Dáil Éireann debate -
Thursday, 11 Jun 1998

Vol. 492 No. 3

Adjournment Debate. - EU Funding.

Mr. B. Smith

I am glad of the opportunity to raise this very important issue about which public representatives in the six southern Border counties are concerned. The retention of Objective I status for the period 2000-06 for the Border region is essential if regional imbalance and disparities in economic performance are to be eliminated. The case for Objective I status is economically and politically justifiable. The infrastructural deficit suffered by the Border region must be addressed. This will only be achieved through the drawing down of the maximum level of Structural Funds.

Structural Funds exercise the minds of public representatives and bodies in the region. At recent meetings in Belfast, Derry and Omagh of the sub-committee of the British-Irish Parliamentary body we learned that this issue is one of key concern for public representatives in the six northern Border counties.

Last Thursday the Minister for Tourism, Sport and Recreation, Deputy McDaid, launched the Border regional report, "The Border Region after 1999: The Case for Special Status". It outlines in a comprehensive manner the numerous valid and cogent arguments for the retention of Objective One status and has been submitted to the Department of Finance. I trust the Minister and Government will be afforded the opportunity of studying it. It outlines the poor performance of the region in socio-economic terms and articulates the region's unique status in the Irish and EU context.

It must be accepted that the prolonged Northern troubles had a devastating effect on the economy of Border counties and the seemingly intractable situation inhibited the normal pace of economic growth and development in the region. The Border created an economic divide, with towns being cut off from their natural hinterland and rural areas being cut off from their natural towns. The area suffered from security problems and from a general lack of development in social and economic terms.

In 1997, 14.7 per cent of the labour force in the Border region was unemployed. This was the highest unemployment rate recorded in any region and well above the national average of 11.8 per cent. Fortunately, employment in the country increased in the period 1993-7 and unemployment fell. However, the Border region's performance again lagged behind that of other regions which meant that fewer new jobs were created and the reduction in unemployment was lower than anywhere else in the country.

Urbanisation is a feature of economic growth and again the Border region is hindered in its potential development due to its largely rural nature. As a region it was unable to achieve the full benefit of Objective I status which the country has enjoyed to date because of the political difficulties in the North.

The region looks forward to the implementation of the British-Irish Agreement. The ongoing peace process must be underpinned by large-scale investment in infrastructure, inward investment and the creation of employment. Now is the time to redress the economic difficulties the region has suffered over a period of almost 30 years.

For the future, the region faces new opportunities arising from the peace process but it also faces a new challenge in being on the exchange rate front-line when Ireland enters EMU without the UK. The region has benefited from Structural Fund expenditure, funds which were successfully negotiated in 1989 and 1992 by Fianna Fáil Governments. However, the Border region did not achieve the success rate the rest of the country did.

The report by the Border Authority clearly outlines why the region should retain full Objective I status. The region is clearly below the 75 per cent of European GDP threshold which determines eligibility for Objective I status; it continues to be remote and peripheral in EU terms; it has a very special status regarding the historic political and economic opportunities arising from the peace process.

I repeat my call to the Government to favourably examine the merits of the case advanced by the Border Authority. I, and my colleague, Deputy O'Hanlon, lend our full support to those arguments. I wish to see our region achieve its potential in economic and social terms and that can only be achieved by large scale and early investment in our roads, water and sewerage services, industrial buildings and telecommunications. The region will only enjoy an increase in employment and a halt to rural depopulation when such investment occurs.

Minister of State at the Department of Finance (Mr. Cullen)

I thank Deputy Smith for raising this important issue to which I will respond in some detail to inform him and the House of the Government's current position. I will outline some of the background to the issue of Structural Funds in the next round. Ireland is currently treated, for Structural Fund purposes, as one single region which receives Objective I funding. Objective I funding channels support to the most disadvantaged regions of the Union which are lagging behind economically. The criterion for this eligibility is a per capita income in GDP terms of below 75 per cent of the Community average. Ireland's GDP per capita now well exceeds this figure. As a single region, Ireland will no longer qualify for full Objective I status after 1999.

The European Commission's Agenda 2000 proposals recognised it would be undesirable for a region which had been receiving assistance to be suddenly cut off from that assistance. This would create a shock to the economy which could threaten progress already made. The Government had been lobbying for this, considering some arrangement was essential to avoid such an economic shock.

In Agenda 2000, the Commission proposed that regions like Ireland which were graduating from Objective I status would be given transition status. Starting out in the next round with full Objective I treatment, there will be a gradual reduction in support levels until, by the year 2006, lower levels of funding, based on Objective II funding, will be reached.

