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Dáil Éireann debate -
Wednesday, 14 Oct 1998

Vol. 495 No. 2

Other Questions. - EU Funding.

Louis J. Belton


41 Mr. Belton asked the Minister for Finance if it is Government policy to seek Objective One status for the western, midland and Border counties; if a proposal to achieve this has been lodged with the EU Commission; and if he will make a statement on the matter. [19591/98]

Derek McDowell


87 Mr. McDowell asked the Minister for Finance the discussions, if any, he has had on the future of Structural Funds at the Cardiff summit, Wales; his views on the sub-regionalisation of the country for the purpose of making Ireland's case for the continued provision of Structural and Cohesion Funds; the nature of the work carried out in his Department on the matter; and if he will make a statement on the matter. [19513/98]

Proinsias De Rossa


103 Proinsias De Rossa asked the Minister for Finance the strategy the Government will adopt regarding the next round of EU Structural Funds; if it is intended to apply for Objective One status for part of the country only; and if he will make a statement on the matter. [19611/98]

Michael Ring


105 Mr. Ring asked the Minister for Finance his views on whether Objective One status will be decided at the EU summit meeting in December 1998. [19102/98]

Michael Ring


106 Mr. Ring asked the Minister for Finance the position in relation to the application for Objective One status; if the application has been submitted for Objective One or transitional status; and if he will outline details in this regard. [19103/98]

Denis Naughten


108 Mr. Naughten asked the Minister for Finance the discussions, if any, he has had with Commissioner de Silguy in relation to regionalisation. [19366/98]

Jim Higgins


109 Mr. Higgins (Mayo) asked the Minister for Finance if he has satisfied himself in relation to the deadline for submission to the EU of applications for the next round of Structural Funds; and if he will make a statement on the matter. [19390/98]

Denis Naughten


135 Mr. Naughten asked the Minister for Finance the plans, if any, the Government has to devolve power from central Government to the regions; and if he will make a statement on the matter. [19368/98]

I propose to take Questions Nos. 41, 87, 103, 105, 106, 108, 109 and 135 together.

This reply concerning Structural Funds is fairly long and is, by necessity, a comprehensive one. The issue of regionalisation for Structural Fund purposes is before Government on foot of a Memorandum for Government and an accompanying paper prepared by my Department. The paper has also been the subject of consideration by the Ministers and Secretaries General group on EU policy.

The House will understand that I cannot anticipate the outcome of the Government's consideration of this issue. My response to these questions, however, affords me the opportunity to comprehensively brief the House on this issue. Ireland, as a whole, is currently treated for Structural Fund purposes, as one single NUTS II region under Objective One. NUTS II regions are regions established by EUROSTAT, the Commission's statistics agency, for various statistical purposes but they are also used for the purpose of determining eligibility for Objective One assistance.

Objective One channels Community support to the most disadvantaged regions of the Union which are lagging behind economically. The criterion for Objective One eligibility is for a region to have a per capita income in GDP terms below 75 per cent of the Community average. Ireland's GDP per capita now well exceeds this figure. Accordingly, the region of Ireland no longer qualifies for Objective One status.

If the eligibility requirements for Objective One assistance were strictly applied, Ireland as a single region would simply not qualify for it under the next round. However, the European Commission in its Agenda 2000 proposals recognised that it would be undesirable for a region to be suddenly cut off from Objective One assistance. The Commission, therefore, proposed that regions like Ireland would be given transition status whereby Objective One assistance, albeit at a gradually diminishing level, would still be available. In practical terms, this would mean that Ireland would experience a gradual reduction in EU funding over the period of the next financial perspective, i.e. the years 2000 to 2006.

Initially, a region in transition from Objective One would enjoy full Objective One benefits. Then a gradual reduction in support levels would occur until, by the year 2006, lower levels of Objective Two type funding were reached.

The Government is conscious that certain subregions of the country at the NUTS III regional level — the next level of statistical mapping below the NUTS II configuration — have not performed as well as the rest of the country in terms of GDP growth. In particular, the subregions 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 of Structural Funds.

