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JOINT COMMITTEE ON EUROPEAN AFFAIRS debate -
Wednesday, 28 Apr 2004

Lisbon Agenda: Presentation.

I thank the Taoiseach for attending. Under the terms of reference agreed by the House the committee can ask the Taoiseach to appear from time to time. We have not exercised that power because the Taoiseach obviously has a great deal on his agenda, and he has double the normal workload with the Presidency and the IGC going up. Thus, we are particularly pleased that the Taoiseach has found time to come along.

We are today dealing exclusively with the report on the Lisbon Agenda. The committee held a series of meetings throughout February, March and April and took evidence and contributions from many witnesses. The report to be published, a copy of which we have sent to the Taoiseach, is a comprehensive study of the Lisbon Agenda, with particular reference to competitiveness, more and better employment, sound economic policies and sustainable growth. The committee purposely selected these areas to address as they were the ones identified by Government as priority areas.

The committee agreed several recommendations in its report and I ask the Taoiseach to consider them carefully when he gets an opportunity and support them at future European Council meetings. In accordance with the normal procedures for these meetings I will ask the Taoiseach to make a presentation, and we will follow that with questions from members.

I thank the committee for the opportunity to be here. I am delighted to address the joint committee. I know the committee has undertaken an examination of various aspects of the Lisbon Agenda over recent months and has published a report of its findings. I also understand the Lisbon Agenda will be considered at the COSAC conference in Dublin in May 2004, and I am pleased to outline the role of the Irish Presidency in advancing the Lisbon Agenda.

I pay tribute to the significant work undertaken by this committee under your Chairmanship, Deputy Mitchell, over the past two years. The committee's work has enabled greater debate and communication on European affairs, which is helpful to me also and ensured proper democratic oversight of European business not only during the Presidency but during the long run-in to it. This is a vitally important function in terms of Irish participation and understanding of the European Union. We must keep the public informed as to how the Union works, how it affects all our lives and how decisions are taken. In this way we can ensure the goodwill of the public towards the European project. In particular, this committee's operation of the new parliamentary scrutiny legislation is of importance.

Early on in our preparations for the Presidency of the European Union I identified the Lisbon Agenda as a priority. The economic and social agenda is central to the lives of our people and the agenda is the agreed strategy framework for achieving growth. I was determined, therefore, to make this issue a key priority of the Irish Presidency. Our preparations for the spring European Council started more than a year ago and a cross-departmental group of officials prepared their initial approach. In addition, the Cabinet committee on European affairs, which I chair, met regularly to discuss how the Lisbon Agenda could be progressed during our Presidency.

We consulted throughout the year with the Commission and other member states. We convened a special meeting of key officials dealing with the agenda from the EU 25 in Dublin in the autumn of 2003. I spent a great deal of time with business lobbies, trade union interests, NGOs, academics and other interested groups to try to get a feel for how we might inject some momentum into the process. A number of important points became clear to us during this preparation time.

We recognised that the Lisbon Agenda had a credibility problem. There was serious scepticism about how we could achieve our 2010 goal. This is partly due to the fact that we do not advertise our success well enough. I acknowledge that we are behind target in a number of areas on the agenda but it is equally important to accept that much has been achieved to date. The biggest challenge facing us now is delivery, and everyone to whom I spoke repeated that the focus must now be on implementation.

Most of the Lisbon Agenda deals with matters of national rather than EU competence. We must make the open method of co-ordination work properly and effectively. Member states will have to learn more from each other through benchmarking, transfer of best practice and peer pressure where necessary. Fortunately, the climate for delivering on the Lisbon Agenda is somewhat better than at any time over the past four years because the global economy is picking up. We must position ourselves to benefit from that recovery.

Enlargement will give the European Union a real stimulus. We can capitalise on both this and the economic upturn to give impetus to our work. Following our analysis of the situation it was clear to me that this year's spring European Council must restore momentum within the overall Lisbon Agenda. I was satisfied that if political leaders projected confidence and determination we could move the Lisbon process forward. In order to do so I propose that heads of state or government accord the highest level of political priority to advancing it.

We could best do this by focusing on two issues. Increased impetus is vital to revitalise Europe's economy and bring about sustainable growth and more and better jobs. These were the areas we debated in the spring European Council on 26 March, and I will outline briefly what we agreed. In terms of growth, we agreed that it is essential to get the right combination of sound macro-economic policies and increased competition.

