JOINT COMMITTEE ON EUROPEAN AFFAIRS debate -
Wednesday, 23 Apr 2003

Vol. 1 No. 23

Scrutiny of EU Proposals.

Chairman

We have two issues to consider today. This is the first occasion on which the sub-committee on scrutiny has referred to this committee for examination two proposed regulations. Since we began examining regulations last October, we have examined about 200 and about a quarter of those have been referred to other standing committees. This is the first time there has been a referral directly to the Joint Committee on European Affairs. The two issues will be taken separately. The first issue is a proposal for regulation of the European Parliament and European Council on insurance requirements for air carriers and aircraft operators. We have with us from the Department of Transport, Mr. Michael Ó Méalóid, Mr. Robin McKay and Ms Niamh O'Brien.

By way of introduction before I ask the officials from the Department to make opening comments, this proposal deals with insurance requirements for air carriers and aircraft operators. The proposal was considered by the sub-committee on scrutiny on 21 November last and was referred to the joint committee for further detailed scrutiny. The proposal is for draft regulation on insurance requirements for air carriers and aircraft operators and the Commission document is dated 24 September last. The aim of the proposal is to ensure a harmonised approach to the level of insurance held by aircraft carriers. The proposal is in response to the recent heightened fears of terrorist attacks after the attack on 11 September 2001 in the US.

The level of insurance held by air carriers operating in Europe was considered. Whereas EU carriers have high levels of cover - in the order of €1 billion, generally speaking - carriers from many non-EU countries have cover for tens or hundreds of millions of euro. The Commission has brought forward this proposal to ensure that we have a harmonised approach. The regulation will apply to all EU and non-EU carriers and operators that fly into EU airports or that use EU airspace. All such undertakings will be required to have specific minimum levels of insurance in relation to passengers, baggage, mail, cargo and third parties. The levels of insurance required will depend on the maximum take-off weight of the aircraft and the insurance must include cover for acts of war or terrorism.

Non-EU aviation undertakings operating in Ireland are currently regulated by the Department of Transport. I understand that it is not anticipated that the implementation of this regulation will increase the Department's workload or costs. The regulation may affect the operating services of some non-EU airlines in Ireland, but it will also ensure that more adequate funds will be available to meet compensation costs in the event of an accident in Ireland involving any of the carriers. I make these remarks by way of introduction. I call on a representative of the Department of Transport, perhaps Mr. Robin McKay, to speak.

Mr. Robin McKay

I do not have anything to add to the Chairman's very extensive summary of the matter under consideration. The proposed regulation is intended to harmonise insurance levels in the European Union. The regulations in place at present require aircraft and aircraft operators simply to have insurance, but do not specify the amounts of insurance. The existing recommended amounts, which were drawn up by the European Civil Aviation Conference, which has 38 European member countries, are relatively low compared with the levels of insurance held by most carriers in the EU member states. I will take questions from any member who seeks further clarification.

Deputy J. O’Keeffe

This seems a very sensible proposal. I see no reason non-EU carriers flying into or over the EU should not have the same level of insurance cover as EU carriers. I would like to ask two questions. Has there been any discussion with the main Irish carriers, Aer Lingus and Ryanair, in relation to the import of this proposal? I have not heard any wild remarks from Michael O'Leary in relation to the regulation, so I take it that it is acceptable to Ryanair.

Chairman

We are dealing with aircraft, not taxis.

Deputy J. O’Keeffe

Touché. The other question I would like to ask relates to the Commission's draft, which states that the rules proposed should apply to State aircraft. What is the position in relation to the Government jet? What type of insurance cover does the jet have at present? Will it be affected by the regulation when it comes into effect?

Chairman

The Deputy is not proposing compensation if the jet does not bring its passengers back to Ireland.

Deputy J. O’Keeffe

I might favour the payment of compensation if some of the passengers were left outside.

Mr. McKay

The levels of insurance being proposed are already met by Aer Lingus and Ryanair, so this regulation will not present any difficulties for them. We undertook a wide public consultation process - advertisements were placed in newspapers in March seeking comments from those concerned. The fact that we have not received any comments to date, to the best of my knowledge, may suggest a certain level of interest in the subject. The Irish-registered airlines' levels of insurance cover are very substantial and are comfortably above the levels specified in the new regulation. It is probable, as discussions on this subject proceed, that State aircraft will be excluded from the scope of the regulation. I do not know the precise arrangements for insuring the Government jet, as it is a matter for the Department of Defence, but I expect that the risk is simply covered by the State just as it is in relation to Government Buildings, etc. I do not know for definite.

