Joint Committee on the Secondary Legislation of the European Communities debate -
Thursday, 11 Oct 1973

Regional Policy Fund : Draft Regulations.

The Commission has issued three draft regulations which are before us for consideration and despite a very heavy schedule, and an almost incredible work load, the Minister has very kindly decided, because of the importance of this whole matter of regional policy and of these three regulations in particular, to come to us today to talk to us at first hand about the whole situation in regard to Community regional policy. Both in his official and in his personal capacity he is very welcome indeed, and it now gives me great pleasure to ask Dr. Garret FitzGerald, the Minister for Foreign Affairs, to address you.

Minister for Foreign Affairs (Deputy Dr. FitzGerald)

Thank you very much indeed, for your kind words. I do apologise to the committee for not having been available before this, in particular to discuss this matter of regional policy, but I was, as you may be aware, touring Europe for two weeks visiting a number of different countries to discuss the approach by the Commission to this problem, to explain the Irish position and to seek support for our attitude in respect of this part of the Commission's approach which we found unsatisfactory. Subsequently I was in New York for two weeks at the United Nations. Therefore, there was no date on which I was able to meet the committee until now. I am glad we could meet at this stage before the Council of Ministers will have considered this whole question of regional policy so that we may have an opportunity of exchanging views at this stage rather than after the whole process has begun.

What I would like to do is to speak briefly about the main defects in the Commission's approach as we see them, viewed from an Irish point of view, but also in some respects more broadly from the European point of view, given that this regional policy has something important to contribute to the development of the Community, to stability and, I may add, the ability to expand dynamically and sustain the growth rate and not be held back by difficulties existing in particular parts of the Community where economic development has not been as rapid to date.

The regional policy, as we see it, is something which is designed to transfer resources within the Community to parts of the Community whose problems are such that they are beyond the ability of the individual member states to cope with them single handed. The supplementary policy is designed primarily to supplement, in the first instance, the work of governments, and that is not to say we would not favour the development of this process of supplementation into a more general European-type policy on a European scale. But realistically we must start, in the first instance, from the base that there are states which have regional policies some of which has proved effective, some of which has not proved adequate, possibly—certainly in some cases—because the state concerned did not have sufficient resources in its better—off areas to transfer to the weaker areas. It is there that the Community regional policy comes in to supplement.

The need for a regional policy is, of course, a little sharpened by the proposal for economic and monetary union. This is not the only reason why it is necessary. We recognise that economic and monetary union gives a new dimension to regional policy and has increased the need for it. Of course, the regional policy concept is in the Preamble to the Treaty itself drawn up at the time and the idea of regional policy had found expression long before EMU had been thought of. The reference in the Preamble refers to the anxiety of those concerned to ensure the strengthening of their economies and their harmonious development by reducing the differences existing in the various regions and the backward and less favoured regions.

Therefore, we relied primarily on the Treaty itself and its Preamble as the basis for regional policy, noting that the need for this policy has been greatly intensified by the proposal, 15 years after the Treaty was signed, to move towards economic and monetary union. The economic and monetary union, although it sets a deadline of 1980, gives some indication of the scale regional policy will need to be on in order to achieve sufficient impact in the less favoured regions to make it possible for the countries concerned to accept the discipline of economic and monetary union and to accept the merging of economic policies which that implies.

Secondly, but deriving from that of course, is the question of the scale of the policy and the fund in question. If there were not a deadline one could argue about the rate at which one should be making progress towards ironing out these disparities or alleviating them to make them tolerable, but given the EMU deadline there is clearly urgency about achieving results quickly which demands resources on a very large scale, and when we come to consider the adequacy of the resources proposed by the Commission we have to have regard to this deadline.

On the sufficiency of the scale, there are a couple of things I would like to say. The fund is divided over a three-year period. There is no explicit commitment to go beyond that point but a clear implication—we would hope to make it even clearer in the process of the negotiations—that it will continue thereafter and presumably continue to expand. However, what is proposed at the moment is a fund building up over three years to a figure of 1,000 million units of account, and in the third year amounting to £450 million. That may sound a good deal of money but, of course, it has to be seen in the context of the actual scale of the regions in question. As we now understand it, the region which the Commission proposes to define as being eligible to reap the benefit from this policy will have a population which would be something approaching one-third that of the Community as a whole. And as many of these areas are argricultural and of low density, the actual area of the Community involved might represent an even higher proportion, over one-third of the area. Therefore, we are talking of a fund which has to be spread over something like one-third of the Community.

I shall ignore the figures for the first couple of years because I regard them as transitional. We all accept you cannot, overnight, create a fund of adequate level; there must be a building-up process. I would have thought, therefore, the figure for the third year would be the relevant figure. Of course, this figure of £450 million in the third year is one which represents the total amount to be fed into this fund. If, however, as seems likely, bearing in mind the high proportion of the Community which is to be covered by it and the fact that most if not all countries will have regions which will, under one or other heading qualify, it is clear that the net transfer between countries will be very much smaller, it does not seem possible, on any likely sharing out of the fund by any criteria, either those now proposed or any that anyone else is likely to propose, that this £450 million gross sum paid in could lead to inter-country transfers exceeding, perhaps, £150 million.

As the purpose of regional policy is to help those countries which have not sufficient resources to help themselves to progress at the rate necessary and required by the terms of the Treaty and by the proposals of the EMU, one must really look at these inter-country transfers as the relevant figures, and the figure of £150 million inter-country transfers is extraordinarily small in relation to the needs. Indeed, it could be argued that this small country alone would need or could absorb a figure which would be more than half of that, meaning that, if we got it which on present figures does not seem likely, little more than half would go to the entire rest of the community, to the other 72 million or 77 million people. This suggests to us that the scale of the fund as proposed is inadequate, even for the third year, quite apart from the inevitable inadequacy of the fund in the building up period in the first couple of years.

In this context we are also concerned with the fact that there is nothing in the proposals as put forward that shows any recognition of the fact that Ireland and Italy have protocols to the respective treaties, the Rome Treaty and the Enlargement Treaty, which guarantee a measure of priority for these countries in respect of this very question of development of areas which are not as well off as other parts of the Community. One would have expected that these protocols would have found some concrete reflection in the proposals. There is not only no reference to them but nothing in the proposals, as I see them, which could be represented as intended to reflect the effects of the protocols. This we regard as of some importance.

The Commission in its proposals of last May did recognise that the problems that would have to be met within the regions of the Community which are to be covered by the fund vary considerably in intensity. We are not talking of a Community divided in two parts, one third of the Community being at a certain lower level and the rest being at a higher level. Of course, where a line has to be drawn between the areas to benefit and those not to benefit there is a continuous gradation of levels of GDP per head, or on levels of labour surplus. These are regarded as the two main criteria which should be applied.

The Commission itself recognises this and in its May document it referred to the fact that there must be standards to ensure that the means available to the fund are used in a manner quite independent of any criterion of Juste Retour and it reflects the size and urgency of the regional problem facing the Community. As we understand it, and recent statements from the representatives of the Commission reflect this: there is an acceptance by the Commission that there are these variations in intensity of the problems and that these will have to be taken into account some way. But the actual proposals of the Commission and the draft regulations in no way reflect this. There is no point at which one can detect any recognition of the varying intensity of the problems within the areas of the Community defined as needing regional policy.

Such indications as there are would appear to suggest the contrary. There is, for example, this question of the percentage of the cost of projects to be financed by the Community. Proposals are made for 15 per cent in respect of industrial projects and 30 per cent in respect of infrastructural projects. There is no suggestion that these would vary according to the intensity of the problems nor indeed in relation to the ability of the country concerned to provide the funds. A flat 15 per cent and a flat 30 per cent are proposed.