The spring European Council agreed that member states must ensure that they meet the commitments for budgetary consolidation which they have undertaken under the terms of the stability and growth pact. Long-term sustainability of public finances must also be secured. In terms of enhancing competition, the potential of the Internal Market has not yet been fully realised. An effective single market for services is crucial. We agreed that the draft directive on services must be progressed as a matter of high priority and on the issue of better regulation that we drive for increased competition.

The quality of the legislation we introduce is critically important and we need to regulate effectively and reduce the red tape that can stifle growth and competition. The recent four-Presidency initiative on better regulation is an example of the EU's commitment to accelerating regulatory reform. There is significant work to be done in this area. The European Council will review progress on tackling regulation at its meeting next November under the Dutch Presidency.

A strong science and research capacity is essential if we are truly to encourage competition, innovation and entrepreneurship throughout Europe. The level of private sector investment in research and development must be improved. All member states have been asked to improve the general conditions for research and development investment and to consider targeted support and incentives to encourage greater investment by business. In order to support sustainable development, the spring European Council called for the rapid implementation of the environmental technologies action plan which will have two important impacts. As well as protecting the environment, it will contribute to European competitiveness and economic growth and enable the European Union to become a world leader in environmental technologies.

It is important to remember that growth and competition are not ends in themselves. They are the means to secure and develop the European social model, with its emphasis on sustainability and inclusion. Modernising social protection systems and bringing the social inclusion agenda centre stage are vitally important and Europe must support all of its citizens. Protecting the most vulnerable members of our society is an essential part of the Lisbon Agenda.

The second aspect of the agenda, which we discussed at the spring European Council was more and better jobs. We agreed that our top priority is to increase the employment rate in Europe. This is the most obvious way to boost growth in the economy. It is also the best way to beat poverty and to counter social exclusion. The European Council agreed that the recommendations of the European employment task force, headed by Wim Kok, must now be addressed as a matter of the greatest urgency. Action must be taken both at national and EU level to tackle the structural challenges outlined in the Kok report, namely, adaptability, attracting more people into the labour market and investing in human capital.

I secured agreement at the European Council that we will carry out a detailed review of our progress on the employment front next year. This will be based on a concise report prepared by the Commission and the Council, which will pay particular attention to how national actions have boosted progress towards the Lisbon employment goals. While there is clearly much to be done, I am confident that we can make progress on this. We have created more than 6 million new jobs since 1999, the employment rate has increased to nearly 65% and long-term unemployment has dropped sharply. What is needed now is a determined effort by all parties in Europe.

Significant progress has been made in many areas of the legislative programme under the Irish Presidency. With the co-operation of the European Parliament, we have progressed measures of real and tangible benefit to citizens and business. These include increased mobility for workers, students and researchers; the European health insurance card, which will become operational by June; incentives for better infrastructure through the trans European transport network's decision; completion of the financial services action plan; greater environmental protection through measures such as the environmental liability directive and further development of the Community's railways through the second rail package.

We must also ensure that all member states continue to work on reaching the EU's transposition target for Internal Market directives. Timely transposition of directives agreed by Council is one of the actions we can undertake across the EU, to level the Internal Market playing field, increase competition and remove legal uncertainty. I am pleased that Ireland has performed strongly in this regard.

The Lisbon Agenda is clearly a reform programme, which now demands urgent action in the areas I have mentioned. As I have said many times, Governments alone cannot bring about the scale of changes required - all stakeholders must be equally committed to the process. I am pleased therefore that we secured agreement at the spring European Council to establish national reform partnerships which will be initiated by each member state in accordance with their own national arrangements and traditions. The important point is that they will involve the social partners, civil society and the public authorities in many countries that have not had the model we have had for so long.

These reform partnerships will be a useful mechanism to promote complementary strategies for change. They will address the broad range of policies - economic, social and environmental - encompassed by the Lisbon Agenda. This will help to build commitment and legitimacy as a lever for change at national level. I am firmly committed to social dialogue which has served Ireland well and has played a key role in the development of the Irish economy over the past 15 years. Our experience of social dialogue can provide a model of good practice for other member states. Working in partnership, we can achieve tangible results when we start with shared goals and engage in collective problem solving.

