Michael Healy-Rae (Kerry, Independent)
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The committee is meeting in public session. We have received apologies from Deputy Brophy and Senator Leyden. I remind members and others to switch off their phones. We are honoured to have an engagement today with Mr. Kevin Cardiff from the European Court of Auditors. I welcome Mr. Cardiff on behalf of the committee.

I also welcome his colleagues, in particular Mr. Janusz Wojciechowski, the Polish member of the court, and Mr. Tony Murphy. This is the final time we expect to engage with Mr. Cardiff as his mandate finishes at the end of next month. The committee started having an annual engagement with the European Court of Auditors some time ago and it has proved very useful for us in gaining a deeper understanding of how European money is spent and what issues are emerging. We hope to continue with such annual engagements. As part of the engagement last year, Mr. Cardiff suggested sending us reports issued by the court and arranged for the committee to be put on the mailing list. Members now receive a copy of all such reports in the committee papers, which is a small but useful initiative.

Mr. Murphy was nominated by the Government to replace Mr. Cardiff after an open competition and although he is here today in his current role, we welcome him and hope this is an engagement he is prepared to continue with in the future. Mr. Murphy was last week endorsed by the European Parliament, with 592 MEPs voting to support his nomination and 56 voting against. He won that one. It is now up to the European Council to decide on the appointment. We very much appreciate that the witnesses can engage with us today on the European Court of Auditors' annual report for 2016 and the EU's use of public funds.

Before Mr. Cardiff gives his opening statement, I must remind all present of the rules on privilege in this Parliament. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. However, if they are directed by the committee to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

I invite Mr. Cardiff to make his opening statement, after which I will ask members for their contributions and questions. I again thank the witnesses for their attendance. It is much appreciated.

Mr. Kevin Cardiff:

I thank the Chair. It is our pleasure to be here and present to the committee. This is my fifth time to appear before it. In the first year of our engagement we did not visit the Houses but, rather, the previous committee visited us, and there is a standing invitation for the committee to visit the Court of Auditors if it has the opportunity to so do. The Court of Auditors has a policy of trying to gradually deepen our engagement with national parliaments, some of which, such as this one, are interested in doing so although one or two others are less interested in doing so. However, that is our policy and we are quite happy to engage with the committee at almost any time and in any way that suits it.

As members know, the European Court of Auditors is the independent external auditor of the European Union. We have three roles in that we consider the accounts of the European Union, whether the spending has been legal, regular and in accordance with the rules and whether the spending has been effective. In other words: are the accounts right, was the money spent legally and properly and did it have the intended effect. Our annual report, which is on the budget of the European Union rather than our activities, mainly concerns the first two issues.

We have a number of products, including the annual report we are going to discuss, opinions on issues such as questions by the European Parliament on new legislation, special reports about effectiveness and annual reports on not just the Commission but also the various European agencies. As members know, there are over 40 European agencies and eight or ten joint undertakings and so on. That is all within our remit. We also compile an annual activity report on our work, although we are not here to discuss that.

The current annual report on the budget of the European Union relates to 2016. The European Commission produces its accounts in the middle of the year and we then have two or three months to prepare the annual report. Our report on the Commission's accounts for 2016 was published in October. We gave a clean opinion on the reliability of the accounts. If this was a company audit, we would stop at that point, conclude that the accounts are a true and fair account of the business and walk away. However, we also consider whether all the transactions were legal and regular.

