments to CAP should be cut so as to redirect funding towards areas where the EU adds value in research and development and innovation. Other member states, France and Germany, while seeking a smaller overall amount, have not taken that view and are more supportive of the CAP and in some cases cohesion. That is the geometry we are looking at as we go into next week's meeting. As it is a negotiation, we will see how it goes. The UK, as the committee will be aware, has been vehement and public about retaining its rebate arrangements, as have the Netherlands, Sweden and Austria but to lesser extent. That is the position of the others involved in the negotiations.
We expect, and it is likely, there will be agreement at next week's European Council. Agreement is not certain but we expect it. Once agreement is reached revised drafts of the regulation with the table will be tabled for adoption by the Council. Meanwhile, the Irish Presidency will have to engage with the Parliament to seek to ensure that these texts are likely to be acceptable. After Council adoption, formally as a legislative item, it has to go to a vote in the European Parliament and we would hope to have that done by June.
The sectoral legislation on CAP, cohesion, overseas development and other areas - 60 plus items - has been moving through the Council and we hope to have those completed by June. What happens if there is no agreement? The treaty is clear that a one twelfth rule of 2013 will apply from January next year; funding would continue on that basis. What that would do in terms of proper planning and proper use of EU taxpayers funding and in terms of the EU reputation is another matter but the fallback is that if there is no agreement we continue on a case by case basis, and the one twelfth rule would apply.
12:05 pm
Ciarán Lynch (Cork South Central, Labour)
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If I allocate ten minute slots, I can allow people back in again. As the debate goes on, it is quite complex and detailed. That might be best as people could be allowed two or three opportunities to come in. I need the groups to indicate who will lead off for those groups. Before moving on the main questioner, perhaps I can put some questions to Mr. O'Sullivan and Ms Campbell. There are a number of issues on the agenda. The UK has a rebate arrangement which has been in place for a number of years. What is the current state of play with it? Given the announcement made by the British Prime Minister in recent days, I would imagine this is a significant issue for them. What is being proposed at the British side of the table on the rebate arrangement?
Ms Niamh Campbell:
The UK position is that it wants to retain the rebate. The discussions at the European Council have been very much focused on the expenditure side. The Commission's proposal would replace the UK rebate by a lump sum correction. As far as Ireland is concerned, our national position is that we do not like rebates because they are too opaque. The British rebate will be a factor in play. Who knows what will happen next week?
Ciarán Lynch (Cork South Central, Labour)
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At the European semester in Brussels this week Mr. Van Rompuy stated that the MFF is on the Council agenda for next week which would give an indication that a serious announcement or development will take place. Is that the witnesses reading of the situation, given Mr. Van Rompuy's comments this week?
Ciarán Lynch (Cork South Central, Labour)
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I was in the room when he said it.
Mr. Kyle O'Sullivan:
I think there was one meeting in November but there was not a deal. I do not think we would be coming back unless it was his judgment that a deal would be reached. As he has not made new proposals, there is no new paper on the table. We would expect that he would make those proposals on Thursday afternoon, as soon as he convenes the Council. Certainly our preparations and those of most member states would be towards a deal.
Ciarán Lynch (Cork South Central, Labour)
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There is just another matter in relation to that issue. At the concluding plenary session yesterday afternoon, at which Mr. Schulz was present, Mr. Barroso made a very interesting comment. In regard to the last slide which shows net beneficiaries and net contributors Mr. Barroso's comment was that 84% of the EU budget is paid by member states but 94% of the EU budget operates in a different fashion and that all European Union countries are beneficiaries of European Union funding. Will the witnesses explain what that means because there is much focus on the fact that a member state is a net benefactor or a net contributor but the way EU funding is allocated to member states is that every country gets more money out of it than what they put in?
Mr. Kyle O'Sullivan:
I know it is true of the EU budget that the spending takes place in all the larger instruments in all of the member states. The largest recipients of Common Agricultural Policy funding will be France, Germany and other larger net contributors. Certainly every state gets back. However, in terms of the net balance, when one calculates exactly what goes in and what goes out, there are slight differences in net contributors. It is probably fair to say that most of the EU spending is spent in the territories of the net contributors because they are the larger member states.
Ciarán Lynch (Cork South Central, Labour)
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Every member state is a beneficiary ultimately.
Mr. Kyle O'Sullivan:
Every member state is a beneficiary ultimately. The Commission and Mr. Barroso do not like to have a discussion about net contributors and net beneficiaries. They see this as EU spending for the EU as a whole and they resist this issue but they do have to come back occasionally and point out that every member state receives CAP funding, regional and Structural funding and it is spread across the European Union.
Ciarán Lynch (Cork South Central, Labour)
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Whether a member state is a benefactor or a contributor it has to contribute to the fund.
The proposal with regard to the financial transactions tax is a means of doing so. Ireland will have to make its contributions to the budget. We will have to wait and see what the agreement is and whether it progresses in Brussels next Wednesday, but the financial transaction tax is seen as a vehicle to assist countries in contributing out of their own resources. Given that we are not signed up to the financial transactions tax, how will Ireland's contributions be made and managed?
12:15 pm
Ms Niamh Campbell:
The financial transactions tax is one of the elements proposed as a way of raising revenue for the EU budget. That proposal was made before we entered into the realm of enhanced co-operation for the financial transactions tax. As the Chairman has said, Ireland is not participating in that. It remains on the table for the EU budget but I think the discussion about how it would be implemented has not advanced in any way. We know that a number of member states who will be participating in the financial transactions tax are not in favour of it being used as an EU budget resource. Therefore, the general intelligence is that there are unlikely to be significant changes in the Union resource arrangements. That is as much as we know. In terms of where Ireland would fit in, our budget contributions will continue to be largely related to our GNI.
Ciarán Lynch (Cork South Central, Labour)
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Thank you. I call Deputy Doherty.
Pearse Doherty (Donegal South West, Sinn Fein)
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I welcome our guests and have a number of questions. On the overall MFF spending, we know there is opposition from countries like Britain and the Netherlands to the overall budget being increased. There has been a lot of talk about the EU budget being used as a vehicle for investment, growth and jobs but how can happen, given the fact that there will not be a substantial increase in the budget? How can one square that circle, that the budget is supposed to be a vehicle for investment?
