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Dáil Éireann debate -
Tuesday, 16 Feb 1988

Vol. 377 No. 9

European Council Meeting: Statements.

I attended the European Council of Heads of State or Government in Brussels last week, accompanied by the Minister for Agriculture and Food, Deputy Michael O'Kennedy, who was acting, on the occasion, for the Minister for Foreign Affairs, Deputy Brian Lenihan, who was indisposed. The Minister of State at my Department for European Affairs Deputy Máire Geoghegan-Quinn, also attended in Brussels.

I have had the agreed Overall Compromise paper laid before both Houses of the Oireachtas, together with the draft Conclusions of the European Council. It was accepted in Brussels that the latter are deemed to be adopted unless certain agricultural elements included are changed by a qualified majority at the Foreign Affairs Council on 22-23 February. It is a foregone conclusion that this will not happen but until after that meeting these detailed points must, strictly speaking, be described as draft conclusions. The Overall Compromise paper sets out the agreements reached on the key questions discussed in Brussels last week.

In the margins of the Council, I had a meeting with the British Prime Minister, Mrs. Margaret Thatcher, on Northern Ireland and Anglo-Irish affairs generally. For the purposes of this meeting, I was briefed by the Minister for Justice, Deputy Gerry Collins, and the Minister for Energy and Communications, Deputy Ray Burke, who came from London for the purpose, following the informal meeting they had there with the Secretary of State for Northern Ireland, Mr. King, and Minister of State, Mr. Stanley. I shall be speaking to the House about these matters tomorrow and I will, therefore, not comment on my meeting with the British Prime Minister at this stage except to say that the meeting was conducted in a calm, reasonable, and dignified atmosphere, in which both of us set out clearly or respective positions.

Before going in detail into the Conclusions of the Brussels Council, I should like to warmly welcome the outcome. The success of this Council was an important step for Europe and could legitimately be described as an historic breakthrough. It provides the institutional and financial framework by the implementation of what has become known as the Delors Plan — for the completion of a Single Market for the whole Community, comprising 320 million people, by the year 1992.

Success at the Brussels Council provides a new plateau for development in Europe from which we will all benefit. As Europe develops, Ireland progresses. Estimates of the effect of the Single Market on the European Community, published by the Commission, indicate that the member states of the Community will together gain by between £80 billion-£90 billion on the completion of the Market, as a result of greater market efficiencies. The Brussels Council provides secure financing for the Community. Within this framework it underpins the future of European agriculture, by providing a firm financial basis for the CAP and it contains key mechanisms in accordance with the cohesion articles of the Single European Act to bring the less favoured regions, including Ireland, up to the overall Community level of prosperity.

As a result of the Brussels Council, the structural funds will be doubled in real terms over the period to 1992 for the regions in greatest need of structural reform, including this country. This will mean a substantial increase in resources. At present Irish receipts from the funds are about £300 million a year. The guideline which has been entered in the records requires the Commission to ensure that GNP per capita in the member state will be a criterion to be taken into account in determining the least prosperous regions for which a special effort will be undertaken. Ireland will be included in these regions. The precise effect of this requirement in money terms is impossible to calculate at present but I can assure the House that it will be substantial — running into hundreds of millions of pounds by 1992.

The new basis agreed for contribution to the Community's own resource budget will save Ireland about £20 million in 1988. This is about 7 per cent of our total contribution. This saving will rise to about £25 million in 1992.

On cereals, despite considerable pressure to set a lower quota or production limit, the Council agreed that there should be no penalty up to a limit of 160 million tonnes which is about the current level of production. A new system of set aside for which there will be 50 per cent EC recoupment will be introduced. It will be available for 20 per cent of arable land for not less than five years. The land may be put into fallow grass or used for forestry or other purposes not involving the output of products in surplus.

In Irish terms, these gains are substantial. They must, however, be considered against the likely effects for this country of the elimination of internal frontiers, and the effect of the new and tighter budgetary disciplines, as they affect agriculture. Our concern must be to make sure that the central states do not gain disproportionately in comparison with those at the periphery. The aim must be that Europe and Ireland together will make substantial gains from the implementation of the plan now given the go-ahead in Brussels.

I will now go in detail into what was decided at Brussels, taking first the increase in own resources agreed there. These will now be within a global limit of 1.2 per cent of Community gross national product for payments from the Community budget and 1.3 per cent for commitments.

These resources will be provided through a significant change in the way in which member states contributions are determined.

Contributions at present are based largely on VAT, with each country last year paying 1.4 per cent of its VAT base. The problem with this system is that it gives anomalous results, since the VAT base varies quite a lot between countries as a proportion of GNP — from 42 per cent in Italy, to 62.5 per cent in Ireland and 70 per cent in Portugal. GNP is generally accepted as a good measure of prosperity and ability to pay, so that those with a high VAT share have been paying more than their fair share.

A straight switch to using GNP as the basis for contributions would have solved this problem but would have involved unacceptable increases in contributions for some countries. The compromise reached is a rather complex one which removes the major anomalies. The 1.4 per cent VAT contribution will be retained, but the base on which it will be charged will be limited to 55 per cent of GNP. That means that Ireland will not be charged 1.4 per cent of its full VAT base, since this VAT base is about 62 per cent of GNP but will be charged only on a lower notional VAT base equal to 55 per cent of GNP. Ireland will save about £20 million in the current year as a result of this change, rising to about £25 million in 1992.

In addition, the extra resources being provided to the Community over and above the 1.4 per cent VAT will be charged on the basis of GNP.

The intention is to have the necessary legal decisions adopted by the Council of Ministers by 31 May next, in order for it to be finally approved, after ratification by the national parliaments before the end of 1988, with retrospective effect from 1 January 1988.