As regards revenue transactions, involving money taken in, there was no question of irregularity and everything, taken as a whole, was legal and regular, as has been the case for many years. As regards expenditure transactions, there has been a sustained improvement in the level of error we have estimated in recent years. In 2016, it was over 3% but in previous years it had reached up to 7%. In 2015 it was 3.8% and in 2014 it was 4.4%. Members can see there has been some improvement in that regard. In 2016, a significant part of audited expenditure, that is, on entitlement programmes such as the single farm payment whereby people receive a single payment or a payment as of right, was not affected by a material level of error. We could not find sufficient errors to deem worthy of reporting. For the first time since we began to provide a statement of assurance in 1994, we issued a qualified opinion. We said that for this part at least, the error level was sufficiently low that it need not be worried about, but, unfortunately, there were some errors in another part. Members can see a graph on screen which displays a trend. Members can see we work within a certain level of confidence, similar to an opinion poll that allows a margin of error of plus or minus 3%. We also work within those parameters. However, the trend seems clear.

Entitlement payments are not a big problem. Spending under the natural resources heading formed the biggest part of direct aid to farmers and there was an estimated level of error of 1.7% in that regard, which is below our threshold. The level of error in respect of administration was 0.2%, which is below the threshold. The levels of error in respect of reimbursements such as rural development programmes, cohesion programmes and so on, whereby individuals do something and then have to go back and claim for it, are far higher, being close to 5% in respect of rural development, for example. We stated there are still problems that the European Commission needs to address in respect of that part of the audit.

Members can see where the money is spread, involving expenditure of €15.2 billion on competitiveness, €36 billion on cohesion and €58 billion on natural resources, which is still the biggest area and of which rural development accounts for €14 billion. Global Europe, which accounts for all of the European Union's interaction with the wider world, including neighbouring countries, involved spending of approximately €8 billion. There is spending of €63 billion on entitlement and administrative payments and the level of error in that regard is low. We will be focusing our future efforts on reimbursement payments, which still involve a relatively high level of error and require further attention.

I will not address in too much depth the slide that is currently being displayed because it is a little too detailed but members have the provided literature and can see the error rates in each specific area. Revenue totalled €150 billion. EU revenues derive from a number of sources, including a portion of VAT collected by national governments, which is then passed on to the EU.

Customs duties are mostly EU duties. Each Government keeps a proportion of the customs duties as payment for administering the system. However, the bulk comes from a payment made by each member state that relates to the economic activity in the country. The more economic activity a member state has, the more it pays. For Ireland, this is something of an issue. If we mis-measure or if the gross domestic product and gross national income measures are not shown to have the same relevance to Ireland as to other countries, it does not matter: we still pay according to the GNI figures and not separate Irish measures.

I will run through the slides quickly. Members can see the areas of greatest spending. For Ireland, it depends a little on what we count but we have paid out more than we have received in recent years. Since we joined the EEC, as it was then, we have received more, sometimes a great deal more, than we paid in. Now, we are a little into positive territory and we are net payers. The greatest share of our spending is under the natural resources heading of agriculture and rural development. As members can see, were it not for that number we would be big net payers. The reason we do not get moneys under cohesion, for example, is because our level of economic development is far higher than in many countries to the east and south east. Such countries probably need that funding a little more. All member states pay in according to GNI. Ireland contributes approximately 1% of the total.

Each year for the annual report we send auditors, literally, all over the world. They spend thousands of days of audit time in total, mostly in European countries but in other countries that receive EU money as well. They track and test individual transactions that are taken on a random basis from the whole. It is like a sampling approach. We do not make findings about specific countries. This is because even if we have thousands of transactions in total, there might only be eight or ten transactions for Ireland. We cannot really reach conclusions about a country on the basis of ten transactions but we can reach conclusions about the whole system on the basis of thousands of transactions.

The overall picture is that the levels of errors and problems in member states and the European Commission have been decreasing. The European Court of Auditors believes it has to reflect that improvement by issuing a different opinion this year in respect of 2016 than for every previous year. The opinion is that for approximately half of the expenditure there is no material problem. However, for the other half there continues to be problems that have to be addressed.

For Ireland, a relatively small number of individual transactions have been tested in recent years and there is no specific problem. There are errors. They tend not to be major but they exist. However, compared to other countries there is nothing specific to say. Indeed, I recall saying for the 2015 report when I was here last year that we found no errors from eight transactions. In the random sample this year, there were only two or three transactions for Ireland. There was an error but it was nothing that would make my hair stand on end or make me think there is anything special about Ireland.