Pearse Doherty (Donegal South West, Sinn Fein)
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We will take them one at a time.
Ms Niamh Campbell:
That is a valid question because there is not going to be an increase in the MFF. In fact, it is clear now that the MFF will be smaller than that proposed by the EU Commission. That is the reality of the situation. At the same time, the Commission's proposal regarding the MFF has focused on areas for supporting growth and competitiveness. There is a big increase in the budget for research and infrastructure. The overall implementation of the MFF within the cohesion area will be focused on growth and employment related measures. It will be a smaller amount of money but there are more efforts to target it on growth-producing and employment-based measures.
Pearse Doherty (Donegal South West, Sinn Fein)
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Obviously that will come at the expense of other measures and I am sure that the EU Commission would have argued in the past that the budget in its entirety was promoting growth, regardless of specific measures. I will leave that aside but I am of the opinion that there is a lot of spin involved in this. It is unfortunate that we will not see a substantial increase in the budget because I am sure countries like Ireland would have benefited from that.
The reference date for cohesion has been altered and set to a later date, which should suit Ireland better. I also welcome the fact that a reassessment is built in whereby if a country is doing better or worse than expected over the period, funding levels can be revisited. Overall, in Ms Campbell's view, did Ireland and, in particular, the Irish regions get a good deal? I understand that the Border, midland and western region, known as BMW, is still seeking recognition that may allow it to avail of greater funding opportunities. Can Ms Campbell enlighten the committee as to how negotiations on this are progressing at this point in time?
Mr. Jim Deane:
I will deal with the BMW issue first. Basically there is a three year reference period to determine the category of a region. The GDP per capita is averaged against the other 271 regions within Europe. Currently, the BMW region is at about 93% of the EU average over the 2007 to 2009 reference period. In the original proposals, the reference period was 2006 to 2008. The reference period has been changed to reflect the latest data from 2007 to 2009. We are not sure, if the reference period was changed to 2008 to 2010, whether the BMW region would even meet the threshold because the calculations are relative. Any decrease would have to be relative to the rest of Europe. Basically, the problem for the BMW region is that in the current round, it is called a "phasing-in" or a "transition" region as it is moving from a less developed region to a more developed region and it will lose that status this time around. This is a constant feature of all of our negotiations with the EU Council and Commission. We feel that the BMW region, which has had a significant drop in real GDP and has significant unemployment issues, should be treated as a special case. We are working on mechanisms to try to maximise the draw down for the BMW region in this context.
Pearse Doherty (Donegal South West, Sinn Fein)
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How likely does Mr. Deane think it is that those talks will be successful? Is it possible to reconfigure or redesign the region, that is, to redefine the boundaries of the region at this point in time? At the time of the drawing up of the BMW region, a lot of political influence was exerted by the previous Government and various counties were included. At that time, even with the expansion of the region, it was still eligible for funding. People in certain areas of the region that are more deprived would now feel that the expansion is inhibiting them from availing of more funding. In that context, is it possible to redefine or even propose a region at this point in time? Following on from that, is it possible to propose a region that crosses borders and to create, for example, a north-west region or a Border region which would be on both sides of the Border?
Mr. Jim Deane:
The Deputy's questions are quite technical but basically, for cohesion purposes, countries are divided into what are called NUTS 2 regions. Member states can apply to have the categories redefined but it is a complicated process and it would probably take two or three years of negotiations with the EU Commission for that to happen. The problem is that if we redefined the regions, we would probably have a smaller area that may qualify for "less developed" status but because the population is so small it would not result in much of an increase for that particular area. We would be decreasing the population covered and population is a key factor in determining the size of the allocation to a region. We do not envisage looking at the NUTS 2 regions in this context at this time. However, we will have to look at them in the context of the local government reform agenda and the changes suggested by the Minister for the Environment, Heritage and Local Government to the way the administration of local government is structured. Nonetheless, at this point in time and in the context of these negotiations, we do not consider it to be a runner. We are trying to focus our energies on maximising BMW draw down through seeking special allocations and examining other criteria. Success will depend on the negotiations and we must factor in the fact that other regions throughout Europe are in a similar position. Basically, the EU is taking money from certain areas and giving it to others. There is only one pot of money there and the question centres on how it is divided up. We are looking to maximise the BMW draw down but we are also looking to maximise the Irish draw down. These are the factors we are taking into account but we are trying to address the issue through the talks process.
Pearse Doherty (Donegal South West, Sinn Fein)
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In terms of my second question, would that be possible? I have met members of the Commission before and discussed redefining a region which would include the six counties of Donegal, Sligo, Leitrim, Derry, Fermanagh and Tyrone, which is the most deprived area on the island of Ireland. The Commission was open to that idea about three or four years ago but said it would be a lengthy process. Is this possible and is it something Mr. Deane thinks we should pursue?
Mr. Jim Deane:
It is not possible under the regulations as they are drafted at present. The allocation is per member state and that is the way the allocations are divvied up. There is an element of the cohesion policy which deals with territorial co-operation, with which Deputy Doherty will be familiar, which includes the PEACE and INTERREG programmes. In that context, one can look for eligible regions on a cross-border basis. Deputy Doherty may be aware that the EU is looking at that in the context of the INTERREG and PEACE programmes, where, for example, one could have a special area that stretches from Belfast to County Meath. Talks are going on around that process but it is complicated.
Another question is whether we could we extend the eligible area down to Meath in Ireland, for example. There are talks on that process but it is a complicated process as well. The answer to the question is that for Border, midlands and western, BMW, region purposes we cannot consider it on a cross-Border basis, but there are options with regard to territorial co-operation. Either way it is not a straightforward process.
12:25 pm
Pearse Doherty (Donegal South West, Sinn Fein)
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Under Article 8 the link remains in respect of macro-economic conditionality. This means local groups could be affected and left high and dry with regard to resources that could have been allocated to them as a result of the macro-economics of the member state. It is a dangerous idea and one we oppose. Is the Government trying to remove the link with the multi-annual financial framework?