Moreover, about the time when the Commission proposals were published there were references in the press to figures represented as possible quotas for the distribution of the fund. The figures in question, when one examines them, are found to reflect simply the proportion of the total amount that each country will have. What was proposed in respect of the different regions was on the basis of population. The very use of the figures, not adopted by the Commission, but dealt with in a working paper, implied that there was an equality of intensity throughout the Community on the population criterion; it was a question of the population in the disadvantaged regions in each member state as a proportion of the total Community population in disadvantaged regions. It does not seem to be consistent with the idea of taking account of the varying intensity of the problems.

This, from my point of view, is of vital importance. We cannot accept that the problems of this country are to be equated with those of relatively highly developed regions of other countries which may face problems of industrial training but which may, in fact, as GDP per head be twice as great as this country. The disparity in some cases could even be greater than three to one. We cannot accept that that kind of variation should be ignored and that we should be put on a par with relatively prosperous areas of very rich member states. We therefore place a lot of importance on this question of the relative intensity of the problem and seeing this translated into some concrete form when the regulations emerge from the present discussions.

In connection with the question of countries providing from their own resources, there is the further point which is closely related to it, the relative capacity of countries to provide from their own resources for the regional policy which is, after all, what the whole policy should be about. Again there is nothing in the proposals put forward in the regulations which seems to reflect this particular consideration, fundamental though it seems to us to be. In this connection it is important to note that the whole of Ireland is seen, naturally enough, as a region for this purpose because even the wealthiest part of this country is in fact, in terms of GDP per head, well down the list and well below the level of any other part of the Community with the exception of Southern Italy. There is acceptance I think that the whole of Ireland should be treated as one region.

The logical corollary of that is that we do not have, and this has now been accepted, any better off areas to draw from, whereas all other member states have, by definition, some area which is well enough off not to need regional aid and from which they can effect some internal transfers. Perhaps it would not be sufficient but they would be in a position to effect some internal transfers. We have no such area. The Irish position in this respect, is unique and we expect this to be recognised in some form. No reflection of the ability to pay emerges at all and, indeed, the use of the 15 and 30 per cent suggests that each country will get according to its own ability to pay.

The better off country which can afford to give big incentives to industrial development would get more because of a fixed relationship between what it pays out and the amount the Community will provide. There is, if anything, an inverse relationship that the rich will get more and the poor less, the opposite to what we had understood to be the fundamental principle of the regional policy.

In addition to this we are not happy with the criteria which have been proposed by the Commission. Firstly, one of the criteria seems to me, and to the Government, to be invariably unsound as a criterion from a statistical point of view, I refer to unemployment. If unemployment figures, internationally, are the product of an administrative process, that process varies enormously from country to country both in level of the employment benefit paid and the traditions in which it is paid vary enormously. Therefore, any comparison between these figures internationally which tends to suggest that 2 per cent unemployed in one country is the same as 2 per cent unemployed in another, is basically nonsensical.

There are parts of the Community, where, if the benefits paid were far better both in amount and in the terms and conditions of payment than the richer parts of the Community, the numbers of unemployed would multiply in response to this incentive. There is, in fact, great underemployment in some areas and underemployment which does not emerge as unemployment because there is not the incentive for it to do so under the existing administrative process. These figures for employment, in our case derived from the live register of unemployed, and similar figures elsewhere which are related to the payment of unemployment assistance or benefit are inherently incomparable in any scheme which, assuming they are comparable, is one which is statistically unsound to start with. We are unhappy with that criterion.

We in Ireland are particularly unhappy with it because in our experience in a country with a vast labour surplus in the past, and still a substantial labour surplus, unemployment can be simply the residue of those who do not go. In Ireland this is the case. My own calculations show that over the 50 years of the existence of the State, which is roughly the life of a man, roughly 47 per cent of those who passed the age of 15 since 1922 and are still alive and have left the educational system and are still actually in Ireland. Almost half left the country. The unemployment element is about 15 per cent. In fact, something like 85 per cent of our labour surplus emigrate. If you use unemployment as a criterion it is not a sound one. The ratio between well-off countries and less well-off countries would be six to one. We reject the use of unemployment as a criterion. We may have to accept it as an element, but on its own it is deeply mistaken. It is one of the key criteria suggested by the Commission, but we do not accept it as such. When the main proposals were put forward at the Council I made it clear that we had reason for not accepting the criteria and I do not expect them to be employed in the Commission's proposals.

Another criterion which is under discussion is that of GDP per head. It has been suggested that any area whose GNP per head is above the average should be excluded. We regard this as unduly generous. Half the Community have GDP above the average. We feel that to use that criterion would be to misconceive the problem. The Commission itself mention one-third of the Community to be considered. That is too big. To employ a definition which brings in half the Community would be absurd. Perhaps 15 per cent would be below the average and would be more realistic. Areas only slightly above the average should not be brought in.

We find something else about the criteria used distressing. We may not have adequate information on this point. Further clarification may help to reassure us. There are indications, as expressed in the media, that in the three different sets of circumstances there is a difference in the stringency of the methods used to arrive at the criteria. In the case of agriculture the criterion proposed seems reasonable enough to us, but when you come to imbalances resulting from industrial change the criterion suggested there is 2 per cent unemployment. We object to unemployment as a criterion to start with. Two per cent is a remarkably low figure. We would not regard 2 per cent unemployment as unemployment at all. We know there must be some people who left through emigration. If we got to the stage where we had minimal emigration with only a few hundred people going each year because they prefer the cultural atmosphere abroad and 2 per cent unemployment, our economic problems would be solved.

When we come to the criteria about structural underemployment in the regional policy, it is suggested that the criteria is different again. There must be 3 ½ per cent unemployed. As regards emigration, it is suggested that a rate of at least 10 per cent of the population will apply. This must be a mistake but if it is not the definition about emigration seems nonsensical. I do not think that emigration at the rate of 10 per cent would occur unless there was a famine or a massacre.

The final criticism I would make of the proposals is that they do not correlate. They do not reflect in any way the Commission's own thinking as set out in the May document. That document suggested that there should be flexibility in the use of resources, particularly concerning the intractible regional areas or trans-border schemes involving more than one area. We were heartened by that reference. It seemed to show an appreciation of the particular problems of this country, North and South, and also the problems of southern Italy. That proposal has disappeared from the July document. There is no reflection of it in the draft regulations before us. We do not understand why it has been dropped. We regard it as a retrogressive step which takes away much of the value of the proposed regional policy as put forward in the original document.

That is a brief amalgam of the difficulties we see. In the nature of things, I am giving you the bad side. There are good features of the document on which we hope to build. There is much which gives us concern. This will come before the Council next Tuesday. Members of the Council representing different countries will give their reactions to the proposals and will try to give guidance to the working party studying them. They will try to seek solutions to the problems. The discussion next Tuesday will be very important. It will be only the beginning of a process. Much work must be done at official level before the Council will be faced with political decisions to be taken. The present plan is that there will be a discussion in November and again in December and the final date for agreement will be reached either before or after Christmas. Much work lies ahead.

I would be happy now to answer any questions asked.

Deputy O'Kennedy

On a point of clarification, do I take it that we confine our discussions in the public sessions to the outline statement of the Minister for Foreign Affairs and that we should not at this stage concern ourselves with what may be the proposals of our Government?

Deputy Dr. FitzGerald

That would be my hope.

Senator Higgins

I should like to make the point at the outset that this discussion on regional policy has inevitably depressed us as regards the level of the Communities' efforts to develop regional policy. The committee should be very depressed and should now carefully consider how Irish interests should be protected since not only have we difficulty with the rather narrow document to which I shall refer later but we have a cutting back on social expenditure in the current year and a cutting back on proposed expenditure in the next year in regard to the Social Fund. We can see, therefore, that the Communities' effort to deal with the two aspects that it was suggested showed a human trend, the social policy and the regional policy, is in fact being cut down.

