That Dáil Éireann calls on the Government toi ensure that the fundamental principles of the common agricultural policy are fully protected in the discussions on the 30th May Mandate on the EEC Budget and to take whatever steps are necessary from national and EEC resources to halt the decline in farmers' incomes and to restore confidence in the agricultural sector.
I note that the Government have, and obviously had to, put down an amendment to this motion and I shall be interested to hear what efforts they are making, have made or intend to make over the next number of weeks, especially at the Summit Meeting at the weekend in regard to this important question. I shall have more to say in relation to their request that we endorse the steps being taken by them to improve farmers' incomes and reduce the downward trend. The measures we are being asked to support have escaped my notice.
I want to mention briefly the fundamental principles of the common agricultural policy. There are three points, a single market, community preference and financial solidarity which, in anybody's language and especially in EEC terms, means that the Community will fund and pay for all common measures. I also want to mention the objectives under the Treaty of Rome of the common agricultural policy. Article 39 states the objectives which are:
(a) to increase agricultural productivity by promoting technical progress and by ensuring the rational development of agricultural production and the optimum utilisation of the factors of production, in particular labour; (b) thus to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture; (c) to stabilise markets; (d) to assure the availability of supplies and (e) to ensure that supplies reach consumers ar reasonable prices.
Part 2 of Article 9 states:
In working out the common agricultural policy and the special methods for its application, account shall be taken of: (a) the particular nature of agricultural activity, which results from the social structure of agriculture and from structural and natural disparities between the various agricultural regions; (b) the need to effect the appropriate adjustments by degrees; (c) the fact that in the Member States agriculture constitutes a sector closely linked with the economy as a whole.
That applies more to Ireland than to any other country in the EEC.
Far from any curtailment of existing supports or in any way undermining the existing supports and the basic objectives of the common agricultural policy, we can see from what I have read in relation to the principles and objectives that we have not come too far on this road. They should be expanded to reach the objectives as laid down in the Treaty. The Commission have reported on the mandate of 30 May 1980. They deal with the operation and funding of Community policies and a number of far-reaching reforms have been suggested. The Commission states that there can be no development of Community activities as long as the Community budget remains artificially limited by the current ceiling on its resources. If they did something about that we might make some progress. The CAP and more specifically the contribution by the UK to the Community budget has been singled out for special mention in that report. The main common agricultural policy proposals are aimed at reducing the rate of increase in agricultural spending so that it will grow less rapidly than the budget by adopting a number of actions. The Commission also proposes to solve the UK budget problem by granting payments to the UK for a limited period to be financed through the budget. However—and this is the important bit—should this be impracticable either by delay in increasing the Community's own resources by lifting the 1 per cent VAT ceiling or by current trends in budgetary expenditure, then the suggestion would be to consider financing these refunds to the UK through abatements of the amounts paid to other member states from the FEOGA Guarantee Fund, the level of such abatements to be moderated for Ireland, Italy and Greece.
One has to be very careful about how one approaches that idea in the Commission's proposal. We can clearly say it is perhaps the most dangerous single element of the report. If it were to come about, no exemption for Ireland would be sufficient compensation for the dangers to the CAP which such a precedent would cause. It would be a clear breach of the basic principle of financial solidarity. It must be opposed in whatever way is necessary to ensure that such a suggestion does not become part of the EEC or the CAP policies.
The Commission also goes on to say in the terms of the mandate that the three inter-related principles on which the common agricultural policy is based remain essential. It is neither possible nor desirable to jettison the mechanism of the common agricultural policy but on the other hand, adjustments are both possible and necessary. We must be very careful that the so-called adjustments they are suggesting are not in any way undermining the principles. Another serious aspect of the report is that the Commission have, accordingly, come to the conclusion that farm income considerations, important though they may be, cannot be the sole point of reference for fixing guaranteed prices and it is neither economically sensible nor financially possible to give producers a full guarantee for products in structural surplus. In relation to the adjustments they are considering and the fact that they are not in any way interfering with the fundamental principles, I think one contradicts the other. The proposal under discussion in the EEC at present is in breach of the principle of financial solidarity. Any proposal to transfer in whole or in part the financing of the common agricultural policy from the Community to member states would be a retrograde step and could easily lead to the collapse of a basic Community policy, which would be unacceptable to us.
We must approach it in that way. I do not intend in any way to be destructive but I should like to hear what either the Minister or the Minister of State has to say in relation to how this matter has been handled since June of this year because it is very difficult for those of us who are not involved in the day-to-day negotiations to know what progress may have been made on what I consider to be very important suggestions from the Commission. We must be clear what exactly is being done. It is my duty on behalf of this party to assure the Government that they have our full support in regard to the steps they are taking, provided that we know what those steps are.
A very important statement was made by Commissioner O'Kennedy to the European Parliament on 17 November. The view he expressed would seem to be in conflict with some of the suggestions that have emanated from the Commission. However, I hope the Commissioner is right. Part of his suggestion was that the Commission reject firmly the notion that an artificial ceiling can be placed on CAP expenditure and he posed the question of how the principles of the CAP policy could be respected, as the European Council have directed, within an arbitrary budgetary ceiling. We must support that call from the Commissioner who, presumably, was speaking to the Parliament on behalf of the Commission. The only way to overcome this major financial problem of the EEC in terms of their budget is by facing the reality of an increase in the 1 per cent VAT rate. This must be done immediately, because if we continue on the road we have been travelling in the past couple of years whereby various interests have been attacking expenditure on the CAP, and with some success in so far as some member states and a number of the Commissioners are concerned, that is a dangerous situation for a Community as a whole. We must remember that Europe hangs together on what is its only developed policy, that is, the CAP. Therefore, this policy should be adequately financed.