Next year will be an extremely important mid-term point for the Lisbon Agenda. The spring European Council agreed that this will be the appropriate point for a detailed review of delivery, five years into the agenda which will guide us over the next five years. As an initial step in the review, we invited the Commission to establish a high level group, chaired by Wim Kok, to undertake an independent study as a contribution to the overall review. The high level group will report by 1 November and this will feed into the preparations for the 2005 spring European Council. I am delighted to have had the opportunity to set the framework for the mid-term review which will be taken forward by the Netherlands and Luxembourg Presidencies over the next year in conjunction with the Commission.

Next Saturday, we will welcome ten new member states into the European Union, bringing its population to more than 450 million citizens. Here in Dublin, it will be my great privilege to host the enlargement celebrations on 1 May. We have planned a good schedule of events around this Day of Welcomes, both in Dublin and in ten towns around the country. It is vital that the enlarged European Union is a dynamic economic force that drives sustainable economic development. Enlargement will stimulate the European economy and will create new opportunities for all. The Lisbon process will benefit from the experience and contribution of our new members while we, in turn, support their convergence and integration as a matter of priority. There will also be exciting opportunities for tourism, trade, economic growth and collaboration in research and knowledge networks. Knowledge, innovation and ideas will be the key resources for economic success in the enlarged Union.

We have restored a focus to the Lisbon Agenda as a result of this year's spring European Council under the Irish Presidency. We identified what needs to be done to promote sustainable growth and more jobs. We have generated the political will to take action and to follow this up over the coming year, for which there is a clear timetable to be followed. There is a clear determination to implement the reforms needed. Appropriate and well implemented reforms mean more jobs, better services, better social protection and a better environment for us all.

I am pleased that the Irish Presidency has reinjected momentum into the Lisbon Agenda. We had a very successful spring European Council overall which was important at the stage we have now reached in the development of the Union and we are determined to continue to make progress on our overall EU agenda throughout the remainder of the Irish Presidency.

Thank you very much. The committee held meetings during February, March and April and recently published a report which will be circulated to members of the press, together with a summary which might be of interest. One point in the report was that Commissioner Bolkestein said that Europe does not have a competitiveness problem but member states do and he cited examples from Finland. One of the committee's findings was that there does not have to be a trade-off between competitiveness and social protection. While Finland, Denmark and Sweden are the most competitive economies in Europe, they also provide high standards of worker protection and conditions. Are family friendly policies part of the consideration for Ireland and Europe? If the unification of Germany is taken out of the formula, EU growth rates equal those of the US,.yet there is more worker protection in the European model.

Under the EUROSTAT assumption of moderate immigration, demographic ageing will cause a 25 member state EU's working age population to fall from 303 million people to 297 million people by 2020 and 280 million people by 2030. This is due to the long-lasting effects of reductions in fertility rates since the mid-1970s and it will be coupled by an increase in the 65 year old and over age group. Taking these assumptions, the number of people in this age group will increase from 71 million in 2000 to 93 million in 2020 and 110 million in 2030. This will cause the old age dependency ratio to increase from 23% to 40% according to the findings. In such a scenario, an overall decline of employment could be expected after 2010 and the fall in the number of employed between 2010 and 2030 would be 20 million workers for the EU 25 as a whole. This is a worrying trend.

The average EU GDP growth rate since 1990 has stood at 2.5%. Taking into account the EU's changing demography, productivity would have to rise to 2.8% between 2010 and 2020 and beyond 3% between 2020 and 2030 in order to compensate for the fall in employment. What steps can be taken to meet these worrying shortfalls? If the issue is not addressed, will the EU economy see something similar to what has been happening to the Japanese economy since 1990?

The accession states will not bring a solution to this problem but add to it because of their fertility rates. The only potential applicant state that may bring a solution is Turkey. Have Turkish demographics been taken into the discussion of the future competitiveness needs of the EU in the Lisbon Agenda?

The Chairman has made a good case for not proceeding with the amendment.

Deputy Quinn is welcome to make that point again when we come to his contribution.

I join the Chairm an in thanking the Taoiseach for attending the joint committee. Committee members are happy that the Irish Presidency put the Lisbon Agenda at the heart of its work programme. Sustainable employment and more competition in Europe are desirable.

The Taoiseach stated that we need to regulate effectively and reduce the red tape that can stifle growth and competition. The scrutiny sub-committee of this committee receives hundreds of new regulations and directives from Brussels every week. There is a fear that we might over-regulate ourselves vis-à-vis other economies, such as India or China, leading to the transfer of jobs there. Many companies are already outsourcing jobs in Germany and the UK to developing economies. Has Wim Kok’s group been made aware of this and will it examine it?