Mr. Jim Deane:
There are two areas here, but I will answer the question in the context of Cohesion Funds. We have concerns about how it will be applied. The Government is signed up at member state level to ensure that there is fiscal discipline and that measures are in place to ensure that it takes place and that is part of the agenda. However, within a Cohesion Funds context we must ensure that the application of that does not impact on programme delivery. We are responsible for taking the legislative package through the EU Council and for the negotiations with the EU Parliament. We are striving to ensure that there are safeguards in place in order that local people are not penalised for member states not adhering to fiscal discipline requirements. We believe enough safeguards have been built into the Cohesion Funds regulations such that only if a member state completely disregards direction from the European Commission and the Council on adhering to targets could there be an impact on Cohesion Funds. I share Deputy Doherty's concern in this regard but we hope we are doing enough to address it in the context of the Cohesion Funds legislative package and we must be cognisant that the Government is signed up to these at EU levels.
Pearse Doherty (Donegal South West, Sinn Fein)
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I wish to ask one final question, although, unfortunately, I have to be somewhere at 1 p.m. There is a complete article devoted to the possible reunification of Cyprus. There is nothing new in treaties and articles being devoted to the reunification of countries. In the past we have seen that the reunification of Germany was specifically allowed for in an EU treaty and it allowed the parties to avail of state aid exemptions and so on. Has there been any discussion whatsoever on the possibility of reunification on the island of Ireland in respect of the MFF and trying to secure additional supports? It is the stated intention of all parties here, bar one or two of the smaller parties; the larger parties are all in support of Irish reunification. Does this factor in any way in the negotiations at European level?
Pearse Doherty (Donegal South West, Sinn Fein)
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Why would Cyprus have done so? Can the delegation explain the article devoted to Cyprus?
Mr. Kyle O'Sullivan:
I cannot explain it. I surmise at this stage that it is connected with the fact that there were provisions relating to Cypriot enlargement last time around which may have had some effect on the financial arrangements. I will find out and get back to Deputy Doherty, but I do not know the reason for that being included at the moment.
Ciarán Lynch (Cork South Central, Labour)
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It could be a pending factor. Turkey is considering joining the EU which gives the Cypriots a certain amount of clout because they have a veto on it.
Kieran O'Donnell (Limerick City, Fine Gael)
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The delegation is welcome. I wish to deal with the practical aspect. Am I correct in saying that what is proposed, ultimately, comes down to money for the State? Although there is a decrease in percentage terms of gross national income, GNI, the physical amount of money, depending on what I am reading, will go from €994 billion for 2013-17 to €1,033 billion for 2014-20. There is a physical increase in the absolute amount of money proposed by the Commission at the moment.
Let us consider the matter based on table 11. Some 85% of our funding for 2011 came under CAP, amounting to €1.645 billion out of €1.935 billion. That means €8.50 from every €10 is coming from Europe through CAP. The European Social Fund amounts to €112 million, the European Regional Development Fund is €49 million, the Cohesion Fund is down to a little under €9 million and the various others allocations bring the total to €1.935 billion.
Let us consider the negotiations and the way funding is allocated to member states and let us bear in mind that in 2011 our net receipts were €586 million according to table 10. Will the delegation give an indication of the total amount of money we received under the MFF programme and which was negotiated for 2007-13? Will the delegation seek to maintain that physical level of funding across the programme areas? Does the delegation understand my question? In simple terms, my question deals with the physical amount of funding. Although the percentage has gone from 1.12% in the seven years to 2013 down to 1.03%, under what is being proposed, the physical amount of money to be allocated by Europe is going up. If inflation is factored in, it has probably gone down in real terms but is the aim of the delegation in the negotiations to maintain or get an increase on the absolute amount of funding received between 2013-17 by 2020?
Kieran O'Donnell (Limerick City, Fine Gael)
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It cuts to the heart of the matter in terms of funding.
Kieran O'Donnell (Limerick City, Fine Gael)
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At this point can the delegation quantify the total amount we will receive up to 2013 for the preceding seven years under CAP?
Kieran O'Donnell (Limerick City, Fine Gael)
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What is the total amount? Does the delegation have the total amount we will receive for the seven years under the MFF?
Kieran O'Donnell (Limerick City, Fine Gael)
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What is Ireland expected to receive?
Kieran O'Donnell (Limerick City, Fine Gael)
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Is that from CAP?
Kieran O'Donnell (Limerick City, Fine Gael)
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What about the total amount received overall? CAP is 85%, but what is the total amount received under the MFF programme for the seven years to 2013?
Kieran O'Donnell (Limerick City, Fine Gael)
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That works out at approximately €2 billion per year. We are working on a percentage. Our inflation rate has been relatively low in recent years. Is it the intention of the delegation in the negotiations to maintain at least €14 billion for the seven years to 2020? My follow-on question relates to the break down under the individual headings.
Ms Niamh Campbell:
There are a number of variables and we are considering the different elements. The two areas where amounts are attached to the names of member states are CAP and the Cohesion Fund. In the other areas, including research, education etc., the amount of money is determined at European level.
Kieran O'Donnell (Limerick City, Fine Gael)
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We compete for it.
12:35 pm
Kieran O'Donnell (Limerick City, Fine Gael)
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In essence, the level of cohesion funding for those seven years would have been relatively low. How much of the €14 billion comprises cohesion funding?
Kieran O'Donnell (Limerick City, Fine Gael)
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That is just short of €1 billion, which is a huge amount.
Kieran O'Donnell (Limerick City, Fine Gael)
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This shows that the CAP is extraordinarily important to Ireland.
Kieran O'Donnell (Limerick City, Fine Gael)
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I am probably being somewhat pedantic but rather than referring to this in the abstract, I wish to discuss money.
Ciarán Lynch (Cork South Central, Labour)
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We will run out of time if the Deputy does not ask his questions quickly.
Kieran O'Donnell (Limerick City, Fine Gael)
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What is the position with regard to the current negotiations on the CAP, particularly in the context of maintaining the level of funding in question? I also wish to ask a minor question on the European globalisation fund, particularly as there appears to have been a significant reduction between what was originally put forward and the revised proposal. However, perhaps our guests will deal with the CAP first. The latter comprises 85% of the budget and is hugely significant for Ireland.