Deputy J. O’Keeffe

How does the Department of Transport propose to deal with the fact that the proposal as it stands provides that the rules should apply to Government aircraft? Surely that puts the Department on notice that there may be some requirement to investigate and possibly to provide insurance cover in relation to our State aircraft.

Mr. McKay

State aircraft are specifically excluded from the Chicago convention, which deals with international civil aviation. I refer to aircraft that are owned by governments, generally speaking, such as military and police aircraft. It is widely expected that the governments concerned will meet any liabilities that arise, rather than there being an explicit need for insurance. The matter is currently under discussion in Brussels, but I am not sure what the eventual outcome will be. My guess is that State aircraft will be left out because their inclusion would make the matter enormously complicated.

Deputy J. O’Keeffe

Does Mr. McKay expect that the draft version will be amended accordingly?

Mr. McKay

I think it probably will be.

Deputy Harkin

I agree with Deputy O'Keeffe that this legislation seems to be very sensible, particularly in light of the events of 11 September 2001. It is right that liability for accidental damage caused by war or terrorist acts should be included and that it should refer to flights in and out of Community airports and over Community territory.

I would like to ask one or two questions based on the documentation I have read. Are we bound by the 1999 Montreal Convention? We do not seem to have signed the amended Rome Convention in 1978. I wonder if and why that is the case. The section of the proposed regulation relating to monitoring and sanctions will have implications for the Department. It was stated in the document that the regulation would not increase the Department of Transport's workload, but it seems to me that the requirements are such that the workload will probably grow - I cannot imagine how that would not be the case. I am sure there will be some extra costs as a consequence. I am not sure, having read through it quickly, if there is anything in this document about loss of baggage. I noted a reference to damage to baggage, but I do not know if loss of baggage is included.

Mr. McKay

We have not yet ratified the Montreal Convention, but we are currently working on it in my division. It is intended that the convention will be ratified. I do not know why Ireland, along with a large number of other countries, has not signed the Rome Convention. It has not found international favour for some reason and it has not yet been ratified by enough countries to make it internationally binding.

The existing monitoring arrangements, whereby the Commission for Aviation Regulation licenses airlines, involves a requirement for airlines to provide details of their insurance provisions. There will be no additional work in that sense. The Irish Aviation Authority will be the other avenue for enforcement when individual aircraft licenses arise. The Department understands that the new regulation will not represent a significant additional burden for the Department or the agencies. The Deputy also asked about loss of baggage. I am not sure if she is referring to the inconvenience caused when one's baggage is delayed and arrives at a later stage, but such problems are not covered by this regulation, to the best of my knowledge. One will receive compensation only if baggage is lost or damaged.

Deputy Harkin

I appreciate Mr. McKay's assurance that it will not increase the workload, but the regulation says that all air carriers flying in and out of the Community may not be in a position to observe the financial fitness requirements that are laid down. It is important to allow for some flexibility and the various instruments that may be used are outlined, including State or bank guarantees. It seems strange that this new regulation will not involve extra work, though I accept Mr. McKay's word that it will not. It is well worth doing this.

Mr. McKay

It is important to bear in mind that unlike some other European countries, relatively few Third World airlines fly to Ireland. That is the area in which the biggest problems would arise. We do not have services with African countries which is where the difficulties arise for the USA and the other EU member states. There are no significant problems at the moment.

Deputy Haughey

Presumably, some airlines are more at risk from terrorism than others with regard to recent history. Has any consideration been given to that and has any research been carried out into that at EU or Irish level? Is it the intention to create a blanket regulation for all airlines or is there a question of differentiating between them?

Mr. McKay

There are no proposals to differentiate airlines and I am not aware of any research of the sort referred to by Deputy Haughey. There has only been one very unfortunate experience in which planes have been used in a spectacular way by terrorists and that was on 11 September 2001. There is no international concern that particular airlines are more likely to be picked on and used in a similar action. It is open to us all to speculate, but I am unaware of any research into the matter.

Deputy Carey

While I recognise that we do not receive significant traffic from Third World countries, there seems to be a tendency to have a short shelf life on the part of tour companies from emerging countries on the periphery of the EU. Does an airline or carrier need to have a certain track record before the regulation applies to them, or will it apply immediately an operator begins business?

Mr. McKay

Strictly speaking, this regulation applies to airlines rather than to tour operators, though a tour operator might also be an airline. Frequently, tour operators charter aircraft from established airlines. The airlines will have to comply with the requirements in their own countries. With the enlargement of the European Union a great many more of what are currently peripheral airlines will come within the full remit of European regulations covering aircraft and airline licensing. The European insurance arrangements will also apply. The intention is that these insurance requirements will apply to all aircraft flying into Europe which means they will cover aircraft from eastern European countries and elsewhere.