This will give a much more equitable distribution of the burden over the years to 1992. A further improvement on the existing situation is that henceforth the correction of budgetary imbalances, primarily the British abatement, will be carried out in such a way that the amount of own resources available for Community policies will not be reduced. It is envisaged that the system will be reviewed again before 1992. There will be a further saving of £6 million to this country in regard to the British abatement.

The Brussels negotiations had major implications for Irish agriculture. The Commission proposals were designed to put a strict limit on agricultural expenditure and contain production around current levels. Clearly we could not oppose reasonable limits in the agricultural area. From the outset we were, however, determined to ensure that the Common Agricultural Policy would remain effective and continue to provide a realistic support base for Irish agriculture. In this we were successful, as the arrangements agreed demonstrate.

The critical issue was the base figure for agricultural expenditure. If this were seriously inadequate then the policy as it applied to all sectors — including the beef and milk areas — would be in jeopardy. This figure has been fixed at a level — 27.5 billion ECU — which takes reasonable account of current policy needs. Given the possibility of an increase in expenditure on agriculture in future years at a rate equivalent to up to 80 per cent of the increase in Community GNP, this should provide a secure, even if tight, base for agricultural expenditure. This is particularly the case when account is taken of the fact that special and adequate provision has been made for the disposal of old stocks and that the cost of this disposal will fall outside the guideline figure. Special provision has also been made to cover exceptional increases in agricultural expenditure due to fluctuations in the dollar or a failure on the part of other world producers to match the discipline of the Community or to meet their international obligations.

The arrangements for dealing with production increases were, in the case of most sectors, largely worked out in the Agriculture Council. That Council had, however, been unable to finalise the cereals issue and this became an important topic in our discussions at this Summit, as it had been also in Copenhagen. In the end, we reached agreement on a Community limit of 160 million tonnes — or 5 million tonnes higher than that proposed by the Commission — and on a system which provides for more limited penalties on excess production than those proposed by the Commission or included in the Copenhagen compromise. While accepting that some restrictions in this sector were inevitable and, indeed, at Community level necessary for the overall viability of the CAP as a whole, we were determined to avoid a threshold or penalty system which would marginalise Irish cereals production. We also agreed to the set aside arrangements to compensate farmers who opt out of crop production and so reduce the danger of production overruns. In the case of the level of aid likely to apply in Ireland, the Community would contribute 50 per cent of the cost of the programme.

Finally on cereals, we adopted resolutions calling on the Commission to negotiate in the GATT to secure a solution to the problem of cereal substitute imports and to propose measures to encourage the incorporation of cereals in animal feed. Thus we can reasonably look forward to action internally and externally to create a better balance between cereals and substitutes.

The measures to contain production in the other sectors went through more or less in line with the majority view of the Agriculture Council. These arrangements do not, of course, involve additional measures in the beef or milk sectors, which account for some 75 per cent of Irish production — although they do involve some reduction in the compensation for suspended milk quotas after 1988-89. They involve a settlement of the deficit problem in the sugar sector in a way that is favourable to the Irish sugar industry.

All in all the agricultural negotiations have been concluded satisfactorily from our point of view. The important thing is that the basis of the CAP has been secured and we can hope to see an end to the constant sniping against the policy from critics within and outside the Community.

Finally, on the detail of the meeting, the amount to be provided for the structural funds, by way of commitment, will be doubled by 1993 in comparison with 1987 — reaching a figure of 13 billion ECU in 1992 in comparison with 7 billion ECU in 1987. Within these totals, the contributions for the less developed regions will be doubled by 1992, with a special effort being undertaken for aid to the least prosperous regions, among which Ireland will be included.

A further very important element is, under the detailed conclusions, that the percentage rates of assistance from the funds will be differentiated in favour of the less developed regions. Within these regions, the rate could be up to 75 per cent compared with the previous maximum of 55 per cent. This means that where in general, we have hitherto had to match Community finance by national finance on the basis of £1 for £1, for the future £1 of eligible national expenditure will be matched by up to £3 from the funds. This will ensure that we can take up the moneys available, while still pursuing the Government's programme to restore order to the public finances.

I cannot conclude without paying tribute to the magnificent efforts by the German Presidency to bring the Council to such an eminently successful conclusion. Chancellor Kohl in his capacity as chairman of the meeting missed no opportunity to accommodate widely divergent views, and to press for agreement. In his efforts to reach consensus, he was ably assisted by Foreign Minister Genscher. Both leaders gave extraordinarily effective leadership and a stimulus to the meeting. At the same time, the success would not have been possible without the will of the assembled Heads of State or Government to reach agreement. It was clear to me that every Prime Minister present was willing to make a contribution, in the interests of the Community, to agreed conclusions. The work of President Delors and his colleagues from the Commission and of the Commission and Council officials in making suggestions and finding agreed formulae really showed extraordinary political skill, dedication and commitment. After 17 hours of virtually continuous meeting on the day and night of the 12 and morning of the 13 February — following a very full meeting the previous day — those around the table made it clear that they were not prepared to accept defeat and finally reached consensus on those aspects of the Delors Plan before them for decision.

It was a meeting at which the European ideal was paramount, and each participant was agreeable to yield a little so that the people of Europe might gain greatly in future years.

The Taoiseach concluded by saying that the meeting of the European Council was one at which each participant was agreeable to yield a little. Having examined very carefully the document which the Taoiseach laid before the House I am not at all convinced that each was prepared to yield a little. It seems that some yielded more than others and the Taoiseach was one of those who yielded most. The results of the Council fell a good deal short of what many of us felt entitled to expect on foot of the commitments entered into under the Single European Act. In June and December of last year the European Council failed to discharge its obligations to the people of the Community, and last week it finally arrived at an agreement which still leaves us with cause for worry.