Kieran O'Donnell (Limerick City, Fine Gael)
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I accept that.
Kieran O'Donnell (Limerick City, Fine Gael)
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What does Ms Cannon anticipate will happen to the €12 billion we would have received for the seven years?
Ms BrÃd Cannon:
It is extremely difficult to say at present. We are in negotiations. The Commission's original proposal, as to different sets of new figures which were put forward by President van Rompuy in November in respect of heading 2, namely, the CAP, is on the table. Unfortunately, there are a number of variables so I cannot provide a direct answer to the Deputy's question. While President van Rompuy put forward various amounts in respect of heading 2 - the overall CAP - what will determine the Irish allocation will be the way in which those funds will be allocated among the member states, both in terms of the direct payments, which come under Pillar 1, and rural development, which comes under Pillar 2. The Commission has not yet put forward a proposal on rural development allocations. We are aware of various proposals with regard to the overall rural development allocation for the entire EU. However, there are no actual figures on the table from the Commission.
Kieran O'Donnell (Limerick City, Fine Gael)
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What is the position under the existing scheme?
Kieran O'Donnell (Limerick City, Fine Gael)
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What will be the position in the future?
Kieran O'Donnell (Limerick City, Fine Gael)
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There is still work to be done on that matter. Under the original proposal, the amount available under the European globalisation fund was €3 billion. This has been reduced to €1.8 billion. That money is extremely important for Ireland in the context of getting people back to work. When it is allocated from the fund, there is no flexibility with regard to how it is used. What is the position in this regard.
Mr. Kyle O'Sullivan:
We have prioritised the Globalisation Adjustment Fund in which a large number of member states are equally interested. However, two problems arise. The first is that it is being squeezed in the context of the amounts available. As the size of the overall budget is being cut, CAP and cohesion funding tend to be protected. However, all other items are continually being trimmed. It is also subject to some uncertainty because the regulation relating to the fund must be renewed this year. There is a blocking minority of member states who are opposing this at present but Ireland is obviously not among these countries. As a result, there is uncertainty in this regard. It is identified in our list of six or seven national priorities and we will continue to prioritise it. From our point of view, anything which is-----
Kieran O'Donnell (Limerick City, Fine Gael)
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Which states are blocking it?
Ciarán Lynch (Cork South Central, Labour)
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Deputy O'Donnell should allow Mr. O'Sullivan to conclude.
Kieran O'Donnell (Limerick City, Fine Gael)
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I apologise.
Mr. Kyle O'Sullivan:
It is mainly northern European member states and one or two Baltic states. Some of them are opposed to it on principle, while others oppose it because they believe it to be too inflexible in the context of their interests. There is a problem with it but this may be overcome. The proposal is still active and live. The fund has been of benefit to Ireland in the past in the context of supporting people who have been made unemployed and we-----
Kieran O'Donnell (Limerick City, Fine Gael)
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Will be pushing in favour of it.
Kevin Humphreys (Dublin South East, Labour)
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I thank our guests for their attendance. What we are discussing is a maximum budget of €972 billion up to 2020. As our guests have outlined, this is a reduction on what was initially proposed.
I wish to focus on two small but important matters. At present, just over €52 million comes through the MFF for social infrastructure projects in rural areas. That money is extremely beneficial in that it allows community halls, community centres, etc. to be built. Will this money be maintained at the current level as the negotiations proceed?
Kevin Humphreys (Dublin South East, Labour)
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Yes, it comes through the MFF and is paid out via the Leader programmes.
Ms BrÃd Cannon:
The funding would form part of the negotiations on the MFF. In the context of the sectoral regulations which govern the Common Agricultural Policy, there are proposals to ensure that at least 10% of member states' rural development funding will have to be spent on Leader projects. It will depend on how much we obtain in rural development funding but at least 10% of what we do receive will have to be devoted to Leader-type projects.
Kevin Humphreys (Dublin South East, Labour)
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I am glad Ms Cannon is aware of this matter. The type of social in question is extremely important. Deputy Pearse Doherty referred to the NUTS 2 and BMW regions. There are large swathes of urban areas which do not receive social infrastructure funding. They previously received such funding via the Dormant Accounts Fund. However, there is no longer any social infrastructure funding for urban areas in cities such as Galway, Cork and Dublin. Are there proposals to rectify the position in this regard through the MFF? The amounts of money involved are relatively small and rural areas benefited from the €52 million spent through the Leader programmes. Are there proposals to secure even a small amount of social infrastructure funding for urban areas? I understand that such proposals exist but I cannot find them in the documentation provided.
Mr. Jim Deane:
It cannot be seen in the documentation relating to the MFF. I believe the Deputy may be referring to the cohesion legislative package, through which five funds are dealt with. Under the regulations which govern the ERDF, 5% of a member state's allocation must be devoted to sustainable urban development activities or operations. It is in this context that ERDF moneys could be used to support initiatives such as those to which the Deputy refers.
Kevin Humphreys (Dublin South East, Labour)
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Are there any concrete proposals? I am not aware of any funding coming into urban areas from the ERDF at present. If our guests do not have the relevant information in their possession, I would be grateful if they could forward it to me.
Kevin Humphreys (Dublin South East, Labour)
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That is correct. However, those entities do not have responsibility for urban areas.
Kevin Humphreys (Dublin South East, Labour)
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Yes, but that fund does not relate to social infrastructure projects. This is what gives rise to the deficit in urban areas. It is for small businesses and allows them to connect with businesses in other cities, etc. However, it is not used in the context of building social infrastructure such as community centres, halls, sports facilities and so forth. It is on the latter that the €52 million for rural areas is spent. There is no similar funding for urban areas which do not suffer from deprivation.
If an element that allows for provision through ERD funding in this respect that is important in this context. I have been talking about this for two years and my understanding is that the Minister would be open to look at trying to put some funding into social infrastructure. If it can be done through the ERD funding, would Mr. O'Sullivan examine the elements through which we can seek that? Many cities and towns are losing out significantly. In comparison to the figure of €972 billion, this is quite a small amount of funding, but for the communities involved it is important.
