Vol. 479 No. 3
6 Mr. Dempsey asked the Minister for the Environment the implications, if any, for Ireland of the recent announcement of a reduction from 85 per cent to 80 per cent in funding for water schemes under the EU Cohesion Funds. [13115/97]
European Council Regulation (EC) No. 1164/94 establishing the Cohesion Fund states that "the rate of Community assistance granted by the Fund shall be 80% to 85% of public or equivalent expenditure". The Commissioner for Regional Affairs wrote to the Minister for Finance on 21 March stating that the Commission wished to reduce the aid rate for environment projects that have not yet been approved for Cohesion Funding from 85 per cent to 80 per cent. This was stated by the Commissioner to have arisen mainly from the substantial over-supply of environment projects for Cohesion Funding and a concern that the abolition of domestic water charges may be contrary to "the polluter pays" principle. The Minister for Finance has written to the Commissioner requesting that the Commission review the matter in light of a fuller consideration of the new arrangements for funding local government.
A marginal reduction in the aid rate for projects not yet approved would not reduce the overall level of funding available to Ireland for environment projects. The overall level of funding for environment projects is set to increase significantly for the remaining years of the Cohesion Fund; a reduced aid rate would simply mean that the total aid available would have to be applied to a larger number of projects. Deputies will be delighted to know that more projects will be approved.
May I take it that the European Commission has not adopted a final and definitive position on the matter and that it is still open to negotiation? Will the Minister confirm that the State will have to spend an extra £60 million to draw down the existing level of EU funding, £800 million approximately, for environment projects because of the proposed change?
It all depends on the way one looks at it. In essence, there are three mechanisms from which to fund sanitary services and environment projects — the Cohesion Fund, Structural Funds and own resources. The bulk of projects are funded from the Cohesion Fund. The overall budget for the Cohesion Fund, in 1992 figures, is 15,150 million ECU or £12,120 million at an exchange rate of one ECU = 80p. Ireland's share is approximately 9 per cent or approximately £1.1 billion which is distributed in the ratio of 50:50 between environment and transport projects. There is a move, however, to alter the ratio to 40:60 in favour of environment projects. To date, 12 water projects have been approved at a cost of more than £160 million. A further 35 waste water projects have also been approved at a cost of £290 million.
This year we are spending approximately £40 million of our own resources to close the gap in funding of 20 per cent. We are drawing down every available penny which means that more projects will be approved. To comply with our own environmental standards and waste water directives all necessary projects will have to be approved between now and 2005 and will be funded through a combination of own resources, Cohesion Funds and Structural Funds. I am heartened that so many projects have been advanced during the past two years. In the context of the mid-term review and in discussions on the next round of Cohesion Funds I hope to be in a position to make a strong case in seeking the maximum amount for Ireland for infrastructural developments.
As the Minister said, it all depends on the way one looks at it. There is no doubt that Irish Governments are well able to draw down the maximum amount for this country. Is it not the case that to draw down the existing level of £800 million at an aid rate of 85 per cent, only £941 million had to be expended? Because of the proposed change, under which the aid rate will be 80 per cent, £1 billion will have to be expended. This means the taxpayer will have to find an extra £60 million. The Minister may have difficulty in following what I am saying but I am using round figures.
I am sure the figures are not right.
I assure him that he has cost the taxpayer £60 million.
The Deputy is wrong and he knows it. We are spending a huge sum of money. There are three components — Cohesion Funds, Structural Funds and own resources.
That is what I am interested in.
We can draw down the same amount by spending £40 million this year. Every project does not qualify for Cohesion Funding. It is simply a matter of readjusting the percentages. We will spend the same amount on more projects and of a different type. The amount we are spending is sufficient to draw down the maximum EU funding available, even at the reduced rate which applies to new projects only. It is not that complicated and I know the Deputy understands what I am saying.
I do not think the Minister does.
It is very complicated. Was it Disraeli who said there are three kinds of lies — lies, damn lies and statistics? Even an ordinary citizen like myself can understand that if we receive less from Europe——
We are not receiving less, that is a lie.