It has been agreed that expenditure under the Community structural funds will increase by 76 per cent between now and 1992. The clear political commitment of the member states during the negotiation of the Single European Act was that expenditure would be doubled by that date. It appears that there is a further undertaking for further increases in 1993, but reading the documentation, all of the references are to appropriation commitments and not to appropriations for expenditure. In fact, it very much depends on the course taken by the individual member states as to whether the result on the ground will turn out to have brought about that increase in expenditure. The undertakings, as far as they are given, involve an undertaking to double the commitment appropriations. If the intention is to double the actual expenditure on the ground, why is the language in the final agreement couched in such evasive terms? The Taoiseach should not have accepted that kind of equivocation because it leaves a doubt as to the real nature of the commitment.

The Council also decided that agriculture expenditure in the Community should not increase at an annual rate greater than 80 per cent of the rate of growth of GDP within the Community. The expectation is that GDP will grow in nominal terms by about 5 per cent per annum over the next few years, with real growth being at around 1½ to 2½ per cent. On this basis real growth in agriculture expenditure would be between .5 per cent and 1 per cent. If nominal growth in Community GDP turns out to be 4 per cent or less, agricultural expenditure could decline in real terms, even at a time of increase in real expenditure in the overall Community budget. That augurs badly for a country as dependent on agriculture and agriculture based industry as Ireland.

We should remember that when we speak of agriculture expenditure we are speaking of matters which affect our farming community intimately on a daily basis and about matters which affect the very substantial proportion of our people who derive their living from processing and marketing agricultural products and from supplying inputs and services to agriculture and the processing industries. The decision of the European Council will make life more difficult for these people. It will also put even greater pressure on cereal growers and milk producers and on those who depend on those categories for their living. Those sectors are already feeling the pressure of greatly reduced margins and that kind of pressure on expenditure in the EAGGF will accentuate that.

I agree with the Taoiseach that the measures that have been taken in the definition of the base figure for agricultural expenditure are to be welcomed. That covers the main concerns we have in relation to that definition. We have cause to note with some satisfaction that the question of the disposal of old stocks has been set apart from the definition of the base for expenditure.

Defective as the agreement is in some respects, it has achieved one of the objectives set out by the Commission and one to which we all subscribe. It has averted what we all expected to be a major financial crisis in the financing of the Community this year in a way which has brought a welcome element of certainty to the financial arrangments of the Community for the next four years. The Commission and the German Presidency are to be congratulated on having achieved at least this objective in the face of obdurate resistance and obstruction by the Governments of some member states, and notably by the UK Government. Looking at the content of the agreement and the measures that have been put in place, I can see no reason why the European Council could not have agreed on all of this last year and spared us the displays of brinkmanship, the political tensions and the uncertainties which have been so much a feature of Community activity over the last eight months in particular.

As far as the agreement on the Community structural funds is concerned, I regret that we did not have an unequivocal doubling of the funds by 1992. On the other hand I welcome the fact that it has been agreed that the activities of these funds should be concentrated on the less well off regions of the Community, in Ireland, in Spain, in Portugal and in Greece. In the case of the European Regional Fund it has been clear ever since that fund was set up some 13 years ago that the dispersion of its resources throughout the Community seriously impeded its ability to reduce the disparities in living standards, income per head and in levels of development between the regions of the Community.

In this connection, the Commission have had an honourable record of attempts to secure a more equitable and more efficient use of resources with a view to reducing those disparities. The Council of Ministers over the years have gone some way to taking account of the need for positive action by ensuring that smaller and poorer member states benefit from fund resources to a degree that is disproportionate compared to their population or their GNP. The fact remains, however, that so far the fund has not had the effect which it was originally intended to have. I hope these measures which have now been agreed by the European Council will give it a positive impetus in that direction.

Broadly similar considerations apply in the case of the social fund and in the case of the agricultural structures fund. In each of these cases this country has a greater need than our more prosperous neighbours for assistance from these funds. In the one case our unemployment rate is higher than that of other member states and in the other, our higher dependence on agriculture and our need to expand and develop the value added to farming output by processing operations mean that development capital is of crucial importance to us. The Community have gone some way to meeting our need in each case.

The commitment to economic and social cohesion contained in the Single European Act means that there is a need to adopt an even more vigorous policy of what might be called positive discrimination in the allocation of resources from these funds in our case and in the case of the other less prosperous regions of the Community. The European Council agreement on the concentration of resources in the poorer regions is to be welcomed as a very significant step and a substantial change of direction. We must now prepare ourselves to use these extra funds to maximum advantage. Under the present agreement, which provides for a 76 per cent increase in the resources of the Structural Funds by 1992, the allocation to Ireland, it appears, stands to be doubled to a level of approximately £600 million per annum. We should take heed of the fact, emphasised by Commissioner Peter Sutherland last weekend, that allocations under these funds are not automatic. We have to produce projects which are worthy of support and which produce a return. In any case, it is in our direct and immediate interest to do so.

Allocations from these funds require a corresponding allocation from national resources, so we must make sure we get value for money both for the national contributions to qualifying projects and for the Community's contribution. This means we have to be very discriminating in our choice of projects. We should ensure that we have on stream a sufficient number of fully worked out projects to use the maximum possible allocation we can secure from these Funds, and planning should begin now. We need to have several years in advance a properly worked out plan as to how we are going to use these extra resources to increase employment and generate income further downstream growth in our economy. Again, Commissioner Sutherland pointed out last weekend that we, in common with other member states, have wasted both Community and national funds in the past and that we cannot continue on that path. Unproductive uses of national and Community funds do not simply disappoint our own people or result in the underachievement of our objective, but also put in question the solidity of our case for continued Community funding.