That is it, really. We can conclude there, save to say that I will explain who we have here today. Tony Murphy has come along because he is the new member designate. Mr. Wojciechowski is here. He is the Polish member of the European Court of Auditors. He is an agriculture expert and a former member of the European Parliament Committee on Agriculture and Rural Development. He is also a former auditor from Poland. Since we had an engagement with the agriculture committee this morning, it was useful to have him present. He presented two of his special reports. That is something we can do for this committee as well if members so wish. We can present special reports as well as the annual report. Mr. Enright works with me. Mr. Welsh is a combination expert. He deals with agriculture now but until recently he was the court's leading expert on the annual report. If there are any really hard questions, I will probably ask him to answer them.

I wish to draw the attention of members to two audits we have completed. I was in charge of them and that is part of the reason I am so close to them, but they are important for Ireland. It is ten years on from the start of the banking crisis. Europe has done a great deal to try to address these. The European Court of Auditors has been looking at the systems that the euro area has set up to deal with banks in crisis in future.

I commend these audits to the committee as work that might be worthy of consideration at some later stage. We find that the systems in place are better and new but that there are still some important technical issues that might hamper them in a future crisis and as a result they should be addressed. In fairness, the two bodies concerned have said they will address them.

Michael Healy-Rae (Kerry, Independent)
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I thank Mr. Cardiff very much for that great overview. It is good to see everything laid out and explained in some detail. It is important for us and the work that we are doing to be in tune with what Mr. Cardiff has been doing with the European Court of Auditors. His replacement is Tony Murphy. We wish him every good luck with his important role. We look forward to keeping up the level of engagement and co-operation we have had during Mr. Cardiff's tenure. These are appreciated by all members.

I welcome Deputy Mattie McGrath. He had told me already that he was involved in another meeting up to now. He will get a copy of the report. We will hand over to Senator Richmond.

Neale Richmond (Fine Gael)
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I welcome our guests to this meeting and I wish them the best of luck for the final hurdle next week at the council and thereafter.

I have two questions relating to spending and revenue of 2016. The first relates to more than 2016. Mr. Cardiff remarked that, for the first time, Ireland has crept into the net contributor column when it comes to membership of the various European bodies. Is there any way to work out the overall balance of Irish payments during the past 45 years of membership? Ireland is now a net contributor. How much has it received directly over 40 years from the European Union?

I hope my eyesight is good enough to see properly the slide on contributions by member states. It is difficult not to recognise the contribution shaded in light green by the United Kingdom. I think it reads 16% or it could be 15%. How can this be addressed when the hole needs to be plugged come 2019? That might be more of an issue for Mr. Murphy rather than Mr. Cardiff, who will get to leave before this becomes a problem.

I might have a supplementary question but I will let our guests start with those questions.

Seán Haughey (Dublin Bay North, Fianna Fail)
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I welcome our guests and thank them for coming in. In particular, I welcome our Polish colleague. I wish Mr. Cardiff's successor well. I hope Mr. Murphy gets over the final hurdles to his appointment – I imagine he will.

I really have no questions. It is a good report. The citizens of Ireland and the EU can be reassured by this report. Certainly, things seem to be improving. There is a general view among citizens, especially Eurosceptics, that the EU is wasteful and so forth in respect of many of the things that it does. That is not the problem of the European Court of Auditors. The court is handed the schemes to audit. The issues of waste and expenditure generally are probably more policy issues. The court simply audits the schemes handed down.

I was going to ask about Ireland and whether there was anything specific to Ireland that we should be concerned about. Our guests have answered that in the presentation. I note that there is an issue in respect of reimbursement payments and that the court is taking measures to deal with that as well.