——the taxpayer will have to pay more to close the gap following the reduction in the aid rate from 85 per cent to 80 per cent. By my calculations, the taxpayer will have to find an extra £60 million. Will the Minister accept there will be a substantial increase in the running costs of these plants when they come on stream which will have to be carried fully by either the taxpayer or the commercial ratepayer? Will the Minister agree that any cavalier action taken by the Government which puts at risk drawing down maximum funding from Europe will be paid for dearly by the taxpayer?
The Deputy began her question by saying there are lies, damn lies and statistics and then went on to prove the point. I will repeat what I said for those who do not hear or refuse to listen.
The total Cohesion Funding available is £1.1 billion and every penny of this will be drawn down and used for good projects. The Deputy is being deliberately wrong when she says we will lose money. She knows that every penny of Cohesion Funding will be drawn down. Nobody is suggesting that this will not be the case.
Eighty per cent, not 85 per cent, will be drawn down.
One hundred per cent of the money available from Europe will be drawn down. They are not that dense that they do not understand the point.
I know £60 million when I see it.
Let us hear the Minister's reply.
The Deputy knows full well that every penny of the £1.1 billion will be drawn down.
I intend arguing trenchantly in favour of "the polluter pays" principle in relation to the regime which was in place and of which the Deputy is so fond, that is, charging for water by way of a water tax which was in no way related to the concept of "the polluter pays" principle as understood in Europe.
It was introduced by the leader of the Minister's party.
The Deputy's party wanted to get rid of it but then changed its mind. It now wants to install meters, while Deputy Molloy wants to pay £23 million.
We called it Spring water.
When the Deputy knocks on doors in Cork North-Central she will be asked why she wants to reintroduce this charge. If I were the Deputy I would focus my attention on that matter rather than on trying to score points in the House.
The Government made the right decision to abolish this tax which was not environmentally or socially progressive. I am confident that the Government will be returned to office but if that does not happen I predict that no other Government will reintroduce this tax, despite the arguments put forward by the Progressive Democrats Party. If that party tries to reintroduce this unpopular and socially and environmentally regressive tax the electorate will give it a very clear message.
The Labour Party introduced the tax.
The Labour Party and this Government abolished it.
It is clear that every available penny of Cohesion Funding will be drawn down so that there will be no loss to the Exchequer. To put it another way, if a person who has to build 100 houses receives a fixed grant it is irrelevant how the money is distributed as long as the houses are built. We have to build a sewage treatment facility and install a water supply for every urban centre. However, the building blocks are constantly moving, so to speak. Those involved in schemes bid for Cohesion Funding and if they are rejected they are considered for regional funding, Structural Funding and finally domestic funding. This happens all the time.
Every penny of Cohesion Funding will be drawn down. The maximum investment is taking place. I have announced an investment in water projects of £150 million which is by far the largest investment in water and sewerage schemes. This investment must continue in future if we want to put in place the necessary infrastructure which will enable the country to thrive into the next century.
It is very important not to regard every view expressed by an official of the European Commission or a Commissioner as holy writ so that we argue our case. Ministers of all other nations fight their corner at Council. I am proud to have done this on behalf of Ireland and will be proud to do so again. It would be a mistake not to fight Ireland's case or defend our good interests. However, this seems to be the attitude adopted by the Progressive Democrats in this debate.
The Minister is beginning to sound like Brian Boru.
There has been much debate about water charges and local government financing. I agree that local government financing has to be put on a sound footing if we want to develop it. The abolition of water charges is contrary to "the polluter pays" principle enshrined in the Maastricht Treaty. How can the Minister say that charging for water is environmentally unfriendly? Maybe I misunderstood him.
The Deputy misunderstood me as I made it clear that the system of charges in place, water taxes, was not related to the cost of providing water or, more importantly, to the volume of consumption. This flat rate tax was totally unrelated to consumption and gave no incentive to people to save water. An environmentally positive water charge is designed to have an effect on the level of consumption. If there is a flat rate charge and unlimited access to water people will make full advantage of the water supply without any regard to the volume consumed.
