I move.
That Dáil Éireann deplores the Government's expressed intention of using the EEC Regional Fund to recoup past expenditure to the Exchequer and demands that the Fund be used to finance a special regional development programme in the less developed parts of the country.
To consider this Motion in its proper perspective, I would suggest one has to go back a few years to the campaign that was waged in preparation for the referendum on entry into the EEC. It cannot be denied that in that campaign we, in Fianna Fáil, and the Fine Gael Party also, campaigned on the basis that one of the advantages which would accrue to this country by entry into the EEC was that there would be a regional fund which would assist, and we hoped substantially, the development of the less-developed areas of this country and, in particular, the western part of the country. I do not think anybody can deny that was the basis on which both the Fianna Fáil and Fine Gael Parties campaigned. The Labour Party, of course, campaigned against entry into the EEC and some of their speakers indicated their lack of faith in the prospect of a regional fund being set up or, if it were set up, of its being any way effective. Had it been known at that time that when the fund was set up the Government of the day would propose to snaffle the money to reimburse the Exchequer, nobody could have campaigned in favour of the EEC on the basis of a regional fund and, indeed, the Labour Party would have been right. I do not know what has been happening now since one was set up— whether it is a consequence of the Labour Party's attitude, which I have perhaps proved was right in regard to the regional fund, or whether the Fine Gael Party have forgotten what it promised to the people during that referendum campaign.
In the last few years both sides in this House have complained at the delay in the setting up of the regional fund and, when it was eventually set up, at the smallness of the fund. I do not think any of us could have made any case at all for the setting up of this fund had we known at that time what was proposed to be done with the fund, had we known that our share, when it came, would go into the Exchequer to reimburse and recoup the Exchequer for expenditure already committed, apparently for the purpose of easing the Government's budgetary problems. The Irish Independent on 14th April, 1975, quoted an extract from a letter written by the Minister for Finance to a county council in which he said that actual payments from the fund in respect of approved projects will be on the basis of part recoupment on the scale of expenditure already undertaken by the member State. Whatever arguments there may be about the letter of the EEC Directive in regard to the regional fund there cannot be any argument in regard to the spirit of it. Regulation No. 724/75 of the 18th March, 1975, states that whereas the fund's assistance should not lead member States to reduce their own regional development efforts, it should complement these efforts. To reinforce that I should like to refer to something which was stated in the European Parliament on 29th April, 1975, by the Commissioner in charge of Regional Policy, Mr. George Thomson. He said that there is the quite separate question and a very important one as to whether contributions from the Community's Regional Development Fund should be additional to the total resources made available for regional policy by member States.
In the preamble of the regulation it is made clear that the member States commit themselves to the general proposition that the totality of resources should be additional; that this has always been the Commission's view. Mr. Thomson continued that as he had stated many times there is no case for a Community Regional Development Fund unless in the end it means that additional resources are made available to help with the regional problems.
I would suggest that the regulation and the clear-cut and reiterated view of the commissioner for regional policy made it quite clear what the spirit of this directive is, that is, that the money available to each country under the regional fund should be additional to and not in substitution for State expenditure.
In a letter also to The Irish Independent, written by the Minister for Finance, and appearing in that paper on 15th April, 1975, the Minister said:
... In fact it is understood that a majority of member States will opt to use fund assistance in part repayment to their exchequers of expenditure on State aids rather than apply it to increase the level of aid granted to some individual projects.
I have been making some inquiries about this matter and the information I have been able to get from Brussels does not correspond with that statement by the Minister. The information available to me suggests that France is proposing to add a percentage to the existing level of grants in its regions, that Italy proposes to develop and identify entirely new projects and to devote all of the fund to these which are largely infrastructural. Germany, in respect of the small part of the fund which it will receive, is likely to devote it to touristic and infrastructural projects which are so far unplanned but which they propose to put into effect with the regional fund money.
If the proposal of the Minister for Finance as indicated in the letter to the county council to which I referred is to be put into effect, is there any way in which it can be established that the regional fund is being used additionally to State aids and not in substitution for them? There are certain provisions built into the regulations which are designed to prevent this, provisions such as obliging the State concerned to inform the recipient of the amount of the money coming from the regional fund, and the publication, at six-monthly intervals, of projects assisted by the fund. Nevertheless it would be very easy for any Government if they chose to do so, to conceal what they are really doing and present projects which were getting aid from the regional fund as if additional moneys were being made available when in fact the money was simply being used to ease budgetary problems. For instance, in what way can it be established that the level of State aid would not have been lower or higher or at the same level in the absence of the regional fund? I suggest there is no way in which this can be done, that this is open to a complete sleight-of-hand operation. The indications given by the Minister for Finance so far are that that is precisely what he intends to do, that he intends to engage in this sleight-of-hand operation.