I thank the Taoiseach for updating the committee on the Lisbon Agenda and on the spring European Council's progress and establishment of national reform partnerships. The committee has been dealing comprehensively with this matter for a number of weeks and has produced a number of recommendations. When the committee began examining the Lisbon Agenda, it asked if Europe wanted to have the same rampant capitalism as the USA. Gradually, as the investigation continued, it was accepted that such a goal should be strived for, particularly if we adhered to the European social model.

The committee noted that Ireland is at the top of the EU class in achieving the Lisbon Agenda. Is there political will among some of the established member states and the accession states to see the agenda through and its reforms put in place? Many of the measures advocated in the agenda will involve domestic pain, particularly for the accession states.

I congratulate the Taoiseach on the progress made on enlargement, combating terrorism and so forth during the Irish term of the Presidency. One priority of the Presidency was to improve EU-US relations. The Minister for Foreign Affairs attended the committee last week in advance of the General Affairs and External Relations Council meeting. He put forward his views on how relations could be improved. At the forthcoming summit with President Bush, will the Taoiseach inform us how the process is evolving and what decisions will be examined at the summit?

In welcoming the Taoiseach, I thank him for such an insight into the Lisbon Agenda and for making it a priority of the Irish Presidency. The other evening, I had dinner with the impressive Ms Carly Fiorina, chief executive Hewlett-Packard. Hewlett-Packard has over 4,000 high technology employees in Ireland, with over 140,000 employees worldwide. It was a joy to hear her enthusiasm for the objectives of the Lisbon Agenda. She spoke not of low-paid jobs but high skilled ones and the future being in patents, research and innovation.

However, several weeks before, I received a letter from the vice president of Hewlett-Packard. In it, he stated his company's concerns over amendments adopted by the European Parliament on the proposed directive on the patentability of computer implemented inventions and subsequent proposals which are to be agreed by the European Council in May. Our economic future rests heavily with the sort of company that Hewlett-Packard represents.

The Centre for European Reform recently reported that Ireland is doing well in employment and productivity but its performance is well under par in innovation and social inclusion. There are concerns that the poor performance in innovation will damage Ireland's ability to reach its targets in the Lisbon Agenda. I hope it will now be on top of our priority list.

I join other committee members who have welcomed the presence of the Taoiseach. It is not often that the Taoiseach appears before a committee and his presence is all the more welcome for that reason.

I also endorse the comments made by Deputy Haughey and others regarding the focus that the Irish EU Presidency has given to the Lisbon Agenda. There is however a sense in which it is a one-dimensional process focusing primarily on competition, when it is a triangulated process which combines social solidarity, sustainable development and the essential necessity for competition. As our Chairman has rightly said on many occasions, this is not about competition within European member states, but about Europe competing with the rest of the world.

After four years, it is quite evident that the Lisbon Agenda will not drive itself. Most people who support the thesis and the process recognise that there is no driver there. Europe last confronted a similar set of objectives when we attempted to complete the Single Market, and the Taoiseach will recall his own involvement. Under Jacques Delors there was a specific Commissioner, an Englishman whose name escapes me - one of those names where the pronunciation of the word bears no relation to the spelling. His office identified 311 directives which had to be enacted by Europe in order to complete the Single Market.

As the EU President who will have a role in selecting the next President of the European Commission and nominating an Irish Commissioner, does the Taoiseach think it necessary for the Commission to take specific executive responsibility for implementing the Lisbon Agenda? Because there is a national competence which does not fall within the Commission, is it desirable to have a benchmark set of indicators, not on the competitive measures such as inflation, but on social inclusion, such as the cost of child care in Finland and Belgium compared to the cost in Ireland? The Taoiseach is not at the stage of worrying about child care or grandchild care, but when it does hit him, he will find that the cost is €850 monthly in Ireland, the highest rate in Europe.

It would be useful if we could see some comparative indicators in order that there would be public pressure at one level to achieve that convergence of competitiveness, along with someone with executive responsibility in the enlarged Commission. We already have 25 Commissioners and there is plenty of work to be done. I suggest that a number of the new incoming Commissioners could be given that task.

