Tom Parlon (Laois-Offaly, Progressive Democrats)

I thank the Deputy for raising this question as it provides an opportunity to outline to the House the position regarding Ireland's continued eligibility for Objective One status under the European Union's Cohesion Policy. The main goal of Cohesion Policy in the European Union is economic and social cohesion. This is based on financial solidarity, whereby more than one third of the Union's budget is transferred to those regions lagging behind in their development, undergoing restructuring or facing specific geographical, economic or social problems. Priority is given to poorer regions to enable them to better address their challenges and difficulties and to benefit fully from the opportunities offered by the single market by underpinning their long-term structural development.

Eligibility for Objective One status, or the Convergence Priority as it will be known after 2006, applies to designated Nomenclature of Territorial Units for Statistics, NUTS, level 2 regions. Eligibility is determined independently by the European Commission based on a range of economic and social indicators and is not determined by the governments of the member states. Only those NUTS 2 regions with a per capita gross domestic product lower than 75% of the Union's average are eligible under Objective One. Both of Ireland's NUTS 2 regions, the Border, midland and western and the southern and eastern regions, have GDP figures above this level.

Under this criterion, neither of the Irish regions will be eligible for the Convergence Priority after 2006. This is a reflection of the degree of economic progress the country has achieved since Objective One was last determined and which underpinned our eligibility for the 2000 to 2006 round of Structural Funds. The southern and eastern region has a figure of approximately 142% of the EU 25 average. This is well above the threshold level. The BMW region is nearly 94%.

The Commission's proposals for Cohesion Policy after 2006 have been broadly welcomed by the Government. We fully recognise the impact of our improved economic position and accept that one of the consequences of this success is that Ireland as a whole will lose Objective One status after 2006. We support the Commission proposals to concentrate the Union's resources on supporting the development of the new member states as a priority. It is important to keep in mind that both Irish regions will continue to benefit from Cohesion Policy from 2007 onwards. However, it should be appreciated that the level of Structural Funds available under the next round will be much reduced. Despite this, Structural Funds can continue to play an important role in the continued economic and social development of the regions.

Funding in the next round will be deployed in accordance with a broad strategic framework oriented to achieve regional competitiveness and support the Lisbon Agenda. The emphasis will be on investment in innovation, in research and development and in the knowledge economy and on improving the employment opportunities for under-skilled workers. The Government has already agreed that the regional assemblies will play a more central role in developing operational programmes for the future programming period. Assembly members will have a significant challenge in determining the priorities, themes or geographic areas to be funded and will be able to articulate local and regional issues and solutions as part of this process.

Ireland has had a good track record in investing Structural Funds in productive activities. We have used them well and they have assisted our development so that we will no longer be eligible for funding at the highest rate. The challenge now is to ensure that future funding is used in an innovative manner to address residual development needs where the added value of cohesion policy can clearly be demonstrated. The issues raised by the Deputy are probably more appropriate for the Department of Enterprise, Trade and Employment. I will ask that Department to respond to the issue he raised.

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