The Minister referred to the urgency of the problem being heightened by the economic and monetary union. I agree with him and would go further and say it is inconceivable to speak of economic and monetary union without having developed a regional policy. This point has been made in a document presented to the Committee on Economic and Monetary Research by Mr. Mitterdorfer: we have regional policies receding. To my mind these documents now before us represent a major departure from the kind of literature—qualitatively—that was in circulation in 1969, 1970 and 1971. Documents emanating from the Commission's institutions in those three years were not only broader in their criteria but were broader than economic success. I can think of documents about regional policy which came out in 1969 and spoke of it as a check on centralised decision-making, and about the so-called necessity to give power back to the regions where power would be centralised by the acceptance of the terms of entry.

Another point I would stress is that when we look at the documents from the different committees placed before the European Parliament they are pathetic in their inferences. Before the Irish decision to sign the document which effected entry to the Community we were told there was a very great need for institutional development, that Parliament would be given great powers but here we have the Parliament commenting on one of the documents before us, that is the proposal from the Commission of the European Community for a council to study the establishment of a European Ministry of Development Fund, and saying presumably this proposal by the Commission is intended to replace its proposals of 17th October, 1969, and 28th May, 1971. In other words, we are now at a stage when the economic reality of the European Economic Community has asserted itself almost totally over any social aim or, as I would put it more explicitly, over any social pretence the Community might have had in the years 1969, 1970 and 1971. Before the Minister goes to the Council I should say that the Council itself is in a crisis because it is absolutely unacceptable to accept any rigours of economic and monetary union without affecting economies.

In the plan which an economic and monetary union would impose on development by member states of their own resources we are asked to accept a restraint on the right to develop resources and at the same time we have none of the social checks which, as the Minister quite rightly points out, were mentioned in the protocol of the Treaty in the case of Ireland and Italy and which were mentioned in the Treaty itself. I find it distressing that regional policy has come to the depth that every report we have before us, official, semiofficial and unofficial, suggests that what we are likely to get now is a hotch-potch of a regional fund that will somehow be acceptable to all members. It is absurd to suggest that you can establish Community criteria in regional policy and then suggest that there is a link effect between these criteria and each and every member state. This is a political absurdity.

When I am making these points about regional policy I am not doing so with any begging bowl mentality but from the point of view of the Community being shown what an economic Colossus they have made with an intensification of the economic aspect and a lack of social policy.

I do not agree that job creation of itself, and industrialisation of itself, are the answers to the regional problem. All these documents ignore the whole problem of definition of a development region. This country has—and had—no regional policy but one cannot speak of regional policy without speaking about local government reform. I would urge the Minister to consult with his colleagues, particularly in our own Government, when he faces the problem of turning out a regional policy for Ireland. The Minister rightly mentioned incomparability of statistics. Commissioner Thomson gave me a direct reply that funds would not be available for the investigation of scientific problems and the definition of regions. He specifically mentioned the problem of statistical incomparability. Therefore, what we have now is an economic document which has replaced all human documents and social pretences of the three previous years. We have the regional policy up for a grand haggling match between the members of the Community. I cannot emphasise sufficiently what public reaction to this may be. The referendum in this country was conducted on the basis of the protocol which brought a large part of the population in favour of Ireland's entry. The argument the Minister will probably face at the Council of Ministers will be that there is a choice of having no regional fund or a small regional fund. But it will be quite unacceptable to anybody who seriously considers the regional problem to have moneys lopped off the social side so that they can be reallocated under a regional heading, or have a weakening of common agricultural policy to make a regional policy possible. If next January the Community produce a slightly changed common agricultural policy, a slightly changed social policy and a new regional policy it will have fooled nobody.

Senator Robinson

I should like to make a few comments following the Minister's devastating and, I think, very correct analysis of the proposal for a regional fund and the whole attitude now of the Commission of the Community towards regional policy. This committee is one of the appropriate ways of making clear what the attitude of the Irish people is in this respect. There is a danger that because this country voted so strongly in favour of entry that we are prepared to accept whatever terms may be offered, that we are not in a strong bargaining position. It would be useful for the committee to indicate in very strong terms to the Minister that the criticisms he has made are the criticisms that we all hold in regard to this policy and that it is unacceptable. We should voice the more-than-concern of the Irish people, particularly in relation to these proposals and, generally, in relation to the way in which the Community is developing.

I think the Minister started off with the right approach by showing that there is at least a theoretical time-scale in relation to the programme for regional policy and the end of that time-scale is 1980. He has shown that the whole premise on which this regional policy is based is completely false. It is three years, with no guarantee of its future. It is not based on a prediction, thus a start on the basis of what is predicted for these three years will not lead in any realistic way to what is intended to be achieved in 1980. It is necessary to come back to these principles again and to seek a programmed analysis of what will be necessary in order to achieve the regional development which will lead to a parity in the Community by 1980 and this is properly linked with any proposals for economic and monetary union. Any proposals for economic and monetary union should be rejected unless there is this programmed analysis and this thought-through process of the consequences and of the scale of funds which must be involved in this.

As well as linking the question of economic and monetary union I would agree with Senator Higgins and link the question of the institutional development of the Community. The Minister was too kind—particularly in relation to the different criteria chosen to determine the low figure of 2 per cent for instance, in relation to industrial area unemployment and the criteria for agricultural areas et cetera—when he said he did not understand. I think he understands very well that this was an attempt by the wealthier countries of the Community to come in on regional policy and the net result has been that we are being faced with a regional policy based on quotas, not any more on the basis purely of population but on the basis that each country must get its quota and therefore, we must go through a very strange and tortuous definition of the criteria to ensure that the wealthier countries get their quota out of regional policy. The explanation given for this or the justification given for it is that otherwise they will not finance it. This, to me, is unacceptable as a basis for a Community, it is unacceptable on the basis of a Community’s regional policy and we do ourselves no good at this stage if we accept a half-baked, so-called regional policy which is based on the selfishness of states, which does not face at all the criteria for having a regional policy, which is not in any sense a Community policy.

We must be very clear that in arguing in this way we are not arguing specifically in Ireland's interests. We are arguing about the Community's road forward from this point. I would agree with Senator Higgins that it is a point of crisis because within the Community there is no institutional structure which will allow for the working out of differences between areas, there is only the state structure and the state structure as it is operating at the moment is operating in the selfish best interests of states. Ministers who go to the Council of Ministers are responsible to their Parliaments, to their people, they have to look after their state's interest. Until we get an institutional structure in the Community which will allow the European Parliament and the Commission to stand over and justify the interests of depressed regions and the more intensive resources that must be diverted to those regions, I do not think we will have a Community regional policy.

Therefore, I want to make the point that the regional policy, as outlined and very ably criticised by the Minister, is unacceptable to Ireland, not just because the amount which Ireland would stand to gain under the criteria is unacceptable but because it is not Community policy. It is a collection of unrelated criteria so that each country will get a quota out of this fund which in itself is ludicrously inadequate and which is not based on any prediction and working towards the logical result of having a Community based on equality in 1980.

I know the Minister has indicated that he does not wish to discuss the Government's tactics and the Government's attitude in public session. I do think, however, that we, as the Members of this committee, ought to use the public session to make it eminently clear to the Minister on the record of these proceedings that we take the very strongest possible objection to the present formulation of this regional policy and that we reflect the views of the Irish people.