The EAGGF is one of the areas to which we should pay particular attention. It appears that the agreement reached last week includes a provision that the assistance available to Ireland from the Regional Fund, the Social Fund and the EAGGF could be as much as 75 per cent. The document speaks of a maximum of 75 per cent and a minimum in any case of 50 per cent. The document does not explain in what circumstances that maximum of 75 per cent would apply. If it were applied, for example, in relation to livestock headage grants it could make a very substantial difference compared to the present situation. To give only one example, it would be possible for the Government here with a constant level of national expenditure to double the combined amount of Community and national expenditure on these schemes. As they are at present a total expenditure of £1 million requires £0.5 million from national resources matched by £0.5 million from Community resources. If the Community contribution is increased to 75 per cent, a national expenditure of £0.5 million will attract Community expenditure of £1.5 million, thereby doubling the total amount involved.

The question would then arise for us as to whether we would use these extra funds to extend the coverage of the scheme by extending the disadvantaged areas or by using the extra funding on increasing the headage payments in existing areas or a combination of the two. I believe that within the kind of parameters we are talking about, if this is an area which would attract 75 per cent Community funding, there would be room to do some of each. In other words we could both increase the coverage of the schemes by extending the boundaries of the disadvantaged areas and at the same time provide for some increase in the level of headage grants paid in the designated areas. That change, if indeed it applies in relation to these schemes, could open up a substantial prospect of a real incentive to do something we very urgently need, that is reverse the decline in our cattle breeding herd and lay the foundations for future growth, an area where the very timid and halfhearted schemes the Government have been attempting to cook up for the last six or eight months, now stalled, I understand, in the financial institutions, do not even begin to address the problem. Perhaps this measure could address the problem in a significant way.

I wonder if I am reading the Taoiseach correctly when I get the impression he is saying he does not intend to pursue this prospect. Toward the end of his speech, speaking of this possibility of increasing the rate of recoupment to 75 per cent, the Taoiseach's conclusion was: "This will ensure that we can take up the moneys available, while still pursuing the Government's programme to restore order to the public finances." That objective is laudable enough in itself but I hope that does not mean the Taoiseach is indicating that none of the benefit of any extra recoupment would be passed on or used in the way I have indicated.

On the contrary.

I am glad the Taoiseach says that is not what he means. I take it, therefore, that he is agreeing with me and I look forward to seeing the measures being put forward by the Minister for Agriculture that will convince me finally beyond any shadow of doubt that that is the case. In that connection the Government have given no indication of any real concern in relation to this whole question of the disadvantaged areas, their extension and their reclassification. We in Government submitted a proposal to Brussels on this whole matter. I have seen no evidence that there has been any follow-up — I was going to say any energetic follow-up but I have seen evidence of no follow-up whatever by the present Government or the present Minister for Agriculture and Food except I understand that the Government put a revised proposal to Brussels last November. Again, the Minister for Agriculture and Food so far has not seen fit to tell anybody what it contains, whether it makes any further proposals for the designation of new areas or whether it makes any different proposals for reclassification.

All I have been able to find out is that it is rumoured that dairy cows would be entirely excluded under the revised proposal, a move I would utterly resist and against which I strongly advise the Minister. Of course, we just do not know because the Minister has refused to give details or any information in answering questions in this House on the matter. It is just not acceptable that the Government and particularly the Minister for Agriculture and Food should be fainthearted about or, as it seems, downright uninterested in this matter when the Community is showing an increased concern with the problems of its less developed regions. This, it seems to me, above any other moment should be the time when we should be pressing forward with schemes of that kind.

In the context of an increase in the availability of Guidance Fund moneys, I would like to know whether there would be any improvement in the accountability of the Commission for its decisions on the allocation of funds to these projects. No satisfactory explanation has been given, for example, as to why such a small number of our aquaculture and mariculture projects have been assisted by the Fund notwithstanding the fact that our coastal waters are widely regarded as the most suitable location in the Community for projects of this kind. We are entitled to know what the Government are doing about that, if, indeed, they are doing anything.

In the cereal sector Irish producers are already in serious difficulties. The disastrous harvesting conditions of 1985 and 1986 left cereal producers very deeply in debt when they needed several successive good harvests and firm prices to have any real prospect of trading themselves back into a position of any soundness. The harvest of 1987 was only moderately good and this winter's wet weather has delayed sowing and the waterlogged condition of the land will delay spring sowing further. That is far from an auspicious start to the year. We already have a co-responsibility levy of 3 per cent in the cereal sector. The decisions of the European Council will impose an extra levy which will be deducted at harvest and will be refunded only if production in the Community does not exceed 160 million tonnes. If production exceeds that level the levy or a portion of it will be retained. Again, if production exceeds that level, the price at the beginning of the following marketing year will be reduced by a corresponding percentage and the same procedure will apply in future marketing years. In addition to that, it has also been decided to reduce the monthly increments in intervention prices from November through until May. All of that would put downward pressure on cereal prices and make cereal growing a less and less viable proposition in our conditions.

As I have said, the combination of all these factors will make life extremely difficult for cereal producers. I sincerely hope that we will not find ourselves in the position where cereal production in this country falls so far that we will produce only a small proportion of our feed requirements because, in that case, we would be very much in the hands of the import channels that are available into this country and, as we know from past experience, our location and a number of other factors have always meant that prices tend to be higher in this country than elsewhere. A reasonable level of domestic cereal production is important to us in terms of stabilising and bringing our cereal prices into a reasonable relationship with those of the other member states competing with us in pig production, poultry production and increasingly in milk and beef production where modern feeding methods require a much higher input of cereals than has been traditional.

Taken together, all of the measures decided on by the European Council may very well resolve the Community's overall problem in relation to overproduction of some cereals but it will do so without giving any consideration whatever to the supply position in individual member states and particularly in Ireland. We are a deficit market for grain and in view of that a reform of the system, based on quotas and national quotas, would have been much more in keeping with our interests and the requirements of the markets. Indeed, it could be argued that a quota system would be far more suitable for the Community as a whole and could be a much more sensitive instrument of market management than the measures agreed by the European Council.