Chairman

I wish to pursue something based on a reply Mr. McKay gave earlier. The briefing note we looked at when the proposal was put to us initially states the Commission's draft states that the rules proposed should apply to state aircraft. The note said that this seems to cover military aircraft, but it is not clear that would be acceptable to EU member states or third countries. Is it certain that the proposed rules will not apply to military aircraft? Until Mr. McKay spoke, I understood it was the other way around.

It seems that while increased insurance cover will result in increased premia for the carriers concerned, it is not clear that such increased premia will cover the increased exposure of insurers for reinsurance. If they do not, further costs will be incurred in due course. Will there be a spiral if the insurance cover does not cover reinsurance costs in the beginning? What are the implications for the travelling public of the resulting increased insurance costs?

Mr. McKay

The text of the regulation is under discussion in Brussels and the issue of military aircraft is being considered. I do not know what the final result will be. My earlier comments constituted a personal speculation that because state aircraft are excluded under the Chicago Convention, they will probably be excluded from this. Governments will simply rely on the goodwill of the governments which own state aircraft in the event of an accident involving one.

Chairman

Many carriers have been hit by post 11 September insurance hikes already. Could the regulation give rise to further hikes?

Mr. McKay

It should not give rise to further hikes for the airlines which already have the level of cover required. All airlines operating within the European Union, the United States of America, Japan, Australia and other first world countries have this level of insurance cover anyway. They will not experience any increase in costs as a result of the introduction of the proposed rules. The airlines which will see an increase in premia will be those which have a low level of insurance currently. Low levels of insurance meant that those who suffered in an accident received low levels of compensation. The proposals represent an attempt to strike a balance by requiring all airlines to have a reasonable level of insurance cover.

Chairman

When will the position with regard to military aircraft be clear?

Mr. McKay

The process is that regulations are debated at official level in Brussels. They go to the Transport Council for a political decision afterwards. I am not sure that this regulation will be ready to be considered by the Council in June. It is possible, but I cannot say that for definite at this point.

Chairman

According to article 2, this regulation shall apply to all air carriers flying to or from an airport in the Community as well as flying over the territory of a member state operating a scheduled or non-scheduled flight. It will also apply to all aircraft operators flying to or from an airport in the Community as well as flying over the territory of a member state carrying passengers and their baggage and mail and to carriage by air of passengers and their baggage, mail or cargo by a state aircraft of a member state or any other country. I presume the reference to "state aircraft" includes military aircraft.

Mr. McKay

It is very definite that the term "state aircraft" includes military aircraft. In general, military aircraft are not insured.

Chairman

In this case, the carrier will not be an air transport undertaking with a valid operating licence as defined in the definitions, but the state owning the aircraft.

Mr. McKay

That is my understanding.

Chairman

What is the timeframe for the adoption of the document?

Mr. McKay

It is possible that there will be political agreement on the regulation in June at the Transport Council. After that I think it will need to go back for a second reading to the European Parliament, which one would expect to take a number of months.

Chairman

In the meantime would you send us a note on the implications for military aircraft over-flying and flying within the State, and our own aircraft flying in other space?

Mr. McKay

Certainly.

Chairman

Are there any other questions or reservations about the proposal? Thank you very much, Mr. McKay.

Item number two is a proposal for a regulation by the European Parliament and Council on the statute and financing of European political parties, and we have from the Department of the Environment and Local Government Mr. Michael Murphy and Mr. Peter Green.

This proposal was considered by the sub-committee on scrutiny at its meeting on 27 March last, and it was agreed to refer the proposal to the joint committee and to also refer it to the secretaries general of the registered political parties in Ireland for their observations. A further information note has been circulated this morning to update the information provided by the Department in March. Who would like to lead off on this?

Mr. Michael Murphy

Thank you very much, Chairman. I am an assistant principal in the franchise section in the Department of the Environment and Local Government, and my colleague, Mr. Peter Green, heads the unit.

We want to give a brief overview of where this regulation has come from, what it entails and the current position in relation to it. Essentially it has its origins in Article 191 of the treaty, which gave recognition to European political parties and the important role that they could play in terms of promoting European awareness. Article 191 was subsequently amended by the Treaty of Nice to provide the Council with power to introduce a regulation to set out a framework for the registration and financing of European political parties. This is what we currently have before us.