Senator Lenihan

I will be very brief because I think we could have an over-talking session here. We are all totally behind the Minister in his endeavours in this respect. The arguments and criticisms he advanced on the proposed regional fund were very valid. We will be doing our part in the European Parliament next week on this. We will be devising a strategy which will involve speakers from all parties—Labour, Fine Gael and Fianna Fáil—in running a campaign against the proposals. This will be on foot of a regional policy document which will be before us in a committee of the Parliament. We will prolong this debate through Thursday and if necessary into Friday.

What I should like to know at this stage is in what practical way we can help. We know the Minister is concerned. We are all concerned. One of the strong arguments we should use is the one made by Senator Robinson, the European argument. There is no point in going back on the referendum. We are in Europe and we are there to make the best of it. The strongest argument we have is that in a European sense, flowing from the preamble to the Treaty of Rome, through the Summit decision and up to now, it is quite clear that regional imbalances as a matter of policy were to be corrected and that this formed an integral part of the whole economic and monetary union scheme to eventuate by 1980. This is clear Community policy. We should stick to that.

Unfortunately, it is a fact of life that there are states and big powers. In particular Germany feels she is footing too much of the bill—and that is a reality—for certain Community policies. What has emanated now is a dilution of the original criteria, a dilution designed to spread the jam a bit thin and to give something to everybody, including the people who are paying the bill. It is a negation of Community policy in the sense that it is not concerned with redressing regional imbalances. I am certain the Minister will make this point very clear.

Before we start talking to and at each other, talking to the converted, I should like to know is there any practical way in which we could help the Minister. As I said, the three parties will be coming together in the Parliament next week and we will have a strategy of debate in which our point of view will be emphasised. We will link up with people from other countries who will have a like point of view to express. I take it we are all massively supporting the Minister in what he can do at the Council of Ministers' meeting. Is there any other way in which we can help? Knowing the difficulty of the Minister's task, because there is a big degree of power politics in this, is there any practical way in which we could help here?

Deputy O'Kennedy

The Minister referred to the guidelines and principles in the Rome Treaty, in the Summit and the Commission's own guidelines, on which we all relied at various stages, and said they are not reflected in the proposals. I would go much further and say the proposals run quite contrary to those principles and guidelines. That raises a very serious problem, not just in relation to the Community's regional policy, but in relation to any other principles and guidelines that may be contained in the treaty or in any Summit meeting that may take place in the future. The impression that all of us got from these principles and from statements emanating from the Commission and discussions we had with the Commissioners responsible, was that as far as possible these principles would be adhered to. We find that the proposals are totally different. It raises a very important issue. The Commission which, in fact, is meant to be the agency for implementing the policy and producing these policies, quite frankly, seems to have been got at even before its proposals were produced for the Council of Ministers.

This brings up a problem, particularly for us here in Ireland, where we are geographically remote and somewhat remote from these institutions at this particular time. The Irish people will be asking themselves if they cannot rely on the clear consistent principles so often stated, how can they be expected to rely on any further statements at any other time? How can we be expected to play the type of role in Europe which we wish to play? This is a major problem which may in some ways complement what Senator Lenihan has said, that is, that it is not just a question of particular proposals on particular policies but a question of the attitude of the member states of the European Community?

If the Council of Ministers are determined to adhere to the criteria which we now have before us this will deal a deadly blow to the confidence which this country and Italy and other countries may have in them at any other time. This is a very major issue. As the Minister has pointed out, we are not here just talking about the welfare of a particular country. We are talking about the development of the European Community and the role which any country can play in it. In almost all the matters mentioned the dreaded principle of Juste Retour, which was so often denied by so many spokesmen, has in fact been implemented in one form or another in the proposals. The fact that the Community as a whole is being looked to to eliminate the imbalances is obviously being overlooked. We are now dealing with a situation where one makes a comparison within the member states. This is what is emerging.

In that context we would be able to give the Minister some assistance in stating that we find nothing there consistent with any statement that has emanated from any responsible source and that the big concern we have is that the Commission charged with the development of the proposals has been interfered with somewhat. We would have thought that the Council of Ministers would have had their opportunity at a later stage to deal with the proposals but apparently, individually or otherwise, they have taken the opportunity to interfere with them before they emerged as concrete proposals.

The Minister has pointed out, quite rightly, that we negotiated a special protocol. There were clear references to border areas at various stages and those matters are now being totally overlooked. I mentioned these points not just with reference to European regional policy but as being basic to the role we can play in Europe and basic to the confidence which the member states can have in their own Community membership.

Deputy B. Desmond

There is a danger that we may convey the impression that we are losing our nerve in the negotiations when we should be stressing some positive aspects. The Minister's criticism has been quite explicit and can be fully supported at national level. A principle of regional development policy has been accepted but the amount involved is absolutely derisory.

The protocol referred to by Deputy O'Kennedy can be a valuable piece of armoury for the Minister and I have no doubt that it will be used effectively. We can appreciate that the wealthier member states will not find it easy to contribute to a budget from which they can expect to get absolutely nothing or from which they can expect to get back only a relatively small proportion. We expect to get £8 million in 1974 as an absolute minimum, £12.2 million in 1975 and £16.2 million in 1976. I strongly support the view that unless the amount of the fund is dramatically increased it will have no impact on the economic infrastructure of this country.

We should not lose our nerve. The members of the European Parliament should yell loudly and should be fully backed up with data from the Department. They should be briefed more effectively by the Department of Foreign Affairs. I suggest that the employers and trade union organisations on the economic and social committee of the community should also be fully briefed. I urge the Minister to see if it is possible to get any acceptance within the Community of the North and South situation. This is terribly important.

Deputy Staunton

I would be inclined to be more concerned about the criteria position of this country and its proportion of this fund rather than about the precise amount which has been suggested at this stage. As the Minister has pointed out, initially it may not be a very big sum but there is a proposal to increase the level still further.

I was in Brussels in May last and I discussed this question with Mr. Thomson. With his permission I transcribed our conversation. The Minister referred to the fact that there had been a dilution of the fund and that there was a special fund which now apparently no longer exists. The proposal was that about 80 per cent of the fund would be dispensed somewhat along the lines at present proposed and that there would be criteria which would be more suitable for our country. The intention at that time was to retain 20 per cent of the special fund to be dispensed centrally by the Commission in Brussels in the interests of broader political and regional development purposes. The fund was to be dispensed without any worry about bargaining power.

In relation to that 20 per cent Mr. Thomson said at the time that he hoped it would be available to Ireland in two ways: that it could be used to initiate studies in depth by experts either on their own or in association with experts from member states to produce comprehensive programmes of development to tackle particular problems. This would be a safeguard for the country which perhaps felt it had not got the full apparatus to do this kind of work. Secondly the money would be available for cross-border purposes et cetera.

The point is that there has been a total dilution of what had been intended in Brussels in May. We find that this fund is to be diluted amongst one-third of the entire community. There is no comparison. The Minister's criticism of the structural unsoundness of this is very valid. The reason for the structural unsoundness is simply that larger nations do not have the goodwill to evolve a fundamentally sound regional policy that would be comprehensive and Community-wide in its embracement. They wanted to insist that they take back into their countries a very large proportion of their input into that fund. Therefore if you started with that as your base and attempt to develop criteria, you obviously develop unsound criteria.

We now find that we are in a regional developmental zone with one-third of the entire Community. I would like to look briefly at certain regions in the EC, what might be termed the underdeveloped regions of those countries. I attended a conference of what were termed the Peripheral Maritime Regions of the EC held in St. Malo in France in July this year. This was a French idea of bringing together the underdeveloped regions of the different countries of the EC to compare the levels of underdevelopment and to have an effective lobby for support. They produced a volume of statistics showing the relative standards of development in underdeveloped regions of these countries. When we talk about what is probably the major criteria of all, the proportion of people engaged in primary employment, which is largely agriculture we find that the Irish average level is about 27.4, but when we get into our western region—with which we should be particularly concerned in any regional development policy in this country, because there is the same structural underdevelopment in our western region within our country, and that is an argument which no doubt we will be talking about in a few months' time—we find that the proportion of people engaged in primary employment is of the order of 45 per cent to 55 per cent in the various regions from Donegal down to the mid-west region.

