Wednesday, 13 November 2019

Questions (32)

Joan Burton


32. Deputy Joan Burton asked the Minister for Finance the progress of talks on the 2021 to 2027 EU budget and the multiannual financial framework, MFF; his views on reports that the contribution by Ireland would raise by a tenth to 0.91% of gross national income, GNI; and if he will make a statement on the matter. [46555/19]

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Oral answers (6 contributions) (Question to Finance)

Does the Minister for Finance believe Ireland will have to significantly increase its contributions to the EU multiannual funding budget, which is due in 2021? It has been suggested that Ireland will have to pay, on average, up to €760 million more into the EU budget per year. It has also been suggested that our net contributions will go up to as much as 0.91% of our GNI. This is complicated by Brexit. The cost of this increase could be close to the cost of a difficult Brexit deal.

I thank the Deputy for raising this matter. The MFF was most recently discussed at the October European Council meeting, where leaders exchanged views on key issues such as the overall level of expenditure, the volumes of expenditure in the main policy area, and financing, including revenues and corrections as well as conditionalities and incentives.

In light of the discussion, the Council called on the Presidency to submit a negotiation box with figures in advance of the European Council meeting in December 2019. The discussion largely reiterated the differences among member states on the matter. There was no narrowing of views on the overall level of expenditure, with a number of net contributors reiterating the need to keep the overall level at 1% of EU gross national income, GNI. While there was strong pushback from the net recipients on the Presidency proposals, which they consider too low, they argue for an overall level of 1.1% of EU GNI. On the allocation of volumes between areas, net recipients expressed strong dissatisfaction regarding proposals on the CAP and cohesion, which they view as requiring further cuts to the Commission's proposals, for cohesion in particular. The issue of rebates also highlighted different positions, with some net contributors stating the need for a correction mechanism as their contributions rise, with others in favour of their phasing out.

The Taoiseach has noted that while Ireland's contribution is likely to increase significantly, we need to talk about the benefits and not just the costs of EU membership, including access to the Single Market, which vastly outweighs EU budget contributions. In respect of contributions to the EU budget, Ireland is likely to see significant growth in its contributions as a result of continued economic growth. For example, under a 1.1% GNI ceiling, the average annual contribution will be €3.3 billion. I will outline the various cost consequences if it is below 1.1%.

Additional information not given on the floor of the House

The Commission published data last week on the level of contributions that member states are likely to make under the next multi-annual financial framework, MFF. I welcome the addition of such data to the debate to provide all parties with a realistic framework within which to negotiate. While Ireland recognises the Commission's figures, member states have differing approaches to the calculation of both contributions and receipts, which can lead to differences in forecasts. The exact level of contributions will depend on the final MFF negotiations, not least the level of overall expenditure and the own resources to be applied. Ireland's contributions to the EU budget in 2018 amounted to just over €2.5 billion. In 2019, we expect final contributions to be slightly below this figure.

The Minister agrees it is a significant issue. The vast majority of people welcome and recognise the benefit to Ireland of being a member of the EU. Given the likelihood of the UK leaving the EU, however, and the changes being made in any event in the multi-annual financial funding programme, it is important that the Minister tell the House and the people the parameters of the discussion. As recently as 2017, the contribution by Ireland to the EU budget was €173 million, whereas last year, it rose to €315 million. My understanding, which the Minister has not contradicted, is that for 2021, it is likely to increase by approximately €760 million. We all appreciate that it will be a significant imposition and burden on future budgets. Will he broaden the tax base to ensure that ordinary workers will not pay the bulk of it, and change his view on bank taxation?

Ordinary workers benefit from our membership of the EU. The Deputy asked a question as to the cost consequences of the various scenarios articulated by other member states and I began to outline the answer, the rest of which will be given in written format. If, for example, the ceiling is at 1%, from 2021 the figure will be €2.575 billion, rising to €2.77 billion in 2023. If it is beyond 1%, the contributions will be higher. Ireland has not outlined, and I will not do so now, our preferred figure because I anticipate the negotiation will continue for some time. On many occasions, however, I have made clear the Government's priorities in respect of the matter, namely, continuing to support farmers and the agricultural community through the CAP system and ensuring the appropriate funding is in place, and supporting research and innovation and the programmes that are important to our island. Our ordinary workers benefit from membership of the Union and access to the Single Market. Even on a no-policy-change basis and even if the current way of calculating payments were not to change, the fact that our income is growing means our commitment, too, will grow.

The Minister mentioned the significance and importance of the agricultural budget and the CAP. The proposals are to "green" the CAP. Will the Government agree to that? Our farmers will have to adapt to more green-friendly agricultural policies, including examining carbon emissions and considering ways to decarbonise the agricultural economy. While we all realise how important agriculture is to Ireland, changes are coming down the road and we will not have much of a choice about them. What planning is the Government doing in that regard? It has spoken about forestry but we have not seen any plans. Remarkably, in the Minister's Budget Statement, I never heard the words "tree" or "forest". It was mentioned at the back of some of the budget documents but he never even mentioned it. It is very important for the future of both Irish farming and the budget.

The Deputy used the word "burden" in respect of the contribution we will need to make to the EU. It is the case that we will need to make a higher level of payment but this is in the context that Ireland has only recently become a net contributor. For decades, we were a net beneficiary but that has changed, and we now pay in more than we receive. As we look at how we will frame our negotiations, it is critical that we reaffirm how important it is to be in the Single Market. The fact that our income has grown, in itself, means we will have to make a greater contribution.

The Deputy asked about the status of the likely change to the CAP. The Minister for Agriculture, Food and the Marine, Deputy Creed, is involved in a great deal of work on the matter, in a coalition of like-minded agriculture ministers, to ensure we can progress our priorities for the scale of the CAP and how it will develop. We want to find ways of ensuring that the CAP will continue to be environmentally sustainable while meeting the needs of Irish farmers and agriculture.