We are reassured by the report. While the European Court of Auditors is not a glamorous institution and while we discuss major issues in the committee, including nothing less than the future of Europe, what the court is doing is extremely important.

Mattie McGrath (Tipperary, Independent)
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I also thank the witnesses for their time and the report.

Michael Healy-Rae (Kerry, Independent)
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I also thank the witnesses for the report. What early work has the court done on Brexit and the future funding of the EU after the UK leaves? My father always taught me to take everyone's advice and guidance especially when it comes to people of experience like the witnesses. As such, is there anything they would like to point out to the committee in relation to the position after the UK leaves? In short, the report is clear that there are improvements to be made but overall there is nothing really to worry about at present. Do the witnesses agree that there is nothing we should be waving a red flag about at this stage?

Mr. Kevin Cardiff:

I will take the questions in reverse order. As to whether there is nothing to worry about, credit must be given to the European Commission for managing to reduce the level of errors in transactions. However, when we do special reports - effectiveness reports - as to whether a programme has delivered what it was supposed to, we find many problems. These are human systems which are about delivering money to people and so forth. It is like any governmental or private sector entity in that it will not get 100% value for every penny spent. However, we still find significant areas where the objectives of programmes are not being fully met. Sometimes that is a question of programmes being overly complex. As such, we tend to recommend quite often that something needs to be simpler. For example, if one has a small business, farm, charity or NGO which one expects to deliver something, one reduces the value if one makes the process very complicated. If applicants spend half their time on administration, it will reduce effectiveness relative to cost. It is also the case that if people do not understand the rules and what is to be delivered, it makes things more difficult.

At government level, individual member states do not specify very well in many areas what they want to get out of each spending programme. The European Commission often does not specify very well what it wants. Sometimes there is an implicit agreement that everybody wants money to go to a particular sector. What we audit against are the objectives laid down for a programme. We discussed the young farmers' scheme this morning, for example. I do not object to younger farmers getting an additional payment, but the scheme has not been demonstrably delivering more young farmers on farms. As auditors, we ask, if the objective is not just to pass on money but to change behaviour, whether that has been delivered. Often, we find it has not. As the Commission and European system generally reduces the amount of problems in terms of technical errors, waste, fraud and so on, we have more time to think about how well programmes perform in delivering their objectives. It is hard to point to particular areas, as this happens almost everywhere. That is why we produced 25 to 30 special reports on effectiveness this year. As the committee has individual areas of interest, it might find some of those reports useful. We can happily be in touch and tell the members what we found in particular areas if that is useful. That is the next area - how well programmes perform.

As to when the UK leaves, the one thing that is clear is that the system will be different. For Ireland, and leaving my auditor's hat off for a moment, this is a potentially major game changer. We know that. I am not going to say anything people do not know because that much is evident. The real question for a committee like this is not just whether the major policy work is being done, as we see the big negotiations and statements, which are really important. However, there is a huge amount of purely technical work that has to be done to avoid errors and the problems that can arise where a business has a Northern Ireland and a Southern Ireland operation, for example. We have to avoid situations where, for purely technical reasons, such a business cannot pass its raw materials back and forth without a great deal of customs' administration. We have to avoid the danger that our goods in transit across the UK might move more slowly than they do now. We have to avoid all of the potential pitfalls of failing to have all the rules checked for Brexit impact - Brexit-proofed, in other words - and then adjusted as necessary. The danger is that dealing with the big questions is so difficult and important that it sucks time away from the other important job, which is to look at all of these technical issues one at a time across the whole system. I do not audit in Ireland so I do not know how well advanced the Irish system is, but I would have thought this is the crucial thing, not just that big questions are addressed, but that these smaller but very important technical matters are dealt with on time. Whether that is possible, I do not know. However, one of the issues the bigger discussions are covering is whether there should be transitions and so forth.