Just to illustrate the vast gap at that conference in regard to underdeveloped areas of Germany the delegates from Schleswig-Holstein said the proportion of people in primary employment amounted to 11.8 per cent, and they were trying to tell us at that conference that the major problem in their part of Germany was that they had this extraordinarily high proportion of people, amounting to 11.8 per cent, engaged in primary employment. Therefore, under the new ball game we are apparently put into the bracket of regions such as these. There is no comparison whatever, and therefore it is obviously entirely unacceptable. If we examine even development in this country in recent years, particularly in our underdeveloped regions, we find that while there are fewer people engaged in agriculture the rate of reduction from the agricultural sector to employment in services or industries is much less than in other countries with which we are comparing, so the problems here are infinitely greater.

To refer very briefly to the question of the referendum, as someone who comes from the west I make no apology for speaking on this, because it is of particular concern to that part of the country for a number of reasons. The major benefit to date through EC involvement has been from the Common Agricultural Policy, but again statistically if you look at the benefits to individual people, it will be seen they have come largely to the east and south. One of the main arguments of those of us who were advocates of membership of the EEC during the referendum was that a regional policy could provide a much greater level of investment and employment than could possibly be hoped for under native government. We pointed out that over 50 years of native government there were problems. We could talk in a narrow sense politically about who was to blame but broadly it can be said that under any native Government this country was underdeveloped.

Therefore the fact of Europe and its regional fund were of major concern. Recent OECD documents showed that the level of investment in this country is achieving even greater imbalances than had existed previously between east and west. The position is very critical and it would seem to me we are now back to the views expressed by Senator Higgins and Senator Mary Robinson and that this is much broader than merely a question of regional policy or the funds we are getting out of it. It comes back to the basic aims of Protocol 30 which refers to the will of the Community to correct basic regional imbalances, which is clearly not the intention of the Community in the document we have before us. If we look at other continents we see the approach to problems of this kind. In the United States, for example, if there are problems in Tennessee an authority is created to deal with it; if there are problems in Alaska funds are put in that area. If it is the intention of Europe eventually to link politically and economically and if regional policy is to be a means of achieving that objective, then they are running in the opposite direction. For all of these reasons I fully support, with the rest of the committee, the work which the Minister has been doing. I should like to compliment him on the work he has done to date, and I am certain that together we can work towards a more reasonable solution.

Deputy Nolan

One of the problems here is the amount of money available. A figure of £2,250 million has been mentioned, but there has been speculation in Brussels and elsewhere that the Council of Ministers has not yet decided on a particular figure. I would like the Minister to comment on this, because everything depends on the amount of money available.

Deputy Dr. FitzGerald

There is only one proposal, that is the Commission's proposal that the fund consists of 500 million units of account in the first year, 1974, 750 million in the second year, and 1,000 million in the third year, adding up to 2,250 million. The Council of Ministers have not yet met and there is no official reaction saying it is either too little or too much. One suspects that at the Council of Ministers both view-points will be put forward. There is confusion because occasionally the figures are misrepresented as being pounds rather than units of account, and occasionally the figure for three years is treated as if it was for a single year. In fact the proposal is quite clear.

Deputy B. Desmond

The Minister did mention 450 million for 1976. I gather it is 416 million: 280 million for 1974, 312 million for 1975 and 460 million for 1976.

Chairman

Yes. We have here, as you know, a communication from the Confederation of Irish Industries, and I think it would be useful and helpful if we were to hear their submission at this stage.

Deputy Nolan

As a member of the European Parliament I would like to pursue this point. Various criteria have been suggested but I think it would be of the greatest advantage to us if the regional policy were based on the per capita income in the various regions. The only other point I want to make is in relation to the question raised by the President of the Committee of the press conference who said that where countries are getting benefit from other funds those areas which have already benefited under other policies should not receive the same assistance as new applicants. New areas should be regarded as priority cases.

A few moments ago Deputy Desmond referred to the preparation of a policy to cover border areas. He suggested that part of the regional fund should go to the proposed Council of Ireland. Yesterday I raised that matter at a meeting and the general opinion of the committee was that when and if an allocation is made to the Government of the United Kingdom and Northern Ireland and to the Government of the Republic of Ireland the two Governments should come together and decide the percentage of the fund to be given to the proposed Council of Ireland and supplement it.

Chairman

That is not as such in the guidelines. The guidelines specifically mentioned a proposal that a part of the fund be reserved to be administered by the Commission in financing schemes for either intractable areas or trans-border regions.

Deputy Nolan

That was just the opinion of members of the committee. This idea of the quota system is something which I do not understand fully. My interpretation of that system is that all the member states subscribe a certain amount of money to the regional fund and set up a regional fund committee who are merely the writers of cheques. The members of that regional fund committee, from my interpretation, would simply sanction cheques without any reference to the areas where there is a need for assistance from the fund to supplement development projects.

Deputy Dr. FitzGerald

That is a possible system. Another possible system is one which simply applies criteria and the money is given to those who meet that criteria. There is a third possibility and that is that the latter system is used until such time as the money runs out. At that point, if demand exceeds resources, how do you allocate it? Could the residual back-up quota be brought in if this situation arises, as I think it is likely to? You might have a quota in that form rather than an automatic quota. We have to be sure as to what system is to be employed if demand exceeds supply.

Senator E. Ryan

The summit in October, 1972, proposed the setting up of a regional development fund. At that time the fund was to be directed in co-ordination with national aids and progressively towards the realisation of EMU and relieving the main regional imbalances in the Community. It did not define to what extent it was hoped to go to correct these imbalances but assuming that there should be substantial correction of these imbalances, that this should go as far as possible to do this by giving generously of funds and other aids, then this correction will have to be realised at the same time as, or, in fact before, the realisation of economic and monetary union. I understand that it is hoped to realise economic and monetary union by 1980. On the basis of the fund that is proposed, and certainly as far as Ireland is concerned, it does not seem to me that there will be any substantial correction of the imbalances by 1980.

Consequently, when the Minister says that we should not worry too much about the amount which we receive this year or next year, or what we will be getting in three years' time, I think he is correct. I think it is fair to say that possibly the first year is too early; we may not have our schemes available and ready for operation. Nevertheless, I think the kind of pace that will arise if we take that view would mean that there is no hope of correcting the imbalances between the different regions to anything like the extent that would be necessary by 1980. This is an argument which could be used, and should be used, with those members of the Community, or with those factions in the Community, who are not terribly concerned about the regions in need of help but are more concerned about the realisation of economic and monetary union.

In my belief there are far more people, far more factions and far more members of the Community who are concerned about EMU than there are about the correction of the imbalances of various regions. This is one way in which we may, the Minister may and the Government may, be able to persuade the Community to be a good deal more generous and more active in correcting the imbalances than they seem to be on the basis of the documents before us and on the basis of the various leaks which have occurred. Another thing to which I should like to refer is Article 5 of the regulations for the setting up of this fund. This article, in section 2, states that in the examination of each request, account shall also be taken of other assistance provided by the Community institutions or by the European Investment Bank. The words " account shall be taken " are rather ambiguous but again it seems to harp back to the remark made by a senior colleague of ours here which was to the effect that after all we were doing very nicely out of the Common Agricultural Policy and that that should be taken into account.