The Lisbon Agenda contains a section promoting social inclusion. This section begins by stating that the number of people in the EU living below the poverty line and in social exclusion is unacceptable. When we were dealing with the report, more note should have been taken of that, and perhaps the committee might return to the matter. More needs to be done in Europe in this regard. The European Anti-Poverty Network has asked the EU to honour the Lisbon Agenda and its promise to make a substantial impact on the eradication of poverty by 2010. There is little evidence yet of much progress.

The new high level group considering the Lisbon strategy is chaired by Wim Kok and will submit its mid-term review in 2005. Did the Government make any representation as to the make-up of that high level group? It has 13 members, with a strong business and academic representation, along with two trade unionists, but it appears to have no social policy element or social inclusion dimension.

The Commission has clearly de-emphasised social inclusion aspects in its own statements in favour of a pro-business and pro-competitiveness agenda. As others have said, this is a three pillar strategy, and social inclusion needs to be re-emphasised. How does the Taoiseach propose that this aspect of the Lisbon Agenda be promoted again?

Regarding transparency, what will happen between now and the issuing of the high level group's report in November? Will there be consultation with civil society, and will those who up to now have been marginalised be fully involved in the process?

Ms Patricia McKenna, MEP

I welcome the Taoiseach. Considering the Lisbon Agenda during the Irish EU Presidency is very important. We have a number of problems with the agenda regarding the over-emphasis on growth and competition. As Deputy Quinn said, it is about a number of different things, about ecologically sustainable development, the whole issue of development, and growth and employment. Sustainable growth is a contradiction in terms. It is ecologically sustainable growth we must consider. There is a lack of emphasis on sustainability and of the impact on the environment.

More and more in the development of Europe we see that environmental and social concerns are being pushed aside in the interests of big business. Deputy Ó Snodaigh mentioned the high level group. As well as the need to have trade unionism represented on it, environmentalists should also feature strongly, because there is always a huge imbalance between big business and other concerns.

Deputy Quinn suggested having benchmarking applied to social services such as child care. It should also be possible to apply it to ecological sustainability, with environmental criteria built in very strongly.

Another issue of growing importance in Ireland and throughout Europe is the ageing population. Long-term care for the elderly will present a problem, as we have a younger population which is not as substantial as the increasing older population.

The Taoiseach referred to red tape which can stifle growth and competition. Some people argue that criteria regarding environmental and social issues are stifling competition and growth. What is the Taoiseach saying in this regard?

A strong focus on science and research is essential if we are to encourage competition, innovation and entrepreneurship throughout Europe. During the Thessaloniki summit the Taoiseach agreed to the establishment of a European defence or arms agency. On foot of that, a report was passed in the European Parliament urging that more resources from research and development were needed to make the European arms industry more competitive globally. I doubt if there is a great deal of Irish public support for that idea. I was surprised that the Irish Government agreed to that in Thessaloníki because it flies in the face of Irish public opinion. Are there concerns in other EU states that resources from research and development are being channelled towards the development of new arms technology, or does everyone think it is a good idea?

I too welcome the Taoiseach. Knowing something of his diary in recent days, I find it amazing that he should be able to come before the committee, and he is to be complimented on that.

The Taoiseach said that in most of the Lisbon Agenda areas we are dealing with matters of national rather Community competence. This is important. When I talk to people about the Lisbon Agenda there is a feeling that what it proposes will happen anyway as part of European culture, but it will not happen unless it happens in each country. It is the combination of the work of all the countries combined which will bring it to fruition.

The area of competition is very important. I recently attended a meeting of ASEP, the Asia-European Parliamentary Partnership, and we have a long way to go before we can match their work ethics and their lower wage costs and so on.

Deputy Mulcahy referred to red tape. I have many friends in business and industry and they regularly bring up the over-regulation that often hampers them when they enter into competition, particularly in foreign spheres such as the USA or the Far East.

The Chairman's first question was on the area of competitiveness, which is taken as a very broad issue in the European model. It is not narrow but taken conclusively to include all areas. It is not simply a business agenda. I wish to make that clear from the outset. The discussion is as much on issues of social inclusion as anything else.

The Chairman asked about three areas, the first being family-friendly policies. Family-friendly employment policies are central to the creation of high quality employment built around real lives and real people. In the European model, throughout the last 20 years - it has affected this country for 30 years now - it has been extremely good for us. Part-time working has meant people holding on to their holiday rates proportionately. There has been maternity and paternity leave. There have been increases in all that, and we have legislation before the Dáil to make further changes. Throughout Europe, that is how people think of doing things to make family-friendly policies work.