We have not done much early work on Brexit because we do not yet have anything to audit. We do not know what the deal is or what arrangement will be put in place. An auditor typically goes in and asks how such and such stands against the rules and expectations. So far, it is not clear what the rules and expectations will be. When it comes to calculating the bill, however, some of that will be done on the basis of what the audited accounts say and we are the auditors. As such, we will be paying a great deal of attention to ensuring the accounts are right for that purpose so that people can rely on our work.

Mr. Peter Welch:

Senator Richmond asked whether it was possible to work out not just the annual situation in terms of net contributions from Ireland, but the cumulative position. I am sure it is, but we could not give a figure right now. In general, the Commission publishes its interpretation of the net balance for each member state and it is possible to go through the reports for a number of years to come up with those figures. Speaking as a British citizen at this moment, it should be borne in mind that working out the net contribution and working out the benefits and costs of being a member of the Union are not quite the same thing. There are lots of benefits which are not budgetary.

Michael Healy-Rae (Kerry, Independent)
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Mr. Cardiff spoke about young farmers and proofing schemes and programmes. I will give an example of how the delivery of funding can go very far off the rails. One could go to an agricultural college 30 years ago for a period of not even 12 months. One started in September and did one's exam in June and one got one's green certificate. All that was required of one was to get one's green certificate. To get one's green certificate today, one has to go to agricultural college for two years and one must go to a placement farm for 12 weeks. One must really jump through hoops to come away with the same piece of paper that one could get very easily 30 years ago. The amount of money and benefits that were in place 30 years ago were far greater for that young farmer than today. One has to do a lot more today to get this magic piece of paper but one gets far less as a result. That is what upsets people in the farming community. I know it is not under Mr. Cardiff's remit, but the court is proofing the money and the various programmes.

However, members of the farming community in Ireland are treated like criminals. If a farmer makes a mistake filling out a form, or doing anything, a big finger of suspicion is pointed at him or her. If anyone else makes a mistake filling out a form, that is called a mistake. When one is involved in farming and receiving money, one is treated like a criminal.

I will give a further example of how crazy the whole thing has become. I am currently dealing with a commonage in which there were eight farmers. For three days, the eight farmers fought to keep a fire out of their land. The fire brigade was there every day, and they did their best to fight this fire and stop it from coming onto their land. It eventually did come onto it, and their land was burned. Legal restrictions applied at this time of year. Remember, they had been killing themselves trying to keep it out. What was the first thing the Department of Agriculture, Food and the Marine did? It stopped their payments.

I went to the Department and said that this was crazy and wrong. I pointed out that the Department was penalising people who were coughing and choking in the attempt to keep this fire out of their land. They did not start it but they did try to stop it. The Department's answer to me was that the officials were terrified of being audited. They were afraid of the consequences if it came to light that this land was burned illegally and money had been given without the farmers lodging an appeal. Even though the Department knew that the farmers should have received their money, it stopped the payments. That way, the only thing the farmer could do in response was submit an appeal, and the Department would have its paperwork right it was audited. That is what it was down to; being ready for an audit.

Where does common sense come into situations like that? That is the reality. The witnesses are doing their job excellently. They are charged with making sure that there is value for money, that there is no wastage and that the money is properly received. Sometimes, however, the things that happen in the middle lose all touch with reality. The incident of the commonage fire is a classic example of bureaucracy gone mad.

The other public representatives here, especially people who represent rural areas like my own, really know what I am talking about. I am sure the witnesses do too. I am sure they have heard these examples throughout their careers, but it is an interesting thing for them to know. I ask Mr. Murphy in his new role, when dealing with people who might not have the same common sense as him, to try to impart a little bit of it upon them. He can always give them the example of the farmers fighting a fire for three days only to have their payments stopped. They still have not been paid. That is just an example.

Colm Brophy (Dublin South West, Fine Gael)
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My apologies to the committee. I am chairing the Committee on Budgetary Oversight and we ran late today.