We monitor, meter and charge the commercial sector for water. This remains part of the environmentally positive approach to water consumption. Late last year I looked at the prospect of metering domestic consumers and asked KPMG to examine the matter. It told me it would cost £200 million to install meters and £8 million per year to administer the system. It concluded that such a system would not be economically viable and that it would be better to invest the £200 million in upgrading the present system. The Government decided not to go down the road of installing meters. All objective people will agree that this was the correct environmental, social and economic course of action.
I do not agree with the Minister who proposes to fund local government on the back of the greatest polluter in urban areas, the private motor car.
Should we not tax cars?
I am not saying they should not be taxed but we are trying to fund local government——
It is a green tax.
Let us hear the question.
The most important issue for those in local government is the problems of pollution and traffic caused by motor cars. Local government will be funded from the source of greatest harm. This is a contradiction.
It is not.
At the same time the Government is abolishing water charges. I do not see the logic in this proposal which is contrary to "the polluter pays" principle.
The logic of what we are doing is lost on the Deputy. The ESRI report said that a tax on motor vehicles is a green tax.
We will have to hope that there are more cars.
No. Why should this system not be used to fund local government rather than going into the central Exchequer?
There will be buoyancy in motor taxation.
There will be more cars.
And more pollution.
Please, Deputies.
It is clear that the transfer of motor tax income from the Exchequer to local government is a popular and good decision. We have one of the lowest rates of motor car ownership per capita in Europe and there will be an increase in the number of cars. Deputy Eoin Ryan is lucky to live in Dublin as people in many other areas do not have access to public transport and a car is a necessity for them.
They could take the train.
That balance has to be struck. Does the Deputy want to tax the car out of existence?
We are trying to reduce the number of cars.
The Deputy should not speak from a seated position. He put his question to the Minister, let us now have the answer.
Biting the hand that feeds it.
Not at all. The reality is that we will have increased car ownership as this country becomes more affluent as a result of good government and the change in economic conditions. We will become the top, as opposed to the lower, earners in the European Union. This Government will continue to provide the economic boom to ensure that economic performance continues. All the statistical profiles indicate that, as that happens, car ownership will increase. There should be a tax on cars and local authorities should benefit from that revenue to develop their own communities. This whole reform package has been welcomed by all the regional conferences to which I brought this message around the country.
Get them off the hook.
Not in the long term.
To get back to the original point of the question, the Minister has now indicated that Cohesion Funds amount to £1.1 billion in total. I did my sums in relation to that and I agree with the Minister not one penny of that funding will be lost. We will still get £1,100 million, but if we were getting subvention from Europe at 85 per cent——
In other words, divided between the environment and transport.
——irrespective of the way it is divided, we would draw down £1,100 million on the basis of a spend of £1,294 million. The position now is that to draw down that £1,100 million, we have to spend £1.375 million. In reality, the Minister has cost this country £81 million, not £60 million.
We had the lies, damn lies and statistics. We are now confusing the transport section of the Cohesion Funding, which is half of it, and applying the same across that rate also. The Deputy can fiddle all he likes with the figures, but they are quite clear. We will draw down every penny. This year we will spend sufficient of our own resources——
I am talking about the whole package.
The Deputy should listen to me.
The Minister is not listening to me.
We will spend sufficient of our own resources to draw down every available penny, and more besides. Will it be Fianna Fáil policy — and perhaps this is part of the PD pressure on funding — that we should simply draw down EU money, provide the 15 per cent or 20 per cent top-up and not spend any of our own resources on projects? Is that what we will witness from Fianna Fáil under PD pressure? The minimum of infrastructural investment in water and sewerage schemes will be carried out if they ever get back to power because that has not been the practice under any recent regime.
We will mop up the mess the Minister leaves us.