We, on this side of the House, made commitments to the people in the referendum on the EEC. So did the Fine Gael members of the Government. For our part we shall do anything we can to ensure that those commitments are honoured. I would suggest that the clearest and most unambiguous way of honouring those commitments is by the setting up of a separate regional fund for development here and making quite clear which money is coming from the EEC and which money is coming from the State into that fund. It should be kept separate from existing funds which have existed and will continue to exist in the future whether or not there is an EEC Regional Fund.
A number of officials in the Commission in Brussels are particularly anxious that projects should be identified and brought forward immediately to the Commission. They make no secret of the fact that assistance, over and above State assistance, is the key to the spirit of the fund.
An example of one possible approach to this matter is if a firm were to get an industrial grant of £100,000. In theory the Government could recoup £50,000 of that money from Brussels. In that case they are obliged to inform the recipient of the grant that he is getting £50,000 from the regional fund. I think it is clear that the fact that the beneficiary is getting half the grant from Brussels will not make the money any more exciting or useful so far as he is concerned. Nor are the people in the region concerned likely to feel any particular gratitude to the EEC as a result. It was always intended from the EEC point of view that it would be quite clear to the regions that they were benefiting from membership of the Community and, in particular, from the funds.
It is, of course, true that our share of the fund at the moment is quite small. We are in a three-year trial period. That is very important and the Government ought not lose sight of it. If, at the end of that three-year trial period, what will emerge is that the country which had the greatest need for the regional fund and which, because of that, per capita, got by far the highest allocation, simply used the fund to reimburse the money to the Exchequer, then I suggest that the Governments of Germany and the Netherlands, who were the main contributors to this, will inevitably say: “Well, that is not what the fund was for, and we do not see why money ought to be paid by us merely to ease the budgeting problems of the Government in Ireland.” There is a grave danger if this matter is not handled properly, that that will be the result at the end of the three-year period.
The Minister for Finance recently indicated that he expected about £4 million would be transferred in this year. I must confess I find it difficult to share his optimism in that regard, having regard firstly to the fact that projects would need to be forwarded to Brussels within a matter of weeks in order that any grants could be made from the fund this year, and also our experience from the FEOGA guidance money, which was allocated to us in 1973, and has not been received yet, is not too encouraging. The important thing I suggest is this: however small the fund may be at the moment, and however much delay there may be in receiving the money and getting the scheme going, it is vitally important that we get off on the right foot now and establish the methods and precedents which will enable a real case to be made, and push for the establishment of a much bigger and more effective regional fund to follow the three-year trial period in which we are now.
I suggest that when the Parliamentary Secretary, who is standing in for the Minister on this, speaks in this debate he should state clearly what type of schemes will be submitted by the Minister for financing from the regional fund in Brussels, having regard to the fact especially that existing projects are already the subject of commitments by the Government and are covered by the Government's published estimates.
One other matter I want to mention in passing is to refer to a comment that the Minister for Finance made when he stated that the Council of Ministers recently indicated in reply to a question in the European Parliament that the intentions of the Irish Government are contrary neither to the legality nor the spirit of the regional fund. I know some observers in Europe, and, indeed, quite a number in this country, who know what the score is are cynically amused at the Minister's statement, knowing that that statement, which he attributed to the Council of Ministers, was, of course, a statement made in response to a question in the European Parliament by none other than the Minister for Foreign Affairs, Deputy Garret FitzGerald. As presented by the Minister for Finance, it was given a good deal more weight on a European level, or he would have us believe that it had such, than it was entitled to.
I have given the reason for the indications that the Government intend to use the regional fund moneys only as a reimbursement to itself of expenditure already incurred or committed. As I said, this indicates an intention simply to use the fund to ease the Government's budgetary difficulties. It has always been the intention of the EEC that the funds should be used to supplement national aid for the regions. I know that, in the case of this country, the Commission have been impressed by what has already been done in the way of regional development, but it has also been persuaded that the resources available to us are not sufficient to see industry and industry-associated infrastructure projects develop at a faster rate. It was with a view to creating additional jobs at a quicker pace that all of the State was considered eligible for regional fund aids. As I said earlier, the allocation to this country was, on a per capita by far the highest in the Community.