In the same way, employment must be made attractive to older people. In many member states the retirement age is far below the statutory age. Next year the special Council is to focus on the national employment policies. A key aim will be to encourage reform, making the employment market attractive to all sections of the workforce. That is mainly geared around older people and women.

While this country is now up to the EU average of women in employment, Deputy Quinn has raised the question of the cost of child care, which is obviously a factor, and if it were not so high, more people would work. Recent figures show that there are people who cannot afford the cost and do not want the hassle. Therefore, they do not work.

There are better European models than ours, and we should be working towards them. All that is in the Lisbon Agenda, and family-friendly policies are there to ensure that one does not lose any rights if one is working, to make it easier for one to work, to allow one to work to an older age if one so wishes, and to ensure facilities for difficulties along the way, whether it be health, maternity leave, or illnesses in the extended family.

Social dialogue is enormously important in the European context. As I outlined at some length in my speech, the number of groups, agencies and representatives of civil society with an input into Lisbon is enormous. Quite frankly, having had to meet all those groups this year and last, one wonders if there might be too many involved. However, since people wish to have their say, their involvement is worth it. They all play their part. Social dialogue is not focused exclusively on one area such as business. The cliché is that the Lisbon Agenda is about big business, but it is not. Anyone who reads the committee's own report knows that. The approach of our Presidency has been carefully balanced and includes action across all the three pillars.

If we succeed in achieving high rates of growth and generating more and better jobs for our citizens, that has a positive impact on social inclusion. The best route out of poverty, in the majority of cases, is a job, and I am therefore pleased that we secured colleagues' agreement that delivering more and better jobs should be regarded as the most urgent issue to be addressed over the coming period. Equally, I draw members' attention to the fact that our approach to employment seeks to improve the quality of jobs, which will, in particular, directly benefit those in low paid, insecure and vulnerable employment.

Similarly, priority will be attached to lifelong learning, which is equally beneficial to those experiencing disadvantage in any way. Literacy, numeracy, training and technologies are all built into it. We have agreed that national strategies on lifelong learning should be established in all member states by 2006. Every country has a basis. There is a very good document on that model, which is not unlike work that would have been done here over the years by such organisations as FÁS, previously AnCO. They developed those lifelong learning programmes, which have proved to be very beneficial. There are many other organisations doing that now. Since it is recognised that education and earning potential are directly linked, action to facilitate access to educational opportunities should help promote social cohesion, not only for those in their 20s or 30s but for far older people too.

Deputy Mulcahy raised the issue of red tape. I will come back to the question on demographics. With red tape, as with any other argument, there are two sides to the argument. In some cases, red tape is necessary since, if one does not have it, people do their own thing without regard to rules, health and safety legislation or health regulations. One must have red tape. However, why we need 1,500 regulations and directives on how to make a cardboard box I do not know. A cardboard box is a cardboard box. Some of it is totally essential, and some of it is in the realm of the zany. We must try to ensure that there is a reason to regulate.

A very good European conference was held here last week, with people from all walks of life involved in arguing regulation from different sides. Clearly, from the point of view of productivity and business, there is over-regulation and too great a burden of bureaucracy. Trade unions would argue as strongly as employers that it must be focused. However, the issue must be carefully examined so that we do not throw out regulations that are important from a working point of view. I agree that there is too much red tape and regulation and that this is one of the things that turns people off. On the other hand, Patricia McKenna, MEP, has raised the point about environmental areas in which it is very important that we have protection and regulation. The environment must be protected in a strong and coherent way.

When I talk about removing red tape and streamlining directives, I do not mean that in a careless manner. However, it should not be so bureaucratic in many areas of production that it places an added cost on the company, making it so unproductive and uncompetitive that we lose it and the investment goes to an entirely unregulated country, resulting in our losing jobs here. As that does not prove anything either, we must be careful with regulations. The White Paper that we published in January and the submissions received on that from this country are very useful. We are one of only three countries out of the 25 that really started applying minds to the issue of regulation. Trade unions, IBEC and the Chamber of Commerce are now actively engaged in that issue.

Deputy Haughey asked me about the political will to act. There are two issues. Much depends on the competencies of the member states. It cannot be driven entirely from the centre, which is in any case not the best way to do it. Wim Kok's report of last year and early work done by Antonio Gutiérrez, the former Portuguese Prime Minister who started the Lisbon strategy, was based on ensuring that it jogged people's minds to do things in their own countries that they should be doing anyway and benchmark them against what is happening elsewhere, getting people to focus on good things such as creating employment and making countries more competitive.