Another impetus that was given to the introduction of this regulation arose out of a traditional practice of the political groups in the European Parliament. Political groups, as we know them traditionally - the Green group, the socialist group and others - are in receipt of funding from the European Parliament, and traditionally made some of those funds available to their constituent political parties. The Court of Auditors in a report in May 2000 found that practice to be irregular. Essentially, the Court of Auditors said that the European Parliament is making this money available to political groups who are to use it and that there is no legal basis for its subsequent passing on in part or in whole to political parties. On foot of this, and on foot of Article 191 and the amendment by the Treaty of Nice, this proposal is now before us.

Essentially there are two important aspects to it. One is the registration facility for political parties, and the second element is financing. Both those aspects of the regulation have qualification criteria attached to them. In order to be registered, a political party at European level must have a presence in at least three member states. It must also have participated or intend to participate in a European election, it must have a clearly defined management structure, and it must register a statute with the European Parliament setting out its objectives and ensuring that the basic purposes for which the EU stands are upheld in its objectives.

Those are the essential qualifying criteria for registering a political party, and that is the first stage process in obtaining financing. Once a political party has registered a statute, it can then file an application with Parliament for funding. Again, there are qualification criteria attached to that.

Those qualification criteria in relation to financing are set at a higher level than the registration criteria. To qualify for finance, a registered European political party must have elected representatives in at least one third of member states, or alternatively must have received at least 5% of the total vote in at least one third of member states at the most recent European election. They are the qualification criteria for registering in the first instance in a stage one, and then subsequently applying for funding, and again a slightly higher threshold to be met in terms of successfully applying for funding under the regulation.

In terms of finance, the sum that has been made available is €8.4 million per annum, which breaks down into 15% to be distributed equally between registered political parties at European level and 85% to be distributed proportionately to those parties in accordance with their representation in the Parliament.

There is a couple of more points on the financial side. Articles 6 and 7 of the regulation set out what moneys can and cannot be used for. Article 6 sets out that the money cannot be used to fund directly or indirectly national political parties, nor can it be used to finance election campaigns. Article 7 sets out those areas where the funding can be applied, such as administration, logistical support, meetings, publications and so on.

Article 5 sets out a donation-type regime to be applied in the context of this regulation, and it broadly mirrors the national donation regime in Ireland, with which we are familiar. Parties in receipt of funding must not accept anonymous donations, they must not accept donations in excess of €5,000, and they also have to declare their sources of finance and any donations they have received in excess of €100.

In budgetary terms, this proposal is neutral. The political groups who receive funding annually from the Parliament will continue to receive funding, but €8.4 million per annum will be ring-fenced to be distributed in accordance with the registration and financing criteria set out in this regulation. The overall pot is not increasing, it is just that this element of it, for registered political parties, will be ring-fenced to be used by them.

Chairman

What is the total pot?

Mr. Murphy

I do not have that figure. I think it is in the region of €35 million to €40 million per annum.

Chairman

How is the other €27 million allocated?

Mr. Murphy

That is allocated in accordance with Parliament rules and conditions that they would have set down. The allocations that have been made to political groups would have been going on for some years now.

Chairman

Let me put the question to you another way. What is the difference between this expenditure and the €27 million? Why is this expenditure being accounted for in this way?

Mr. Murphy

The whole intention of the regulation was to bring transparency and clarity to what previously was happening with Parliament group funds which were making their way to political parties, for which there was no legal basis. This is what the Court of Auditors found in May 2000 as being irregular, and this is putting it on a transparent statutory framework.

Chairman

Does that mean the other €27 million is used by the groups as distinct from the parties?

Mr. Murphy

Exactly.

Chairman

You mentioned Article 5. Specifically you said a party must declare its sources of finance, providing a list specifying the donors and the donations, with the exception of donations not exceeding €100, a threshold which is much lower than in Ireland, and that a party shall not accept anonymous donations, donations from the budgets of political groups in the European Parliament, donations from legal bodies in which the State holding exceeds 50% of the capital or donations exceeding €5,000 per year per donor from any natural or legal person. Does that same rule apply to the constituent parts of the group? An example is the European People's Party to which Fine Gael is affiliated. Does the regulation simply apply to the umbrella group?

Mr. Murphy

Chairman, what scenario are you thinking of?

Chairman

I am talking about the donations exceeding €5,000 per year. It is stated that it "shall not accept" more, whereas a political party in the State can accept donations above that figure, and the figure may actually be more than €5,000 provided it is declared. This regulation seems to prevent a party from accepting donations above the specified amount of €5,000. How does that affect the constituent parts of groups like the EPP or the socialist group?