This gives rise to the possibility of seeking to adopt a regionalisation approach to the next round of Structural Funding. Under the most straightforward regionalisation approach, the existing single region of Ireland would be reconstituted as two 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 taken the region with a per capita income below 75 per cent of the EU average would qualify for full Objective One status, while the rest of the country would still be a region in transition for Objective One funding.

The Government is, therefore, currently considering the option of an approach to EUROSTAT, the Commission's statistical office, with a view to having Ireland reclassified from its present single region status. This move, if it is decided upon and accepted by EUROSTAT, could mean that a region comprising the west, Border and midlands regional authority areas would qualify for Objective One status. Such a region would also potentially qualify for Structural Funds transition arrangements after the year 2006. It should also qualify for a better State aids regime for attracting new industry for the years 2000-2006 than it would if it were in transition.

I stress that, if a part of the country were to qualify for Objective One as a result of the proposed reclassification, this would not mean the rest of the country would be treated any less favourably in EU transfer terms than it would have been anyway under the transition regime currently proposed for Ireland as a single region. The Government will insist that the non-Objective One part of the country would qualify fully for the transition regime, and we have no reason to believe any differently. Consequently, if one region in Ireland qualifies for full Objective One assistance, the other region benefiting from the transition regime will be no worse off. Any extra benefits for a region qualifying for full Objective One status cannot and would not be at the expense of the region in transition under Objective One.

Overall, there will be a substantially lower per capita transfer of Structural Funds in the next round to Ireland compared to the current round. In addition, any region in Ireland which receives Objective One status will not achieve the same per capita transfer of Structural Funds as Ireland as a whole received in the current round. This reflects the improved economic performance of the country at national and regional level as compared with the European average in recent years. More specifically, being below 75 per cent of GDP for a region is not the sole factor as regards share out. Other criteria are equally important. In the final analysis, the levels of assistance to a region are determined by reference to its population, relative prosperity and unemployment levels. In regard to the latter, for instance, Ireland's unemployment rate and the unemployment rate of any prospective Objective One region in Ireland are significantly below the levels of unemployment in some of the more populous Objective One regions elsewhere in Europe.

It must be stressed that the scope in terms of area for a reclassification is limited. The regional classification operates on an EU basis and any new regions must be generally in line, as regards population and size, with the norm across the EU. They must also be geographically contiguous. This means the option of designating microregions, such as poverty blackspots within regions and cities, to avail of Objective One funding for those areas is not available.

As part of the process of preparing the groundwork for the Government's consideration of the issue, my Department has intensively examined and analysed the various implications of any regionalisation approach. Official contacts have been made with not only Directorate General XVI, which under Commissioner Wulf-Mathies has responsibility for the Union's regional policy, but also with EUROSTAT and Directorate General II, which under Commissioner de Silguy has responsibility for EUROSTAT. These contacts have been useful in enabling an informed analysis to be put to the Government.

In the event of a regionalisation approach being adopted, the regional administrative framework may require adjustment. Such adjustment as is necessary will be the subject of discussion with the Commission and will take account of the views of the regional interests. A major consideration is that the efficient and effective administration and management of Structural Funds spending, for which Ireland enjoys a just reputation, must not be jeopardised, particularly in the coming period of declining overall assistance from Europe.

I would underline for the House that the key point in regard to the next round of Structural Funds is that Ireland will suffer a significant drop in its receipts. Regionalisation should help to mitigate this to a degree, but this will not be at the expense of the region in transition. Against a background of facing a drop in Structural and Cohesion Fund receipts as compared with the current round, Ireland, reflecting its increased prosperity, must be able to meet more of its investment needs from its own resources.

The Government has put significant additional resources into key programmes designed to eliminate social exclusion and improve social services in areas such as health and education. The Government's expansion of the capital investment programme will continue to develop Ireland's economic potential, while improving facilities in social services.

Our budgetary situation means Ireland is now in a strong position to continue these programmes throughout the country in future. As long as we continue with the prudent policies which have played a major part in securing the economic growth of recent years, we should have the resources to make good the reduction in EU aid for the country as a whole.