The reason the Lisbon Agenda has not moved so much is that there is better implementation when the competencies are in the European Union as against when they are not. Domestic competencies as such are not such a high priority. This year's report shows that clearly. Much greater success is achieved when there is collective effort. I am not referring to Ireland in particular, but in many ways the same argument may be applied to us.

This leads directly to the question as to whether it is a good idea to have someone in the Commission directly to liaise, co-ordinate and drive these matters forward. I believe I have answered the question: if it is not happening when it is outside the competencies, then somebody must focus in on it. The only proviso I would make - as I have before to the National Forum on Europe - is that the unions are somewhat worried about that because they fear it might become competition orientated. However, if it is holistic it has my support. That goes back to what I said at the outset, namely, that competition is inclusively linked in.

I would emphasise for the committee the concern that if it is a "competition" Commission, the aspects that have to do with "social affairs" will be dropped. There is a difficulty. I would say to Deputy Quinn that the important issue is how the job is framed. I agree with him that the capacity is there, within the Commission, to do the job. How it is framed will be important, however. I would not agree it should be competition exclusively. That would create a problem.

Senator Quinn asked about patents. I met the chief executive of Hewlett Packard again, yesterday, in Dallas. She is an impressive lady, to put it mildly, who runs an organisation of 144,000 people in 70 countries. She has been responsible for the rationalisation of Compac. She is highly supportive of what is happening in this country. She has proved that by moving several of Hewlett Packard's centres to Ireland. She is enormously conscious socially of her responsibilities as regards both environmental and labour issues. She speaks only of quality employment, proper training and education for workers. It is disappointing that the patents directive has not been sorted out.

On the services side of the Internal Market I believe much progress will be made. However, there is no agreement among many countries on patents for many reasons. As the Senator knows better than I do, to have a patent in the United States and one in Europe is enormously difficult. We are losing out and it is affecting business because it is so difficult here. I have heard all the arguments on the other side. To be honest I do not really accept them. I will not attempt to make a case for them. In this case the Germans are particularly difficult. I do not believe this matter will be comprehensively addressed during the Irish Presidency, except at the Competitiveness Council meeting in May. I am not sure what progress was made at yesterday's meeting Dromoland. I do not see us being able to get there. I have lobbied Chancellor Gerhard Schröder and others, but there is a divergence of views and opinions. The "blame game" is being played, somewhat, between the Commission and member states, as well as between large and small countries. I do not see this being resolved. On the services directive and the work of the Internal Market in this regard, major progress will be made, but not on patents.

Will the Taoiseach clarify the position on the benchmarking table?

I agree with the point the Deputy has made as regards the benchmarking table. It is good for us to keep pressure on each other in this regard, but there is too much concentration on looking within, and not without. I fear European states will spend the whole decade from 2000 to 2010 benchmarking each other, as India and China beat the socks off us all. We need to be benchmarking ourselves against other-——

Unlike the Single Market, the dichotomy is that there are national and Commission competencies. What would drive national competence deficiencies is public opinion. Public opinion would be aroused if there was a comparative benchmarking table between sustainable development in Sweden, as distinct from sustainable development in Ireland.

One of the recommendations is that with 25 member states involved in the process, something like 2,500 indicators become a task in its own right. One suggestion was that the committee should support moves to appoint a vice-president of the incoming Commission to try to bring about greater transparency, and perhaps fewer indicators. I add that as a supplement to the question put by Deputy Quinn.

The indicators are published every year. By themselves they are large and cumbersome. We have reduced the number this year to try to focus them in order that public opinion can better appreciate them. That is a useful innovation. My colleagues here tell me that we have it down to 12, from the enormous document that existed formerly. I am not sure who would have looked at it in the past, but now at least there is a clear focus with 12.

I want to come back to two points the Chairman made, one on productivity and the other on the demographic issue. While there are obviously good things in the United States that we should work hard to emulate, as regards the committee's own deliberations I saw that this was discussed and that the productivity comparison figures that emerged were equivalent to about 70% of US levels. The figures are not entirely valid. The Commission's spring report noted that while this country had a strong performance on the productivity front, Europe as a whole had not done as well - with growth rates and productivity per employed person going down since the mid-1990s. It now fluctuates somewhere between 0.5% and 1%. However, we are committed to improving EU productivity. That includes reducing, where appropriate, non-labour costs, introducing flexible forms of work and investing in human capital. These initiatives will contribute to productivity growth.