Mr. Peter Green

If I understand you correctly, in my view there is a legal distinction. We are talking about the legal entities of European political parties and we would have no knowledge of their constituent groups. The party as a unit would have to obey these rules.

Chairman

Effectively, there will be different rules for the European People's Party or the Socialist Party at European level and for Fine Gael, the Labour Party, Fianna Fáil and other parties at national level.

Mr. Green

Yes, absolutely.

Chairman

The rules we are discussing are much tighter. One cannot accept a donation of more than €5,000. Is that a new regulation?

Mr. Green

It is a new regulation in terms of European political parties. As far as we are aware they have never been regulated before in this manner. These are new restrictions. Various countries obviously have their own rules but it is the first time we know of that European political parties have a statute of their own.

Chairman

Was there no previous limit?

Mr. Green

Not one of which we were aware.

Deputy J. O’Keeffe

It appears a new regulation is necessary following the decision of the Court of Auditors and it is appropriate that we would be supportive of a new regulation. It is a question then of what its content should be. Perhaps the purpose of this meeting is to tease out some of the implications. I would like to ask a couple of questions, one of which relates to finance. I am not entirely clear on the figures that have been mentioned. According to the brief, the available finance is €8.4 million per annum. I did not understand the reference to another €27 million. What is the total package covered by this proposed regulation? If we are dealing with only €8.4 million per annum, why are we not dealing with the entire package? I would like further clarification on this issue.

The other serious issue that needs to be resolved is the entitlement to qualify for funding. We are talking about a party that has achieved at least 5% of the total vote in at least one third of the member states, or that has elected representatives in at least one third of the member states. One relates to the current 15 member states and the other to the 25 that will probably exist in a year's time. According to the note there is a softening in the Irish position with a view to coming away from the third of the member states which at present would reduce from five to three. Would that same softening apply to an enlarged community of 25? Would we take the view that representation in only three of the 25 would allow a political grouping to qualify for funding? While there might be some case for a softening in regard to the reduction of the requirement from five to three member states in a 15 member Community, there would not seem to be much credibility for a European party that would have representation in only three of 25 member states. Does that relate to the current position in regard to the European alignment of the Government parties at present or what is the reason for the approach which seems to be hinted at here?

Chairman

I already asked a question similar to the first part of Deputy Jim O'Keeffe's question. Can we take it to mean the €27 million is for parliamentary use and the €8 million is for political party use? Is that the distinction, allowing funding for administration, education and literature?

Mr. Murphy

The initial difficulties arose when European political groups, as we traditionally know them, were seen to be passing on some of the funding they received from Parliament to constituent political parties. That was found to be irregular by the Court of Auditors in 2000 and this regulation is an attempt to regularise and provide a statutory framework to address it.

In terms of financing, €8.4 million per annum has been set out to be distributed in accordance with the registration and financing criteria of this regulation to registered European political parties. The larger figure to which we referred - it is not an exact figure as I do not have it to hand - was in relation to the whole pot that exists for political groups operating in the European context. The amount that is available under this regulation is clearly €8.4 million and that is the sum about which we are talking.

The other point I was trying to make is that the entire regulation is neutral in terms of budget. In other words €8.4 million is coming from the bigger pot and is being kept aside for distribution in accordance with this regulation.

The second point the Deputy raised relates to qualification criteria. There is an asymmetry between the registration criteria and the financing criteria in terms of qualifying for financing. This has been the subject of some discussion throughout the negotiating period on this regulation. The Commission has replied to the effect that there should be a difference between registration and qualification criteria, in other words, it should be more difficult to obtain financing than to register. The regulation is, as we see it, after a period of time for negotiation. It is quite a high threshold and it will get higher if it remains as it is in an expanded EU. At present we would be talking about five member states and obviously in a EU of 25 it would be eight or nine member states, which is quite a high threshold. Throughout the negotiating period we felt it was too high and quite recently at a GAC meeting the Council circulated a questionnaire seeking member states' views on what they would be prepared to run with. A number of member states - Denmark, Sweden, the UK, Italy and The Netherlands - had a preference for three member states rather than a third of member states as a sufficient qualifying criteria. The Department of Foreign Affairs, which led the negotiations on our behalf, had indicated that we would prefer an easing of that position as well. We have not finalised our position on that. There is a meeting taking place in Brussels tomorrow after which things may become clearer. Although I understand the Greek Presidency is keen to tie up this during its term, a decision is not expected tomorrow.