Michael Healy-Rae (Kerry, Independent)
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We understand. We relayed your apology earlier, so the witnesses understand.

Mattie McGrath (Tipperary, Independent)
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I feel it incumbent upon me as a rural Teachta Dála to support the Chair on that issue. Mr. Cardiff commented that he has not seen a rise in the number of young farmers following the European Union's investment. That is true. I am a farmer myself, and it is a battle for us to keep our young people in farming. The first reasons for this are the anti-social hours and seven-day working week. During the boom, there were much more lucrative opportunities elsewhere. Some young people have returned since then. However, it is a huge hurdle to get them into the farm colleges, to get them on placements, etc. The biggest killer of all is bureaucracy. Deputy Healy-Rae and I are taking up this issue in our own Parliament. I mean no disrespect to my colleagues here. There are huge issues around farmers not receiving payments. The penalties were mentioned. They are huge and very excessive. I refer to 100% penalties. Yesterday, Deputy Healy-Rae mentioned a farmer participating in a slurry scheme. He raised capital from leasing instead of being financed from his bank, and a 100% penalty was imposed. That is criminal behaviour on the part of the people imposing the penalties. This is a special scheme.

In the same way, many payments have been outstanding for two years. The only excuse the Minister can give for this is to cite computer glitches and errors. The Taoiseach said he would raise it with the Irish Farmers Association, IFA, at its annual general meeting. The IFA is the main farming organisation, whose AGM the Taoiseach was attending that evening. Meanwhile, if the farmer makes the mistake, he is criminalised. Massive penalties are applied, and if the issue is anything to do with taxation, punitive interest and penalties apply. For his payments, however, he has to wait. This affects the small businesspeople and small suppliers who are supplying these farmers. These are honest, decent people who want to pay their way and always do. They cannot do so because of a computer glitch. This is happening in a minority of cases, but those cases are real.

I refer again to penalties and schemes. The latest one I saw was when I was speaking on climate change. A colleague arrived and sat beside me. He opened his laptop, and a picture of a tractor and a plough appeared. That always catches my eye because I am a ploughman, a farmer and a man of the soil. Not a bogman, I note, but a man of the soil. I learned then of a new EU directive stipulating that farmers could now only plough uphill. I do not know who thought of that, or where he came from. Deputy Healy-Rae will know of many areas in Kerry where one could not plough uphill, as a first objection. Second, that will cause far higher emissions and carbon monoxide output through use of diesel. We cannot use a horse because the EU will not allow us. A horse could break wind and cause air pollution. It has gone bonkers.

The Minister for Finance, Deputy Paschal Donohoe, said during the budget debate that a scheme which forced women out of the workforce when they got married was bonkers. Many of the things that come from the EU are bonkers, and to a lot of them are added Irish statutory instruments which are even more bonkers. We are even more zealous in tying ourselves up in red tape, but we keep complaining that there are no young farmers and no production agriculture, only ranches. This must be dealt with. Fair play is fine play with me.

I am not talking about people who deliberately make false claims on commonage, as has sometimes occurred. They must be punished. The ordinary farmer, however, is struggling with machines and equipment. He is trying to upskill himself and his family and keep his farm viable and in the family. Family farmers are the backbone of this country, and they must be supported and protected. They need no special favours, but they must be allowed to breathe, and not be smothered with bureaucracy and farm inspections.

During the talks to form this Government, there was talk of a system of yellow cards and red cards for inspections. Inspections on farms are carried out on the mornings of funerals, when someone has died. That would never happen in the countryside because everyone respects the dead, and a funeral is meitheal. This applies especially in the northern part of my own county. It is atrocious. I live in the southern region, where it is not half as bad. Over-zealous inspections are literally terrorising people who are trying to do their best. The same is true with the restrictions on spreading slurry under Council Directive 91/676/EEC, the nitrates directive, which operates according to calendar dates. It is nonsensical. There can be the finest of weather outside of allowed dates, and a farmer cannot spread slurry.