We must also focus on research and development priorities to remain competitive. As regards the figure of 70% relative to 100%, there are many other factors which have not been taken into account in that survey such as the different choices as regards hours worked, lifestyles and such issues. Europe is not nearly as bad as has been portrayed. I made the point recently in the office of the Institute of European Affairs that Europe tends to talk itself down by leaving out the social dialogue side of the equation. Our social dialogue and social protection are far better than anything that the United States can offer. We should not just throw that out as if it does not matter and say we have less productivity. There are many other concerns that must be taken into account.

On the dependency ratio and demographics, the populations of European member states are ageing, although not to same extent in all countries. However, birth rates, by and large, are down to under two children per marriage. In many countries it is 1.2. Ireland is currently 1.6, I believe, a dramatic change from the time we joined the European Economic Community. Italy is at a stage where it has to bring in a large number of people into its economy every year.

There is major unemployment among the accession states to the newly enlarged Europe. One of the major issues on the "new neighbours" initiative is access to the EU. I have met many of these countries over the last few months. Russia wants access, as does Ukraine. I met the Lebanese Prime Minister the other day and these countries are all seeking agreements in this regard. There is no fear that we will have insufficient people, because countries are seeking stability agreements and legal permits.

Equally, our European colleagues are reforming the pension provisions and extending the pension age. We know that pensions were provided at age 65 years because 120 years ago it was noted that the majority died at 64 years, so pensions were provided for those aged 65 on the basis that it was unlikely people would live very much longer. There is no basis for retiring at 65 years and that is the reason for making the retirement age more flexible. I am not suggesting that people should be forced to remain at work. However, it will not be possible for people to retire at 50 or 52 years with a full pension. It is projected that in Ireland the number over 65 years will double in the next 20-25 years. This will give rise to dependency ratio issues. I envisage that in all the association and stabilisation agreements, it is inevitable that agreements will be reached where people will be permitted to enter the European Union. Turkey is an exception in demographic terms.

A great deal of work has been done on social exclusion. Patricia McKenna, MEP, asked about armaments. This is not an important part of the Lisbon Agenda. There are arrangements under the European Security and Defence Policy to increase co-operation between the armaments industry and member states. Such co-operation is attractive to member states as there is a significant amount of duplication in this area. Ireland does not have an armaments industry of any substance. A few of the technology companies are involved in some parts. It is in our interests to have access to a competitive armaments sector when procuring our national defence requirements. The armaments industry remains very much a national competence issue and I cannot see that changing in the period ahead.

During the Swedish Presidency, environmental issues were raised at Gothenberg and many excellent sustainable developments have resulted. I can provide some of the reports that were commissioned, but I am sure Ms McKenna has seen the reports because she has addressed the European Parliament on these issues.

Mr. Wim Kok, a former trade union leader, a former leader of the European Trade Union Confederation and a former Prime Minister, is the worker oriented chairman of the high level group. The person I supported for membership of the committee was Mr. Niall FitzGerald, chairman of Unilever and co-chair of the transatlantic business dialogue, where I have worked very closely with him on that initiative. There are a number of trade unionists on it. Mr.Bedrica Moldan, a former Czech Minister for the Environment and chairman of the environmental centre is on it. It is a very balanced committee. While there are business people there, clearly there are people with an environmental background on it.

The European Council gave very strong signals on global warming, where we called for early implementation of the Kyoto Protocol on environmental technologies. Patricia McKenna, MEP, will be aware of the pressure that has been put on Russia and this will be taken up during the EU- Russian summit shortly. It is seen as essential that we get Russia to sign up to these issues and we will do our best to achieve that.

I thank the Taoiseach. It is an indication of the importance of this issue that we invited the Taoiseach to address it rather than any other issue. Clearly the Taoiseach and the committee spent a great deal of time working on it. The issue can be more effectively dealt with collectively in the European Union than at intergovernmental level.

The Taoiseach has a very busy work schedule as President of the Council and the committee is grateful that he took time from his busy schedule to be present today. I thank the Taoiseach for his presentation and for dealing with the questions. That concludes the business of the meeting.

The joint committee adjourned at 4.05 p.m. until 2 p.m. on Wednesday, 12 May 2004.
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