Deputy J. O’Keeffe

To qualify for funding one would have to be represented, as is proposed, in one third of the member states, which as currently constituted is five. As was said, in an enlarged Community the number would be up to eight or nine, depending on where the line is drawn. There seems to be a switch from a fraction to an absolute number. Ireland's current position, if I interpret it correctly, is to go with three member states and not a fifth of the full membership. Will that continue to be our position even in an enlarged community? While I see some case in a 15 member Union to accept three member states as a reasonable basis for a European tag, there seems to be very little case for it in a Union of 25 members. In accepting three member states, are we moving from a third to a fifth or are we going down from a third to just three? What is our current position?

Mr. Murphy

We have not finalised our position. Throughout the negotiations on this regulation our view has been that one third of member states was too high. Whether we go about tackling it by way of a fraction or mentioning the number of member states, they are essentially negotiating positions. Five or six countries have taken up a negotiating position as of the last meeting to the effect that they would prefer three member states. Obviously, if that went into the regulation it would carry through into an expanded EU. It remains to be seen what comes out in the wash. We have not finalised our negotiating position but we have been worried consistently throughout the negotiating period about the high threshold, as were a number of member states.

Chairman

I just want to be clear on this point before I call Deputy Ó Snodaigh. It does not just apply to political parties. It talks about political parties or alliances of parties. Could a party form an alliance with other parties in other member states to make up the necessary numbers?

Mr. Murphy

Yes.

Deputy Ó Snodaigh

There is mention of political groupings and alliances of political parties in the document. Is it intended in the long run to do away with or replace the political groupings so that one has, going by the figures, 20 political parties in Europe? I am not happy with the principle behind this legislation. If €8.4 million was misspent by the Court of Auditors, why not just ban the spending of this on national political parties in the first instance? That would get around the issue.

Any money given to this alliance of political parties will filter back to national parties. Yet the legislation states it cannot be spent on elections and must be spent on administration. We all know if money is spent on administration that frees up other money to be spent on elections and promoting the party. Therefore it would be anti-democratic because it would benefit those parties who have managed to create an alliance of political parties, or political parties represented in eight or nine countries.

To be registered as a political party or alliance, the group must be present in at least three member states. What is the definition of "present in three member states"? Could it mean one member in each country?

Mr. Murphy

The impetus for this regulation has come from Article 191 of the EC Treaty which specifically recognises the importance of European political parties or political parties operating at a European level. It is separate from political groups. When we talk of political groups, we are talking about groups of MEPS operating at EU level. That is from where the impetus for the regulation has come and that is what it is trying to address. It is trying to give concrete effect to what was previously simply an aspirational statement in Article 191 by providing a system whereby they can be registered and receive funding as European political parties.

Deputy Ó Snodaigh

My last point was on the issue of presence in at least three member states.

Mr. Murphy

My understanding is that it is a legal presence in the three member states.

Deputy Ó Snodaigh

The requirement is just one of registering in three states.

Mr. Murphy

Exactly, in line with the legal requirements in a particular state. For example, if one is registered in the register of political parties here, one has a legal presence as a party in this State.

Deputy Ó Snodaigh

Forcing or encouraging the creation of European political parties is a move away from the creation of the groupings that are currently in existence. There is a pot of money to encourage political parties in these member states to amalgamate, and create a single-entity political party or a legal entity as an alliance of political parties.

Mr. Murphy

The regulation does not state explicitly that is what it is doing. There is a sense that there is probably a separation between political groups and political parties taking place to that extent.

Deputy Harkin

I still have some difficulty understanding the rationale for what we have before the committee. This has been expressed by both speakers so far. I agree with Deputy Ó Snodaigh. The document states that the Court of Auditors considered the practice whereby political groups were channelling some of their funding back to their own constituent parties to be irregular. Given that, why not simply change the legislation so that practice is not allowed, rather than introducing a second level of funding? This €8 million is going to be taken from the overall pot of €35 million. Is this legislation more driven by a push towards registering European parties than by looking at some of the malpractice that the Court of Auditors found?

When two levels of funding are introduced, as this legislation is attempting to do, there is certainly an advantage conferred on larger groupings and political parties, with a consequent disadvantage for smaller groupings. That certainly is a problem here. I am not sure why - Mr. Murphy has explained how - this legislation is in place. While it says it is addressing a particular problem that existed, the problem could be adequately addressed without this legislation. I have concerns that this legislation, while addressing the problem, is also pushing in another direction.