I wish to refer to chapter 4. In November 2012 the first round of the budget negotiations failed and the EU officials indicated in terms of funds earmarked for EU overseas aid. Some €11.3 billion in EU overseas aid was spent in 2011, which is the largest sector of funding for overseas aid. Presidency Van Rompuy will chair summit in relation to this. The Tánaiste met Bill Gates in Dublin last week and he expressed concern about where the European Union budget would land in terms of the international budget, 90% of which goes towards development aid.
Are the ceilings commitment details in the most recent proposal from President Van Rompuy sufficient to deliver on EU policy commitments, as stated in the Lisbon treaty, and the specifics under heading 4 to address the increased development needs in the context of climate change and economic crisis? Is that captured in the negotiations in terms of next year? This is the largest section of world aid from a single source. We are looking at what some people would consider modest cuts or cuts in farm subsidies, regional aid spending and an overall cut of approximately €30 million in the EU budget for foreign policy. Where is that being captured and examined under the current negotiations?
12:45 pm
Mr. Kyle O'Sullivan:
As the Deputy will note, under the original Commission proposal we were heading towards €70 billion and the most recent proposal from President Van Rompuy was €60.5 billion. It is one that has been subject to significant reduction in terms of the way the negotiations are going. That is as a result of pressure from the CAP and cohesion areas. The MFF discussion will only settle the overall figure for heading 4. It will not go into the details of the individual spending instruments but we have supported funding for initiatives on food security, sustainable agriculture, the environment and gender equality in particular. We have pressed that if there are further cuts or cuts to this heading that we would not support an across the board cut. The larger instruments include: the European neighbour instrument which provides funding for measures in eastern Europe and the southern Mediterranean; the pre-accession instrument which covers countries joining the EU; and development co-operation instrument which covers mostly development work in middle income countries. We have argued that the cuts should be applied to these instruments rather than to the smaller instruments covering humanitarian aid and other items, as we think they are less likely to impact on the poorest areas. We have a particularly policy line on this. We have been projecting that but it is clear that this area of the budget is being squeezed.
Kevin Humphreys (Dublin South East, Labour)
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We all remember when the farming community highlighted the issues relating to the CAP in their protest in October. This aid programme is very important and I hope that during our Presidency it will be to the forefront in our considerations on this area. Ireland's overseas aid programme is approximately €639 million and the EU aid's programme is €3.3 billion and, therefore, any significant cut in the EU aid programme would have a huge impact on people in the Third World. I ask that this be kept to the forefront in next week's negotiations.
Stephen Donnelly (Wicklow, Independent)
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The witnesses are all very welcome. I thank them for their analysis. I have a query on the data in terms of the net receipts. The slides presented were provided by the officials, is that correct?
Ciarán Lynch (Cork South Central, Labour)
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Yes.
Stephen Donnelly (Wicklow, Independent)
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No source given for these and it was not possible to check them, but Ireland's GNI is much higher than is shown on the graph. Similarly, the data suggest that we have been net recipients but I have analysis from Deutsche Bank - I appreciate none of the witnesses has seen this and I do not expect them to comment on the analysis but they may be aware of it - which uses five different methodologies to determine our position and four of them show us to be net contributors to the tune of between €100 million and €200 million. The GNI figure on this graph is far lower than the real figure, perhaps it is a very old figure and there are still comparable. This shows us as being net recipients as opposed to the Deutsche Bank analysis which shows us as being as net contributors. Can I get the witnesses thoughts on how comfortable they are with the data provided and what is the source of it?
Stephen Donnelly (Wicklow, Independent)
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Ireland's GNI is well in excess of €30,000. There are no units on this chart and I do not know if the figures are euro, US dollars or another currency but I assume that they are euro. Ireland's GNI is in excess of €35,000 but the chart shows it as being considerably less than €30,000. Perhaps it is for a particular year some time ago.
Stephen Donnelly (Wicklow, Independent)
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The year 2011.
Ms Niamh Campbell:
My colleague has told me it is from EUROSTAT. As regards the Deutsche Bank analysis, we would be interested in that. The analysis of the net position is not complex. We in the Department of Finance make the payments to the EU budget twice a month. We have all those numbers and then the receipts are measured in conjunction with the Commission. It is quite easy to do that analysis. We are definitely a net beneficiary, of that there is no doubt. We would be very interesting in seeing those figures.
Stephen Donnelly (Wicklow, Independent)
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Can I provide it afterwards? The witness might get back to me on it.
Ciarán Lynch (Cork South Central, Labour)
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You come back to the clerk on that.
Stephen Donnelly (Wicklow, Independent)
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I thank the Chairman for that. Let us assume that figures given in The Economist are right, then according to this chart we are somewhat of an outlier. I can imagine the argument put forward by the net contributor countries such as France, Germany, etc., that Ireland in terms of its GDP per capita and standard wealth metrics is as wealthy as they and yet we are on the wrong side of the line here and why are we not net contributors? Within the context of very sensitive euro level negotiations on Ireland's debt, the banking debt and all of those issues, is there any reputational risk to us of still being a net recipient even though we are one of the wealthiest countries in the eurozone?
Ms Niamh Campbell:
It is an interesting question. This is an interesting table because it shows where we are vis-à-vis the EU budget. Much of it has to do with the nature of the EU budget in that the reality is that CAP and cohesion is the way the EU budget is structured. Our membership goes back longer than many of the eastern European countries whose cohesion receipts are relatively lower in regard to their GNI. People at European level are aware that Ireland has been a very successful beneficiary from the EU budget.
Mr. Kyle O'Sullivan:
If I may add one point, given that the profile of our receipts is predominantly in the agricultural area rather than in the cohesion area that is probably one of the factors which will protect our reputation. We have drawn down significant cohesion funding. We have been very good at spending it. We have very good absorption rates, very good rates in terms of proper spending and correctness about that and the cohesion receipts are falling and have been falling for many years and that is correct. We have a large agricultural sector and we are operating that very well and very much in line with the Common Agricultural Policy.