This idea of transition has been designed by the Commission to ease the way out of full Objective I status. However, difficult negotiations lie ahead in the Council of Ministers and Ireland will have to strive to secure its interests. It should be noted that even if all of Ireland were to qualify for Objective I status under the next round, our current levels of prosperity and substantially improved employment figures would act to reduce our share in the next round vis-a-vis the current round. It is necessary to emphasise that the benefits associated with Objective I funding in Ireland in the current round will not be matched by the level of transfers likely to be associated with Objective I status next time out. The funding intensity enjoyed by Ireland at the moment is unlikely to be enjoyed by Objective I regions after 1999.

We are now facing a situation where the impressive performance of the economy means we cannot expect the same level of Community assistance in the next round. We need to maximise the effectiveness of future Community assistance and ensure our most pressing investment needs are addressed. Among the issues which need to be tackled is the situation of those parts of Ireland still lagging behind. The Government is conscious that the prosperity which has been achieved in recent years has not applied uniformly throughout the country and is committed to addressing this problem. In particular, the regions of the Border, the west and the midlands currently have a per capita GDP of less than 75 per cent of the EU average and are likely to be below 75 per cent for the reference period to be used for the next round.

In this context, one possible strategy to address the development requirements of those parts of Ireland might be to propose a regionalisation approach to the next round of Structural Funding. Under a regionalisation approach, the existing single region of Ireland could be reconstituted as two new regions, of which one could consist of those parts of the country whose per capita GDP is below 75 per cent of the EU average. If such an approach were proposed and accepted by the Commission, the region with a per capita income below 75 per cent of the EU average would qualify for full Objective I status, while the rest of the country would be a transition region covered by Objective I funding.

I emphasise that we cannot unilaterally adopt a regionalisation approach. In the first instance, the proposal for new regions would have to be put to EUROSTAT, the Commission's statistical service, whose approval on statistical and other grounds would be necessary. It would then be for the European Commission as a whole to decide on the matter. It must be said that indications to date as to the likely response to this option are not positive. The Commission has made it clear it could not support proposals to change the current regional map basis for Objective I status which were not adequately based in terms of regional administration. In addition, it is clear the Commission fears the precedent effect of such a proposal.

The Government is committed, in the Action Programme for the Millennium to those regions, including the Border region, which are lagging behind. It remains to be seen whether this commitment can best be met by a regionalisation approach or by an approach where the best possible terms are secured for Ireland as a single region in transition. In this context, the Government has not ruled out pursuit of a regionalisation approach. The matter is receiving detailed consideration and has been raised with the Commission at political and official levels. A decision on the issue will be made at the appropriate moment.

The Government is also conscious of the circumstances affecting the Border region which has had to cope with the spill-over effects of the troubles in the North for three decades. However, the British-Irish Agreement provides us with the means of achieving lasting peace and stability. The overwhelming endorsement of the Agreement by the people, North and South, shows clearly and emphatically that people want peace, they want accommodation and they want to work together for the benefit of people, North and South, and for the benefit of people on the islands of Ireland and Britain. This Agreement will bring real, tangible benefits and, in making the Agreement a reality, those areas that suffered over the years from the effects of violence have most to gain from a peaceful future.

The European Community has made a generous and substantial contribution to economic and social development in Northern Ireland and in the Border region in the South. In this context, it is pleasing to note that President Santer has spoken of finding new creative ways of availing of the fresh opportunities the Agreement will bring. The General Affairs Council, consisting of the Community's foreign ministers, noted the contribution made by Community assistance in promoting the prospects for peace and agreed the Community should continue to play an active role. The European Parliament has also called for consideration of how the Agreement can be supported in practical terms. We warmly welcome the ongoing support from our partners and will examine with them the options for continuing support.

Peripherality is a significant issue facing Ireland and the border counties. At an informal Council of regional development Ministers earlier this week in Glasgow, I emphasised to my European colleagues the problems of peripherality for those regions on the Atlantic seaboard of the Community. The challenge facing these peripheral parts of the Community was noted and appreciated by our European partners.

The Government's objective in the negotiations on the next round of Structural Funding will be to achieve the best possible result for Ireland as a whole. The Government will also assess the overall package in the context of how it will address our substantial infrastructural backlogs; our human resource problems and, the needs of those parts of the country, including the Border Region, whose development is still lagging behind.

Many of you will be aware that preparations are currently under way for the development of a national development plan for the investment of Structural and Cohesion Funds in the period 2000-6. The Minister for Finance has issued invitations to Government Departments, the social partners and regional authorities, including of course, the Border regional authority, to make submissions to him for investment priorities which they would like to propose for inclusion in the national development plan for 2000-06.

The report, "The Border Region After 1999 — The Case for Special Status", which was launched last week, is a valuable contribution to the debate on planning for the next round of Structural Funds. As a precursor to the Border regional authority's full submission on the next national development plan, it provides food for thought about what the region's status ought to be and about its possible share of Structural and Cohesion funds in the next round.