Mr. Murphy

It is a legitimate——

Deputy Sexton

Before Mr. Murphy answers that question, in addition to the previous two speakers' questions, this legislation will create a further tier of bureaucracy because somebody will have to police it. My cynical self is saying "Jobs for the boys and girls". I should not really say that at a meeting like this, but I cannot help but say it. It seems a very large piece of legislation to amend what appears to have been something that was identified and required to be addressed by the Court of Auditors.

Mr. Murphy

The issues raised by Deputies Harkin and Sexton are legitimate points of view. Regarding the two levels of funding, the important point is that there is not more funding available. It is the same amount of funding except this subset of the funding is being dealt with in a more transparent and open way. This is a European initiative, not an initiative of the Department of the Environment and Local Government. To return to the origins of the legislation, which I dealt with in Deputy Ó Snodaigh's comments, it arose from Article 191 of the EC Treaty which specifically recognises the importance of European political parties. The financing aspect of that was subsequently grafted on to it following the Treaty of Nice. Article 191 was declaratory in format; it had no practical application without a registration and financing element to it. This is what the Commission is trying to address.

Deputy Haughey

Does Mr. Murphy have a copy of the report of the Court of Auditors from May 2000?

Mr. Murphy

While I do not have a copy with me, I can make one available.

Deputy Haughey

That would be useful if members wished to consult it.

Deputy Harkin

The answer Mr. Murphy gave was that a certain portion of the funding would be now applied in a more open and transparent way. Why will only a certain portion of this be done in this way? Why introduce new legislation that deals with only some of it when it could deal with all of it?

Mr. Murphy

There are two separate pieces of financing. The €8.4 million will be subject to the rules set out in this regulation. The balance of the funding will be subject to the normal rules and regulations that the European Parliament applies in its budgetary matters. This does not come under this regulation.

Deputy Harkin

Mr. Murphy is telling me how rather than why. I am trying to understand why this is happening. Am I correct in assuming the €8 million is part of a pot of €35 million that was there to begin with?

Mr. Murphy

It is in its generality.

Deputy Harkin

Part of that pot has been set aside and new regulations are being applied. Does this go back to Article 191 of the Nice treaty?

Mr. Murphy

Yes, and to the report of the Court of Auditors and the legal difficulties it highlighted about the practices of political groups in the Parliament and how they were using part of the money.

Deputy Harkin

I think the report of the Court of Auditors could be dealt with without this legislation by simply amending what was there. My concern is this is prompted by Article 191 of the Nice treaty. It implies that it is financial and concerns more open and transparent use of funds. Its implications are much greater than that and I have concerns regarding those.

Senator Feeney

The last sentence of section 14 states, "The name of the political group may appear on the candidate's ballot paper at a European election". Will this be the first time the name of the political group will appear as well as the party name?

Mr. Green

The name of the group has traditionally appeared on the ballot paper. This stems from the 1992 Act and therefore does not arise from this regulation. If one wishes, a candidate will have the name of their party and group on the ballot paper.

Deputy N. O’Keeffe

Does the EU recognise that the limit on anonymous donations across member states is €5,000? Regarding 5.1, Ireland expressed a preference for the softening of the one third position. What does the "one third position" mean?

Mr. Green

The practice varies from country to country. It would not be right to say this is what is done in every country. These European political parties are distinct from national parties. National law will still govern national parties. In the same way, Irish parties will not be bound by the figures in——

Deputy N. O’Keeffe

It is identical to what is happening here.

Mr. Green

It is pretty close to it in the sense that in Ireland, political parties can accept up to €6,348 in a year from one source.

Chairman

Can a party in Ireland accept a donation of €10,000 and declare it?

Mr. Green

No. A political party cannot accept more than €6,348 from any one source in a given year.

Chairman

While the thrust of the EU regulation is in the same direction, the limit is a little lower.

Deputy N. O’Keeffe

What does the softening of the "one third position" mean?

Mr. Murphy

This relates to the qualification criteria. To apply and be successful in applying for financing a registered political party must have elected representatives in at least one third of member states. This threshold is currently under some debate.

Deputy N. O’Keeffe

What is the position regarding Independents?

Mr. Murphy

Independents will receive funding in the normal way directly from the European Parliament. It is outside the scope of this as it is about parties and European political parties.

Deputy N. O’Keeffe

Will Independents get a percentage of the overall budget?

Mr. Murphy

Not in the context of this regulation. Independents will be dealt with separately through European Parliament rules and conditions for funding.

Deputy N. O’Keeffe

Does the European Parliament recognise Independents as much as it recognises political parties?

Mr. Murphy

This deals with political parties. I understand that an independent MEP will receive funding directly from the European Parliament budget, as do the political groups.

Deputy N. O’Keeffe

Does it amount to €8.4 million?

