Marian Harkin (Sligo-Leitrim, Independent)

Given the time constraints, I will make a few comments on the budget agreement reached last December. As we know, the European Council reached agreement on the budget for 2007-13. However, the European Parliament is not happy and we expressed this opinion forcibly last week in Strasbourg. Why are we unhappy? Like Oliver Twist, we want more. As the Minister is well aware, we need more. For 2006, the financial perspectives amount to 1.093% of EU GNI. However, the agreement reached in December foresees an average figure of 1.05% of EU GNI. In total, we are speaking about €862 billion. While that figure is enormous, in reality we are facing cutbacks.

Last June, the European Parliament agreed that in order to ensure a better match of political priorities and financial needs, a financial commitment of €974 billion, or 1.18% of EU gross national income, was required. Hence, we face a shortfall of €112 billion and the battle lines are drawn.

The Parliament rejects the Council's conclusion because the reduction in commitments in respect of competitiveness, growth and employment will jeopardise the Lisbon Agenda and because they do not guarantee a budget that will meet the commitments made to all member states, particularly to the new member states. In other words, the proposed agreement will not guarantee a budget that will enhance prosperity, competitiveness, solidarity, cohesion and security in the future. There will be tough negotiations ahead because the Parliament has the power of veto on the budget. However, at least we have a framework and a basis for negotiation and can begin to plan.

Many of the ten new countries will be bitterly disappointed by the cut in cohesion funding. There is also genuine concern throughout Europe that this budget will not deliver on competitiveness and innovation. While everyone is talking about the Lisbon Agenda, to deliver the Lisbon strategy the EU must increase and not cut its investment in research and development. In this context, alarm bells should be ringing here at home. Ireland has just been ranked 11th in the most recent edition of the European innovation scoreboard, with Sweden, Finland, Switzerland, Germany and Denmark cited as the leaders in innovation. This bad news was compounded by the results of another study which showed that within two years, Ireland will plummet from third to 21st place in a European league table measuring information and communications technology skills. Hence, given that the EU is cutting back on funding into research and development and innovations, we must act quickly and decisively at home.

From an Irish perspective, there are positives and negatives in this budget. One of the positives is the allocation of €200 million to the PEACE programme for 2007 to 2013. The EU has invested in excess of €1.25 billion in the PEACE programmes, and while €200 million is a major reduction, nonetheless it represents a genuine commitment. I congratulate the Government on its negotiating ability in convincing its EU partners to continue with this support. However, now that European funding is decreasing, it is essential that both governments allocate mainstream funding to PEACE projects. I also congratulate the Government on securing €800 million for cohesion funding. However, I ask it to spend it in areas of need. From 2000 to 2003, only 14% of all cohesion funding was spent in the BMW region. Cohesion means convergence and bringing all regions to the same level, not spending the money on areas where GDP is almost 50% higher than in others. Unfortunately, there has been a substantial cut in rural development funding and as Ireland faces a cut of almost 35%, this will have major implications for the rural economy here. It is crucial the Government makes up the deficit and creates the dynamic rural development policy necessary to offset the reduction in numbers in the agricultural economy.

Finally, I welcome the proposed review of the budget in 2008 and 2009 and look forward to constructive and positive negotiations between the Council and the European Parliament on the next financial perspectives.

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