Mr. Tony Murphy:

We will try to address some questions. As Senator Richmond already stated, some of them may be a bit political for us and go beyond our mandate. In response to Senator Richmond's questions, the nine referrals are basically cases where we just have a suspicion that something is not quite right. We really do not want to compromise any future investigation because the experts in this field are in OLAF and they have the proper criminal investigators. We do not want to ruin any potential trail that has to be followed. They vary from the artificially created - someone setting up a false business so that everything looks fine on paper but it is just a falsehood - to public procurement where it is not just an error but we think there is something more sinister behind it, that it is really a deliberate attempt to make sure there is not fair competition or to restrict procurement to a single bidder by making the thing so specific that nobody else could tender for it. These are the kind of issues.

On the non-absorbed funds, there is a rule called end plus three. Three years after the end of the programming period, the money lapses if it has not been claimed. The member states can still claim money from that programming period up to the end of 2023. There is a proposal for the new 2021-27 programming period to shorten this back to end plus two, as it was before. The longer this thing goes on, the more it eats into the next programme period. There is so much effort going into spending the money from the previous period that the implementation and take-off of the following period just takes a long time.

There are delays in the budget formulation process for sure. The expectation many moons ago was that this current Commission would finalise the negotiations and that the budget would already be agreed at that stage. We are now looking at sometime next year hopefully. It has to be resolved sooner rather than later. The focus so far has been on fixing where we are with Brexit and the implications that will also have for the budget. In terms of what it will mean, it is very difficult to say. There are rumours of 10% or 15% cuts across different policy areas. It would be unfair to say that because, in a way, the fun will really start with the budgetary negotiations between the member states. Certain member states want to retain the importance of the Cohesion Fund and do not want the budget to be cut there, while other member states, perhaps ourselves included, want agriculture and the CAP to be maintained or even increased. It is going to be a matter of fighting for what is left in a reduced budget. That brings in the issue of security as well. This is what I was trying to say in terms of 1% of GNI to the EU budget. Sometimes all these extra demands come on the EU budget without member states wanting to pay for it. As was said, if a lot of money has to be put into security, it will have to be cut somewhere else unless member states are willing to pay more. It is a matter of getting what we pay for, if I can put it like that.

In response to Deputy Durkan's comment on being efficient and effective, I tried to explain that we have two aspects, the legalistic compliance aspect and our performance. There are definitely weaknesses in the performance framework and how we can measure certain policies. Overall, people try to spend in an efficient and effective way but that does not always produce the results we wanted in the first place. We still have some work to do on that. There is a proposal in the court that we will have a separate annual report next year on performance. That might help address some issues. It will be more focused on the performance aspects and may help address some of the issues the Deputy raised in several of his questions. On state aid, in any case where the state aid goes to DG Competition and the Commission, they normally rule on it. Where we are finding problems, we have a disagreement in the interpretation of the applicable rules. For instance, in some of the errors we think the aid intensity is too high. We had a particular problem with the absence of the incentive effect. If it is not there, for us that is an error. There can be undetected state aid or state aid not being notified; sometimes it would have been allowed if it was notified but it is not notified so no one is aware of it. Monitoring of formal requirements is sometimes not met. It is a variety of things, I would say, in terms of state aid.

On climate change, and it is probably the same for the questions on pesticides and rural Ireland, I would put them all in a group and say these are issues for the Commission Directorate Generals that are directly involved such as DG Agriculture and Rural Development, DG Health and Food Safety or whatever. What we are doing afterwards is basically auditing the decisions they have taken. We are not a party to the political process or discussions on which pesticides should or should not be banned. The Commission services use the experts in the field, as it were. We come along and see what the outcome is and how it is implemented. We might like to think we have a bigger role than we have in that regard but we do not. We are basically auditors. We see what has happened and how the political decisions, programme and objectives are implemented ex post. That also goes a bit to what the Chair was saying on the pesticides.

On shared management, it is like anything. When there are more actors involved it is more complicated. We have shared management between the Commission and the member states. Cohesion is where we have problems because there are a lot of actors involved. We have the audit authorities in the member states, the Commission and the Ministries. It is really a big chain of people who are involved in implementing EU funds. On performance indicators, hopefully the report we will have next year will address some of those issues in a clearer way. At the moment, all we are saying is that we have issues with the framework, whether the indicators set are good or not. Next year, we hope to be able to come with something that says whether objectives are being met in particular policy areas. I would highlight real performance impact. One of the big issues we have is that indicators are often for output rather than impact. Output is just saying how many people have done a training course. It is good that people are trained but the real thing is the impact. Has it made a difference? Has it made them more employable? Has it led to employment? That is where we are looking to see that those type of indicators would be better.

Senator Leyden raised an interesting point. It is not coming from us. We are auditors. We are there to see if rules are being applied. The people who set the rules are the legislators, that is, the European Parliament and the European Council on the basis of proposals from the European Commission. They are set by that triumvirate, if one likes. Nonetheless the Senator raises a very interesting point. We have come across cases, I am not saying in Ireland particularly because Ireland did not feature in our sample, where national rules are more demanding than EU rules and it causes problems. We call that gold-plating.

The problem for us is that where the national rules are more demanding than the EU rules under the regulations we have to apply the national rules, which, as I said, are more strict and demanding than the EU rules.