As I have already said, the overall decisions in relation to agriculture expenditure will inevitably put further pressure on milk producers. The super-levy system is already biting deeply into the returns of Irish dairy farmers, notwithstanding the margin of preference which Deputy Austin Deasy secured for them while he was Minister for Agriculture. The situation of milk producers with smaller quotas can only be described as dramatic. In the past few weeks I have met a succession of small dairy farmers from the midlands whose quotas, including flexi-milk, are in the region of 10,000 gallons to 15,000 gallons. They found in their December statements from their co-op that not alone were they not going to get an income for the month of December but that they actually owed the co-op money on foot of the super-levy, and, not only that, but that there was no prospect whatever that they would be in a position of having any net payments in to them from the co-op until the beginning of the next milk quota year.

The expenditure measures that have been taken offer absolutely no hope of any relief for those milk producers and they will find that pressure on them will only increase and that life will become more difficult. The Taoiseach mentioned that the European Council agreed on a reduction in the compensation for suspended milk quotas after 1988-89. I am not sure what the total effect of that is in terms of the Irish dairy sector. I do not believe it is very large but that will be another area where margins and the possibility of making an income are going to be restricted, particularly in the context of the guidelines that have now been put into operation for total agricultural spending.

The Council agreed on measures to take land out of cereal production. As I understand it, a payment of some £67 per acre will be made to cereal producers who take a proportion of their land out of production and leave it fallow and a payment of £33 per acre will be made for land taken out of cereal production and turned over to grass production. I gather further that it is expected that the national contribution to the cost of this measure will be in the region of £6 million. That again is another in a long list of areas where the Government have missed an opportunity. There are a great many possible uses for good tillage land in the production of crops or products which are not in surplus.

The European Council's decision clearly allows the use of set aside land for beef or lamb production although, as I have said, with a lower payment. They also appear to contemplate, and the Taoiseach mentioned this, its use for forestry production. There are a great many other uses that reasonable tillage land can be put to. One I would mention, in particular, is the production of malting barley. That is the sector where the Community do not have a surplus, where there is a firm market and where we can produce a good quality product to be sold in other Community countries, particularly in Germany.

I know the Minister for Agriculture and Food was pressed to include such an alternative use of land taken out of feed barley, feed wheat or milling wheat production but I cannot see any evidence of any effort on his part to press this issue. Much of that land could be suitable for the production of soft fruit where there is a potential for developing here a market which would substitute for imports into the Community from third countries. Horticultural production, to mix the metaphor, would be another fruitful area for consideration. Outlets could be developed there which would not in any way create a burden on the Community's financial resources. The production of ornamental shrubbery is another possible area which could be considered. So far as I can see, the Government have failed utterly to get across any of these potential uses to our Community partners. Of course, it is not too late. Grass and forestry have been mentioned——

We will take them all on board. They will be in the regulations.

The point I want to make is that these matters must be pursued properly and energetically in the farm price discussions and when the Council come to making the detailed regulations to put these decisions into effect.

What I have said about the set aside programme recognises the fact that the European Council have agreed on the measure but I think I should point out that this measure in itself creates the danger of a renationalisation of agricultural policy. There is a range of rates of payment and a scale of Community financing of these payments with the rate of Community financing declining as the rate of payment increases. This is an area where the more prosperous member states can have an advantage if they wish to use it. There are clear dangers in this from the point of view of those of us who favour truly common prices.

One of the major disappointments of this European Council meeting is the fact that it appears to have made no progress whatever in taking the most obvious and practical step towards strengthening the European monetary system, that is, the integration of sterling into that system. There is no indication of any systematic pressure on the UK Government to take this step. I believe our Government should be leading a movement in this direction since Ireland is the country which suffers most inconvenience from the fact that sterling is not part of the EMS. I fully understand that the Fianna Fáil Party in Government always seem to have difficulty in handling Anglo-Irish relations but this matter is too important to allow sensible policies to be impeded by ancient prejudices and complexes. It is a time for determined action and the Government should now be lining up allies among the member states in favour of a measure which would be, even in terms of the national interest of the UK, a very sensible step.

I was appalled to find in the documents which the Taoiseach gave us a reference to the continuation of these compensation arrangements for the UK. I know that arrangement goes back quite some time and that the arrangement that was in place up to the last European Council meeting was negotiated at Fontainebleau first by the Minister for Finance and then by the Heads of State and Government.

During that whole discussion we made it very clear, that is, those in my party directly involved in the negotiations, that we did not believe there was any objective justification whatever for this kind of refund or rebate. I am disappointed to see that after quite an amount of effort, the other member states have still allowed themselves to be seduced by this particular idea. There is no foundation whatever for it. It is based on the proposition that the only measure of benefit from membership of the European Communities is what goes in through the budget and comes out on the other side of the budgetary process. There are many in the EC who must know that that is only part of the picture and for some member states indeed only a very small part of it.

We must look at what the conclusions of that European Council mean for the future. Although, as I have said, they show a number of deficiencies, they nevertheless put the Community firmly on the path set out in the Single European Act. We must prepare ourselves for what that involves. In this connection Commissioner Sutherland today has suggested the creation of what he calls "an action committee for 1992" that would be composed of members of the Oireachtas, representatives of the trade union movement, of the farming and business communities and so on, to put together the wisdom and initiative in all of those groups to take all the various steps and to prepare ourselves for the day we will have a truly common market without boundaries in the European Communities. I commend that initiative because it would be one of the ways in which we could use the talents available in our society to ensure that we get the benefits and make the contribution to the Community which the Single European Act has opened up.