This ambiguity will have to be cleared up. It is something which we will fight against. The idea that because we do well out of the CAP or the social policy we should not press for a better share of the regional policy is not on.

Deputy Dr. FitzGerald

That particular subsection of Article 5 seems to me to be narrowly defined because it starts off by stating: " In the examination of each request, account shall also be taken of other assistance provided ". It seems to me that that must be narrowly interpreted as being a request for money from project to project. I would not have thought that it could have been used in the wider sense to take in the demands of each state in relation to the benefits that state receives. It is a point which will have to be clarified.

Senator Higgins

This further gives the impression that this will be a serious disadvantage to those countries with an undeveloped structure.

Deputy Dr. FitzGerald

Yes, there could be problems but the aim is to help particular projects and it is up to each country to put forward sufficient projects to get what they are entitled to. We will have to make sure that we do that. On the particular point, I would go for the narrow definition and I think that when we seek clarification we will be reassured on that.

Senator E. Ryan

If it means to make sure that there is co-ordination that is all right.

Deputy Dr. FitzGerald

I think it means that if you put forward a project for help you cannot get moneys from the European Investment Bank and from the regional fund, two lots of money from the same people. I think that subsection is intended in that sense. The Senator was right to raise the point to have it clarified particularly in view of what has been said about the Common Agricultural Policy.

On the question of the Common Agricultural Policy, I should like to state that this policy will certainly be very beneficial to this country. Our position on this is quite clear, however. On the most optimistic assessments yet made on the benefits of the Common Agricultural Policy it is agreed that this would not by itself bring our growth rate up to, never mind beyond, the Community average. Yet, what is required by the summit is the correction of the imbalance, which in my view means catching up. There is no question of the Common Agricultural Policy having that effect. The implementation of this policy would bring us close to or much closer to, the Community average hitherto. It would bring us to a base point from which the regional policy could help us catch up but it could not, by any calculation, do more than that. That of itself would involve an increase in our growth rate of something of the order of 50 per cent, which is big enough.

Senator Lenihan

The CII document brings that out very much; it describes the enormity of the problem.

Deputy Dr. FitzGerald

Our average is 3 ¾ per cent over the last ten years. I have not the figures for the Community but it certainly would have been between 5 and 6 per cent. How long we have to go before we reach that I cannot say.

Deputy Esmonde

As I understand it, the original idea of the Paris Conference in October, 1972, was that high priority should be given to correcting structural regional imbalances in the Community affecting the realisation of economic aims. We have had a chronic situation in this country of under-employment, emigration and low production and difficulties concerning marketing. Certain sections of our community are more viable than others. Under various policies emanating from Europe a certain amount has been written but not enough has been said. We have waited for some years for a regional policy to come from Europe and we hoped it would provide something that would correct this chronic malaise in our system.

The Minister has made a very important and good point today: that we like other countries, have no better-off area from which to draw. That is a very significant statement because, as I see it, this proposed regional policy requires the Government and various organs of this State to provide the balance of the money or some assistance. There is a limit to what you call on the taxpayer to pay to make up that difference. I see the proposal on regional policy as impracticable and unworkable in the Irish context. That is the most serious aspect of the overall view of this proposed policy.

Chairman

Thank you. With your permission I shall now call on the Confederation of Irish Industry representatives. We have three of their representatives with us who have been kind enough to offer to come here and make a submission to us from their special position and their expert knowledge of how this matter of regional policy might affect Irish industry. I think this would also be helpful to the Minister. The deputation from the Confederation consists of Mr. Liam Connellan, Director-General; Dr. Seán Ó Ceallaigh, Director of Business Policy, and Mr. James Dorgan, economist. The Members have before them the excellent submission by the confederation. I shall not ask the deputation to read it again, but, perhaps, the Director-General would like to go through it and summarise it and, perhaps, underline or direct attention to such particular aspects of it as he considers appropriate.

Mr. L. Connellan

If I may I should like to speak for five or ten minutes on the general view which industry takes of regional development and go through a few points, a brief introduction on the present position of Irish industry as we see it, on the labour slack in our economy, on the funds that appear to be needed by Irish industry in order to take up that slack and on the line we have taken very specifically on some of the criteria for a regional policy and finally on how we might help.

First, on the present position of industry, we estimate that at present industry is growing in output by about 10 per cent, about the best figure since 1968. This is ensured by very strong home demand, high farm incomes and very strong export demand. The various stimulii have been, in addition to farm incomes, devaluation, a very high level of confidence in industry and a high level of activity in all the countries around us and many new foreign industries coming on stream. Just now industry is moving very well, making the best progress for at least five years and perhaps the best ever. Whereas, ten years ago, perhaps, we had very high tariff barriers—typically around 40 per cent—against British products, now, with the Anglo-Irish Free Trade Agreement having practically run its course we are down to the 4 per cent to 8 per cent range in a very wide range of products, so that effectively we are now operating in a free trade area with Britain. Therefore, we feel the restructuring of industry is pretty well over and we are now running industry tightly.

Despite the fact that we are growing by about 10 per cent, at very best employment is industry is growing by about 2 ½ per cent. That does not mean a lot to our economy. We have an actual growth in population of around 30,000; a drift from agriculture of about 6,000; and immigration at present of around 3,000. If we want to cut into the 61,000 unemployed by 15,000 per annum it could therefore mean creating a total of 50,000 additional jobs per annum. The normal split between industry and services tends to be about 3:4; this would mean about 20,000 new jobs, literally net new jobs in industry. If this is related to the 300,000 people who are working in industry it means about 7 per cent net increase in employment is required in order to take up the slack existing in our economy. Because things are moving quite fast now, at worst the productivity in industry will probably be of the order of 7 per cent. In order to achieve the target of which I have been speaking, about 20,000 net additional jobs per annum, we must have an industrial growth rate of about 14 per cent against the 10 per cent in 1973, which is the best achieved in the past five years and perhaps the best ever.

This 10 per cent growth rate this year is due to demand from other markets outside but is also due to investment, which is probably about £150 million, coming from profits, the Industrial Development Authority and foreign enterprise. If we want it to go from 10 per cent to 14 per cent it would mean, in current terms, an additional £60 million investment. But the present 10 per cent is taking up a good deal of slack and that slack is gradually running out, so it is probably not an underestimate to say that if we want to get up to 14 per cent it means an additional £75 million next year over and above the £150 million investment this year. Obviously, this is moving substantially outside our own resources to provide. So in looking at the regional policy of EC which is an obvious source of funds, and one relates it to the objectives of the Paris Summit giving a high priority to sorting out regional imbalances, much of the regional imbalances can be sorted out through development of industry.

Some weeks ago we tried to make an examination of the EC regional documents and issue a newsletter which was intended to be supportive to the Minister. I hope it has done this. It is difficult to walk the tight-rope between having a béal bocht and adopting a Community view and, at the same time, bargain fairly hard with our partners. The image we have tried to project is that Irish industry is moving fast, is dynamic and that there is an opportunity to solve the problem very quickly now because of that fast movement and that if it can get that little extra acceleration now it will mean a great deal in the years ahead.

We tended to focus very much on the criteria because we regarded the negotiation on the fund as something which will go on right through to the end of the year as regards the size of the fund. As a simple slogan I suppose our line on the criteria was to support a policy which would mean the allocation of resources to areas of greatest need and try to focus on the lower decile in the Community, that is the lower 10 per cent, against particular criteria. The criteria have been quite definitely specified by the Europeans and we tried to examine these and see what they would mean in an Irish context, while trying to take a European view at the same time.