The Industrial Development Authority in its end of the year statement issued on the 1st January, 1975, indicated that £10 million would be paid by the Authority to Irish industrialists expanding or modernising their industries during the year 1975. Assuming that the 1975 regional development fund allocation to Ireland were to be spent equally between infrastructure and industry projects, there would then be the possibility of increasing approximately by half the IDA grant to these native Irish industries undertaking expansion programmes.
Indeed, previous experience with other EEC funds has been along these lines. In the case of food processing industries, who will have already received aid from the national authorities, usually the IDA, grants have also been payable by the guidance section of the EAGGF in Brussels. By the end of the summer, grants totalling approximately £8½ million should have been approved to Irish farms from this source. In the case of training activities, grants totalling approximately £18 million have already been approved to Ireland. In the case of projects submitted by the private sector grants have been payable both by the national authorities here and the Social Fund itself.
In regard to Irish industry and the possibility of getting it to invest and expand, we all know that rising costs and smaller markets are making survival for industry extremely difficult at the moment. The possibility of channelling regional fund moneys to companies with development plans must be considered. At a time of financial stringency, larger grants may well be necessary to ensure that these investments are undertaken. Indeed, the Government have acknowledged that the cash flow position of a number of Irish companies is a major problem and is likely to remain so during this year, if not next year.
The Central Bank report has emphasised, particularly in certain sectors in industry, that there are very serious liquidity problems. The same report went further in stressing that in the case of some firms, because their difficulties were due to the combined effects on their cash flow of stagnant demand for products, falling profits, and the adverse effects of taxation, their basic problems were not capable of being solved by an increase in bank credit. There is a clear-cut shortfall in internal cash flow in industry which the Confederation of Irish Industries some time ago estimated to be approximately £60 million in this year.
In the light of all these circumstances, and the fact that many firms are in such a position that even with credit available they cannot take it up, there may very well be a strong case for considering increased grants to induce Irish industries to expand in the less-developed parts of this country.
I suggest that the allocation from the regional fund, coupled with the measures which the Government might take in ease of industry, would go a long way towards easing this problem. If, however, as the Minister for Finance has argued, the percentage grants available are already high enough and should not be increased, if that argument is true, and I will not go into detail on it at the moment because I do not think it would be relevant, clearly there are many urgently needed infrastructural projects to which the whole of our part of the regional fund could be devoted, in conjunction, of course, with expenditure by the Government.
Speaking recently to the Economic and Social Committee of the EEC, the Deputy Director General of the Department responsible for regional policy in Brussels stated that the council were aware that considerable grants were necessary to attract business to the least-favoured regions, that being particularly true, as I indicated, in present economic circumstances. It was for this reason, he said, that the council have decided to increase the maximum rate of grant payable from Brussels from 15 to 20 per cent. Of course, to justify such a grant, the amount of the grant from the Government would have to increase from 30 to 40 per cent.
In the light of all this, it is all the more surprising that the Department of Finance, on behalf of the Government, should have indicated in their statements that the Government are to consider the resources from the regional fund as a reimbursement to the Government of expenditure already incurred or committed. In the light of that, one is entitled to ask whether the basic objective of the fund is being changed, and whether the fund is now to become a tool of budgetary policy or monetary policy. There was in the past and, indeed, to some extent it still remains, tremendous enthusiasm in under-developed areas of the Community and in particular in under-developed parts of this country for what the regional fund might offer. It seems clear that, unless there is a change in policy as indicated by the Minister for Finance, the only direct beneficiary from the arrival of the regional fund will be the coffers of the Department of Finance.
One local authority which inquired from the Department of Finance about how the regional fund was to be used got, as I indicated earlier, a detailed reply, which ended by suggesting that projects which were to be the subject of applications for regional fund aid should be submitted through the appropriate Government Department. In the light of the Government's proposal, as indicated by the Minister for Finance, to snaffle this money, what is the point in a local authority making any application under the regional fund, because the whole thing is, apparently, going back to the Government and we are as we were, with systems operating as before and any money coming in simply going to ease the budgetary pressure on the Government for the financing of things like industrial development or infrastructual development?