I congratulate the Taoiseach and the Minister for Agriculture and Food on the part they played in the successful outcome overall to the EC Summit last week. The agreement reached was the best that could have been achieved by any Government in the circumstances. There were times over the past two days when it looked as if once again the EC political Leaders did not have the will to overcome their national interests and look towards the greater Europe promised and envisaged by the Single European Act. For most of the Summit it appeared the Leaders were bogged down in the minutiae of grain tonnage rather than moving one iota towards the implementation of the commitment to economic and social cohesion in Europe in five years time.

Thankfully a major disaster was averted at the eleventh hour. By and large there were several positive features for this country agreed at the Summit. The new funding arrangements have been guaranteed up to 1992. Agriculture has been reformed within a maintained Common Agricultural Policy which must go a long way towards giving security to farmers. Finally, Ireland will undoubtedly benefit from the doubling of economic aid to poorer countries through the Structural Funds.

It is unfortunate that at this Summit, as with all others, the overwhelmingly technical nature of the farming negotiations normally take precedence over greater political developments within the EC and between the EC and the world at large. We rarely have an opportunity in this House to debate issues other than the day to day issues of particular packages and in this respect we miss out on not having a Foreign Affairs committee. In recent times there has been a major change in the thinking of many countries within Western Europe which have an association with the European Communities, countries such as Austria, Switzerland and Sweden which have negotiated trade arrangements with the EC. Some of these countries operate under the umbrella of EFTA. They are now reappraising their position, vis-á-vis the EC and as the Single European Act is being implemented. When the EFTA countries met in December they urged the creation of what they called “a single European economic space” which would afford them many of the advantages of a common market without the responsibilities of agriculture. They are, individually and collectively, reappraising their attitude to the EC. In my view there is a real possibility that Norway will reconsider its decision to enter the EC and may lodge an application shortly. Furthermore and notwithstanding its treaty obligations on neutrality, Austria is reported to be considering applying for membership in the early nineties.

The new relationship being considered by some of these EFTA countries pales into insignificance by comparison with the reappraisal which West Germany seems to be making with its Eastern partners. There appears to be a growing orientation within that country towards increased economic association with the members of COMICON, especially with its near neighbour, East Germany. This growing West German enthusiasm to look east can be explained by the greater political rapprochement between the two Germanies and the greater liberalisation of the Russian economy by Mr. Gorbachev. There are reports that the COMICON countries are on the point of completing negotiations to have diplomatic relations with the EC for the first time. The big fear for this country and for the EC would be that West Germany's enthusiasm to develop its eastern contacts and markets would lessen its commitment as the biggest and wealthiest partner within the EC. In my view it is extremely important that this trend would not lead to a change in the balance of power within the EC. Furthermore I recommend that the Government involve themselves in political contacts within the wider European context so that we should not lose out in any new alignments.

We should also begin at this stage to look at the implications of the internal commitments we have undertaken to implement the Single European Act. With four budgets to go until 1992, what preparations are the Government making to equalise the VAT rates within the EC. It appears there is a proposal to have two standard rates of VAT in each country, (1) from 4 per cent to 9 per cent and (2) from 14 per cent to 19 per cent. This proposal will have major revenue repercussions in Ireland. We, together with Denmark and France, are the EC countries most dependent on indirect taxation. When this revenue dependency is considered in conjunction with Ireland's excessively high income tax rate and excise duties, the Irish are in effect being retaxed over and over again. It must be recognised that the Department of Finance will not of their own accord rectify our tax structure under the Single European Act for 1992. I ask whether the Government have begun to consider how they will equalise our VAT rates over the next four budgets? I do not think they have begun to consider this. I recommend also that the Government begin addressing this problem if we are to be in a position to benefit from a single European market in less than five years.

There are other matters arising from the Single European Act which the Government should begin to address in a co-ordinated fashion at this stage, for example, the opening up of the banking industry in Ireland and the effect that would have. This would open up EMS funds and interest rates to the business community here. However, I wonder if this country has begun to do anything to attract foreign banks here in five years time?

With the prospect of a cohesive market of 320 million people in Europe the time has also come for this country to reassess its attitude to foreign languages if our young people and industrialists are to maximise the benefits in 1992. At present we spend £160 million on teaching the Irish language and £150 million on teaching English. This compares with £40 million a year being spent on French, £3 million on German and £2 million on all the other languages. How can we expect to sell on German, Spanish and other markets in five years time and to get the benefits of the Single European Act if we do not spend money now on teaching the languages of these markets to our business people?

Finally I would like to deal with the next European Summit at Hanover when the Taoiseach, we are told, is due to nominate Ireland's next Commissioner. I hope that above all else we will have learned the lessons of the past few years. I hope, that unlike past experience, the Taoiseach will nominate our new Commissioner in plenty of time so that he can negotiate a good portfolio and pursue the real possibility of securing the Presidency of the Commission for Ireland, a smaller country, in the next couple of years.

Any offers?

He or she?

The previous Deputy for Dublin West.

Would you like to go back yourself?

On behalf of the Labour Party I welcome the outcome of the resumed summit in Brussels but I wish to put on the record our concern at the way the two main parties, the Government party and Fine Gael, through both the Taoiseach and the Opposition Leader, appear to have put on the record of the House this afternoon an overriding concern with the agricultural sector in our society in terms of its benefiting from this.

And food processing.

That the Delors package, according to Commissioner Sutherland's assessment and that of the other Commissioners, has, by and large been achieved as the outcome of the summit is something which we must welcome. I should like to put on record the concern of my party at the total lack of preparedness of this Government to avail of the benefits of the increased and enlarged structural funds. It is simply no use for any Taoiseach to announce in this House, as if it were a type of personal achievement, that the structural funds are to be enlarged to the tune of 100 per cent when we are no longer in a position to make maximum use of what that means. The reality now is that, for the first time in an integrated and a much better policed way than previously was the case, access to these enlarged funds will be given only to those countries that can provide and table detailed integrated programmes as distinct from proposals, which was the experience with regard to the Social Fund and, to a much greater extent, the Regional Fund.