I do not think it is necessarily a problem. It does come up occasionally in negotiations. It is not a key factor but sometimes it does arise and people are aware of it. We are very good at implementing EU common policies and we do it properly and well. We make no apology for it. We have a large agricultural sector and that is very important to us. We feed a lot of Europe. I am not sure that it is directly a drawback to our negotiations but it is a fact.
12:55 pm
Mr. Jim Deane:
It demonstrates some of the difficulties we have in looking for special allocations for the BMW region because they do point to the high level of GDP and GNI per capita relative to the rest of Europe. That mitigates our arguments for special allocations. Notwithstanding that, we still fight the good fight in that regard, but I accept it is a factor.
Stephen Donnelly (Wicklow, Independent)
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I thank the witnesses. Sticking with the net amounts for a moment, the figures we have - let us assume we are net recipients - are in aggregate. Do the witnesses have analyses for the various pots of European money? Ms Campbell mentioned earlier that a lot of the pots are open for competitive tender. In Wicklow I am involved in drawing up strategic plans, seeking investment and a variety of areas where there might be European money. One of the things I am quite struck by - academic colleagues have told me the same for their research in universities - is that a large amount of money is available but in certain areas in this country we are probably not getting as much of it as we could because we do not know about it. In academia, when one finds out about the various European pots of money it is fantastic because one knows where to go, but many people do not know. Similarly, in Wicklow, I found someone who knew about European pots of money. It turns out that money is available and we are applying for it. However, it is certainly not something that is uppermost in the minds of those involved in community groups seeking funding. Has any analysis been done on how good we are at getting access to the various pots, as opposed to the aggregate figure where we appear to be net beneficiaries?
Mr. Pat Kelly:
Yes, but that does not address Deputy Donnelly’s specific question because he is talking about community groups and others. Research funding, unlike the funding we have been discussing up to now is funding that is available to the European community on a competitive basis. Groups of researchers and companies come together on collaborative projects and they apply for funding which is awarded on a competitive basis.
In terms of Ireland’s success in activating and applying for this money, we currently have a target of €600 million from the current framework programme and we fully expect to achieve the target. We are doing quite well. We have already received awards totalling €480 million from the current framework programme. It is not the case that there is not good awareness in the community, both in academia and in business, we are doing better than the European average. Research funding is something that is quite well known. We would expect it to continue during the next programme. The question related more to community group funding and smaller pots of money.
Stephen Donnelly (Wicklow, Independent)
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It was about all of it. It would be fantastic if the witnesses could provide some analysis to the committee. There might be an opportunity for there to be more awareness about some pots of European money to help us activate them. Would you like me to wrap up, Chair?
Ciarán Lynch (Cork South Central, Labour)
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I have asked Deputy Humphreys to organise a pairing arrangement during the vote. If that is agreeable to Deputy Donnelly, we will proceed.
Stephen Donnelly (Wicklow, Independent)
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Yes. I am interested in finding out if there are opportunities in that regard. I just wonder, for example, about the discrepancy between the figures provided and the Deutsche research. Perhaps the Deutsche research includes both the public and the private. I do not know, but I would welcome an informed opinion as to whether there are opportunities for us to access more funding for academia or community organisations. Would it be possible to come back to the committee with some analysis in that regard?
Stephen Donnelly (Wicklow, Independent)
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On the various pots that are available to academia, communities and others. It seems that the analysis provided is based on money that goes directly to the Government and therefore one can track it very well. What I am seeking is the wider analysis.
Stephen Donnelly (Wicklow, Independent)
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I am including research but the question is wider than that.
Stephen Donnelly (Wicklow, Independent)
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The answer is “Yes”.
Ciarán Lynch (Cork South Central, Labour)
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Approximately 23.8% of our applications are successful. We are above the European performance rate at drawing down innovation funding to this country.
Stephen Donnelly (Wicklow, Independent)
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Would it be possible to get a table on the various pots?
The final question relates to waste or the perception of waste. The EU budget is growing in real terms. It might be shrinking as a percentage of GNI but it is still growing in real terms. As with any bureaucracy around the world, a certain amount of waste can set in. Has any analysis been done or are there ongoing projects within the institutions to drive down spending? The area on which people like to focus is wages, although it is usually a small amount of spend. Have the wages of officials in the European Union been benchmarked against member countries? What level of wages are being paid? Are there programmes such as the comprehensive review of expenditure that we have in this country to ensure that all member states are getting value for money out of the European Union?
Ms Niamh Campbell:
The answer is “Yes”. Heading 5 of the MFF is administration. I am being shown information from various sides but the answer is “Yes”. This is not part of the MFF per se. There is an amount for administration. A number of member states, including Ireland, would like to see the same restraint in member states being mirrored in the administration budget of the institutions. In the Commission proposal there was a 5% reduction in staffing levels in the institutions. There is more information in terms of staff regulation which we can make available to the committee. It is not part of the MFF discussion itself; it is the staff regulation discussion. We can provide the information if Deputy Donnelly would like it.
Stephen Donnelly (Wicklow, Independent)
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I appreciate that it is not part of the MFF, but it is very important from a political perspective to ensure, in particular when so much is being asked of our own public servants and citizens, that we are getting the same value for money. The administrative budget, for example, is increasing by more than 10% in real spending terms. I would not like a situation where a big chunk of the 10% was just going into higher salaries as opposed to setting up useful new pieces of the administration. If the officials have information in terms of benchmarking-----
Ciarán Lynch (Cork South Central, Labour)
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The figure popped up in Brussels. The administrative cost of running the Union was 3.6% and it has increased to 3.8% in recent years. There has been a marginal increase – 10% on the individual figure. We could try to get the figures for Deputy Donnelly.
Stephen Donnelly (Wicklow, Independent)
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They would be useful. I echo Deputy Humphreys’ call. For what it is worth, I believe the international development funds for the European Union are incredibly important. Europe leads the way in that regard. My understanding is there is pressure on the funds. I lend my unambiguous and full support to the fund not being reduced and to the European Union meeting its 0.7% targets for international development.