Of course, one thing that has been highlighted very much by all of this is the fact that the Government have no regional policy whatever. The previous Government did a great deal of work in developing a regional policy and implemented it in a number of areas as, indeed, is illustrated very clearly by the fact that when one hears downtalk about saving the west, largely one hears it in relation to a quite restricted area, whereas at one time it meant virtually anywhere west of the Shannon. That is a fair indication of what was done in practical terms.
I do not say the previous Government had a final blueprint for a regional policy. We had gone a long way towards producing it. Various studies were under way. One of the factors involved in finalising it was the benefit which could accrue and the extent of it from the EEC Regional Fund. We do not hear anything from the Government, and have not heard anything from them, about the development of a regional policy, about what they intend to do in relation to those, perhaps by many people, longforgotten recommendations of the Buchanan Report and indeed subsequent developments.
I suppose that a Government who have not got a regional policy at all and apparently have not thought about the subject, might be tempted to take the easy way out and, when the EEC Regional Fund becomes available, simply to say: "Right, we will put that into the Exchequer and that will help us to pay for the various items we have to pay for—the IDA and road works and sewerage, and so on." It is not good enough in the light of the undertakings given. It is not good enough in the light of the requirements of the fund, and the spirit in which the fund was set up. It is not good enough in the light of the case we made to Brussels and to the EEC for the setting up of a large regional fund. It is not good enough, I would suggest, in the light of the requirements of the people of this country and, in particular, it is not good enough in the light of the enormous damage it may do to the possible development of the fund in future, having regard, as I said, to the fact that we are now in a three-year trial period as far as the EEC and the regional fund are concerned, unless we show clearly and unequivocally in that period that we can and do make use of that fund to do worthwhile regional development, supplementing the efforts of the Government, there is the gravest danger that there will be no regional fund in a few years' time in the EEC. If that happens, then a policy such as was indicated by the Minister for Finance will have contributed very substantially to the disappearance of the EEC Regional Fund.
I would like to know and I would ask the Parliamentary Secretary to indicate whether any projects have yet been submitted by the Government for payments from the EEC Regional Fund and, if not, when will projects be submitted for that purpose? Also since such projects are presumably already committed as far as the Government are concerned, and since the amount of money from the Government to aid them is committed, I should like to know what is proposed to be done in regard to the payments from the fund in relation to such projects?
Is it proposed to use the money from the fund in relation to such projects to add to the aid being given and already committed by the Government, and thereby to increase the amount of aid available? Alternatively is what is proposed mere recoupment to the Exchequer? I call on the Parliamentary Secretary to give a firm unambiguous commitment to the setting-up of a clearly separate regional fund to aid the less-developed parts of this country especially in the west. Anything other than that is, I would strongly urge on the Parliamentary Secretary, merely reneging on the clear understanding which was given to the people—I would go further and say the clear promises that were given to the people —by both Fianna Fáil and Fine Gael in the EEC referendum. Not alone is a failure to set up such a fund a reneging on those promises but it is also, and cannot be described as anything else but, a fraud on the people, particularly those in the poorer parts of the country who deserve better than to be subjected to these promises and then have the promises reneged on because the Government find themselves in financial difficulty.
If the people are to benefit from the EEC Regional Fund, even to the limited extent that is available now, and if we are to do our part to ensure that the permanent, long-term EEC Regional Fund is set up and set up on an adequate basis, then we must demonstrate now and the Government must demonstrate now, their good faith and their determination to ensure that there is here a regional fund aided directly and clearly from the EEC Regional Fund, a fund which will be used either to supplement industrial grants or Irish firms in the less-developed part of this country and/or the financing of urgently needed infrastructural development if the less-developed areas are to have a hope of getting on their feet.
The Parliamentary Secretary knows as well as I do that there are major infrastructural works needed if certain parts of this country are to have a chance to develop properly. We must, I believe, use the EEC Regional Fund to demonstrate that this is the kind of thing which gives us a de-cently-sized fund for which we are getting really big sums to develop the poorer regions and enable this country to take its place fully in the EEC and to subscribe fully to an integrated monetary policy in the future, a thing we cannot do until we develop this country. I hope the Parliamentary Secretary will be able, on behalf of the Government, to make such a firm and unambiguous commitment and that he will be able to put on the record of the House that the Government have now decided that they are not going to use the money from the EEC fund to reduce budgetary difficulties at the expense of the poorest people in this country.
