Ceisteanna-Questions. Oral Answers. - Living Standards.

Michael Noonan

Question:

19 Mr. Noonan (Limerick East) asked the Minister for Finance if, in view of the fact that living standards in Ireland are approximately one-third below the average EC level, he will outline the proposals, if any, he has put to the European Commission or his EC colleagues to ensure a convergence of living standards in the context of European Economic and Monetary Union.

As the Deputy is aware, there is to be a doubling of the EC Structural Funds for the less-developed regions of the Community over the period to 1993. Ireland has already been allocated over £2.8 billion and, with further allocations to come from Community initiatives, we are likely to get about £3 billion in total. Discussions on economic and monetary union are still at a very preliminary stage. The need for regional policies to assist the process of convergence is recognised and Ireland will continue to press for special attention to the problems of the less developed and more peripheral regions of the Community in the context of economic and monetary union.

Within the framework of Community dialogue and discussion, we have continued to emphasise that despite the greater convergence of economic policies which is already taking place, problems are still likely to arise from the fact that different countries are at different stages of development. Greater integration will benefit the Community generally but we cannot be sure that these benefits will be evenly distributed. The Delors report itself acknowledged that if sufficient consideration were not given to regional imbalances, the economic union would be faced with grave economic and political risks. This analysis was also endorsed in the report prepared by the National Economic and Social Council.

Both the Commission and my EC colleagues are fully aware of Ireland's concerns in this area. The Commission will be publishing a detailed study on EMU later this year. I would hope that this study will pay particular attention to the regional distribution of the costs and benefits of EMU.

(Limerick East): Can I take it from the Minister's reply he accepts that our living standards are, on average, one-third below those of the EC and that he has put no proposals whatsoever to the Commission or to his EC colleagues to close this gap?

The Deputy should not make any such assumption as it is not correct and I have not said so.

(Limerick East): As the Minister did not outline any proposals I can only assume that he did not put any. The Minister referred to Structural Funds but, apart from the fact that Structural Funds to a large extent are being wasted on current expenditure, will the Minister give an estimate of how much of this gap in living standards he expects these funds to close between now and 1993?

Within the various Community fora it has been made clear to our colleagues that EMU must be considered in its totality, not just in terms of the undoubted benefits which are likely to accrue, but also in terms of the possible costs. We have argued that it is vitally important, for the stability of the union, that net benefits should be distributed in a manner which is consistent with the Community's objective of greater economic and social cohesion. This objective is, of course, enshrined in Article 130 of the Single European Act. We have also taken the view that our approach for now should be to firmly articulate our concerns within the framework of Community discussion and dialogue and in that way we can present our arguments in favour of measures to promote cohesion in the context of the overall development of all Community policies.

We would be pleased if EMU were to be as beneficial for all regions as some would contend. However, we will be working to ensure that appropriate measures are put in place to provide support should this favourable scenario fail to manifest itself. The Deputy should be aware that, at the informal ECOFIN meeting held at Ashford Castle in the last days of March, the Commission published a document on economic and monetary union and on the economic rationale and design of the system. We were unhappy with that section of the paper which dealt with the costs and benefits of the EMU and expressed our unhappiness in very forceful terms. We urged the Commission to pay greater attention to the regional distribution of the costs and benefits of EMU in the detailed study which they will carry out later this year.

Nobody could predict at any stage what will be the full impact of the Structural Funds. We are moving from a position of £361 million in 1988, to £462 million in 1989, to £557 million in 1990, representing an increase in nominal terms of 54 per cent. The Commission will be carrying out a study of what impact those Structural Funds will have, which study will be available by the end of 1990, when it will become clearer how much the gap is being narrowed by the Structural Funds which was the primary objective when introduced.

(Limerick East): Would the Minister agree that it is clear from his reply that he is still proceeding on the basis of reacting to proposals on the part of other people — principally of the part of the Commission — while putting forward none himself on behalf of this country? Furthermore, would he not agree there is a danger that the relative positions, so far as the living standards of ourselves and our partners in the EC are concerned, will become frozen as soon as economic and monetary union is achieved?

The Deputy should listen. As I said, the Structural Funds represent the first set of funds put in place in an endeavour to bring about the convergence we all wish to see happen and desire. When we ascertain what will be their impact, then we will be looking beyond the Structural Funds, and this will take us as far as 1993. Within the context of EMU we have already suggested that the solution may lie — depending on what the then gap will be — in expanding the Community budget and providing additional resources in that regard. But it would be totally imprudent to go any further than that at this stage until the Commission has established to everybody's satisfaction what will be the impact of the present Structural Funds.

(Limerick East): A Ceann Comhairle——

I am sorry, Deputy Noonan. We must now proceed to another question. We cannot dwell unduly long on any one question which would clearly be to the disadvantage of the remaining questions which, hopefully, will be disposed of.