We first had a look at the income particularly in the light of the 3.9 per cent that had been rumoured in regard to allocation of funds. On per capita income we found that 12 per cent of the Community’s population lived in regions where per capita income is less than 1,500 units of account per annum. If that criterion was applied right across the Community it would mean 7 per cent of the division to Ireland. On the unemployment side, we examined the various figures for unemployment and found that from our point of view the best break point seemed to come at the 4 per cent mark. If one takes areas where the unemployment was more than 4 per cent this would give a division to Ireland of 5 per cent. We turned then to agriculture and suggested that we take the areas where the proportion in agriculture was more than three times the average. This would give Ireland an allocation of 11 per cent.

On the declining population side, we considered the areas where the population was declining and it would appear that Ireland would have a division of 14 per cent on that basis. We make these points strongly with our counterparts in Europe. We are against the criterion of heavy dependence on employment in declining industries. This is a problem of areas which are already developed. In a declining industrial situation there is a certain industrial tradition in existence. To change from textiles to engineering is not as big a change as that from agriculture to engineering. If we take any one of these criteria separately it would appear to give us 7 per cent, 11 per cent or 14 per cent in allocation terms.

We have tried to make the point that in many of the areas where the problems are compounded there is a multiplier effect between them. If there is a declining population that affects the age structure. A combination of factors can develop. The combination might push our figure up to 20 per cent. We tried to look at the problems on a trans-community basis. In our line of approach we were supported by the Italians.

We have also tried to enlist the support of our colleagues in Northern Ireland. We may have some success with them. We have talked about the amount of money necessary for the development of industry and for the intrastructure around industry. The telephone and communications services obviously create problems. The development of transport is also important. On transport we have taken the line that we are an island far away from the major centres of population. This is one of the key reasons why we have regional problems. We have argued in favour of a transport subsidy to the major centres for our finished products, and for bringing in raw materials.

In conclusion, the confederation is briefing the industrial and other members of the Economic and Social Committees. We attend regularly at meetings of the UNICE regional groups. Commissioner Thomson has asked UNICE for another meeting. We will raise our points of view as often as we can. We would be delighted to give whatever help we can to the Minister, and the chairman and members of the committee. I would like to thank the chairman and Minister.

Senator Higgins

Mr. Connellan mentioned article 3 (1) on page 4. I have not seen the docufent myself and am not in a position to comment on it.

Chairman

Mr. Connellan has given us an expert analysis of the capital investment in round terms which he foresees as being necessary. Have you and your expert colleagues, Mr. Connellan, formed any view in your own minds as to what you think the amount of the regional fund should be, arising from your knowledge of our Irish situation.

Mr. Connellan

A figure of £75 million was mentioned. If there is a drop off from 10 per cent growth rate in industry at the moment—the projections for next year are not as good——

Chairman

You would think from your knowledge of Irish industry that for industry alone Ireland would need a certain figure?

Mr. Connellan

A figure of £75 million has been mentioned as a rough estimate but there might be some additional profitability if we are lucky.

Chairman

Are you thinking of £35 million or something larger from a regional fund?

Mr. Connellan

Yes.

Deputy B. Desmond

A figure of £400 million if increased to £700 million with an acceptance of 8 per cent for Ireland would work out at £35 million.

Mr. Connellan

That would be right across the board.

Deputy B. Desmond

If that money was spent in the west of Ireland it would have a drastic effect.

Deputy Dr. FitzGerald

That is a round figure. I would have thought that the infrastructural requirement would be greater than the industrial.

Mr. Connellan

That is assuming that everything goes very well; if industry invests, let us say, £150 million, as last year, and still get the growth rate, that assumes that demand is very good in export markets and remains very good in export markets.

Deputy S. Flanagan

I should like to compliment the representative of industry on a very excellent analysis. He drew attention to a problem that has caused concern to us here over the years and that is that where there is an existing industry and that industry collapses there is an immediate and very strong claim by the people of that area for its replacement. That has often worked out to the detriment of places that have the endemic problem he spoke about, no industrialisation or virtually no industrialisation, plus a crazy age set-up as regards people employed in primary industry and so on. He came up with a figure of, I think, 20 per cent, which would be associated with the attempt to cure that situation which is a typical west of Ireland situation. I should like to repeat the observation he made in this regard.

Secondly, he mentioned the transport subsidy. I should like to find out from him what sort of progress he thinks he or his colleagues may have made in this.

Mr. Connellan

Not very much. We have not given any detailed consideration to the allocation of funds within the country. We have been looking primarily at Europe and concentrating on developing an Irish case.

Deputy S. Flanagan

Has this sort of transport problem existed elsewhere? Italy, I think you said?

Mr. Connellan

Yes.

Deputy S. Flanagan

Northern France? Northern Scotland?

Mr. Connellan

Yes, there is some precedent for giving subsidies on the agricultural side to some parts of the Community. We are trying, within the Confederation at the moment to examine the efficiency of our transport on the island, in so far as this is possible, in conjunction with our colleagues in the North of Ireland, and there is another study going on on the movement of goods from the island to the major centres of Europe. Hopefully, as a result of this, we will be able to come forward with fairly concrete proposals early in the new year. We have mentioned the transport subsidy proposal to the Transport Commissioner. He has tended to be favourable but he does not have any funds.

Chairman

We are very grateful to Mr. Connellan and his colleagues. Mr. Connellan, we wish you every success and we hope that you will be running a campaign parallel to what the Minister is trying to do.

Mr. Connellan

We will be delighted to.

Chairman

We hope we will have you again before us on various matters which we will be discussing.

Deputy Dr. FitzGerald

I am also very impressed with and very grateful for the work done and the study carried out. I can see myself using some of those figures in Brussels before long.

Chairman

Senator Lenihan suggested that we might devote our minds to what way we as a committee could be of assistance to you, Minister, in your efforts. I think we have had some very useful contributions from the Members. May I just mention a couple of my ideas before I ask you to reply to the various points which have been raised?

I agree with all the Members of the committee who have spoken about the importance of the amount of the fund. I think the inadequacy of the figures we have heard mentioned so far has been very urgently underlined for us by what we have just heard from the delegation from the Confederation of Irish Industry. I fully agree also with your brilliant analysis of the criteria which have been proposed in these regulations. My comment would be that these criteria will have to be entirely recast. In particular I think that, if the guidelines laid down by the Commission are to be followed such a recasting of these criteria is absolutely necessary, with particular emphasis, I would suggest, on the per capita income of a particular region being a fundamentally important criteria.

You mentioned the relationship between a proper regional development policy and the evolution of a monetary and economic policy and in relation to that I would like to refer to something which was in the guidelines and which I thought was of great significance, namely, that we should not look on this question of the evolution of the regional policy as something which is of significance only to the peripheral areas, the under-developed areas of the Community. The guidelines brought it out very clearly that it is just as much in the interests of the over-developed central regions of the Community to have a balanced regional policy because if life is to be tolerable in these central areas there has to be de-congestion and it is just as vital for these central regions that there be balanced development throughout the Community as it is for peripheral areas. That point has been made forcefully in the guidelines and, perhaps, it could be brought back into the argument.

My personal view is that infrastructure from our point of view is vitally important. We had a debate in this country some years ago on our regional development policy, particularly with reference to the Buchanan Report and I took from that debate at the time the impression that an adequate infrastructure, particularly in our western seaboard counties, is perhaps the most important thing of all. I hope that when you are putting forward our case you will lay particular emphasis on the importance of regional fund assistance for the creation of an infrastructure here and in the other peripheral areas which will be on a par with the infrastructure which exists in the central regions. My view, and perhaps it is simplistic, is that if you have in most of our underdeveloped regions a first class modern infrastructure, to a large extent the problem will take care of itself.