The negotiations ahead at European level will be tough and complex and are likely to continue for at least several more months. The European Council in Cardiff last June did not involve substantive conclusions on Structural Funds. While the European Council in Vienna next December can be expected to advance the negotiations, it is unlikely that any final agreement will be reached before the target date of next March.

We have gone long past the time for questions, but in view of the length of the Minister's reply I will take three questions, from Deputies Naughten, McDowell and Noonan.

Is there a time limit for submitting proposals for NUTS II? If we do not have the submission in by a certain date does that mean we will not be considered for Objective One status?

Is it possible for the Department of Finance to control the funds for one region, namely the west, midlands and Border counties, if it were to receive it, without actually putting regional structures in place? Or do we need to have regional structures in place to receive that funding?

One of the major arguments made in favour of sub-regionalisation is that if the entire country is given transitional funding between now and 2006 it will inevitably lose all funding beyond that time. I do not understand the basis for that assertion. Neither do I understand why it is suggested that parts of the country could not continue to receive reduced funding beyond 2006. Will the Minister indicate to the House whether he has received such an indication from the Commission, or on what basis that assertion is being made.

The Minister has more or less told us that in the first instance this is a statistical exercise. The Minister also laid out the conditions the Commission will require if he opts for a regionalisation approach. He said the regions must be contiguous and that we cannot take micro urban or rural areas. What is the smallest region the EU would regard as acceptable? Must we regionalise on the basis of regional authority areas or counties or would it be possible to take DEDs in severely disadvantaged areas?

Deputy Naughten asked if there was a time limit on putting forward the proposal for sub-regionalisation. The answer is "no" because we have not started substantive negotiations on the next package. Chancellor Kohl set out a tentative timetable in Cardiff under which these negotiations would be concluded at the end of March.

As regards regional structures, the first exercise we will engage in will be a statistical one which will be presented to EUROSTAT, the statistical agency of the Commission. To be classified as a NUTS II region, which Ireland as a whole is classified as, there must be some form of regional structure. In the past it was not stated what type of regional structure was needed, so we can only look at what has happened recently. The UK has negotiated Objective One status for some regions in the south west which have a light administrative regional structure. There must be some form of administrative or regional structure but the detail has yet to be worked out.

Deputy McDowell asked what will happen at the end of 2006. If Ireland remains a single Objective One region in transition, which is the current proposal as of July 1997, we will not get Objective One funding at the end of 2006. One cannot anticipate whether funds will be available at that stage. If the present scenario continues, we might get Objective Two or Objective Three funding, which is light compared to Objective One funding, which is the real money available to the Commission. We would be in a totally new category. There might be other types of funding available, but it would be small.

What does the Minister anticipate could happen if we regionalise?

If we break Ireland into two regions, an Objective One region in transition — the wealthier part — and an Objective One region, the intention would be that at the end of 2006 the Objective One region would go into the category known as an Objective One region in transition for the next round. We would then still be able to dig out of the Objective One envelope.

This issue is quite complicated and I am sure people are making fortunes giving courses on this in Europe. The peculiar name NUTS is the French word for territorial units. A NUTS I region is the whole of Ireland; NUTS II is an Objective One region which is the whole of Ireland; NUTS III regions are the regional authorities we now have; NUTS IV regions are counties and NUTS V regions are micro areas. To qualify as an Objective One region, it must be a NUTS II region. Under the present rules, that relates to population, wealth, unemployment and other factors. A small region cannot be given Objective One status. Small areas are NUTS V and NUTS VI regions. There is a hierarchy of such regions.

Some European funds which go to urban areas, for example, will continue to go there, but they do not form part of the Structural Funds package and will not be influenced by it. The smallest region for Objective One status is a larger region than a chosen area in County Kildare or County Limerick.

Is it defined as a regional authority area or could it be one or two counties?

It would have to have a certain population to become an Objective One region.

What size of population?

Hierarchical and statistical exercises must be done.

Perhaps the Minister could send me a briefing note.

I will send the Deputy all the briefing notes available in the Department.

Written Answers follow Adjournment Debate.