These schemes were never in the bog or on the farm.

Neale Richmond (Fine Gael)
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We are discussing the financial accounts of the European Union.

Mattie McGrath (Tipperary, Independent)
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Yes.

Neale Richmond (Fine Gael)
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All right.

Mattie McGrath (Tipperary, Independent)
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I was asked to comment. I was late in arriving, and maybe I missed some of the discussion. Senator Richmond might not be interested in rural Ireland, but I am.

Neale Richmond (Fine Gael)
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I am, but I do not see how it is relevant to the presentation, to be honest.

Mattie McGrath (Tipperary, Independent)
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It is very relevant, especially when the Taoiseach, Senator Richmond's party colleague, said last week that he would ask the IFA about problems with computer glitches. Perhaps the Senator might address that instead of picking on me.

Neale Richmond (Fine Gael)
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I did not see this issue in the accounts. We are discussing the audited accounts.

Mattie McGrath (Tipperary, Independent)
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It is very relevant to the accounts.

Neale Richmond (Fine Gael)
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I refer to the financial accounts of the European Union.

Mattie McGrath (Tipperary, Independent)
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Through the Chair, please.

Neale Richmond (Fine Gael)
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The financial accounts of the European Union are at issue, and Deputy McGrath is talking about farm inspections.

Mattie McGrath (Tipperary, Independent)
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Our guest mentioned that he was disappointed with the uptake of young farmers vis-à-visthe EU funding, so it is very relevant. Unless we want the barren wasteland Senator Richmond wants outside the Pale.

Michael Healy-Rae (Kerry, Independent)
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To be perfectly fair, the man that started all of this was Mr. Cardiff. He was talking about the protection of the schemes from a financial point of view and delivering results on the ground. He said it was important that they provided value for money, and that it means something to the recipient of the money at the end of the line. He also said it was important that the recipient would not have to spend so much money that the payment would not actually be worth their while. That is the way I understood it. It is good to have this level of engagement about all aspects of the issue.

Neale Richmond (Fine Gael)
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I apologise.

Michael Healy-Rae (Kerry, Independent)
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It is great to broaden a debate, especially with our guests. It is our chance to let them see the type of problems that we, as representatives, deal with among the people who are affected, either positively or negatively, by the different funding streams.

Do the witnesses see and understand the type of problems that we as representatives encounter when we are dealing with those who are so affected, positively or negatively, by the different funding streams that come through?

As we are talking about family farms, I want to make one small point. The witnesses are all aware of the tradition going back over hundreds of years that, if there were five children in a family, the eldest child would inherit the farm. There might have been a little bit of envy on the part of the other siblings because the eldest would have a way to make a living and would be set up because he or she would have the land. However, now we are living to see the most unusual thing; the eldest children do not want to get the farm. They want to be the first out of the traps to go away and get a job, leaving the other siblings at home. It is the youngest ones who are left holding the can. Before, it was an honour and a great thing to inherit a farm. Now, there is a generation of young people growing up who do not want to inherit the farm because they do not see it as a viable way of making a living, especially if it is a small farm. As Deputy McGrath said, we cannot all be big ranchers. That is how far gone we are now in Ireland, especially with the small, traditional family farms. The children feel they cannot afford to be farmers. That is an awful sad reflection on all of us in Ireland and over in Europe. It is a sad day.

Mr. Kevin Cardiff:

Deputy McGrath's points are very interesting. In Ireland, we might do eight inspections in a year. Those auditors who might be turning up on a funeral day for an inspection - they are not us, just to be clear. We do often say to the European Commission that it needs to get the rate of errors down and be tighter around controls sometimes. At the same time, we are calling for simpler schemes so that it is harder to make accidental mistakes and so that people do not need to do a third year of agricultural college just to understand the scheme. People should be able to engage better with the schemes, so that they do not claim simply because it is too much trouble. All of these things undermine the potential for a scheme to deliver what it is supposed to.