That brings me on to something you mentioned and that is the question of percentages. The percentages mentioned are all in cases inadequate but particularly so in relation to what is proposed for infrastructure development. At the very least the amount forthcoming from the regional fund for infrastructural development should be 50 per cent of the cost.

I should also like to mention something which Members of the committee have mentioned—and from our point of view it is a very important aspect of the whole matter. We hope, Minister, you will strive in so far as you can to have reincorporated into the whole notion of regional policy the idea of some portion, whatever it may be, of the fund being reserved by the Commission for the administration of special schemes in particularly intractable areas or trans-border areas. It is vitally important in the European context that whatever individual member states might be able to do in regard to regional policy, if the entire expertise, knowledge and resources of the Commission as such were brought to bear in a particular region or in the administration of a particular scheme, it could serve as a headline or a pilot scheme for all member states in dealing with their own particular problems.

A point which struck me in looking at the regulations was that the regional fund committee as proposed seems to be a totally emasculated concept. At the time of the Paris Summit I visualised a very important and effective regional policy committee being created. As the regulations envisage the situation, the committee will be nothing more than simply a vehicle to attempt to co-ordinate the regional policies of the member states. It will have no say and no voice in the Community's regional policies as such, or in the amount of money to be devoted to the Community's policies. It will in effect be nothing more than a study group investigating the regional policies of the member states and in some vague way allegedly co-ordinating them. I particularly wish to draw the Minister's attention to the idea of giving this committee much greater powers. It should be given teeth, and a much greater say in how the regional policy is to evolve and what the total amount of money to be made available should be and the criteria by which it should be administered.

As practically every Member of the committee has said, the Common Agricultural Policy is something on its own, something which has been developed by the Communities as a necessary and integral part of the Communities' life, and should not and cannot in any way be confused with the completely separate matter of regional policy. Those are my views. Before the Minister replies does anybody wish to make any further point?

Deputy Dr. FitzGerald

In replying I will limit myself somewhat to a few points because some of the points raised lead up to the question of what approach the Government should adopt or intend to adopt in the discussions to come. This is something which I prefer not to go into in this public session.

I very much welcome the views expressed and the degree of support given by the Opposition in this matter. It certainly strengthens our position that there should be such a clear view that the proposals in their present form are unacceptable. Since this is the view of the committee I have no hesitation in saying that it strengthens our position.

You yourself, Mr. Chairman, in summing up identified two points and I am grateful to you for that. One which was mentioned by other Members of the committee was that we should present our views not merely from the point of view of our own national interest but in European terms and in terms of trying to secure a policy which would meet the requirements of the whole ideal of a regional policy, and which would have removed from it some of the inadequacies which are in danger of being imposed by an excessively sectional or national approach to it. I am very conscious of this. Indeed, I have always seen a regional policy as something European in character, involving the taking on of responsibility by the Community as a whole and all its members. Although the Community has achieved much, it is only in certain areas like the agricultural policy that its policies can be seen to be fully European.

On the question of infrastructure, I meant to refer to this as another area which could be a problem area for us. A definition with regard to infrastructure in the documentation is proposed. There is the question of whether there may be a rather narrow approach to this which we could not accept. The wording used is that the fund may contribute to financing infrastructural investments required for the development of industrial or service activities totally or partially financed out of public funds.

Much would depend on how narrowly the words " what is required for the development of industries or services activities " are defined. They could be defined broadly as public investments which are necessary for economic development outside the agricultural sector. That would be my understanding of what they should mean. There could be a danger that they would be defined much more narrowly and that unless you actually built an extension to a road or a factory it would not be infrastructure for industrial or services purposes. Clearly this is something we must clarify. As was said when the representatives of the Confederation of Irish Industries were here, the infrastructure section of the fund could end up much more important to the industrial sector. I think it probably will

Deputy B. Esmonde

Through the Chair, does the Minister think that agriculture is ruled out?

Deputy Dr. FitzGerald

I think the view which would be taken by the Commission is that we have an agricultural policy which contains provision for structural reform. We are not just concerned with the exclusion of agriculture here. We are also concerned lest the definition of the rest of the economy is made very narrow. We regard the whole question of infrastructure as very important.

I also noted the point about the two-tier system. We do not understand why it should have been dropped. I am grateful to Deputy Staunton for his clarification and for his note of what Commissioner Thomson said earlier this year. I have taken a note of that point. It is a useful indication of the importance then attached to it by the Commission that a figure as high as 20 per cent should have been considered for this purpose. I would have hoped for a slightly higher figure.

Deputy Staunton

I can give the Minister a copy.

Deputy Dr. FitzGerald

I am very grateful indeed. It is important that that figure should have been mentioned and perhaps the fact that we have got this information will enable us to press the case more strongly.

Deputy O'Kennedy

I commend Deputy Staunton on his initiative on getting that tape. I should also like to confirm what he said. Precisely the same thing was said to others of us around the same time.

Deputy Staunton

On the same day. I wish to point out that the tape was taken with Mr. Thomson's permission.

Deputy Dr. FitzGerald

I am grateful to the Deputy for the information. The only point on which I am not sure that I am in agreement is in regard to the Regional Policy Committee. I would be fearful lest it would elevate the Regional Policy Committee to a position where the political element of carve-up might assume too much of the whole operation, and even though we are very disappointed with the proposals the committee has put forward and are puzzled that the committee should have put forward proposals of this kind, it could well be that an arrangement with the Commission might be more in our interest. I shall consider the point you have made there, but I think there can be two different viewpoints on that. I would limit myself at this point to those remarks.

Senator Higgins

On this question of the money running out and there being more demand than supply, at what point would this be considered——

Deputy Dr. FitzGerald

This would be vital because the whole question of whether there might be a quota arises. If the fund were so organised that there was some system of relating supply to demand that would not require a quota, that would be all right, but no such system has been proposed. I think it is clearly possible to devise such a system. If, for example, the percentage contribution made by investment and industry were related to the needs of different areas and if it were reviewed from time to time so that the contribution to the less disadvantaged areas were adjusted in relation to the funds available, you could see a solution of that kind if it were worked out. It would not require a quota, but we know of no proposal of that kind at the moment.

Senator Higgins

There is nothing in this document to suggest that it would.

Deputy Dr. FitzGerald

I have seen some recent comments by the Commission on this question, which is perhaps a hopeful sign, but there is certainly no proposal before it at the moment which looks like being in any way capable of resolving the dilemma of the fund being so small in relation to the need. I fully accept the conclusions reached by the CII on the industrial side and the scale of the needs that are there. Given that problem it is clear that a situation could arise in which there simply would not be enough funds to meet the projects which qualify under the criteria. In those circumstances we shall have to insist on clarification as to how that problem will be dealt with. If there is some other proposal for dealing with it let us hear it; if there is not, let us face the reality and go back to quotas, but we would want to be very sure that our quota was appropriate to the problems of this country and appropriate to the legitimate needs by any of the regional criteria being applied.

Chairman

Before we go into private session, I would like to say we have some further matters to deal with, and I suggest we might have a short meeting tomorrow at, say, 11 a.m.

Agreed.

Chairman

Secondly it was our hope to have views put before us today from the Congress of Trade Unions. Unfortunately, due to the mechanics of the thing, we were not able to have that hope brought to fruition. I just want to tell you we shall be inviting them to give us their expert and helpful advice on regional policy, at any rate, and probably on other matters, as soon as possible.

Senator E. Ryan

Would it be possible to have a memorandum a few days beforehand?

Chairman

Yes. You will appreciate we would have done this also with the CII, but we wanted to get them here, even though it was very rushed.

Deputy B. Desmond

I think you can be assured you will have one.

The Committee went into private session.

The Committee adjourned at 6.35 p.m. until 11 a.m. on Friday, 12th October, 1973.