1:05 pm
Joe Higgins (Dublin West, Socialist Party)
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This is the EU scrutiny committee where the elected Members of the Irish Parliament, the Dáil, bring their concerns, proposals and objections and hopefully get through to somebody who sits in the Council of Ministers, the Council of Prime Ministers or somewhere. How will the concerns, proposals and objections that have arisen here today with regard to multi-annual financing be processed and arrive at the desks of the people who will be making decisions next week?
Mr. Kyle O'Sullivan:
The multiannual financial framework is negotiated primarily through the General Affairs Council on which our representative is the Tánaiste. The Minister of State, Deputy Lucinda Creighton, is also present. It will be negotiated next week and as we get to finalisation at the European Council the Taoiseach will be present. The briefing, the material and the preparation that will go into those meetings will be produced between the Departments of Finance and the Taoiseach, between my colleague and me, and we will reflect that in the advice we are giving to the members of the Government who will represent us next week.
Joe Higgins (Dublin West, Socialist Party)
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To ensure we are not here engaged in a window dressing exercise, is Mr. O'Sullivan saying that concrete proposals and suggestions that have come up here and objections to certain courses of action will be in a memorandum that the Taoiseach or an appropriate Minister will see? Is that how it works?
Joe Higgins (Dublin West, Socialist Party)
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In the refractory process I wonder how much of what we say, representing the Irish people, gets onto the agenda. Hopefully, it is a meaningful exercise but I will move on to the substantive issues.
Where does the Horizon 2020 and the EU framework research programme come under here?
Joe Higgins (Dublin West, Socialist Party)
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It is under the general heading of Smart and Inclusive Growth.
Joe Higgins (Dublin West, Socialist Party)
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The American military are not a patch on inventing language that means the opposite when it comes to the EU bureaucracy - smart and inclusive growth. In that regard, the so-called security research, which includes large grants to armaments companies in the European Union to produce weapons of mass destruction, is provided for here. I ask the witnesses to bring my concern about and total objection to that to the attention of the Government. I would point out, and the witnesses might be able to clarify further, that two weeks ago my colleague Paul Murphy, MEP, in an exchange with Commissioner Geoghegan-Quinn, asked how Horizon 2020 would work or the current research funding. Incredibly, in response she stated:
My colleague pointed out how two Israeli arms manufacturers, for example, got research funding from the European Union. I accept it is not the witnesses' business to comment or make a judgment on policy but it is mine and I am saying that as far as Horizon 2020 is concerned, I believe the view of a huge majority of the Irish people should be that there would be no further research into the creation of weapons of mass destruction, which is what this is all about.
I think it is important to realise that the areas in which research funding is provided is civilian in nature at all times. That does not mean of course, however, that funding which is given aspects of security may not be used in any other ways, but we don't have control over that.
Ciarán Lynch (Cork South Central, Labour)
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As the Deputy said, that point can be noted. The officials cannot comment on a matter of policy but Mr. O'Sullivan has indicated that issues mentioned this afternoon can be brought to the Taoiseach.
Joe Higgins (Dublin West, Socialist Party)
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I appreciate that. The Irish Presidency has committed to "work closely with the European Defence Agency". In terms of the Presidency of the EU, a neutral state, advocating this kind of stuff, I want my objections noted in that regard. When we have 25 million people unemployed billions of euro in funding should go to infrastructural development for real social progress and to employ people rather than to armaments spending and all the obscenity that involves.
I refer to the question of the European Globalisation Adjustment Fund which was commented upon earlier. In an explanatory memorandum to an earlier version of the Council regulation a document points out that while the European Union Solidarity Fund and the Globalisation Adjustment Fund have proven their utility, the maximum amount foreseen under the current financial framework has never been used. There is a proposal to decrease that but in terms of the experience of many countries, and people in this country, when I was a member of the European Parliament I was involved in trying to assist the Dell workers in Limerick access these funds. I was part of a delegation from one of the committees that spoke to the Dell workers in Limerick on that. It was hugely bureaucratic and that was the reason the amount was not taken up. Rather than cut because of that should the approach not be to eliminate the bureaucracy and make it much more quickly accessible to the workers who need it? The experience of the workers in Dell is that many of them were in despair at the end of the process. Do the witnesses have any comment on that?
Mr. Kyle O'Sullivan:
That sounds very sensible. What we are doing at the moment on the MFF is trying to protect the heading, the allocation for it, but an issue definitely arises about the actual terms of the Globalisation Adjustment Fund and the way we can access it. It needs to be made accessible. We have accessed it for workers in Ireland. It has been very important here and we would try to maintain that access. In the context of the MFF, we are trying to protect an allocation of funds to it in the first instance but I agree that in terms of the way the Globalisation Adjustment Fund works, we believe it should be clear and easy to access. I would imagine that where that is being treated - it is not being treated as part of the MFF - we would take that view.
Joe Higgins (Dublin West, Socialist Party)
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Is it the case that the Government will seek to maintain the fund?
Joe Higgins (Dublin West, Socialist Party)
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Can the issue of the lessons that should have been learned from the experience of workers trying to access it be brought into this process as well? I know Ms Campbell is talking about overall budgets but it is linked to-----
1:15 pm
Mr. Vincent Landers:
Consider the circumstances that will obtain once the MFF is negotiated and funding is made available for a continuation of the European Globalisation Fund, EGF, over the period 2014 to 2020. There is now sectoral proposal for the EGF to replace the current regulation being discussed by the Council. Subject to the agreement next week in the MFF context, we will lead the negotiations during our Presidency. We will try to improve, to the greatest extent possible, the application and usefulness of the EGF, including through learning lessons from previous use. We will try to find ways in which to address concerns expressed by workers, social partners and certain member states regarding the difficulties they have had in accessing the fund and the reasons they did not do so.
Joe Higgins (Dublin West, Socialist Party)
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Does Mr. Landers believe it will be in place for the new budget and not be lagging behind?
Ciarán Lynch (Cork South Central, Labour)
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Let me assist the Deputy. That measure will probably be scrutinised by the Joint Committee on Jobs, Enterprise and Innovation. I ask the clerk of this committee to make contact with the clerk of that committee to ensure the measure, when introduced, will be scrutinised. There is a follow-on process associated with the MFF. Potentially, the measure could be submitted to us for general scrutiny, in addition to scrutiny of the jobs aspect.