On the young farmers, we do not, as a court of auditors, object to money going to young farmers. That is a policy choice of the European Union. It is a democratic decision and we would never challenge it. What we are saying is that money to support young farmers should be delivered in a way that actually supports them. At the moment, it might not make any difference to a decision, for example if a young person is trying to decide whether to become a farmer or a family is trying to decide how to distribute a farm. This payment should make a difference. It should not be something that one will get either way. It should not be something people will just find a way around. It should make a difference to behaviour if it is to be effective as an incentive. We did not find that it was an effective incentive. Perhaps it is too widely spread or not targeted enough. It was not actually changing the behaviour of individuals very much.

In Ireland, we deal with the kind of farm structures that are here. In some of the other countries where we do audits, the average farm size might be 3 ha or 4 ha, not even 10 h, 15 h or 20 ha. Each country has a different set of problems and the European-level schemes will always be at a loss to cope with national-level problems. There needs to be a good, effective policy-making step at the national level as well, when individual agriculture Ministries are deciding how to apply the flexibility they have been given at the European level. Every country is really quite different and therefore needs to have and use a level of flexibility.

I will let Mr. Wojciechowski speak because he is much more expert than I.

Mr. Janusz Wojciechowski:

I fully agree with my colleague. I also agree with Deputy McGrath that bureaucracy is a very big problem in the European Union. This is one of the conclusions of our report which was presented to the agriculture committee today. In respect of the Rural Development Programme, RDP, the European Commission requires too much. In the financial period 2007 to 2013, the average size of the programme document was 400 pages. In the next period, it was 700 pages. It contained a lot of data that was interesting for academic discussion but not for the farmers. The Irish RDP was one page shorter. In respect of absorption of the RDP, Ireland is in second place. Finland has 43% absorption and Ireland has 38%. The average size, four years into the current financial period, is 21%. It is therefore a better situation in Ireland.

I presented two reports about the RDP and the young farmers scheme. We have very serious problems with agriculture in the European Union. During the last decade, we have lost 4 million farms. We have lost almost 20 million in respect of land declared by the farmers to the Common Agricultural Policy, CAP. We have a very difficult problem with the generational situation among farmers. Some 80% of farmers are older than 45 and one third of European farmers are older than 65. In a country like Portugal, over 50% of farmers are aged over 65. My country of Poland has one of the best situations. Interestingly, this positive result in support for young farmers in Poland was achieved by support for the old farmers. There is a special pension system and there are other supports for them.

We have two levels of bureaucracy, European and national. I made a similar presentation to today's at the Polish Parliament. I presented the young farmers report, for which Poland was one of the countries audited. I would say that the European Court of Auditors has nothing against Polish farmers. There are no abuses or irregularities. However, a representative of young farmers who was there said the Polish authority had a lot of objections against them. Some 3,000 farmers were forced to reimburse part or all of the funding. It was surprising. The national authority created additional requirements to those of European law. From our point of view, everything was okay. From a national point of view, there was a big problem.

The main problem of European agriculture is a lack of long-term vision for the future, beyond the next seven years. We are used to planning agriculture policy over seven-year periods.

It is necessary to have a long-term vision of what European agriculture will be like from 2040 to 2050. How many farms will there be, how many farmers, and what will the model of farming be, whether family farming or industrial farming? This is a political choice. It is a necessary discussion about the long-term vision of agriculture, not just for seven years, which is not enough. It should be the vision for a longer time.

Michael Healy-Rae (Kerry, Independent)
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I offer Mr. Cardiff every good personal wish for the future. He did everybody a great service in being such a respectable man about his job, very dedicated and straightforward to deal with. It was widely recognised in both Houses of the Oireachtas and was appreciated. I wish him good luck in the future. I thank the witnesses for being here today.