This Government, tragically, have no proposals for local government reform. They have, tragically, no proposals for any kind of regional structures which by definition will be the mechanism which will enable people to qualify for and benefit from regional and structural aid directly and immediately. While there has been a debate over the past two years, since the tabling of the Delors package by the Commission with the Council, I think in 1985, no work of any substance that I am aware of has been done by the Government in the area of gearing up to benefit from the integrated regional aid which we can only get under the new enlargement of the structural funds. I would invite the Taoiseach at a suitable opportunity to correct my information if it is wrong.

I speak with some experience, having been involved with the Social Fund during my period in office, when it was of critical importance to large sectors of industry in our society. It is quite clear from the Taoiseach's comments and those of the Leader of the Opposition, Deputy Dukes, that excessive dependency is now being focused once again on the agricultural sector. I remind the House that 16 per cent of the labour force is involved in agriculture and by the time 1992 comes probably less than 10 per cent of the labour force will be directly involved in agriculture. When we joined the Community in 1973, 26 per cent of the labour force was directly involved in agriculture and the norm of the European level is somewhere of the order of between 6 per cent and 9 per cent. We need to look critically at how the benefits of the enlarged market can be applied to resolve the problem of unemployment.

I know the Taoiseach felt the necessity to be brief but tragically the statement makes no reference to the fact that there are 16 million unemployed Europeans within the Community of 320 million. That is twice the total number of active farmers in the entire Community and no mention has been made of them in this or any of the statements made so far in this House. Unless the enlargement of the structural funds which will in part be paid for by the European taxpayer can be made relevant to those who are unemployed in our society — many will be coming out of agriculture because of the change in structure — we cannot be happy with the outcome of membership of the Common Market as it was known when we joined it, the European Community as we now refer to it.

I shall give a more specific illustration. There will be many claims — indeed, I already heard the President of the IFA, with the outstretched láimh looking for extra assistance for farmers on Saturday afternoon last when the announcement was made — for the increasing of disadvantaged areas, of headage payments in this or that area. I would remind this House of a statistic that I came across in recent research. Just under 10 per cent of total unemployment in population terms in this State, occupies less than 0.4 per cent of the land mass of the State, concentrated in pockets or ghettos of unemployment of unprecedented proportions. I am referring to the greater Dublin area between Tallaght and Clondalkin. Unless we can provide an integrated programme through the structural funds to address many of the structural difficulties of those people, the report that the Taoiseach has given to the House and the possible benefit to the Community at large will have no relevance to these people.

We within the Labour Party welcome the fact that some degree of logic has been introduced into the Common Agricultural Policy without destroying its base, which is a very good achievement after much difficult negotiation. I recognise and pay tribute, not so much to the summit but to the achievement because I think that the Taoiseach would agree that the bulk of the work was done in previous councils. Nevertheless, finally we have got some degree of rationality built into the CAP. We have finally dealt with the problem of own resources in a manner which is much more equitable because of its references to GDP and GNP rather than the VAT base.

There are many positive things which have come out of this summit. The Taoiseach is to be congratulated, as are the other Prime Ministers and Heads of State who were involved in this summit. I urge, on behalf of the 16 million unemployed Europeans, which figure is likely to go closer to 20 million by the year in which the internal market is completed, that unless we make a reality out of the provisions for cohesion which were built into the Single European Market, we will not be able to give any degree of comfort to the Irish voters in relation to the outcome of this summit.

The last point I wish to make is specifically in relation to availing of the benefits of the structural funds in so far as this can affect and improve the situation for people living in the greater Dublin area, or any urban area. I repeat that what we need is a structured regional approach to availing of these funds. I listened to the briefing which Commissioner Sutherland gave to the Joint Committee on the Secondary Legislation of the EC meeting this afternoon that some kind of coherent action programme should be initiated on a collective basis involving the social partners and the Oireachtas on this issue. Commissioner Sutherland spoke in terms of the forthcoming internal market which is, as Deputy Kennedy has mentioned, four budgets away and that is a very short timetable for those involved in this House. He said that at present, in a survey published in the British Independent newspaper in terms of those business communities and people within the business community who are aware of the completion of the internal market and its implications for their businesses, 78 per cent of French businesses were aware of the market, 57 per cent Spanish, 18 per cent West German, 5 per cent UK and, allowing for some degree of extrapolation which would be reasonable, it is probably true to say that less than 10 per cent of Irish businesses are aware of the full implications of the completion of the internal market.

Already we have been informed that of the 300 barriers identified by the Commission in terms of directives or areas that need harmonisation, 70 have been completed, 124 are now agreed in principle, subject to approval, and 100 remain outstanding. Of these 100, many are of a non-contentious nature, or of a size or implication that is not significant. Despite many of the comments that have been made in different journals and by different people, the fact that the Government have now succeeded in getting agreement at the Brussels summit will bring us very close to the deadline of 1992, if not into 1993 or 1994, but very close in terms of how this economy will reap the full benefit of the advantages of the completed market. Unless there is an integrated programme approach prepared for now and detailed in terms of an integrated programme for Dublin, for example, and a road structure that enables us to transport the kinds of goods and services that we are capable of producing in this economy, we shall miss the boat.

I urge the Taoiseach, his Government and the Minister for Industry, and Commerce, who is present, not to be mesmerised by the obsession of so many people in this House with the immediate benefits to the agricultural community that this measure can bring about, but to recognise that simply announcing a doubling of the structural funds of itself will be of no value unless we are in a position to respond. Quite frankly, on the evidence I have obtained from Government sources to date, I do not believe we are sufficiently prepared to put in formal applications of a kind that will maximise, to the tune of 75 per cent, access to these funds to which the Taoiseach referred.