It is ridiculous to suggest that the CAP can be cut, thereby enabling some funds to be used for the development of other policies whether these be social, regional or any other. We should not be asked to solve the British budgetary problems by way of contributions from other member states, particularly by way of the CAP or by way of a return of justifiable FEOGA receipts under the CAP. It is important, too, to note the percentage cost of the CAP in terms of the over-all budget. In 1979 the figure was 74 per cent. In 1981 it was 64 per cent and in 1982 it is expected to be about 61 per cent. This is taking everything into account that can in any way be related to agriculture, but in reality the cost of the CAP budget is less than 50 per cent of total expenditure. The CAP represents only 0.4 per cent of EEC gross domestic product. These are the figures that we who are concerned particularly about the CAP must put forward. We must ensure that the other member states realise fully what is happening and what some member states are trying to bring about. What they are trying to do cannot be tolerated under any circumstances. I take this opportunity of urging the Taoiseach who will be representing us at the Heads of State meeting this week to make these points crystal clear to the other member states. I am confident that he will have support in this regard from many other member states. I urge the Minister and his representatives to ensure at the Agricultural Council that the fundamental principles of the CAP are not affected in any way. The Irish Government cannot accept the approach as outlined in that part of the Commission's proposals which are being discussed now at the Council. Instead, we must seek ways and means of ensuring that more and not less money is made available from the EEC through the CAP or through special measures to which I shall refer shortly.
I should like to turn now to the second part of the motion in which we urge the Government to take whatever steps are necessary in terms of national and EEC resources to halt the decline in farm incomes and to restore confidence to the agricultural sector. The word "confidence" in this context is of paramount importance. If there is no confidence in the future of agriculture within the terms of the CAP we shall not have the great development for which we have the potential within our agricultural industry. One might ask why we need additional measures here at home and supplementary measures in the EEC in addition to normal price fixing. The first factor is one for which there is not too much sympathy in Europe. This is our level of inflation. Consistently the level of our market prices is much lower than the levels which apply in the other member states. There is the question, too, of the level of our production compared with the situation in the other member states and in addition there is the factor of our distance from the main markets and the fact that 70 to 80 per cent of our produce must be exported. All of these factors are very relevant and in addition there is the question of the importance of Irish agriculture to over-all economy. During my time in office I found that factor to have significant results with other member states, none of which is in the same position.
Regarding inflation, the problem is that, even leaving this factor aside for the moment, we should be in a position to have presented to the EEC by now a series of measures for consideration by them. I am not referring to some of the measures that were announced by me as Minister and which have not been concluded by the present Minister. I am talking about measures additional to those and which should be put forward for special consideration between now and the price-fixing date. Calls are being made by various organisations for the Taoiseach to embark on a tour of European capitals.
All the heads of state will be together this week. Will the Irish be putting the case for special treatment to offset the proposals which are being discussed in this mandate? That is the time to start presenting those proposals and to make the position quite clear to the heads of Government that we need over and above what will result from the price fixing in the months ahead. It is important that the Taoiseach make this quite clear at the meeting of the heads of state.
When we concluded the price fixing for 1981 last April we had a special package of measures in addition to the 14 per cent increase, and we also had a commitment from the Council to present a further package of measures before 15 July, which were concluded since then, perhaps not on the lines which were intended last March. There is another element which leaves the door open for the Minister and the Government, a wording which was prepared on the night of the fixing of the prices early last April by the President of the Commission, Mr. Thorn, to enable us to accept what was being offered that night. He said that the commission had undertaken to study other methods of assisting in social and other problems resulting from a fall in incomes in the agricultural sector, which is of particular importance to the Irish economy. They are not my words. They are the words of the President of the Commission written out by him and accepted by me in addition to others which we added ourselves.
What action has been taken on those since last April? If no action has been taken, now is the time to present this case once again with substantial proposals for special consideration by the Commission. Those words of the President of the Commission were accepted by the Commission and by the Council. The Minister must look for ways of giving special assistance to Ireland because of distance of markets and market prices generally.
There are a number of ways to do this. We had already put some of those suggestions forward. The Minister can say we did not make much progress on them. I am the first to accept that we did not make as much progress as we would have liked. Some of them were agreed but others which can have a substantial impact on the incomes of farmers were presented this time last year to the EEC Commission by me.
An example is an extension of the disadvantaged areas scheme, which will cost a lot of money but is a way to use the existing mechanisms within the EEC to assist the farming income situation here. The whole country would be designated as a disadvantaged area. Consideration should also be given, because of the distance we are from the main markets, to a transport subsidy. We should also look for exemptions of the various levies, the co-responsibility levy, particularly, on milk production.
I am rather amused to find that the Commission still come forward with a proposal for a super levy on milk which was defeated successfully on two occasions by us in 1980 and 1981. It was virtually wiped out altogether this year, but they have come back with it. I do not believe there is any possibility of acceptance of a super levy within the Community. An Irish Government can never accept that. There is also the suggestion which we put forward which is now part of the Commission proposals about farm incomes generally, that is, that in certain circumstances direct income supplements should be considered.
There are numerous ways in which the Minister and the Government should assist the farming community at EEC level. Inflation is one of our biggest problems. The Government in the July budget increased the inflation rate by 5 per cent by the measures introduced then. The proposals they are considering at the moment for presentation in the January budget will add a further 5 to 8 per cent to the rate of inflation. The Minister is now smiling. Does he not agree with the Minister for Finance?