Mr. Murphy

No.

Deputy N. O’Keeffe

Therefore it is a plus to the national government.

Mr. Murphy

It is outside it.

Deputy Ó Snodaigh

We should oppose this measure as it complicates a measure that is already in existence. People have expressed opposition to the creation of a European political party. If a political party was founded and stood candidates in nine of the 27 countries and achieved this figure it would be able to claim the full €8.4 million. I cannot see that many of these political parties will be set up quickly to comply with this legislation. Under Article 9, a political party established under this regulation could receive up to 75% of its funding from Europe. In the future, the Parliament could vote for a figure of more than €8.4 million. Where would this party be governed? Will European or, for example, Irish regulations govern it? It means a European political party, not governed by legislation within this State, could contest elections here. The legislation is different in this case and there are probably further differences.

Senator Dooley

Will it be necessary for a political party registered here and aligned to a group in Europe to have a registration of the group it is aligned to registered and recognised here? In doing so, would the funds transferred from this fund have to be administered separately to that of the political party that is represented here? For example, Fianna Fáil is a member of the UEN group. Will it be necessary for the UEN to be registered here? If so, would it be necessary to have a separate accounting procedure and structure for the dispersal of the funds? While the regulation refers to the Europe-wide context, I am not clear whether it refers to the alliance of political parties or the association. I do not know if the alliance refers to groups that have a presence in Europe or are recognised within the European Community, or an alliance of national parties.

Deputy Harkin

Originally, we spoke of a pot of €35 million distributed to MEPs. While I am not sure what basis it was distributed on, I am sure people were quite happy with it. If €8 million of that is to be ring-fenced for political parties only it will result in the reduction of the allocation to Independent members.

Mr. Murphy

I wish to take a hard example. The socialist group comprises a Party of European Socialists and I assume that party will seek to be registered when this regulation comes into effect and seek financing under it. The party will do this in a European rather than national context. Separate to the Party of European Socialists, there is a party of European socialists parliamentary group and this is the socialist group made up of 170-180 MEPs. The parliamentary group of European socialists has a Party of European Socialists, a broad network of parties with similar beliefs. I presume they will seek to register that party and this will hold for other groupings.

Senator Dooley

Regarding the transfer of funds, where do the funds go from a national perspective? Does it filter back to the political party or does it filter to a subsidiary of the party or group based in the member state?

Mr. Murphy

The funds will stay with the political party at European level that is registered in accordance with the regulation. The regulation specifically forbids it to be used for electoral purposes or to filter to national political parties. It seeks to maintain a transnational aspect to the process.

Senator Dooley

It stays within the European context and is therefore associated with the people within the group here.

Mr. Green

If one reads Article 5, one will see these political parties will have a more open reporting system that we are accustomed to here. One will note that the parties have to publish details of revenue, expenditure, assets, liabilities, donations etc., and this will have to be audited by the Court of Auditors. What the money is used for will be more apparent than we are used to in Ireland.

Senator Feeney

Regarding the transfer of funds, do we have any idea of how Independents will be dealt with? Will we see equity of funding for parties and Independents?

Mr. Green

This draft regulation deals with political parties at European level. European Parliament statutes and regulations will govern the treatment of Independents. I am not familiar with those regulations.

Senator Feeney

It is wrong for us to think that Independents will be looked after with the €27 million. I heard Mr. Green say that Independents were outside of that. Did I misunderstand him?

Mr. Murphy

Independents are outside the context of this regulation. The funding of Independents will continue from the Parliament budget in the normal way. We are not familiar with how Independents are funded from the Parliament budget.

Senator Feeney

If an Independent were to join one of the groups, will that bring that MEP inside the net?

Mr. Murphy

I presume it would if the group was to register in accordance with the regulations.

Chairman

One will find arrangements like this. For example, an MEP in Northern Ireland associates with the EPP and can share its research facilities etc.

To summarise, there already was a budget of €35 million and the money was being used without regulation and transparency. The Court of Auditors criticised this and is now trying to regulate this and make it transparent. Part of this involves a reporting procedure, audited accounts, maximum donations etc. As we are all politicians we may be in danger of taking a biased view of this, therefore, it is good to have had this discussion openly and with the press present. It will need to be equitable, transparent and there must be accountability and an independent assessment as to its fairness. Perhaps those concerns could be communicated to the Minister and we note the report. Is that agreed? Agreed.

I thank the officials from the Departments of Transport and the Environment and Local Government.

The joint committee adjourned at 3.50 p.m. until 11 a.m. on Friday, 9 May 2003.