I spent two years putting right what Deputy Quill's party did in Government with Fianna Fáil. The Deputy has a brass neck to make comments like that. Any Government that wants to provide the infrastructure Ireland will need to continue to thrive — water supply, roads and sewage disposal systems — will have to put in a considerable portion of taxpayers' money to match the maximum money that will be available from the Cohesion Fund.
That is what concerns us.
If anybody wants to pretend they can reduce that without having an impact on our development infrastructure, they are perpetrating a con job on the people but they will see through it.
That is not what is intended.
I will call Deputy Dempsey but we have spent too long on this question.
It is an important question.
In deference to other Deputies who tabled questions, I ask Deputies to be brief.
The Minister was good enough to ask a question of me. I will send him the figures. Regardless of how much money he spends, Fianna Fáil will spend equally. Fianna Fáil secured these funds. Labour quickly jumped into bed with us in 1992 because they thought they would be able to spend some of those funds.
The great Shelbourne Hotel meeting.
I was there.
The Minister did not even sit down with the poor man.
I was there when he sent the love letter.
Let us hear the Deputy asking the question.
I will not allow the Minister to distort Fianna Fáil's policy because of his own policy inadequacies. The simple fact is that because of the decision the Minister made, taxpayers will have to pay more money than they would have had to pay if he had not made the decision.
It is not true and the Deputy knows that.
If Fianna Fáil cannot change the decision the regional affairs Commissioner made to reduce this figure from 85 per cent to 80 per cent, we will spend that money. The fact remains, however, that this Minister, who lectured everybody else in this House about spending money so freely, cost taxpayers £60 million to £80 million by making a decision that was not properly thought out.
I am not sure if the Deputy asked a question——
I did not. It was an answer to the Minister's question.
I thought it was a political speech.
Like the Minister's.
There is very little truth in what Deputy Dempsey said. I have explained more than once today, and I know people are teeing up for an election, that we are expending——
More taxpayers' money.
We do not believe the Minister's explanation.
Let us hear the answer.
They do not want to hear it. When the Deputies opposite cannot get at me one way, they try to shout me down. I will give them the truth again.
It is all wrong.
Every penny of European money will be drawn down. We are spending our own——
More of our own.
That is true.
I will call the next question. That is the best way to resolve this.
I would like to be able to finish a sentence. We should not allow Members to be shouted down.
I agree.
We are not spending a penny more of our own money this year to draw down every shilling. Unless it is Fianna Fáil policy to reduce——
On a point of information——
There is no such thing as a point of information.
It is a point of misinformation. The Deputy has distorted figures all afternoon. He should listen to the truth.
I have not distorted the figures. The Minister is talking about this year when he made all the promises because an election was looming. I am talking about the full Cohesion Fund programme, the £800 million or the £1.1 billion.
I will call the next question because this is getting out of hand.
The Minister is distorting the facts.
Will Deputy Dempsey let me speak?
The purpose of Question Time is to elicit information, not to give information.
We are not getting it.
Deputy Dempsey wants to go on the election campaign and distort the facts.
The Minister is distorting the facts.
Every shilling of European money will be drawn down. We are now expending, and have done for years——
Nobody is arguing with that.
——more of our own Exchequer funding than every penny drawn down from Europe.
There is no virtue in that.
Unless Fianna Fáil, under Progressive Democrats influence, intends cutting back dramatically, that will continue to be the case.
And it will cost the taxpayers.
If it is the case that Fianna Fáil and the Progressive Democrats want to slash the expenditure, and that may well be the case——
Who is distorting the facts now?
The Minister should get off the stage.
——they should let us know about it. When this Government is re-elected it will continue to provide our own resources——
Taxpayers' money.
——not only to meet the top-up required to draw down the maximum European funding but to continue to fund projects funded exclusively from Exchequer resources.
So there is a top-up.
Our policy will be to continue to provide a good infrastructure for the people.
So there is a top-up. The Minister told the truth in the end.
I am calling Question No. 7.