In that regard there should be some enlarged role for the committee on secondary legislation and for the Members of the Oireachtas in this area where there is a consensus. It is something that the Government could usefully consider. We have enough issues of domestic concern on which we are divided and on which we argue with each other, but here we have an agreement within the context of an enlarged Community. Somewhere in the middle of the next decade we will, without doubt, run the risk of missing the boat if we do not respond now to something that has taken two and a half years to put in place.

Before referring specifically to the outcome of the talks in Brussels in regard to the Regional and Social Funds, with which I propose to deal, I propose to comment briefly on the remarks made by the Taoiseach with regard to his talks with the British Prime Minister, Margaret Thatcher. It is incomprehensible that at this point in time the British Prime Minister would not be aware of the very deep concern and anger that is felt by the people here, North and South, with regard to events recently concerning both the Birmingham Six and the Stalker-Sampson affair.

Beidh deis eile chun cur síos ar an méid sin.

Níl ach cúpla focal le rá agam. Creidim gur ábhar tábhachtach é agus nílim chun aon rud a rá a chuirfeadh isteach ar na ráitisí atá ar siúl idir na hAirí agus Mr. King i láthair na huaire. What I particularly want to say is that despite the anger and the incomprehension that exists in relation to the attitude of the British Government at the time in relation to the Birmingham Six and in relation to the Stalker Sampson Affair and the matters which have piled on top of that in recent days, it should go from this House that the question of scaling back in any way on security co-operation between the security forces both in Northern Ireland and in the Republic of Ireland should not arise. That is a matter which should be beyond any question of negotiation. It is a matter which concerns the life and limb of citizens, North and South, and should not be a matter for negotiation or scaling back.

In relation to the EC Summit itself, what I have to say is that The Workers' Party have consistently argued that the Regional and Social Funds are potentially the most important instruments in the economic development of this State in terms of our membership of the EC. The moneys allocated to these funds have never been adequate to meet the demands made on them, although it has to be said that Ireland has received a higher than average positive response to applications for funding, especially from the Social Fund. The Regional Development Fund in particular could be of major economic benefit to Ireland because of the freedom to put such funds into production areas of our economy, such as the food processing industry, technology etc.

The point raised by Deputy Quinn with regard to the structures that are needed in order to ensure that these funds are used productively and are not frittered away is an important one. The question of a foreign affairs committee has been raised yet again with regard to development in the EC and the need for a forum where a continuous debate could take place with regard to foreign affairs matters including the EC. However, a foreign affairs committee on its own would not be adequate to deal with the kind of discussions that are needed with regard to developments that are to take place in the EC over the next three to four years. So I will watch with interest the proposals, if any, that come from Government with regard to how the structures will be put in place to make the best use of the increased funding that has been won from the recent summit.

Having said that, there can be no doubt that the outcome of last week's EC summit, particularly the decision on increased social and regional funding for Ireland, was disappointing. Any attempt by the Taoiseach to suggest otherwise is simply an effort to put a gloss on the outcome. The proposed increases in the Social and Regional Funds for Ireland are quite inadequate and considerably below the level of funding that was promised would automatically flow from this country's ratification of the Single European Act. I find it extraordinary that the Taoiseach should have consented to this shortchanging of Ireland by the wealthier members of the EC. The Workers' Party have always believed that a doubling at least of structural funds was necessary to protect this country from the full impact of the completion of the internal market by 1992. We have argued that, given the failure of Irish capitalism and successive Irish Governments to develop our economy and industrial infrastructure, particular measures were needed now to ensure that Ireland did not fall even further behind the wealthier countries of the EC. This need has been recognised by many other people. Only last week the Governor of the Central Bank, Mr. Maurice Doyle, speaking in Strasbourg and quoted in The Irish Times of 11 February, stressed the need for the Community to devote more resources to the poorer member states and warning that Ireland did not join the EC to become what he called the Appalachia of western Europe. He said that economic and monetary integration would not necessarily improve the lot of the poorer countries and Irish concern about integration represented a real fear that the achievement of economic and monetary union could actually result in the further impoverishment of the less developed countries on the periphery of the Community.

It was for these very reasons that we argued in the debate on the Single European Act that prior agreement on the extent of the increase in funding for the Social and Regional Funds should have been a pre-condition of ratification of that Single European Act.

During the referendum campaign on the Single European Act we were assured by supporters of the Single European Act that the total allocation for the Community's Regional and Social Funds would be doubled and that Ireland would be entitled to the same percentage of the enlarged sum as it had received in previous years of the smaller sum. This was the proposal made by the President of the EC Commission, Mr. Delors last year, but since then consistent efforts have been made by the wealthier EC countries to water down these proposals. If the commitment contained in the Delors proposals had been honoured, Ireland would have stood to get more than £860 million. But it appears that the Taoiseach has settled for something less than £600 million. It is significant that in his speech to the House here today he has not even attempted to put a figure on what he has accepted. Indeed it also appears that even this decision is subject to agreement being reached at the next EC summit on agricultural issues. Of course it is by no means certain that agreement will be secured on these issues. It is hard to believe that at a time when we need more financial assistance than ever the Taoiseach should have settled for such a reduction on what we had been promised, and that he should now be trying to pass off this failure as a great victory for this country. Indeed, on the basis of the figures I have quoted, we are losing something like 30 per cent of the money promised both in terms of the Delors Plan and the promises made in this House by the supporters of the Single European Act when it was being debated here.

It can now be seen that the advice we gave in the debate on the Single European Act that a firm, unambiguous commitment on the extent of the increases in structural funding should have been a pre-condition for ratification of the Single European Act was sound, political sense. Supporters of the Act told the public and this Dáil that this was a needless safeguard, but the Brussels summit has told us that the size of the Regional and Social Funds is regarded simply as a matter of trading and bargaining between the wealthier powers in the EC. The outcome on that basis has been a deplorable failure of this Government.

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