Joe Higgins (Dublin West, Socialist Party)
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Let me consider the concept of conditionality in respect of the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund. An explanatory memorandum states: "Article 21 of the CSF Regulation provides for rules on conditionality linked to the coordination of the Member States' economic policies, including the possible suspension of commitments and payments for programmes supported from the Funds covered by the Common Strategic Framework." In other words, if the targets dictated from Europe on budget deficits, for example, are not met, the funds can be cut as a punishment or sanction. Is that the officials' understanding?
Mr. Jim Deane:
In simple terms, that is the understanding, but as I stated previously and as mentioned by Mr. Vincent Landers, after the MFF is agreed its aspects must be brought into the negotiations on the various regulations. The cohesion legislative package is one of those. When the decision on macro-economic conditionality is made at the Council meeting next week, we must reflect it in our cohesion regulations, which apply to the European Regional Development Fund, the European Social Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund. We are trying to mitigate the chances of being sanctioned. If a member state has a procedure taken against it in regard to macro-economic conditionality or its fiscal discipline, the Commission will request that member state to take effective action to address the problem. It is only where the member state consistently fails to take that action that such a suspension could actually be invoked. It would be a suspension of funding until such time as the member state could actually take action. The provision already exists under current regulations in regard to the Cohesion Fund itself. The suspension has only been threatened once, in the case of Hungary.
We want to include language such as "proportionate", "equality of treatment" and "practical". Only at the end of a long, drawn-out procedure should be an impact on the member state. We believe the mechanism should apply only if the State wilfully ignored the Commission's recommendations on how it should address its problems. Ireland, having followed a programme of assistance and having met all its targets in that regard, would not expect the facility to be used against it.
Joe Higgins (Dublin West, Socialist Party)
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We on the left see it in light of the big stick used by the European Commission in pursuit of neoliberal policies to insist on permanent austerity for the Irish people. This matter did not feature in the detail during the debate on the fiscal treaty, for example. There was a general discussion but the detail was never alluded to. What are the costs that would be incurred if a country did not meet the targets dictated by Brussels in regard to the budget deficit, for example? Are the sanctions fixed in regard to the funds? Is the cut a percentage of funding, or is funding withheld? How does it work?
Mr. Jim Deane:
It is not fixed. Any decisions made are supposed to be proportionate and effective and take into account the economic and social circumstances of the member state in question. They also take into account external factors that would contribute to the ability to meet the targets. The sanctions do not pertain to fixed amounts.
Joe Higgins (Dublin West, Socialist Party)
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The Government should not agree to so-called conditionality, which represents the imposition of an economic philosophy that is destroying whole sectors of Irish society, and jobs in particular. The imposition of ongoing austerity when flexibility is needed for investment in infrastructure, etc. is destructive from every point of view. I would like this point noted somewhere.
Ciarán Lynch (Cork South Central, Labour)
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I received Deputy Mathews's apology and thank him therefor. He had some constituency matters to attend to this morning.
Peter Mathews (Dublin South, Fine Gael)
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The President of Ireland was at the opening of the school and community centre. My long-standing acceptance of an invitation to attend is the reason I could not have been here earlier. I normally like to be present for 100% of the meetings, as the Chairman knows given that I test his forbearance and patience.
Ciarán Lynch (Cork South Central, Labour)
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I offer it up.
Peter Mathews (Dublin South, Fine Gael)
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I thank the Chairman.
I would like to be associated with the last point made by my colleague. I have not seen the details of the research that was done but we must be careful that we do not walk ourselves into circumstances into which we could become highly compromised or weakened within a multi-annual framework that has conditionality. I would like to be associated with Deputy's remarks, not in an aggressive way but in a manner that demonstrates my being aware of his point.
Ciarán Lynch (Cork South Central, Labour)
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The cycle is to continue until 2020. On the basis of Mr. Van Rompuy's comment that we could see a major movement in the budgetary negotiations next week, what would be the position if there were an application to become a member state, such as that of Turkey at present? What would happen with regard to the MFF if the United Kingdom, for example, were to leave?
Ms Niamh Campbell:
That is an interesting question. It is not something that we have focused on in the regulation, but it might be covered. Croatia has been factored in. An adjustment would have to be made in the circumstances the Deputy described. The regulation stipulates that if new member states acceded during the period, the financial framework would be adjusted. Just as the adjustment was made for Croatia, there would have to be an adjustment for other states.
Ciarán Lynch (Cork South Central, Labour)
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Would it be a fair assessment to say future MFF arrangements, and certainly the one in question, point towards what might be described as two-tier funding? I refer to ring-fenced, determined funding such as CAP and cohesion funding and funding under Horizon 2020 and other modern initiatives that are operated on a per-application basis among competing countries across Europe. Is this Ms Campbell's observation on the future funding trend?
Ciarán Lynch (Cork South Central, Labour)
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If targeted funding is to be allocated to specific areas, it will not be like CAP funding because it will be allocated by way of competition. Will the CAP model not be recreated?
Ms Niamh Campbell:
The two main elements of the EU budget are CAP and cohesion funding earmarked for member states.
The rules are set out and every member state knows them. Moreover, the remaining policy areas are not allocated on the same basis, which is not a new development and this is the way in which the European Union budget actually works.
1:25 pm
Ciarán Lynch (Cork South Central, Labour)
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There is one other matter, which concerns Deputy Higgins's comments on how this information is fed upwards through the process by the witnesses. If needs be, if the witnesses wish to revert to me for further emphasis on the points made by members today, I certainly will accommodate this. In addition, the transcript and recordings of today's proceedings will also be available. I will be more than grateful, that is, almost insistent, that this will happen. I note Mr. O'Sullivan has acknowledged in his own comments that he will be taking away those points as well.
Finally, I propose to the joint committee that the multi-annual financial framework, MFF, might be a subject to which members might wish to revert for scrutiny after agreement but before the legislation goes through. Is it agreeable to members that we can revisit the issue again during that window? Agreed.
I apologise for using an incorrect name earlier and thank Mr. O'Sullivan, Ms Campbell, Mr. Landers, Mr. Deane, Mr. Kelly and Ms Cannon for their attendance.